Date: 20061207
Docket: A-285-05
Citation: 2006 FCA 398
CORAM: DÉCARY
J.A.
NOËL
J.A.
NADON
J.A.
BETWEEN:
Uniboard Surfaces Inc.
Applicant
and
Kronotex Fussboden GmbH and Co. KG,
Stevens-Dufour Inc., Goodfellow Inc., Kronoflooring GmbH, Beijing Kronosenhua
Flooring Co., Quality Craft Ltd., Quickstyle Industries Inc., Kaindl Flooring
GmbH, Kronospan Luxembourg S.A., Unilin Flooring NV, Torlys Inc., Government of
the People’s Republic of China, Sichuan Shengda Wooden Products Col. Ltd,
Vohringer Wood Product Co. Ltd, Asia Dekor Industries (Shenzhen) Co. Ltd, Shaw
Industries Inc., Mohawk Industries Inc., Shanghi Allsun Wood Industry Co. Ltd,
Matériaux à Bas Prix, Kronopol Ltd, Lamwood Products (1990) Limited, Akzenta
Paneele and Profile
GmbH or the Classen Group of Companies, Yekalon Industry, Inc.,
and Espace Production International
(Epi), S.A.
Respondents
and
Attorney General of Canada
Intervener
REASONS FOR JUDGMENT
DÉCARY J.A.
[1]
The
applicant (Uniboard) filed a Notice of Application for judicial review of a
tripartite final determination made by the President of the Canada Border
Services Agency pursuant to subsections 41(1)(a) and 41(1)(b) of the Special
Import Measures Act (R.S., 1985, c. S-15) (the Act or SIMA).
[2]
The
applicant is the only known Canadian manufacturer of laminate flooring. On
August 13, 2004, it launched a complaint of dumping and subsidization with the
Agency. A lengthy investigation ensued, during which some 360,000 pages of
documents were filed. In his final decision made on May 17, 2005, the
President determined:
1) that the
People’s Republic of China (China) and France had engaged in dumping;
2) that China had subsidized
laminate flooring destined for Canada; and
3) that the
dumping investigation involving Austria, Belgium, the Federal
Republic of Germany and the Republic of Poland (all together, the four
European countries) was to be terminated as the margin of dumping of the goods
from these countries was insignificant, [viz., it was less than 2% of the
export prices].
[3]
Even
though the applicant, in its Notice of Application, sought to quash or set
aside the three determinations made by the President, it only sought relief in
its memorandum of fact and law with respect to the third determination, the one
relating to the termination of the investigation involving the four European
countries. It follows that the findings of the President with respect to the
dumping by China and France and the
subsidization by China will remain undisturbed
whatever the fate of this application.
[4]
The
applicant attacks the third determination on grounds which pertain on the one
hand to procedural fairness and on the second hand to what it describes as legal
issues.
Duty of procedural fairness
[5]
It is
accepted by all counsel that procedural fairness is applicable to SIMA
investigations.
[6]
It is also
accepted by all counsel that the determination of the content of the duty of
procedural fairness in any given case is a question of law and is reviewable
under the standard of correctness.
[7]
The duty
of procedural fairness is better described by its objective – which is
essentially to ensure that a party is given a meaningful opportunity in a given
context to present its case fully and fairly – than by the means through which the
objective is to be achieved for the simple reason that those means will depend
on an appreciation of the context of the particular statute and the rights
affected (see Baker v. Canada (Minister of Citizenship and Immigration),
[1999] 2 S.C.R. 817, at para. 22). There is no rigid test or formula. There
is no list of items to be checked out. The duty, to use the words of a former
era, is to ensure fair play in action.
[8]
All counsel
agree that the content of the duty of procedural fairness is flexible and
variable. As might be expected, the debate amongst them is with respect to the
place procedural fairness occupies in SIMA investigations on the wide spectrum
defined by the case law. At the upper end of the spectrum are full
participatory rights (oral hearings, cross-examination of witnesses, etc.). At
the lower end are minimal participatory rights (paper hearing, etc.).
[9]
The
question to be answered, at the end of the exercise, was carefully crafted by
Le Dain J. in Cardinal v. Director of Kent Institution, [1985] 2 S.C.R.
643, at p. 654:
The
question, of course, is what the duty of procedural fairness may reasonably
require of an authority in the way of specific procedural rights in a particular
legislative and administrative context and what should be considered to be a
breach of fairness in particular circumstances.
[10]
Much was
said, in the written and oral arguments, about whether prejudice is a factor
that comes into play when deciding procedural fairness cases. The applicant
argues that in light of Cardinal, the final determination of the
President should be set aside as soon as a breach of the duty of procedural
fairness has occurred and the Court should not speculate as to what impact the
alleged breach might have had. The respondents argue, in light of Stevens
v. Conservative Party of Canada, 2005 FCA 383 (leave to
appeal denied SCC 3281), that the issue of prejudice should well be in the mind
of the Court when it decides to set aside a decision. As is often the case,
the solution, here, lies between these two propositions.
