Date: 20130115

Docket: T-685-11

Citation: 2013 FC 34

Vancouver, British Columbia, January 15, 2013

PRESENT:    The Honourable Madam Justice Snider

 

 

BETWEEN:

	COMMUNICATIONS, ENERGY AND PAPERWORKERS UNION OF CANADA
		Applicant
	and
	THE MINISTER OF CANADIAN HERITAGE AND OFFICIAL LANGUAGES AS REPRESENTED BY THE ATTORNEY GENERAL OF CANADA
		Respondent

 

REASONS FOR JUDGMENT AND JUDGMENT

 

I.                   Introduction

 

[1]               Until July 13, 2010, CanWest Global Communications Corp. (CanWest) was the owner of significant newspaper publishing assets. As of July 13, 2010, those newspaper assets were acquired by Postmedia Network Canada Corp. (Postmedia).

[2]               The Applicant in this case is the Communications, Energy and Paperworkers Union of Canada (CEP or the Union), which represents 1800 employees of the former CanWest publishing divisions. While acknowledging that the majority of the voting shares of Postmedia are held by Canadian entities, CEP alleges that control in fact of Postmedia is held by non-Canadians. As such, CEP believes that a review of the acquisition by Postmedia ought to have been conducted by the Respondent, the Minister of Canadian Heritage and Official Languages (the Minister), pursuant to the relevant provisions of the Investment Canada Act, RSC 1985, c 28 (1^st Supp) [the Act or ICA] to determine whether the acquisition was likely to be of net benefit to Canada.

 

[3]               By letter dated February 24, 2011, CEP wrote to the Minister (the CEP Request) making a series of allegations about the control in fact of Postmedia and including an unsigned copy of the Asset Purchase Agreement, pursuant to which the newspaper assets of CanWest were transferred. In its letter, CEP asked the Minister to:

 

(a)                find that Postmedia “is in fact controlled by its non-Canadian shareholders and creditors”; and

 

(b)               satisfy himself that the acquisition was of net benefit to Canada (which CEP asserts it is not, taking the position that undertakings by Postmedia are necessary to protect Canadian cultural and economic interests).

 

[4]               In a brief, one-page letter dated March 22, 2011 (the Response Letter), the Minister responded to the CEP Request. The Minister acknowledged the receipt of the CEP Request, thanked CEP for “taking the time to share the CEP’s concerns”, and provided a brief general explanation of how the provisions of the ICA operate. The Minister did not respond directly to the two specific requests advanced by CEP; nor did he provide any direct reasons for not doing so.

 

[5]               CEP argues that the Minister has failed to exercise his mandate under the ICA. Further, the Response Letter is a “matter” or “decision”, in the sense of s. 18.1 of the Federal Courts Act, RSC 1985, c F-7 and hence amenable to intervention by this Court. Specifically, CEP asks that Court overturn the alleged “decision”, return the CEP Request to the Minister with directions that the Minister:

[D]etermine, in accordance with s. 26(2.1) of the Investment Canada Act, and any further directions of the Court, whether he is satisfied that the entity which acquired the CanWest newspaper publishing assets is controlled in fact by one or more non-Canadians and, if so satisfied, review the acquisition for whether it is likely to be of net benefit to Canada, having regard to the factors set out in s. 20 of the Investment Canada Act.

 

II.                Issues

 

[6]               The issues before me are the following:

 

1.                  Was the Minister’s Response Letter a “decision” or “matter” within the meaning of s. 18.1 of the Federal Courts Act and thus properly the subject of judicial review?

2.                  Upon request of a third party, does the Minister have a duty to review an acquisition to determine whether an entity is controlled in fact by one or more non-Canadians?

 

3.                  Does the inability of the CEP to bring a judicial review application of the Response Letter result in an untrammelled discretion in the hands of the Minister, contrary to the teachings of the Supreme Court of Canada in Roncarelli v Duplessis, [1959] S.C.R. 121 at 130-145, 16 DLR (2d) 689 [Roncarelli]?

