Supreme Court of Canada
Howard Smith Paper Mills Ltd. v. R., [1957] S.C.R. 403
Date: 1957-05-13
Howard Smith Paper
Mills Limited and Others (Plaintiffs) Appellants;
and
Her Majesty The
Queen (Defendant) Respondent.
1956: October 29, 30, 31; 1956: November 1,
2, 5, 6, 7; 1957: May 13.
Present: Kerwin C.J. and Taschereau, Rand,
Kellock, Locke, Cartwright and Fauteux JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR
ONTARIO.
Criminal law—Conspiracy in restraint of
trade—Defences—Whether intended prevention or lessening of competition “undue”—Validity
of indictment—Whether different offences created by the Criminal Code, R.S.C.
1927, c. 36, s. 498(1)(d)—Application and effect of the Combines Investigation
Act, R.S.C. 1927, c. 26, s. 41, enacted by 1949 (2nd sess.), c. 12, s. 3,
renumbered and amended by 1952, c. 39, ss. 6, 8—The Interpretation Act, R.S.C.
1952, c. 158, s. 19.
It is not necessary, to support a charge
under s. 498(1)(d) of the Criminal Code, 1927, that the
prosecution should establish any detriment to the public from the agreement
made, nor is it a defence to such a charge that the agreement resulted in
public benefit, through reasonable prices and profits. The section is
designed to protect free competition, and any agreement for the prevention or lessening
of that competition, to an extent that is “undue” within the authorities, is
punishable. The section proceeds on the footing that the preventing or
lessening of competition is in itself an injury to the public, and is not
concerned with public injury or public benefit from any other standpoint.
An indictment alleging that the accused
conspired “to unduly prevent or lessen competition in the production,
manufacture, purchase, barter, sale, transportation or supply” of goods is not
bad for duplicity, or as charging several offences in the alternative. A single
conspiracy is contemplated by s. 498(1)(d), viz., one to “prevent
or lessen competition”, and the words following are merely means by which that
competition may be prevented or lessened. For the same reason, it is not
correct to strike out the words “production” and “manufacture” from the
conviction merely on the ground that there was no evidence of a conspiracy
expressly directed to the prevention or lessening of competition in these two
respects.
Section 41 of the Combines
Investigation Act, 1927, as enacted in 1949 and amended and renumbered in
1952, applies on a prosecution for a conspiracy completed before the coming
into force of the 1952 amendment. The effect of the section is to render
admissible in evidence written communications, described as “inter-office
memoranda”, from one servant of an accused corporation to another even if they
never left the premises of the company in whose possession or on whose premises
they have been found. Such documents, when admitted, are prima facie evidence
not only against the corporation in whose possession they were found but
against other alleged conspirators mentioned in them.
[Page 404]
APPEAL by 22 companies and one individual
from the judgment of the Court of Appeal for Ontario, affirming the conviction of the appellants
and one other company by Spence J. on an
indictment under s. 498(1)(d) of the Criminal Code, R.S.C.
1927, c. 36 (one other company and another individual, also indicted and
convicted, did not appeal to the Court of Appeal), and a cross-appeal by the
respondent. Appeal dismissed and cross-appeal allowed.
Leave was granted by Cartwright J. on November
22, 1955, to appeal on the following questions of law:
1. Did the Courts below err in holding that
section 41 of the Combines Investigation Act, R.S.C. 1952, Ch. 314 as
enacted by, 1949 (Second Session) Ch. 12, section 3, and as amended by
1952, 1 Elizabeth II, Ch. 39, was applicable to this case?
2. Did the Courts below err in law in
holding that a number of documents consisting of written communications from
one servant of an accused corporation to another servant of the same
corporation, which documents were referred to at the trial as “inter-office
memoranda”, were admissible in evidence against all the accused?
3. Did the Court of Appeal for Ontario err
in not holding that the indictment and/or the conviction was void for duplicity
in that it states two separate offences in the alternative under
section 498(1)(d) of The Criminal Code namely the offence of
agreeing to unduly lessen competition and the offence of agreeing to unduly
prevent competition?
4. Did the Court of Appeal for Ontario err
in not holding that the indictment and/or the conviction was void for duplicity
in that it states in the alternative the several offences under
section 498(1)(d) of agreeing as to manufacture, purchase, barter,
sale, transportation or supply?
