Brunico Communications Inc. v. Canada (Minister of Canadian Heritage), 2004 FC 643

Date: 20040430

Docket: T-1287-03

Citation: 2004 FC 643

Ottawa, Ontario this 30^th day of April, 2004

Present:           THE HONOURABLE MR. JUSTICE von FINCKENSTEIN                  

BETWEEN:

                                BRUNICO COMMUNICATIONS INCORPORATED

                                                                                                                                            Applicant

                                                                           and

                                      THE MINISTER OF CANADIAN HERITAGE

                                                                                                                                        Respondent

                                            REASONS FOR ORDER AND ORDER

[1]         Brunico Communications Incorporated (Brunico) is a business communications company which owns two national, bi-weekly, tabloid-sized publications called Strategy and Playback. The Minister of Canadian Heritage (Minister) is responsible for the Support for Editorial Content Grant Program (Program). Since 2000-2001, the Program, through the Canadian Magazine Fund (Fund), has provided grants to publishers of eligible magazines in order to contribute towards the production of high-quality magazines showcasing the work of a wide cross-section of Canadian creators.

[2]         The program works on the following basis. The fund uses a funding cycle based on the the government's fiscal year i.e. April 1^st to March 31^st. During a funding cycle, a publisher can apply for funding for its next fiscal year based on certified financial statements of its last fiscal year. Applications have to be submitted by October 15^th and the money in the fund for that year is dispensed to all eligible applicants before March 31^st. To illustrate with the example of Brunico (which has a fiscal year commencing July 1^st), it applied for funding for its fiscal year commencing July 1^st, 2001, during the funding cycle April 1^st, 2000 to March 31, 2001, using its last completed financial statements, which were the statements for its fiscal year July 1^st, 1998 to June 31^st, 1999.

[3]         Brunico's first application was submitted in October 2000. It was approved and Brunico received $107, 377 for Strategy and $104, 975 for Playback. However, its second application, submitted in October 2001, was denied on March 18^th, 2002.

[4]         The fund is designed to support magazines but not newspapers. There is no generally accepted definition in the industry as to what constitutes a magazine as opposed to a newspaper. The application form for the 2000-2001 cycle only defined eligible magazines as follows:

2.2.2.       Eligible Magazines

To be eligible for the Support for Editorial Content component of the CMF, a magazine must be published by an eligible publisher within a twelve (12) month period ending between April 1, 1999 and March 31, 2000, and:

-                Be a printed magazine that appears in consecutively numbered or dated issues, published under a common title, at regular intervals, not more than once very week, excluding special issues, and at least twice every year;

-                contain a minimum average of 80% Canadian editorial content. Canadian editorial content will be calculated as a percentage of total editorial content;

-                have minimum editorial expenses of $30, 000 or a minimum average editorial expense of $3, 000 per issue;

-                contain at least 10% advertising content and contain no more than 70% advertising content, excluding enclosures (inserts and outserts). Advertising content will be calculated as a percentage of total advertising and editorial content in a magazine;

-                generate advertising revenues of at least $60, 000;

-                have a minimum average total circulation of 5, 000 per issue;

-                be edited, designed, assembled, published and printed in Canada; and

-                have completed a full publishing cycle and ahve been in operation for a complete financial year prior to application.

[5]         The definition for eligible magazines for 2001-2002 was slightly different and read:

2.2.2        Eligible Magazines

To be eligible for the Support for Editorial Content component of the CMF, a magazine must:

-                be published by an eligible publisher;

-                be publishing at the time of this application;

-                have completed a full 12-month publishing cycle and have been in operation for a complete financial year prior to application.

In addition to these three criteria, the following publishing and distribution activities must have all occurred during a publisher's twelve (12) month financial year that ends on a date falling within the period fo April 1, 2000 and March 31, 2001 and must be true at the time of this application. These criteria are:

A.             be edited, designed, assembled, published and printed in Canada;

B.             appear in consecutively numbered or dated issues, published under a common title, at regular intervals, not more than once every week, and at least twice every year;

C.             contain an average of at least 80% Canadian editorial content, Canadian editorial content will be calculated as a percentage of total editorial content including inserts. Inserts are measures based on their size in relation to a page in the magazine;

D.             have minimum editorial expenses of $30, 000 per year or an average editorial expense of $3, 000 per issue;