 

[7]               For the reasons that follow, I have concluded that the Minister’s Response is not a “matter” within the meaning of s. 18.1 of the Federal Courts Act and, in any event, the Minister has no duty to respond to third party requests for review. Thus, there is no foundation to this application for judicial review and it must be dismissed.

 

III.             Admissibility of Murdoch Affidavits

 

[8]               A preliminary issue was raised by the Minister with respect to the admissibility of portions of the Affidavits #1 and #2 of Mr. Peter Murdoch, Vice President of Media of CEP (the Murdoch Affidavits). The Minister asks that the Murdoch Affidavits be struck. The impugned sections of the Affidavits consist of attached documents which purport to provide background facts to the Postmedia acquisition and ownership. The only purpose of the impugned documents appears to be to substantiate the CEP’s submission on whether control in fact of Postmedia is non-Canadian. Except for the Asset Purchase Agreement, none of these documents were provided to the Minister.

[9]               The impugned portions of the Affidavits are not matters within the knowledge of Mr. Murdoch, they are not “business records” within the meaning of the Canada Evidence Act,  RSC 1985, c C-5  or at common law and they were not (except for the Asset Purchase Agreement) before the Minister. Not only are these documents inadmissible hearsay, they are of no assistance to me in this judicial review. This is because, as acknowledged by CEP, I am not being asked to rule on the merits of whether the acquisition of the CanWest newspaper assets resulted in control in fact by one or more non-Canadians. Quite simply, the Murdoch Affidavits, in their entirety, are irrelevant to the questions before me. They will be struck.

 

IV.             Statutory Framework

 

[10]           To situate this application for judicial review, I begin with a brief overview of the relevant provisions of the ICA.

 

[11]           The ICA, enacted in 1985, replaced the Foreign Investment Review Act, SC 1973-74, c 46 [FIRA]. As described by the Minister. The ICA is the primary mechanism for reviewing foreign investments in Canada. Consistent with the purpose of the ICA as set out in s. 2 “to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada”, the ICA provides for review of businesses – even those which will be controlled by non-Canadians – in limited circumstances.

 

[12]           Cultural business activities are recognized as having special status under the legislative scheme. Section 15 provides that an investment that would not otherwise be reviewable is reviewable if:

 

[13]           The “prescribed” business activities to which s. 15(a) applies are set out in Schedule IV to the Investment Canada Regulations, SOR/85-611. Of specific relevance to this case, the “publication, distribution or sale of books, magazines, periodicals or newspapers in print or machine readable form” is a prescribed business activity. All parties agree that the acquisition of the CanWest newspaper assets was an acquisition of a “prescribed business activity” for purposes of the ICA.

 

[14]           In 1999, the authority to review investments related to cultural businesses prescribed under s. 15(a) was transferred to the Minister from the Minister of Industry (see Order Transferring to the Minister of Canadian Heritage the Power, Duties and Functions of the Minister of Industry, SI/2009-99).

 

[15]           The tests for determining the Canadian status of an entity are set out in s. 26 of the ICA. Pursuant to s. 26(1)(a), a Canadian-controlled entity is one where “one Canadian or two or more members of a voting group who are Canadians own a majority of the voting interests of an entity”. The CEP does not dispute that Postmedia meets this definition of control. In other words, Postmedia (at least at all relevant times for this judicial review) qualified as a Canadian‑controlled entity under s. 26(1)(a). However, this is not the end of any potential review of the Postmedia acquisition (or any other acquisition of control of a cultural business). The Act recognizes the difference between the notions of “legal control”, pursuant to s. 26(1)(a), and

“control in fact”, pursuant to s. 26(2.1). Section  26(2.1), a provision added to the ICA in 1993, provides that:

 

[16]           The bottom line is that, if the Minister were to determine that Postmedia is controlled “in fact” by non-Canadians, the Minister would be obliged, through examination of the factors set out in s. 20 of the ICA, to satisfy himself that “the investment is likely to be of net benefit to Canada” (ICA, s. 21(1)).

 

V.                Analysis

 

A.                Issue #1: Is the Response Letter a “decision”?

 

[17]           CEP argues that the Minister’s Response was a decision. In the CEP’s view, the letter was a decision by the Minister to refuse to exercise his discretion, under s. 26(2.1) of the ICA, to review the Postmedia acquisition.