5. Did the Court of Appeal err in law in
not holding that the effect of wartime control orders, directives and requests,
proven in evidence, was to constitute a break in the continuity of any alleged
agreement or agreements between the accused and in not holding that the
conviction was bad in law as being a conviction on one count with reference to
two alleged agreements which are distinct in time?
6. Did the Courts below err in holding that
the element of “undueness” required by section 498(1)(d) may be
proved by reference only to the scope and extent of the agreement or
arrangement complained of and without proof of detriment to the public?
7. Did the Courts below err in ruling that
they were precluded from having regard to evidence tending to show public
benefit, reasonableness of prices and profits, and, particularly, did the
learned Trial Judge err in the ruling which he expressed (at 1954, O.R. p. 572)
in the following words, “In considering the evidence adduced I am not free to
find that the lessening intended was not undue on the basis of any necessity of
the industry, reasonableness of prices resulting or reasonableness of profits
obtained”?
[Page 405]
The application for leave to appeal was opposed.
Counsel for the respondent moved for leave to cross-appeal but stated that such
leave was sought only if the application of the appellants should be allowed.
Leave was granted to cross-appeal on the following question of law:
Did the Court of Appeal for Ontario err as a matter of law in varying
the conviction by striking out the words “production” and “manufacture”?
Joseph Sedgwick, Q.C., John J. Robinette,
Q.C., Hazen Hansard, Q.C., John D. Pickup, Q.C., A. Laurendeau, Q.C., D.K.
MacTavish, Q.C., and John M. Coyne, for the appellants.
N.L. Mathews, Q.C., and B.J. MacKinnon, for
the respondent.
THE CHIEF JUSTICE:—I agree with Mr. Justice
Kellock and desire merely to make a reference to the refusal by this Court of
leave to appeal from the decision of the Court of Appeal for British Columbia in Regina v. Morrey. There the accused had been found guilty of
an indictment preferred under the Combines Investigation Act, but the
Court of Appeal set aside the conviction. The Crown did not appeal to this
Court on any dissent expressed by Mr. Justice Davey, but desired leave in
order to raise a number of questions. This Court thought that, irrespective of
these questions, the order made by the Court of Appeal setting aside the
conviction and, if the Crown so desired, ordering a new trial could be
justified on other grounds, and that if any of the points suggested by the
Crown arose in the present appeal they could be dealt with when judgment was
delivered. It is apparent, however, that none is involved in the present
determination.
TASCHEREAU J.:—The appellants were charged under
s. 498(1)(d) of the Criminal Code, as in force prior to November 1, 1952, on an indictment, the material
portion of which, for the purposes of the present appeal, reads as follows:
During the period from 1933 to the 31st day
of October, 1952, both inclusive,...did unlawfully conspire, combine, agree or
arrange together and with one another and with...[others named in the
indictment] to
[Page 406]
unduly prevent, or lessen competition in
the production, manufacture, purchase, barter, sale, transportation or supply
of articles or commodities which may be the subject of trade or commerce, to
wit, book papers including general printing and converting papers, fine papers
including rag content and sulphite writing paper, coated papers, miscellaneous
fine papers including blotting and bristols, groundwood printing and specialty
papers containing more than 50% groundwood and other fine papers, and did
thereby commit an indictable offence contrary to the provisions of the Criminal
Code, section 498, subsection (1)(d).
The appellants were found guilty by
Mr. Justice Spence, sitting without a jury, and this judgment was unanimously
confirmed by the Court of Appeal for Ontario. Mr. Justice Cartwright granted leave to appeal to this Court
on questions of law, and leave was also granted to cross-appeal on the
following question:
Did the Court of Appeal for Ontario err as a matter of law in varying
the conviction by striking out the words “production” and “manufacture”?
The facts are not in dispute, and as they have
been summarized by my colleagues, it is unnecessary to deal with them once
more.
I agree with Kellock and Cartwright JJ. and I am
of the opinion that this appeal should be dismissed.
I wish however to add a few observations
concerning the necessity of showing detriment to the public, and as to the
meaning of the word “unduly” found in s. 498(1)(d) of the old Criminal
Code, under which the charge is laid.