[11]
Cardinal dealt with procedural
fairness in the particular context of prison administration. The Court stated,
that the content of the duty was a question to be approached with caution in
order to avoid unduly burden or obstruct the process by imposing unreasonable
or inappropriate procedural requirements. Despite the recommendation of the
Segregation Review Board to discontinue the administrative segregation of two
prisoners, the Director had decided to continue segregation without affording
any hearing to the prisoners. The Court concluded that there had been a breach
of the duty of procedural fairness:
“… because of
the serious effect of the Director’s decision on the appellants, procedural
fairness required that he informs them of the reasons for his intended decision
and give them an opportunity, however informal, to make representations to him
… They were entitled to know why the Director did not intend to act in
accordance with the recommendation of the Board and to have an opportunity
before him to state their case for release into the general population of the
institution … [the Director] had a duty to hear and consider what the
appellants had to say …” (at page 659).
“These were
in my opinion the minimal or essential requirements of procedural fairness in
the circumstances … There is nothing to suggest that the requirement of notice
and hearing by the Director … would impose an undue burden on prison
administration or create a risk to security” (at page 660).
[12]
It is in
this particular context of a breach of an essential element of the duty of
procedural fairness, viz. “the requirement of notice and hearing”, that the
so-often quoted words of
Le Dain J. were pronounced:
“I find it
necessary to affirm that the denial of a right to a fair hearing must always
render a decision invalid, whether or not it may appear to a reviewing court
that the hearing would likely have resulted in a different decision. The right
to a fair hearing must be regarded as an independent, unqualified right which
finds its essential justification in the sense of procedural justice which any
person affected by an administrative decision is entitled to have. It is not for
a court to deny that right and sense of justice on the basis of speculation as
to what the result might have been had there been a hearing” (at page 661).
[13]
Cardinal, I venture to say, is far
less dramatic and much more pragmatic than has sometimes been said. There had been
no hearing; therefore there was a breach of an essential requirement of the
duty of procedural fairness; therefore the decision could not stand. To say
that Cardinal stands for the proposition that any breach of any
requirement of the duty of procedural fairness renders a decision invalid, or that
any breach of any procedural rule constitutes a breach of the duty of
procedural fairness, or that a court has no discretion to deny the relief
sought, is to read the reasons of the Supreme Court of Canada out of context.
[14]
An
occasion to exercise the judicial discretion to withhold a remedy despite the
failure to afford a hearing arose in Mobil Oil Canada Ltd v.
Canada-Newfoundland Offshore Petroleum Board, [1994] 1 S.C.R. 202. In that
case, as in Cardinal, “no full hearing, which could have been effected
in writing”, had been afforded (at p. 227). Iacobucci J., for the Court,
decided not to grant the remedy sought because to do so would be “impractical”
and “nonsensical” in the circumstances as they “involve a particular kind of
legal question, viz., one which has an inevitable answer” (at p. 228). He
insisted that his decision was “exceptional” and that he “would not wish to
apply it broadly”. In concluding his reasons, he referred to, and approved, a
decision of the Court of Appeal of British Colombia in R. v. Monopolies and
Mergers Commission, [1986] 1 W.L.R. 763, in which the Court withheld relief
in a non-prison context because “good public administration is concerned with
substance rather than form” and because the Commission “would have reached and
would now reach the same conclusion as did their experienced chairman”.
[15]
In Ahani
v. Canada (Minister of Citizenship and
Immigration),
[2002] 1 S.C.R. 72, the Supreme Court of Canada stated at para. 26, without further
analysis or explanation:
Insofar as
the procedures followed may not have precisely complied with those we suggest
in Suresh, we are satisfied that this did not prejudice him.
We conclude that the process accorded to Ahani was consistent with the
principles of fundamental justice.
(my emphasis)
[16]
In Canadian
Pacific Railway Co. v. Vancouver (City), [2006] 1 S.C.R. 227, the Supreme
Court of Canada dismissed various complaints
of unfairness made by C.P.R. that impugned the hearing process. The Court
first held that the notice of the by-law, even though it might have used “an
alternate wording [which] might have attracted more people”, was sufficient
because “what is required is fairness, not perfection” (at para. 46). The
Court then found that the revision of the by-law after the hearing and without
further hearing did, in the circumstances, meet the requisites of fair process,
“particularly when it is bore in mind that the City had a duty to deal with a
complex situation where different interests were at play and the City’s
ultimate obligation was to act in the interest of the entire public” (at para.