 

[18]           The Union also submits that the actions of the Minister’s delegates, as reflected in the Affidavits of Ms. Marston-Shmelzer, Deputy Director of Investments and Director, Cultural Sector Investment Review (CSIR), demonstrate that a decision not to review the Postmedia acquisition was actually made.

 

[19]           The Minister submits that the Response was simply an acknowledgment of receipt of the information submitted by CEP or a courtesy letter and not, therefore, justiciable. I prefer the Minister’s characterization of the letter.

 

(1)               General Principles

 

[20]           For judicial review to be available this application must qualify as a “matter” that may be reviewed under s. 18.1(1) of the Federal Courts Act.

 

[21]           A “matter” as contemplated by s. 18.1(1) encompasses more than decisions or orders rendered by federal bodies. A recent judicial explanation of s. 18.1 is contained in the Court of Appeal decision in May v CBC/Radio Canada, 2011 FCA 130, 420 NR 23, a case involving a judicial review of a Bulletin issued by the Canadian Radio-television and Telecommunications Commission. In rejecting the applicant’s argument that the Bulletin was reviewable, the court provided the following general guidance (at para 10):

. . . While it is true that, normally, judicial review applications before this Court seek a review of decisions of federal bodies, it is well established in the jurisprudence that subsection 18.1(1) permits an application for judicial review "by anyone directly affected by the matter in respect of which relief is sought". The word "matter" embraces more than a mere decision or order of a federal body, but applies to anything in respect of which relief may be sought: Krause v. Canada, [1999] 2 F.C. 476 at 491 (F.C.A.). Ongoing policies that are unlawful or unconstitutional may be challenged at any time by way of an application for judicial review seeking, for instance, the remedy of a declaratory judgment: Sweet v. Canada (1999), 249 N.R. 17.

 

[22]           Just because a document is called an acknowledgment or courtesy letter does not necessarily protect it from judicial review. Thus, I must carefully examine the Response Letter, within its factual and statutory context.

 

(2)               The Response Letter

 

[23]           I begin by reviewing the Response Letter. The entire body of the Response Letter is as follows:

Thank you for your letter of February 24, 2011, on behalf of the Communications, Energy and Paperworkers (CEP) Union of Canada, regarding the acquisition of the newspaper publishing assets of Canwest Global Communications Corporation by Postmedia Network Canada Corporation. I appreciate you taking the time to share the CEP’s concerns with me.

 

As you may already know, detailed information concerning the treatment of specific investments under the Investment Canada Act is privileged and cannot be disclosed to third parties. However, I am pleased to provide you with information on the scope of the Act and how it is applied.

 

In the cultural sector, the Investment Canada Act applies to non-Canadians establishing new cultural businesses in Canada or acquiring control of existing Canadian cultural businesses. Non-Canadians are required to obtain the approval of the Minister of Canadian Heritage prior to directly acquiring any Canadian cultural business, including newspaper publishing businesses, with an asset value of $5 million or greater. However, Canadian businesses with non-controlling foreign partners are not subject to the Act.

 

Please be assured that the Act is consistently applied to foreign investments which fall under its jurisdiction. Investments in Canada’s cultural sector are rigorously monitored to ensure that the Act is respected.

 

Please accept my best wishes.

 

[24]           As I read the Response Letter, there are three important notions contained in the letter. First, the Minister acknowledges receipt of the CEP Request. Secondly, the Minister emphasizes the privileged nature of any information concerning specific investments. Thirdly, the Minister explains that, in general, acquisitions by non-Canadians require approval of the Minister while investments by “Canadian businesses with non-controlling foreign partners are not subject to the Act”.

 

[25]           The CEP takes the position that the letter shows that the Minister misunderstands his powers under the Act. The basis of this argument appears to be the omission from the letter of any reference to s. 26(2.1) of the Act which permits the Minister to exercise discretion to review a transaction where control in fact may be held by non-Canadians. I do not find this omission to be material. The Minister was providing a general overview, in an attempt to be helpful, and cannot be expected to provide a detailed legal opinion on all of the provisions of the Act. There is nothing in the letter that is incorrect. The CEP’s attempt to read more into this letter is not persuasive.