E.             contain at least 10% advertising content and no more than 70% advertising content. Advertising content will be calculated as a percentage of total advertising and editorial content in a magazine including inserts. Inserts are measures based on their size in relation to a page in the magazine;

F.             generate advertising revenues of at least $60, 000; and

G.             have an average total circulation of 5, 000 or more per issue.

[6]         Concerns arose as to whether the program swept in too many publications that are more newspapers than magazines. Consequently, the Minister, in consultation with two industry groups (Brunico did not belong to either), developed a test for distinguishing between newspapers and tabloids. This test was adopted on January 25^th, 2002. The definition of eligible magazine and the newly adopted test were set out in the Applicant's Guide for 2002-2003 and provided as follows:

b)              Eligible magazines

To be eligible for the Support for Editorial Content component of the CMF, a magazine must:

-                be published by an eligible publisher;

-                be published at the time of this application or during the application process; and

-                have completed a full twelve (12) month publishing cycle and have been in operation for a complete financial year prior to the application.

In addition to these three criteria, the following publishing and distribution activities must have all occurred during a publisher's twelve (12) month financial year that ends on a date falling within the period of April 1, 2001 and March 31, 2002, and must be true at the time of this application. A magazine must also:

A.             be edited, designed, assembled, published, and printed in Canada;

B.            appear in consecutively numbered or dated issues, published under a common title, at regular intervals, not more than once every week, and at least twice every year;

C.            contain an average of at least 80% Canadian editorial content. Canadian editorial content will be calculated as a percentage of total editorial content including inserts. Inserts are measured based on their size in relation to a page in a magazine;

D.             have minimum editorial expenses o $30, 000 per year or an average editorial expense of $3, 000 per issue;

E.             contain at least 10% advertising content and no more than 70% advertising content. Advertising content will be calculated as a percentage of total advertising and editorial content in a magazine including inserts. Inserts are measured based on their size in relation to a page in the magazine;

F.             generate advertising revenues of at least $60, 000; and

G.             have an average total circulation of 5, 000 copies or more per issue.   

Newspapers

For 2002-03, the definition of a newspaper for purposes of the CMF has been clarified. This definition, developed in consultation with industry representatives, is based primarily on the physical traits of a publication, thereby avoiding subjective decisions on the content of a periodical. Only when there is a preponderance of characteristics common to newspapers is a periodical ruled ineligible. This approach has allowed for the continued eligibility of many periodicals.

Out of a scale of 10 points, publications with six or more total points are ruled to be newspapers, and therefore are considered to be ineligible for CMF funding. This preserves the principle that eligible periodicals can share some characteristics in common with newspapers and still be considered a magazine. The scale is as follows:

Broadsheet or tabloid format	2 points
Unbound	2 points
Printed on newsprint of any quality	1 point
Identified as a newspaper	1 point
Articles start on the cover	1 point
Primarily free distribution whish is not individually addressed	2 points
Divided into detachable regular sections	1 point
Total	10 points

[7]         This new way of distinguishing newspapers from magazines, although adopted on January 25^th, 2002, was applied to the ongoing funding cycle for 2001-2002. This meant that Brunico was held ineligible for any funding during this cycle.

[8]         The printed version of the Applicant's Guide for 2002-2003 was made available in August 2002 and applicants were given an opportunity to revise their publications by December 31^st, 2002 in order to meet the definition of eligible magazines under the Fund. Brunico availed itself of this opportunity and its application for the funding cycle 2002-2003 was approved.

[9]         Brunico now seeks judicial review of the decision of the Minister to disqualify it for funding for the 2001-2002 based on the test adopted on January 25^th, 2002.

ISSUES

[10]       There are two main issues raised by this application:

1.          Did the Minister owe the applicant a duty of fairness and did she breach that duty?

2.          Did the Minister violate the applicant's right to freedom of expression?   

RELEVANT LEGISLATION

Department of Canadian Heritage Act, S.C. 1995, c. 11 (Act)