49). Finally, with respect to a complaint that the City had failed to disclose
information prior to the public hearing, the Court found that the standard
practice of making the documents available through the City Clerk’s office
prior to, and during, the hearing, constituted sufficient disclosure (at para.
57) and that “the relevance” of some documents alleged by C.P.R. to have prevented
it from making a more powerful argument was “tenuous” (at para. 61). The Court
concluded that “on balance the procedure followed by the City was appropriately
fair and open”.
[17]
The question
of whether the existence of some prejudice can be examined by the court, was
squarely addressed in cases where the breach alleged was that of failure to
disclose.
[18]
In Kane
v. Board of Governors (University of British Columbia), [1980] 1 S.C.R. 1105, Dickson J.,
stated as follows, at page 1116:
6. The court
will not inquire whether the evidence did work to the prejudice of one of the
parties; it is sufficient if it might have done so. Kanda v. Government of
the Federation of Malaya, supra, at p. 337. In the case at bar, the
Court cannot conclude that there was no possibility of prejudice as we have no
knowledge of what evidence was, in fact, given by President Kenny following the
dinner adjournment. … We are not here concerned with proof of actual
prejudice, but rather with the possibility or the likelihood of prejudice in
the eyes of reasonable persons.
[19]
In Toshiba
Corp. v. Anti-Dumping Tribunal, (1984), 8 Admin. C.R. 173 (F.C.A.),
Hugessen J.A. qualified a Tribunal’s practice of not disclosing a preliminary
staff report, as “dangerous”, but went on to say the following:
“Upon analysis, however, I am satisfied that everything
contained in the preliminary staff report is either a matter of general or
public knowledge or is based upon facts and sources which were, in due course,
properly brought out at the hearing in such a manner that all the parties to
that hearing had a full opportunity to test them. Thus, while, in my view,
there might have been a technical breach of the rules of natural justice, it
can be said with confidence at the end of the day that such breach was minor
and inconsequential and that the result of the inquiry would not have been
different had such breach not occurred.
[20]
MacGuigan
J.A. reviewed the case law in Canadian Cable Television Assn. v. American
College Sports Collective of Canada, Inc. (C.A.), [1991] 3 F.C. 626 . He
concluded as follows:
26. The applicant
did not, in fact, argue that it was adversely affected by the extra-hearing
evidence, but rather that, in dealing with a complaint based on evidence
received outside the hearing process, a Court will not inquire into whether the
evidence did work to the prejudice of one of the parties; it is sufficient if
it might have done so. A court was said to be concerned, not with proof of
actual prejudice, but rather with the possibility or the likelihood of
prejudice in the eyes of reasonable persons.
37. In my
opinion, this review of the case law indicates the fallacy of the applicant’s
argument. Contrary to its contention that a court will not inquire into the
question of prejudice, all of the authorities which focus on the matter show
that the question of the possibility of prejudice is the fundamental issue:
Kane, Consolidated-Bathurst, Cardinal Insurance, Civic Employees’ Union, and
Hecla Mining.
(my emphasis)
[21]
Relying
finally on the decision of Hugessen J.A. in Schaaf v. Minister of Employment
and Immigration, [1984] 2 F.C. 334 (C.A.), at page 442, MacGuigan J.A.
added:
41. “If a
final word needs to be said, let it be that an inconsequential error of law, or
even a number of them, which could have no effect on the outcome do not require
this Court to set aside a decision … The authorities have all required a real
possibility that the result was affected.”
[22]
To
summarize Kane, Toshiba and Canadian Cable Television: where the
breach of the duty of procedural fairness consists of a failure to disclose
some evidence, as a general rule the court, in the exercise of its discretion,
will intervene if the court is in no position to determine whether the breach
might have worked to the disadvantage of the complainant. Conversely, as a
general rule, where the court has before it the evidence which was not
disclosed at the hearing before the tribunal, and where the court is satisfied
that it is in a position to conclude that there was no prejudice and no possibility
or likelihood of prejudice, the court will not intervene.
[23]
The
recent decision of this Court in Stevens dealt, not with a breach of the
duty of procedural fairness, but with a breach of a procedural requirement of
the statute at issue. The court refused to quash a decision made unlawfully on
the basis that in the circumstances of the case, ulterior events had shown that
the breach would not in any event have had an impact on the legal outcome of
the case.
[24]
In
my view, all these decisions support the following proposition: in a given
context, even though a breach of the duty of procedural fairness or of a
statutory requirement has occurred, a court may hold the ultimate view that
because of the inconsequential, trivial or mere technical nature of the breach,
the relief sought should not be granted.