 

[26]           The CEP also submits that:

If the letter communicated a departmental or ministerial policy or interpretation of the Act which precluded consideration of CEP’s request on its merits, then the letter is subject to judicial review.

 

[27]           The response to this argument of the Union is that the Response Letter, in no way, communicates such a policy or interpretation of the Act. Not only does the Response Letter not reflect this intention on its face, there is not a shred of evidence to support that the letter was intended to convey such a policy or interpretation.

 

[28]           The letter is, in my view, simply an acknowledgement of the CEP Request. It does not reflect any decision by the Minister. On its face, this is not a matter as contemplated by s. 18.1(1) of the Federal Courts Act. 

 

(3)               Actions of CSIR

 

[29]           Even though the Response Letter is, on its face, nothing more than a courtesy response to the Union, it may be that the context of the correspondence establishes that a decision had been made. This is the second argument of the CEP.

[30]           The CEP argues that the record, as a whole, demonstrates that the Minister (or, more accurately, the officials in CSIR) had made a decision that no review of the Postmedia acquisition would be carried out.

 

[31]           With respect to this argument, I first observe that the Response Letter was issued less than one month after the CEP Request. This immediately gives rise to a reasonable argument that the Response Letter could not possibly have been a decision on the merits of the CEP Request, given how long it would take to review the allegations raised by the Union. This was acknowledged by the CEP during oral submissions. Thus, the CEP’s second argument – that the functionaries in the CSIR had actually made a final determination that the acquisition would not be reviewed – is difficult to accept.

 

[32]           In making this argument, the CEP relies on statements contained in the Marston-Shmelzer Affidavits. In her affidavits, Ms. Marston-Shmelzer describes the general process followed by CSIR in reviewing investments that fall with the mandate of Minister. As described by Ms. Marston-Shmelzer:

To seek any decision by the Minister of Canadian Heritage under the Act, members of CSIR staff are required to prepare a briefing note to the Minister of Canadian Heritage for the signature of the Director of Investments.

 

[33]           Ms. Marston-Shmelzer also referred to the CEP Request and how it was handled by CSIR. While CSIR provided input to the Minister’s office, the sworn statement of Ms. Marston‑Shmelzer is that, “At no time did CSIR take any steps to seek a decision from the Minister of Canadian Heritage in response to the [CEP Request]”. The Union appears to take the view that this statement contains an acknowledgment that CSIR officials decided not to take action on the CEP information. This is an unsustainable interpretation of the evidence of Ms. Marston-Shmelzer. All that she states is that no steps were taken to ask the Minister to make a decision. This is a far cry from deciding that there is no merit in the CEP Request. There is nothing in the affidavits to suggest that a decision to review the Postmedia acquisition was not carried out or would not be conducted. I also note that the CEP takes this interpretation of the sworn evidence of Ms. Marston-Shmelzer without having cross-examined her on her affidavits to clarify any of her statements.

 

[34]           In sum, I do not accept the CEP argument that the Minister, through his officials in CSIR, had made a decision not to act on the CEP Request.

 

B.                  Issue #2: Does the Minister have a duty to act on the CEP Request?

 

[35]           The question of whether the Minister made a reviewable decision is linked to the question of whether the Minister is under any duty to carry out a review of the Postmedia acquisition in response to a request to do so from the Union. Stated in different terms, can the request of a third party trigger a s. 26(2.1) review?

 

[36]           If there is such a duty, it could follow that the CEP Request should have been acted on by the Minister and his failure to do so would raise a justiciable issue. This would be consistent with comments contained in Krause v Canada, [1999] 2 FC 476 at 491, 236 NR 317 (see also Popal v Canada (Minister of Citizenship and Immigration), [2000] 3 FC 532 at para 30, [2000] FCJ No 352) to the effect that anything in respect of which relief may be sought may qualify as a reviewable “matter”. Thus, if I conclude, as submitted by the CEP, that there was a duty on the Minister to respond, the failure to do so may be reviewable since, arguably, there would be a remedy (such as mandamus or certiorari) available to the Union. In my view, there is no such duty.