Minister's powers, duties and functions 4. (1) The powers, duties and functions of the Minister extend to and include all matters over which Parliament has jurisdiction, not by law assigned to any other department, board or agency of the Government of Canada, relating to Canadian identity and values, cultural development, heritage and areas of natural or historical significance to the nation. ... General duties 5. In exercising the powers and performing the duties and functions assigned to the Minister by section 4, the Minister shall initiate, recommend, coordinate, implement and promote national policies, projects and programs with respect to Canadian identity and values, cultural development, heritage and areas of natural or historical significance to the nation. ... Financial assistance and dealing with property 7. To facilitate the implementation of any program of the Minister under this Act, the Minister may (a) provide financial assistance in the form of grants, contributions and endowments to any person; ...		Compétence générale 4. (1) Les pouvoirs et fonctions du ministre s'étendent de façon générale à tous les domaines de compétence du Parlement non attribués de droit à d'autres ministères ou organismes fédéraux et liés à l'identité, aux valeurs, au développement culturel et au patrimoine canadiens et aux lieux naturels ou historiques d'importance pour la nation. ... Tâches 5. Dans le cadre de ses pouvoirs et fonctions, le ministre a pour tâche d'instaurer, de recommander, de coordonner et de mettre en oeuvre les objectifs, opérations et programmes nationaux en matière d'identité, de valeurs, de développement culturel et de patrimoine canadiens et pour ce qui a trait aux lieux naturels et historiques d'importance pour la nation et d'en faire la promotion. ... Aide financière 7. Pour faciliter la mise en oeuvre des opérations ou programmes prévus par la présente loi, le ministre peut_: a) accorder une aide financière sous forme de subventions, contributions ou dotations; ...

Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Scheduled B to the Canada Act 1982 (U.K.), 1982, c. 11

Fundamental freedoms 2. Everyone has the following fundamental freedoms: a) freedom of conscience and religion; b) freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication; c) freedom of peaceful assembly; and d) freedom of association.		Libertés fondamentales 2. Chacun a les libertés fondamentales suivantes : a) liberté de conscience et de religion;              b) liberté de pensée, de croyance, d'opinion et d'expression, y compris la liberté de la presse et des autres moyens de communication; c) liberté de réunion pacifique; d) liberté d'association.

ISSUE 1: Did the Minister owe the applicant a duty of fairness and did she breach that duty?

[11]       There are three subparts to this issue :

1.          Did the Minister owe the applicant a duty of fairness?

2.          What was the nature of this duty of fairness?

3.          Was the duty of fairness breached in this case?

I propose to examine these questions in sequence.

Did the Minister owe the applicant a duty of fairness?

[12]       In Roseau River Anisinabe First Nation v. Roseau River Anishinabe First Nation (Council), [2003]_F.C.J. No. 251 at para. 42, Kelen J. discussed the application of the duty of fairness as follows:

Decisions made by legislative bodies of a general nature and based on broad considerations of public policy are considered to be immune from the duty of fairness. In contrast, an administrative decision that is directed at a particular person and affects "the rights, privileges or interests" of that individual will trigger the application of the duty of fairness, see Baker v. Canada (Minister of Citizenship and Immigration),[1999] 2 S.C.R. 817 at para. 20.

[13]       In this case, the decision was of an administrative nature and it affected the privileges and interests of the applicant. Therefore, the Minister did owe the applicant a duty of fairness.

What was the nature of this duty of fairness?

[14]       The content of the duty of fairness varies according to the context. Several factors have been identified as important to defining the content of the duty of fairness in a given situation (Baker v. Canada (M.C.I.), [1999] 2 S.C.R. 817 at pages 837-844):

1. the nature of the decision being made and the decision making process,

2. the nature of the statutory scheme and terms of the statute pursuant to which the decision maker acts

3. the importance of the decision to the individual affected by it,

4. the procedures chosen by the decision maker, particularly if the statute has left the choice of such procedures to the decision maker

[15]       An additional consideration regarding the nature of the duty of fairness is the legitimate expectation of the individual affected by the decision (Baker, supra.). In Canada (Minister of Employment and Immigration) v. Bendahmane, [1989] 2 F.C. 16 (F.C.A.), Hugessen J.A., in a statement that has since been cited with approval by several courts,^[1] discussed the doctrine of the legitimate expectation as follows at pages 31-32:

The applicable principle is sometimes stated under the rubric of "reasonable expectation" or "legitimate expectation". It has a respectable history in administrative law and was most forcefully stated by the Privy Council in the case of Attorney-General of Hong Kong v. Ng Yuen Shiu, [1983] 2 A.C. 629 (P.C.)...... Lord Fraser of Tullybelton put the matter thus (at page 638):

. . . when a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise, so long as implementation does not interfere with its statutory duty. The principle is also justified by the further consideration that, when the promise was made, the authority must have considered that it would be assisted in discharging its duty fairly by any representations from interested parties and as a general rule that is correct.