[25]
It
should come as no surprise that the concept of prejudice has discreetly made
its way into our administrative law. The proliferation of administrative
decisions and of tribunal-made procedural rules, the advent of complex
inquiries and the filing of sometimes frivolous and abusive judicial challenges
have forced the courts to be more vigilant. As a result, courts have attempted
to ensure on the one hand that no unreasonable or inappropriate procedural
requirements which unduly burden the administrative process are imposed and on
the second hand that judicial interventions in the administrative process aim
at preventing or correcting real injustices and at putting substance ahead of
form.
[26]
Returning
to L’Heureux-Dubé J. in Baker, at para. 21, when determining the content
of the duty, “all of the circumstances must be considered”. Some factors have
been singled out in the case law. The list given in Baker, “is not
exhaustive” (at para. 28). “Other factors may also be important” (at para.
28). The guiding principle, in any given case, is that the persons affected
“should have the opportunity to present their case fully and fairly, and have
decisions affecting their rights, interests or privileges made using a fair,
impartial and open process, appropriate to the statutory, institutional, and
social context of the decision” (at para. 28).
[27]
It would
be a mistake, in my view, to routinely attempt to apply to a given process each
of the five factors singled out in Baker, if only for the reason that they
might just not fit a particular context. The importance of the decision, for
example, was generally considered in cases where the decision had a direct
impact on the individual rights of the person concerned. So interpreted, the
factor can be a misleading factor when applied to decisions which do not,
properly speaking, affect individual rights. I do not read Baker as
suggesting that decisions affecting economic rights are by their nature less
important than decisions affecting individual rights. It would be conceptually
wrong to describe from the outset such decisions as being less important. I
would rather start in all cases with the premise that all decisions are equally
important for those who are affected by them and then examine how they actually
affect the persons concerned. The decision at issue here has important
economic consequences which may well end up affecting the daily life of
workers, the survival of a trade and the well-being of a whole community.
That, surely, militates in favour of some participatory rights in the process even
if Parliament was relatively silent in that regard. In the case at bar,
however, this important factor is to a large extent neutralized by the
influence of three other factors: the type of investigation at issue, the
statutory scheme and the procedural choices of the Agency.
- Type of
investigation
[28]
We are
dealing here with dumping and subsidy investigations made by the President of
the Canada Border Services Agency under sections 31 to 41.2 of the Special
Import Measures Act. The purpose of these investigations is to determine,
in accordance with sections 15 to 30.4 of the Act, the normal value of goods,
their export price, the margin of dumping, if any, and if so, the amount of
subsidy, if any. It is fair to say that the exercise viewed as a whole is complex
and technical and requires specialized analysis and calculations of commercial
data. The exercise is essentially a fact-finding economical mission in an
international trade context.
-
Statutory scheme
[29]
The
investigations are subject to very strict statutory time limits. The President
must make a preliminary determination of dumping or subsidizing within 60 to 90
days after the initiation of an investigation (s.38); in exceptional
circumstances, and before the expiration of the period of 90 days, the
President may extend the period to 135 days (s. 39). The President must make a
final determination of dumping or subsidizing within 90 days from the date of
the preliminary determination (s. 41). The President has no authority under
the Act to extend this final deadline. In the case at bar, the complaint was
filed on August 13, 2004. The investigation was initiated by the President on
October 4, 2004. The preliminary determination was made 135 days later, on
February 16, 2005. The final determination was made 90 days later, on May 17,
2005. The time period allowed by the statute was used up to the last hour.
[30]
Apart from
a requirement that notices of the initiation of an investigation, of a
preliminary determination and of a final determination be given to the parties
and published in the Canada Gazette (s. 34(1), 39(2), 41(3)) and that reasons
be given for both determinations (s. 38(3), 41(3)), the Act provides little
guidance with respect to the manner in which the investigation is to proceed.
The only requirements deal with “provision of evidence to the President”
(sections 78 and 79) and “disclosure of information” (sections 82 to 88.1).
[31]
Subsection
78(1) authorizes the President, by notice in writing, to require a person in Canada to provide evidence “under
oath or otherwise”. According to subsection 78(4), nothing in section 78
“shall be construed as authorizing the President to require any person to
provide evidence orally”.
[32]
Section 83
grants every party (or its counsel if the information is confidential) “a
right, on request, to examine the information [provided to the President]
during normal business hours and a right, on payment of the prescribed fee, to
be provided with copies of any such information that is in documentary form or
that is in any other form in which it may be readily and accurately copied”.
[33]
Persons
who wish some or all of the evidence to be kept confidential must submit a statement
designating as confidential the information and submit at the same time a
non-confidential edited version or a non-confidential summary of the
information (s. 85). Failure to provide the non-confidential edited version or
summary within at most thirty days from the date the person has been informed
of his failure will cause the President to ignore that evidence (s. 87(3)).