 

[37]           The main problem for the CEP is that there is nothing in s. 26(2.1) or anywhere in the ICA that provides for a third party complaint or request to review a transaction. Parliament did not intend to allow a third party to trigger a review of an acquisition in these circumstances. Had Parliament so intended, explicit language to that effect would have been included. Where the intention was to permit a process, the Act so provides; see, for example, s. 37 which provides for a process of obtaining an opinion of the Minister in certain circumstances.

 

[38]           The broad discretion of the Minister to commence a review under the ICA is similar to the discretion of the Minister of National Revenue considered by the Court of Appeal in Distribution Canada Inc v Minister of National Revenue [1993] 2 FC 26 at 41, 99 DLR (4th) 440 (CA), leave to appeal to the SCC refused, [1993] 2 SCR vii. In that case, a group of grocers was asking the Minister of National Revenue to enforce certain provisions of the Customs Tariff, RSC 1985, c. C-54 against persons buying goods in the United States to bring to Canada. In concluding that the Minister of National Revenue had not failed in his duties under the Customs Tariff, the Court of Appeal stated that:

Only he who is charged with such public duty can determine how to utilize his resources. This is not a case where the Minister has turned his back on his duties, or where negligence or bad faith has been demonstrated. It is a case where the Minister has established difficulties in implementation and where he enjoys a discretion with which the law will not interfere. [Emphasis added.]

 

[39]           In the case before me, the Minister has a similarly broad discretion under s. 26(2.1). The Minister is required to apply a complex and important statutory scheme to foreign investments in Canadian cultural activities. There is no evidence before me that the Minister has “turned his back on his duties” or that this is a situation “where negligence or bad faith has been demonstrated”. Indeed, the evidence of Ms. Marston-Shmelzer is that the Minister, through the CSIR, takes great care to review all information before it in assessing whether a review under s. 26(2.1) is warranted. Moreover, given the strong statutory requirements for confidentiality in such matters, the Minister’s ability to exercise a broad discretion is even more important. In these circumstances, the court should not interfere.

 

C.                 Issue #3: Does the Minister’s discretion amount to absolute or untrammelled discretion?

 

[40]           The final argument of the CEP is that refusing to allow a judicial review of the Minister’s decision would amount to immunizing the Minister from judicial review, contrary to the teachings of Roncarelli, above. Accordingly, the CEP submits, the Minister’s exercise of (or failure to exercise) his discretion in response to the CEP Request should be reviewable by this Court. I do not agree that this is a situation to which the principles espoused in Roncarelli apply.

 

[41]           I agree with the CEP that absolute or untrammelled discretion, which may be exercised on the basis of any consideration which the decision-maker chooses, does not exist. In Roncarelli, above at 140, Justice Rand, concurring with the majority of the Supreme Court, stated that:

… [N]o legislative Act can, without express language, be taken to contemplate an unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute ... "Discretion" necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate…

 

[42]           Justice Rand opined that statutory discretion must be exercised on the basis of relevant factors, informed by the statutory scheme. According to Justice Rand, the irrelevant consideration taken into account in the cancellation of the applicant’s liquor licence in Roncarelli was the applicant’s exercise of his “unchallengeable right” to post bail for Jehovah’s Witnesses. The scope of the discretion under the statutory scheme was informed by the purpose of the statute, relating to the sale of liquor in a restaurant (Roncarelli, above at 141). Just as the colour of a person’s hair or the province in which a person is born is irrelevant to the sale of liquor in a restaurant, neither was Mr. Roncarelli’s action to post bail (Roncarelli, above at 140).

 

[43]           Unlike Roncarelli, there is no evidence before me of any irrelevant considerations taken into account by CSIR or the Minister. Although the Union asserts that the request to review was ignored because it was made by a third party, who has a right to submit information, there is no evidence that this occurred. By contrast, the reason for the cancellation of Mr. Roncarelli’s liquor licence was “free from doubt” in view of the testimony of Mr. Duplessis and Mr. Archambault, general manager of the Liquor Commission (Roncarelli, above at 133).