[16]       As a general principle, the Court seeks to find an appropriate balance between efficient administrative practices and the effective participation of the parties (Brown and Evans, Judicial Review of Administrative Action in Canada (1998).

[17]       Based upon the above factors, the Minister owed a relatively low level of procedural fairness to the applicant in this case. The decision being made by the Minister was primarily administrative in nature and was made pursuant to a broad discretionary power granted to her by the Act. It was also made in a non adversarial context (Jada Fishing v. Canada (Minister of Fisheries and Oceans) (2002), 41 Admin. L.R. (3d) 281 (F.C.A.)). Although there was no appeal to the Minister's decision, it was open to the applicant to apply for funding the following year, which it did successfully in this case.

Was the duty of fairness breached in this case?

[18]       The Minister issued an Applicant's Guide for the funding cycle 2001-2002 which clearly stated that magazines but not newspapers were eligible for funding. It contained a definition of eligible magazines which excluded newspapers. However, newspapers were not defined.

[19]       During the summer and fall of 2001, the Minister held consultations and, as a result, adopted a definition for newspapers in January 2002. But instead of applying it to the next funding cycle, the Minister applied it to the existing funding cycle and to applications already in the pipeline. In effect, the Minister applied the rules set out in the Applicant's Guide for 2002-2003 to applications received for 2001-2002. Or, to put it another way, for 2001-2002, the Minister published a guide that set out one set of rules and then applied another.

[20]       This violated both the most elementary rule of procedural fairness (an applicant should know the case he has to meet) and violated the legitimate basic expectation held by the applicant (that the Minister would act in accordance with her own published Guide).

[21]       It is no defense, as counsel for the respondent argued, that there was no opportunity for applicants to comply once the new system was adopted. Where one runs a program, such as the Support for Editorial Content Grant Program, in which past performance determines an applicant's eligibility for future benefits, one cannot change the rules in midstream without there being any transitional provisions or without giving applicants advance notice. No matter how broad the discretion of the Minister is, elementary procedural fairness demands that where the Minister publishes program rules for a given cycle she apply the same.

[22]       The decisions of Marie France Gosselin, made in the name of the Minister of Canadian Heritage on March 18^th, 2002 in respect of the applications of Brunico for funding in respect of Strategy and Playback are, therefore, set aside. The matter is referred back to Canadian Heritage to be determined in accordance with the rules set out in the Applicant's Guide for 2001-2002 so that Brunico, in respect of Strategy and Playback (if they otherwise qualify), can receive the amounts that they would otherwise would have been awarded without the adoption of the new rules on January 25^th, 2002.

[23]       In light of the foregoing, there is no need to consider the Charter issue raised by the applicant.   

ORDER

THIS COURT ORDERS that

1.         The decisions of Marie France Gosselin, made on behalf of the Minister of Canadian Heritage on March 18th, 2002 in respect of the applications of Brunico Communications Inc. for funding in respect of Strategy and Playback are set aside. The matter is referred back to Canadian Heritage to be determined in accordance with the rules set out in the Applicant's Guide for 2001-2002 so that Brunico Communications Inc. can receive, in respect of Strategy and Playback (if they otherwise qualify), the amounts it would otherwise been awarded had the new rules not been adopted on January 25^th, 2002.

2.          The applicant shall have the costs of this application.

           "K. von Finckenstein"

                                                                                                                           Judge                     

FEDERAL COURT

                NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                               T-1287-03

STYLE OF CAUSE: BRUNICO COMMUNICATIONS INC.

                     v.

THE MINISTER OF CANADIAN HERITAGE

                                                                 

PLACE OF HEARING:         Ottawa, Ontario

DATE OF HEARING:           April 27, 2004

REASONS FOR ORDER : The Honourable Mr. Justice von Finckenstein

DATED:                                 April 30, 2004

APPEARANCES:

Julie Thorburn                FOR APPLICANT

Valerie J. Anderson                   FOR RESPONDENT

Andrea Bourke             

SOLICITORS OF RECORD:

Cassels Brock & Blackwell LLP            FOR APPLICANT

Toronto, Ontario

Morris A. Rosenberg                FOR RESPONDENT

Deputy Attorney General of Canada

Department of Justice

Toronto, Ontario