- The
Agency’s choice of procedures
a) general practice
[34]
The Agency
has made public the practice it follows when it initiates an investigation.
The document is entitled “Statement of Administrative Practices for the Special
Import Measures Act” (June 2004).
[35]
The very
day an investigation is initiated, the Agency sends a request for information
to all known exporters and importers. The request describes in detail the
necessary information which must be prepared and submitted. Exporters are
allowed 30 days and importers 21 days in which to respond. Extensions may be
granted in exceptional circumstances. Information submitted past the time
limit may not be considered in the preliminary phase of the investigation.
[36]
The
preliminary determination is made as much as possible on verified data, but
time does not always allow for verification of all the information. The
requirement for an on-site visit is at the option of the Agency. Notice is
given of on-site visits and the party concerned is advised ahead of time of the
material that is to be verified and of the data that must be made available at
the time of the visit. A verification exercise is only conducted with the consent
of the exporter and only if the foreign government does not object and if prior
assurance is given that the investigators will have complete and full access to
all company records that they deem necessary to examine.
[37]
If a
preliminary determination is made, the Agency’s officers, on request, will
review with individual exporters the calculations used. Explanations of all
calculations together with the reasoning underlying the calculations are given
at what is described as a disclosure meeting. Detailed calculations worksheets
are provided and discussed. The approach which the Agency plans to use for the
final determination is also discussed at that time in general terms.
Information and arguments presented orally by parties at the disclosure meeting
must be confirmed in writing; otherwise they will not be considered.
[38]
In most
cases, the investigation leading to the final decision consists of meetings
with additional firms not yet visited, verifying new information, revisiting
exporters for clarification of details and visiting importers if necessary.
Disclosure meetings will be arranged, on request, after the final determination
is issued.
b) participatory rights in general
[39]
The Agency
considers importers, exporters, Canadian producers and the foreign governments
to be parties to the investigation. It requests information from them, it
makes that information available to other parties, it allows the parties to
submit case arguments and it allows the parties to reply to case arguments
submitted.
[40]
The Agency
has established a practice of posting on its website an exhibit listing of all
documents submitted by the parties. It has also created the SIMA registry whose
task is to process requests made to obtain copies of the material listed on the
website.
c) participatory rights in this
investigation
[41]
An
investigation schedule was posted right from the start on the Agency’s
website. The schedule set out in details the various time limits imposed on
the parties throughout the investigation. The following notice is found at the
end of the schedule:
This
Investigation Schedule will be updated as necessary. Parties/counsel should
monitor the website to inform themselves of changes. Any changes which reduce
the time allowed for parties/counsel to submit information or make
representations will be communicated directly to parties/counsel.
[42]
In the
instant case, since the President extended the time limit for the preliminary
determination, the Investigation Schedule was amended accordingly. The
deadline to submit case arguments was set to March 25, 2005 and later extended
to march 30, 2005. The deadline to submit briefs in reply to case arguments
submitted by others was originally set to April 1, 2005 and it was eventually
extended to April 19, 2005.
[43]
In
addition, and exceptionally, the Agency disclosed its preliminary calculations
related to the final determination beginning on April 15, 2005. The Agency
decided to disclose such information since the calculations were now based on
verified information and indicated that there would be substantive changes from
those reported at the preliminary determination. This approach provided counsel
with an opportunity to comment on the results of each exporter as they became
available.
Conclusion on the duty of procedural
fairness
[44]
It flows
from the above that the investigation is essentially a paper-investigation that
is as distant as it can possibly be from the judicial decision making model and
very much remote from the process typically associated with administrative
tribunals. I find it quite remarkable that the statute prescribes that a party
does not as of right receive the information provided to the President: the
party is only entitled, on request, to examine the information at the
President’s premises and can only obtain copies of the information in a
documentary form on payment of a fee. These statutory participatory rights are
at the extreme bottom end of the procedural fairness scale.
[45]
It also
flows from the above that an investigation by the President can end up in
certain cases being a race against the clock. This is the express will of
Parliament, presumably out of economic necessity. One has to accept that
notwithstanding the diligence of the Agency and of all the parties incidents
are likely to occur which, in this particular context, will be seen as being
inescapably inherent to the process. Investigations of that magnitude (360,000
pages, six countries, three continents, five or six different languages) can simply
not be completed within the maximum allotted time (225 days) unless the duty of
procedural fairness is set at a low threshold. There can be no legitimate expectation
of a higher threshold. Perfection or near-perfection is simply not in sight.
[46]
As I understand
counsel’s arguments with respect to procedural fairness, he complains that he
struggled to obtain access to some material, that some documents were produced
out of time, that public versions of confidential information were made
available too late, that the Agency refused to abide by the published
investigation schedule and that, as a result of the failure to close the record
as scheduled, the President “appears to have abandoned all semblance of
procedural integrity” and rendered “a decision on the basis of a disordered
record and incomplete and unfinished reports”.