It has been argued on behalf of the appellants
that the offence is not complete, unless it has been established by the Crown
beyond a reasonable doubt, that the agreement was detrimental to the public, in
the sense that the manufacture or production was effectively lessened, limited
or prevented, as a result of the agreements entered into. It has also been
suggested that there is no offence, if it is shown that the acts complained of
were beneficial to the public. With these submissions I entirely disagree.
Conspiracy is a crime by itself, without the necessity of establishing the
carrying out of an overt act. Stephen (Digest of the Criminal Law, 9th ed.
1950, p. 24), basing his opinion on Regina v. Whitchurch et al., goes as far as saying:
When two or more persons agree to commit
any crime, they are guilty, of a misdemeanour called conspiracy whether the
crime is committed or not, and though in the circumstances of the case it
would be impossible to commit it.
[Page 407]
The public is entitled to the benefit of free
competition, and the prohibitions of the Act cannot be evaded by good
motives. Whether they be innocent and even commendable, they cannot alter the
true character of the combine which the law forbids, and the wish to accomplish
desirable purposes constitutes no defence and will not condone the undue
restraint, which is the elimination of the free domestic markets.
It is my strong view that traders, manufacturers
and producers cannot, as the law now stands, monopolize a substantial part of
the markets of the country in given industries, to promote their own business
interests, and then set themselves up as public benefactors, by saying to the
Courts that the conspiracy was organized in order to achieve the stabilization
of prices and production.
I believe that the law has been clearly
expressed by Mr. Justice Mignault in Stinson-Reeb Builders Supply
Company et al. v. The King:
Injury to the public by the hindering or
suppressing of free competition, notwithstanding any advantage which may
accrue to the business interests of the members of the combine, is what brings
an agreement or a combination under the ban of section 498 Cr. C.
Vide also Container Materials, Limited et al.
v. The King where
Sir Lyman Duff, then Chief Justice, said at p. 152:
The enactment before us, I have no doubt,
was passed for the protection of the specific public interest in free
competition. That, in effect, I think, is the view expressed in Weidman
v. Shragge (1912), 46 S.C.R. 1, in the judgments of the learned Chief
Justice, of Mr. Justice Idington and Mr. Justice Anglin, as well as
by myself. This protection is afforded by stamping with illegality agreements
which, when carried into effect, prevent or lessen competition unduly and making
such agreements punishable offences; and, as the enactment is aimed at
protecting the public interest in free competition, it is from that point of
view that the question must be considered whether or not the prevention or
lessening agreed upon will be undue… That is only another way of putting what
was laid down in Stinson-Reeb v. The King [supra], which, it may
be added, was intended to be in conformity with the decision in Weidman v.
Shragge, as indicated in the passages quoted in the judgment.
Weidman et al. v. Shragge
and Rex v. Elliott are
also to the same effect.
[Page 408]
I have therefore reached the conclusion that
this appeal should be dismissed, and I would dispose of the cross-appeal as
proposed by my brother Kellock.
The judgment of Rand, Kellock and Fauteux JJ.
was delivered by
KELLOCK J.:—As the questions submitted to this
Court are questions of law, our jurisdiction being limited to such questions,
the findings made by the Courts below upon the evidence are not in question. It
will be convenient to deal first with questions 6 and 7.
The offence of which the appellants have been
convicted is provided for by s. 498(1)(d) of the Criminal Code, R.S.C.
1927, c. 36, which provides that:
Every one is guilty of an indictable
offence...who conspires, combines, agrees or arranges with any other person, or
with any railway, steamship, steamboat or transportation company,...
(d) to unduly prevent or
lessen competition in the production, manufacture, purchase, barter, sale,
transportation or supply of any such article or commodity, or in the price of
insurance upon person or property.
“Such” refers back to the earlier paragraphs in
which the article or commodity is described as “any article or commodity which
may be a subject of trade or commerce”.
It is contended that as the word “prevent” is
used in s. 498(1)(d) in the sense of absolute elimination, the
word “unduly” is meaningless unless it be interpreted as involving injury to
the public. It is therefore argued that it is a defence to a charge under the
section if it be shown that the agreement entered into by the accused had
in view the interests of the parties or public benefit such as “reasonableness
of prices” or obviation of the “hardships of a depression by keeping all mills
working part-time as a result of which a real public advantage is gained”, to
use language employed by the appellants in their factum. While “prevent” quite
commonly is used in the above sense it is also used in the sense of “hinder” or
“impede”. In the French version the word is “prévenir” which also is commonly
used in the sense of “empêcher”. In this sense the word “unduly” is appropriate
in connection with both “prevent” and “lessen”.