[44]           In fact, the Response Letter and Ms. Marston-Shmelzer’s unchallenged affidavit evidence, viewed in light of the purpose of the ICA, demonstrate that only relevant considerations were taken into account. The purpose of the ICA is described in s. 2:

 

[45]           All of the considerations cited by the Minister in the Response Letter and Ms. Marston‑Shmelzer in her affidavits are relevant to the statutory scheme and its function. The statutory scheme of the ICA demonstrates the importance of maintaining confidentiality with respect to the review of particular businesses; publicity could lead to consequences detrimental to the business, to foreign investment in Canada and to Canadians who benefit from this foreign investment. Further, the explanation of the scope of the Minister’s jurisdiction, while quite general, is accurate and is not inconsistent with the purpose of the ICA. Most importantly, Ms. Marston-Shmelzer’s evidence explains the procedures that are followed by CSIR with respect to submissions by third parties. These procedures demonstrate that third party submissions are reviewed to enable proper administration of the Act’s objectives, and are not ignored on the basis of who provided them.

 

[46]           Contrary to the submissions of the CEP, the Minister is not immunized from judicial review. The Minister’s discretion under the ICA is not absolute; the court may intervene if factors irrelevant to the purpose of the ICA and the context in which it is administered were considered. However, when a breach of the rule of law is not demonstrated on the facts, and any discretion appears to have been exercised on the basis of relevant factors, it is not the role of the court to intervene.

 

VI.             Conclusion

 

[47]           In conclusion, my key findings are that:

 

1.                  The Response Letter was an acknowledgment or courtesy letter that was sent solely for informational purposes. It does not constitute a refusal to make a decision. Nor does the record show that a decision not to act on the CEP Request was made.

 

2.                  Section 26(2.1) does not impose a duty on the Minister to conduct a review upon the request of a third party.

 

3.                  The discretion of the Minister is not untrammelled and there is no evidence that his discretion was or would be exercised on the basis of considerations irrelevant to the purpose of the ICA.

 

[48]           For these reasons, I conclude that this application for judicial review should be dismissed on the basis that there is no “decision” or “matter” that can be challenged by way of judicial review.

 

[49]           The Minister is entitled to his costs and requests a lump sum of $10,000. Both parties accepted that the sum of $10,000 in costs would be appropriate in this case. In my view, $10,000 (inclusive of taxes and disbursements) is a reasonable assessment of costs for a matter of this degree of complexity.

 

 

JUDGMENT

 

THIS COURT ORDERS AND ADJUDGES that:

 

 

1.                  the Application for Judicial Review is dismissed; and

 

2.                  affidavits #1 and #2 of Mr. Peter Murdoch are struck from the record; and

 

3.                  costs in the amount of $10,000, inclusive of disbursements and taxes, are awarded to the Respondent.

 

 

“Judith A. Snider”

 

 

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

DOCKET:                                         T-685-11

 

STYLE OF CAUSE:                        COMMUNICATIONS, ENERGY AND PAPERWORKERS UNION OF CANADA v THE MINISTER OF CANADIAN HERITAGE AND OFFICIAL LANGUAGES AS REPRESENTED BY THE ATTORNEY GENERAL OF CANADA

 

PLACE OF HEARING:                  VANCOUVER, BRITISH COLUMBIA

 

DATE OF HEARING:                    JANUARY 8, 2013

 

REASONS FOR JUDGMENT

AND JUDGMENT:                         SNIDER J.

 

DATED:                                            JANUARY 15, 2013

 

APPEARANCES:

 

Mr. Joseph Arvay Ms. Alison Latimer	FOR THE APPLICANT
Mr. Harry Wruck Ms. Maria Molloy	FOR THE RESPONDENT

 

SOLICITORS OF RECORD:

 

Arvay Finlay Barristers and Solicitors Vancouver, British Columbia	FOR THE APPLICANT
William F. Pentney Deputy Attorney General of Canada Vancouver, British Columbia	FOR THE RESPONDENT