[47]
Some of
these allegations are well-founded. Others are not. Some are mere
speculations. Counsel did not explain, in his memorandum of fact and law, nor
was be able to at the hearing, how the few incidents that actually occurred, in
and by themselves or through their cumulative effect, deprived the applicant of
a fair hearing in the context of a SIMA investigation.
[48]
There
were, admittedly, flaws in the application of the procedural rules set out by
the Agency. But these flaws were nothing but incidents inherent to the process
and inconsequential in the context of the whole investigation. They
constituted at best a breach of some of the procedural rules and in no way can
they be said to have breached the requirements of the duty of procedural
fairness owed the applicant. The applicant participated in all the phases of
the investigation, and its views were sought throughout. Put simply, the
applicant had a full opportunity to be heard. Although the hearing was perhaps
imperfect, it was nevertheless on balance fair, reasonable and appropriate in
the circumstances. To repeat the words of Chief Justice McLachlin in C.P.R.
v. Vancouver (City), “what is required is
fairness, not perfection” (at para. 46).
[49]
The
statute provides very little procedural safeguards. The Agency went beyond the
requirements of the statute in adopting the rules of procedure applicable to
such investigation. In view of the importance of the decisions it makes, the
Agency is amply justified and prudent in proceeding as it does. The Agency
devised rules of procedure that are fair, reasonable and appropriate considering
the rigid and complex context within which it operates. This Court has made it
clear, in Cougar Aviation Ltd v. Canada (Minister of Public Works and Government
Services),
(2000) 264 N.R. 49 at para. 62 (F.C.A.) and in Xwave Solutions Inc. v. Canada (Public Works and Government
Services)I,
[2003] F.C.J. No. 1089 (C.A.), that procedural choices of tribunals such as the
Agency should not be lightly interfered with .
[50]
In the
end, I have reached the conclusion that the flaws that have occurred during the
investigation did not individually or collectively constitute a breach of the
duty of procedural fairness.
Legal issues
[51]
The
applicant raises three legal issues:
a) the refusal of the
President to disclose Verification Reports in alleged violation of the full
disclosure requirements of section 83 of the Act;
b) the calculation of transfer
prices in related party transactions, which allegedly was not done in
accordance with OECD Transfer Pricing Guidelines allegedly endorsed by
the Agency; and
c) the calculation of the
margin of dumping, which allegedly was made in violation of the formula set out
in subsection 30.2(1) of the Act.
The verification reports
[52]
The first
alleged error will be examined on the basis of the standard of correctness
because it is closely associated with concerns of procedural fairness and also
because it involves the interpretation of the word “information”, in the Act,
with respect to which the Agency has no special expertise. The nature and
scope of disclosure under the Act is a matter akin to that in issue in Canada
(Deputy Minister of National Revenue – M.N.R.) v. Mattel Canada Inc.,
[2001] 2 S.C.R. 100, at para. 33), where the Supreme Court of Canada applied
the standard of correctness to the construction of the words “sale of goods for
export to Canada” and “a condition of the sale of the goods” which were said
not to be “scientific or technical” and to be concept “akin to commercial law …
traditionally the province of the Courts”.
[53]
The
verification reports were not disclosed to the applicant during the
investigation on the basis that they were not, properly speaking, “information”
or “evidence”, but were, rather, internal documents prepared by officers of the
Agency for the use of the President. The reports were filed before this Court,
on a confidential basis, so as to enable us to determine their true nature.
[54]
The
reports at issue slightly differ in form from one to another, but in essence
they each constitute the result of the audit undertaken by the Agency’s
investigators of the written documentation provided to the President by some
foreign firms in the course of the investigation. (That written documentation
is made available to the applicant and is not at issue here). The reports
contain in an Appendix all the documentary evidence that was provided by the
firm to the investigators in the course of the auditing process; that
documentary evidence is referred to as “Verification Exhibits” and is made
available to the applicant. Some reports also contain references to what is
reported as having been said or done by employees of the concerned firm during
the audit.
[55]
In reality,
therefore, the only “information” or “evidence” to which the applicant is not
given access to is that provided orally in the course of the audit and the
summary, description, analysis or interpretation of that oral evidence and of
the Verification Exhibits which are made by the investigators in their
verification reports.
[56]
This is
not “information (or “evidence”) provided to the President” within the meaning
of sections 78, 82 and 83 of the Act. As noted earlier, we are concerned here
with an investigation which is a paper-only investigation. Oral testimony is
not contemplated by Parliament or by the Agency’s rules and the totality of the
information provided to the President is submitted to him in writing. Even
when it comes to comments or arguments by any of the parties, which have been
made orally during a “disclosure meeting”, we have seen that they will be
ignored by the President unless they are submitted to him in written form
without delay.