[Page 409]
The appellants further contend that the word
“unduly” in the statute should be interpreted by calling in aid the provisions
of the definition of “combine” in the Combines Investigation Act, R.S.C.
1927, c. 26, as amended by 25-26 Geo. V. (1935), c. 54, s. 2, where it is
defined for the purposes of that statute as, inter alià, a combination
which “has operated or is likely to operate to the detriment or against the
interests of the public whether consumers, producers or others”. It is
contended that if s. 498(1)(d) of the Criminal Code is to
be construed without reading similar words into it “parties to the same
agreement might be found guilty if charged under section 498(1)(d),
without proof of public detriment, while they would go free on the same
evidence if charged under the Combines Investigation Act”.
I cannot accept this contention. If there is a
difference between the offences described in the two statutes, Parliament has
deliberately so intended. It will be seen, however, that s. 498(d) does
have in view injury to the public but injury to the public of a character
expressly specified by the section itself.
In the course of his judgment in Container
Materials, Limited et al. v. The King,
Duff C.J.C. said:
The second point arises from the contention
of the appellants that the essence of the offence is an agreement to do
something injurious to the public; that such injury to the public must appear
from the evidence and must be found as a fact in order to establish a legal
basis for a conviction.
At p. 152, the learned Chief Justice dealt with
this contention as follows:
The enactment before us, I have no doubt,
was passed for the protection of the specific public interest in free
competition. That, in effect, I think, is the view expressed in Weidman v.
Shragge (1912), 46 S.C.R. 1, in the judgments of the learned Chief Justice,
of Mr. Justice Idington and Mr. Justice Anglin, as well as by myself.
This protection is afforded by stamping with illegality agreements which, when
carried into effect, prevent or lessen competition unduly and making such
agreements punishable offences; and, as the enactment is aimed at protecting
the public interest in free competition, it is from that point of view that
the question must be considered whether or not the prevention or lessening
agreed upon will be undue… That is only another way of putting what was laid
down in Stinson-Reeb v. The King, [1929] S.C.R. 276, which, it may be
added, was intended to be in conformity with the decision in Weidman v.
Shragge, as indicated in the passages quoted in the judgment.
The other members of the Court who took part in
the judgment expressed in other words the same principle.
[Page 410]
When it is considered that in the course of his
dissenting judgment in the Court of Appeal in the above case Henderson J.A. had said at pp.
195-6(D.L.R.):
In many of the cases the purpose or
objective of the alleged conspiracy has been, per se, a crime. A very
different situation arises where the purpose of the agreement is a proper one
on its face and entered upon in good faith in the belief not only that it is
within the legal rights of the parties, but in the case of a trade agreement,
is for the good of the particular industry and the public who are concerned.
At p. 196:
The Crown accepts the view that there
having been an association of manufacturers in this industry prior to 1931, and
the industry being in a bad way financially, having taken heavy losses and
being in danger of collapse, the object of the accused was to form an
association which would stabilize the industry, put it on a sound footing and
make it prosperous.
It is charged by the Crown that in
effecting this object the accused did unduly stifle competition. No evidence is
offered in support of the view that in standardizing their products the accused
did any injury to the public or to their consumers. For all that appears to the
contrary, one is entitled to conclude that this stabilization and
standardization was all for the benefit both of the industry and of the
consuming public…
At 204:
I do not find in this huge record… evidence
to prove injury to trade and commerce. To the contrary, I find that the
evidence indicates that Canadian manufacturers in this industry have, by their
efforts, stabilized the industry, greatly increased its sales to the benefit of
shareholders, employees and the public interest,
it is plain that the contention now put forward
by the appellants was effectively negatived by the judgment of this Court.
Anglin J., as he then was, in Weidman et al.
v. Shragge had
said at pp. 42-3:
...the prime question certainly must be,
does it, however advantageous or even necessary for the protection of the
business interests of the parties, impose improper, inordinate, excessive, or
oppressive restrictions upon that competition the benefit of which is the right
of every one? The King v. Elliott, 9 C.C.C. 505, at p. 520.
This judgment received the approval of this
Court in Stinson-Reeb Builders Supply Company v. The King, per Mignault J. at p. 278. At p.
280 Mignault J. said:
Injury to the public by the
hindering or suppressing of free competition, notwithstanding any advantage
which may accrue to the business interests of the members of the combine, is
what brings an agreement or a combination under the ban of section 498
Cr. C.
[Page 411]
It is therefore clear that the Courts below
dealt with the matter before them from the proper point of view. The statute
proceeds upon the footing that the preventing or lessening of competition is in
itself an injury to the public. It is not concerned with public injury or
public benefit from any other standpoint.
It was contended that the case at bar was
distinguishable from all previous cases of a similar character which had
reached this Court in that the agreement constituting the conspiracy was not to
be found within the four corners of a written document but had to be deduced
from oral evidence, correspondence, minutes and other writings. This contention
is, in my opinion, untenable. It relates merely to a matter of evidentiary
proof.
The answer to questions 6 and 7 must, therefore,
be in the negative.
With respect to question 5, it is not necessary,
in my opinion, to discuss the argument which was addressed to us in so far as
that argument was founded upon matters of evidence. The essence of the argument
is that although the agreement, which the Courts below have found to contravene
the provisions of s. 498(1)(d), continued without break throughout the
period mentioned in the indictment, and although s. 498(1)(d) remained
unrepealed, the agreement ceased to come within the ban of the
section during the period of the wartime controls for the reason that all
possibility of competition in fine papers was eliminated by virtue of the
legislation then in effect.
In my opinion the short answer to this
contention is contained in part of the reasons for judgment of Duff C.J.C. in
the Container Materials case, supra. At p. 153 the learned Chief
Justice, after pointing out that the Court of Appeal had held that the aim of
the parties to the agreement there in question had been to secure effective
control of the market in Canada and that they had been very largely successful
in effectuating that aim, went on to say: “But the fact that such was the
agreement affords in point of law a sufficient basis” for a finding that
the section had been contravened.
[Page 412]
Assuming that during any part of the period of
control the aim of the parties to the agreement could not have been
successfully carried into execution, such a fact would not, in law, constitute
any answer to the indictment.
In Regina v. Aspinall et al., Brett J.A., as he then was, said, at pp.
58-9:
Now, first, the crime of conspiracy is
completely committed, if it is committed at all, the moment two or more have
agreed that they will do, at once or at some future time, certain things. It is
not necessary in order to complete the offence that any one thing should be
done beyond the agreement. The conspirators may repent and stop, or may have no
opportunity, or may be prevented, or may fail. Nevertheless the crime is
complete; it was completed when they agreed.
In his Digest of the Criminal Law, 9th ed. 1950,
Stephen J. says at p. 24:
When two or more persons agree to commit
any crime, they are guilty of the misdemeanour called conspiracy whether the
crime is committed or not, and though in the circumstances of the case it would
be impossible to commit it.
The authority relied on is Regina v. Whitchurch et al.,
and, in my opinion, it fully justifies the statement in the text.
The appellants referred to the decision of the
Court of Criminal Appeal in England in Rex v. West et al.
In that case, however, the regulations in question had been amended so that in
effect there were three separate offences charged. Nothing of that kind is in
question here. Section 498(1)(d) remained in force
throughout. The fact that the wartime controls were of a temporary nature no
doubt influenced the parties to the conspiracy in continuing their agreement
throughout. That the agreement did continue is sufficient in itself in point of
law even had the Courts below been unable to find, as in fact they did find,
that the agreement was not as ineffective during the period of the controls as
the appellants contend.
In my opinion, therefore, question 5 must also
be answered in the negative.
With regard to question 3, it is contended that
the indictment states two separate offences in the alternative, namely, the
offence of agreeing to unduly lessen competition and the offence of agreeing to
unduly prevent competition.
[Page 413]
Again, with regard to question 4, the error the
Court below is alleged to have fallen into is in failing to hold that the
indictment was void for duplicity in that it states in the alternative the
several offences under s. 498(1)(d) of agreeing as to
manufacture, purchase, barter, sale, transportation or supply.