[57]
In the
circumstances, reports prepared by investigators on conversations they had with
employees of audited firms in the course of the audit cannot be properly
described as information provided to the President by the parties within the
meaning of the Act. The summary, description, analysis or interpretation by
the investigators of the information they receive during the audit are internal
documents which need not be disclosed.
The second and third alleged errors: the
standard of review
[58]
The second
and third alleged errors will be examined on the basis of the standard of reasonableness,
for the following reasons.
[59]
The fact
that Parliament, in section 96.1 of the Act, has allowed judicial review of a
President’s actions made in a procedural or substantive context points to more
deference.
[60]
The
questions of whether the President properly tested transfer prices and properly
calculated the margins of dumping draw on the President’s expertise in
international trade matters. These issues are technical and the statute, in
subsections 19(a) and 19(b), confers some discretion on the President. Were
courts to become mired in all the minutia of detail informing a margin of
dumping calculation, it is sure that they would not see the light of the day beneath
the volumes of evidence that would assuredly be produced – as they were in this
case – on judicial review. This factor points to more, and considerable,
deference.
[61]
The
purpose of legislation factor is a neutral factor. While there is, maybe, some
polycentric elements in the decision made by the President, he is not asked to
make pronouncements on policy nor to balance the rights of competing economic
factors. He is asked in the end to calculate dumping in a manner that conforms
with the Act.
[62]
Finally,
the questions at issue are not purely legal issues, notwithstanding the
applicant’s efforts to characterize them as such. Determining transfer pricing
is essentially fact specific, requiring first an investigation into whether a
corporation actually sells to related companies and, if so, on what basis are
transaction prices established. Similarly, the question of how dumping is
determined, is essentially a mathematical calculation using data collected by
the President. While these questions contain legal elements, the emphasis is largely
factual. More deference is warranted.
[63]
In the
end, after balancing the four factors singled out by the Supreme Court of
Canada, I reach the conclusion that the standard of review lays somewhere
between the reasonableness standard and the patently unreasonableness standard.
As I prefer to err on the side of caution, I will adopt the reasonableness
standard.
Calculation of related party transaction
prices
[64]
The
applicant has provided no example, no law, and no evidence to support its claim
that related party transactions were accounted for improperly by the President.
Its argument is based on a microscopic reading of one part of one sentence in
the President’s reasons, at para. 62, and on a misapprehension of what the
President actually said in that sentence.
[65]
According
to section 2, the definition section of the Act, normal value means “normal
value determined in accordance with sections 15 to 23 and 29 and 30”. In this
case, normal values were determined primarily under sections 15 and 19.
Section 19 gives the President wide discretion as to which of the two methods
prescribed by the Act should be used in a given case to determine the normal
value of the goods. The method prescribed in subsection 19(b) leads to the
normal value of the goods being determined as “the aggregate of (i) the cost
production of the goods, (ii) a reasonable amount for administrative, selling
and all other costs, and (iii) a reasonable amount for profits”. The applicant
alleges that the President did not include items (ii) and (iii) in the
calculation. The evidence simply does not support the allegation.
Furthermore, the President referred to “the total cost of the product”, which
encompasses the three items described above, and not, as suggested by the
applicant, solely to “the cost production”.
[66]
The applicant
also alleges that the President erred in refusing to have the transfer prices
between related parties tested in accordance with OECD Transfer Pricing
Guidelines. It was reasonably open to the President to find, as he did,
that these guidelines did not pertain to domestic transfer prices between
related companies, were primarily aimed at minimizing conflicts between tax
administrations and were not binding on the Agency.
Calculation of the margin of dumping
[67]
The third
and final alleged error is with respect to the President’s interpretation of subsection
30.2(1) of the Act. That subsection reads as follow:
|
30.2 (1) Subject to subsection (2), the margin of dumping in
relation to any goods of a particular exporter is zero or the amount
determined by subtracting the weighted average export price of the goods from
the weighted average normal value of the goods, whichever is greater.
|
30.2 (1) Sous réserve du paragraphe
(2), la marge de dumping relative à des marchandises d’un exportateur donné
est égale à zéro ou, s’il est positif, au résultat obtenu en retranchant la
moyenne pondérée du prix à l’exportation des marchandises de la moyenne
pondérée de la valeur normale des marchandises.
|
[68]
The
applicant, essentially, argues that the President erred in making “a
significant departure from established practice in respect of the calculation
of margins of dumping”, i.e., to use the very words of the President, “in
discontinuing the Agency’s practice of zeroing for purpose of determining a
margin of dumping for an exporter”.