To return to the statutory language that
everyone is guilty of an indictable offence “who conspires, combines,
agrees or arranges with any other person...(d) to unduly prevent or
lessen competition in the production”, etc., in my opinion, upon the proper
construction of these words, there is but one offence created. To adopt in part
language used by Meredith J., as he then was, in Rex v. Elliott:
The crime is in the conspiracy, not in the
unlawful acts comprehended in it.
A little later on the same page the learned
judge pointed out that
By looking at the acts agreed to be done,
instead of only at the agreement to do them, the crime is apt to be wrongly
multiplied.
As the question involved in the cross-appeal is
allied to questions 3 and 4, I propose to consider it at this point also. That
question is as to whether the Court of Appeal erred in law in striking from the
conviction the words “manufacture” and “production”. In the course of its
judgment the Court of Appeal
affirmed the finding of the trial judge that
the Mills as a group and the Merchants as a
group did conspire with one another to lessen or prevent competition in
the fine paper industry in Canada; the Mills at the production level, the Merchants at the wholesale
level. Within that broad, over-all, all‑embracing agreement each group
had its part to play in accomplishing their common purpose.
The Mills, pursuant to a common
understanding between them and the Merchants, co‑operated with the
Merchants to prevent, if possible, any inroads by others into the wholesale
field in which the Merchants operated; and the Merchants in turn, pursuant to a
common understanding between them and the Mills, co-operated with the Mills to
prevent, if possible, any mill competition from the only source where it
really existed, namely, foreign manufacturers.
(The italics are mine.)
There was, of course, evidence upon which such a
finding could be made.
[Page 414]
In my opinion, on the plain reading of s.
498(1)(d), the accused may be charged with conspiring “to unduly
prevent” competition in any one or more of the modes mentioned in para. (d)
depending upon the evidence to be adduced, or, similarly, “to unduly
lessen” competition and he may also and no doubt will invariably be charged
with conspiring “to unduly prevent or lessen” by any one or more of such means.
The fact that, as in the case at bar, there was no evidence directed to the
word “barter” has no effect upon the result nor would it have had if that word
or any of the other intended modes of carrying the conspiracy into effect had been
omitted, so long as one of the statutory means was specified. The Crown could,
for example, if it did not intend to adduce evidence with regard to any of the
other words contained in the section, confine itself to charging a conspiracy
with regard to “manufacture” only.
Accordingly, the form of the present indictment
is authorized by s. 498(1)(d) and that being so, it falls within
ss. 852(3) and 854 of the Criminal Code. The decision of this Court in Belyea
v. The King; Weinraub v. The King, is
authority for the view I have expressed and is unaffected by the fact that s.
1010(2) of the Criminal Code as it then stood no longer exists.
With regard to the question raised by the
cross-appeal, it will be observed that in the extract from the reasons of Roach
J.A., quoted above, the learned judge was directing his mind to the essence of
the charge under s. 498(1)(d), namely, the conspiracy to prevent
or lessen “competition”. Subsequently, however, when the learned judge came to
deal with the question which is now the subject of the cross-appeal in this
Court, he did so in the following two passages:
I do not think that the evidence
establishes that they conspired to prevent or lessen production and
manufacture in Canada, but
of that I shall have more to say later.
And subsequently:
As earlier stated herein, I do not think
that as between the two groups there was a conspiracy to lessen or prevent production
or manufacture.
[Page 415]
With respect, these passages appear to lose
sight of the nature of the charge, namely, the conspiracy to unduly prevent or
lessen “competition” in production, manufacture, etc. There is, therefore, here
an error in a matter of law, namely, an erroneous construction of the statutory
offence and the charge contained in the indictment, and not in the question of
fact as to whether or not there existed or did not exist any evidence of
conspiracy to lessen or prevent competition in production or manufacture, as to
which the learned Justice of Appeal had made a contrary finding, namely, that
the Mills as a group and the Merchants as a
group did conspire with one another to lessen or prevent competition in
the fine paper industry in Canada; the Mills at the production level, the Merchants at the wholesale
level. Within that broad, over-all, all‑embracing agreement each group
had its part to play in accomplishing their common purpose.