[69]
A change
of policy, in and by itself, is not an error unless it offends the enabling
statute. Indeed, policies are rarely written in stone and it is very much
within the realm of administrative tribunals to set them out and, when the need
arises, to adapt them to new realities.
[70]
I will not
comment on the previous policy. The only question the Court must answer is
whether it is reasonable to interpret subsection 30.2(1) of the Act as allowing
the Agency, where determining a margin of dumping for an exporter, to take into
consideration export sales that reveal no dumping (because their price is equal
to or greater than the home-market sales price), a practice which will often
result in a reduction of the overall margin of dumping found for that exporter.
[71]
I see
nothing in the language of subsection 30.2(1) which prevents taking into
account all export sales price in order to determine the margins of dumping.
Quite to the contrary, and the French text is perhaps even clearer in this
regard, the method used is comparing the weighted average export price of the
goods with their weighted average normal value. Average weighting, in my view,
calls for an examination of all the relevant export sales made during the
relevant period, even those that show no dumping. The reference to “zero” in
the subsection would be useless if, as argued by counsel, only sales that show evidence
of dumping were to be considered.
[72]
Some of
the export sales may be at the same price as the home-market sales, some at a
higher price and other at a lower price, with the result, respectively, of
having a neutral effect on the margin of dumping, of reducing the margin of
dumping and of increasing the margin of dumping. In order to account for the
possibility that the average weighting of all the export sales result in a
negative integer, the Act provides that a negative result be zeroed after
the final weighted dumping margin has been established. In other words,
zeroing does not occur on a transaction by transaction basis; it is only
applied after the weighted margin of dumping is calculated.
[73]
In the
end, the final calculation will result either in zero or in a positive number.
When it results in a positive number, that number becomes the margin of dumping
and if it is less than two per cent of the export price, it will be deemed by
section 2 of the Act to be “insignificant”. The President then has the duty,
under section 35, to terminate the investigation.
[74]
This
approach is consistent with recent decisions of the World Trade Organization
appellate body (see Appellate Body Report, European Communities –
Anti-Dumping Duties on Imports of Cotton-type bed liners from India, WT/DS
141/AB/R (March 2001), Appellate Body Report, United States—Final
dumping determination on softwood lumber from Canada, WT/DS 264/AB/R (August
2004) and Appellate Body Report, United States – Final dumping
determination on softwood lumber from Canada, WT/DS 264/AB/RW (August 15, 2006).
While these decisions are not binding on this Court and dealt with provisions
of international agreements which are not literally similar to those found in
the Canadian statute, it is not unreasonable for the Agency, nor for this
Court, to take them into consideration.
[75]
As the new
approach adopted by the Agency is consistent with both the Canadian statute and
international agreements to which Canada
is a party, it can hardly be qualified as unreasonable.
Disposition
[76]
For the
above reasons, I would dismiss this application insofar as the People’s
Republic of China, Sichuan Shengda Wooden Products Col. Ltd and Asia Dekor
Industries (Shenzhen) Co. Ltd are concerned, without costs.
[77]
I would
quash the application insofar as the other Chinese and the French exporters are
concerned.
[78]
I would
dismiss the application with respect to all other respondents.
[79]
I would
grant costs to the respondents who have filed a memorandum of fact and law, it
being understood that there will be one set of costs when various respondents
were represented by the same counsel.
“Robert
Décary”
“I
agree
Marc
Noël J.A.”
“I
agree
M. Nadon J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-285-05
STYLE OF CAUSE: UNIBOARD SURFACES INC.
v.
KRONOTEX
FUSSBODEN GMBH AND CO. KG, STEVENS-DUFOUR INC., GOODFELLOW INC., KRONOFLOORING
GMBH, BEIJING KRONOSENHUA FLOORING CO., QUALITY CRAFT LTD., QUICKSTYLE
INDUSTRIES INC., KAINDL FLOORING GMBH, KRONOSPAN LUXEMBOURG SA, UNILIN FLOORING
NV, TORLYS INC., WYERHAEUSER COMPANY LIMITED, GOVERNMENT OF THE PEOPLE’S
REPUBLIC OF CHINA, SICHUAN SHENGDA WOODEN PRODUCTS CO. LTD., VOHRINGER WOOD
PRODUCTS CO. LTD., ASIA DEKOR INDUSTRIES (SHENZHEN) CO. LTD., SHAW INDUSTRIES
INC., MOHAWK INDUSTRIES INC., SHANGHI ALLSUN WOOD INDUSTRY CO. LTD, MATÉRIAUX A
BAS PRIX, KRONOPOL LTD., LAMWOOD PRODUCTS (1990) LIMITED, AKZENTA PANEELE AND
PROFILE GMBH OR THE CLASSEN GROUP OF COMPANIES, YEKALON INDUSTRY INC.,
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