In my opinion, this a finding that the mills and
merchants together did conspire to unduly prevent or lessen competition in both
production and manufacture as well as in purchase and sale. The object of the
mills was to limit competition in production and manufacture to themselves as
against outsiders and in this they were aided by the common agreement of the
merchants. Even if the mill competition which was in view was from foreign
manufacturers, the finding expressly includes this, namely, that there was a
common understanding between mills and merchants “to prevent, if possible, any mill
competition from the only source where it really existed, namely, foreign manufacturers”.
In my opinion, therefore, the Court of Appeal erred in striking out the words
“production” and “manufacture” from the indictment.
It is contended on behalf of the appellants that
there is no jurisdiction in this Court under the provisions of s. 1025 of the Criminal
Code to entertain the cross-appeal as it is said that there was no “setting
aside” of the conviction within the meaning of s. 1014. I cannot agree. A
conviction upon a charge of conspiring to unduly prevent
[Page 416]
or lessen competition in the barter of any
commodity is, to my mind, as I have already pointed out, not the same as a
conviction of conspiring with respect to the preventing or lessening of
competition in the purchase or sale of a commodity. Accordingly, in substituting
a conviction of conspiring to unduly prevent or lessen competition in the
purchase, barter, sale, transportation and supply of an article, the Court of
Appeal necessarily set aside the conviction made by the trial judge, namely,
that of conspiring to unduly prevent or lessen competition in the production,
manufacture, purchase, barter, sale, transportation or supply of that
commodity.
With regard to question 1, the contention of the
appellants is essentially founded upon the language of subs. (2) of s. 41 of
the Combines Investigation Act, R.S.C. 1927, c. 26, as enacted by 1949
(2nd sess.), c. 12, s. 3, and amended by 1952, c. 39, ss. 6 and 8. By virtue of
s. 6 of the 1952 Act the former s. 39A was renumbered as s. 41.
It is contended for the appellants that s. 41 is
not a procedural but a substantive enactment and can have no restrospective
operation, and further, that the reference to s. 498 in subs. (2) is confined
to s. 498 of the Criminal Code as enacted by s. 11 of the statute of
1952, which begins with the following words:
11. Sections four hundred and
ninety-eight and four hundred and ninety-eight A of the Criminal Code chapter
thirty-six of the Revised Statutes of Canada, 1927, are repealed and the
following substituted therefor:
The contention is that the words
“section four hundred and ninety-eight” in subs. (2) of s. 41 refer to the
s. 498 enacted by the statute of 1952 and, accordingly, that even though s. 41
is to be considered a procedural enactment, it is expressly made applicable
only to prosecutions under the new s. 498. It is therefore said also that, as
the prosecution here in question is in respect of the period ending with
October 31, 1952, to which s. 498 of the Criminal Code as it stood on
that date is the applicable section, resort cannot be had to the antecedent of
s. 41, namely, s. 39A, enacted in 1949 by 13 Geo. VI, c. 12, as that section,
although continued by s. 6 of the 1952 legislation as s. 41, ceased,
[Page 417]
by reason of its amendment by s. 8 of the same
statute, to have any application to a prosecution under the old s. 498.
There is no question, in my opinion, that s. 41
is procedural in its nature and in so far as the appellants’ argument is
dependent upon a contrary view it cannot be supported.
In my opinion the Interpretation Act, now
R.S.C. 1952, c. 158, affords an answer to the appellants’ contention. By s.
19(1), it is provided that where any Act or enactment is repealed, then, unless
the contrary intention appears, such repeal does not, save as in the
section is otherwise provided,
(d) affect any offence
committed against any Act, enactment or regulation so repealed or revoked, or
any penalty or forfeiture or punishment incurred in respect thereof, or
(e) affect any...legal
proceeding or remedy in respect of any such...penalty, forfeiture or punishment
as aforesaid,
and any such...penalty, forfeiture or
punishment may be imposed, as if the Act...had not been repealed.
Accordingly, regardless of any repeal of s. 498
of the Criminal Code, the liability to prosecution thereunder continued.
This, of course, the appellants concede.
It is further provided by subs. (2) of s. 19
that
Where other provisions are substituted for
those so repealed or revoked, then, unless the contrary intention appears,...
(c) in the recovery or enforcement
of penalties and forfeitures incurred...under the Act, enactment or regulation
so repealed or revoked,...the procedure established by the substituted
provisions shall be followed as far as it can be adapted.
This appears to be a clear enactment that s. 41,
as enacted or amended by the statute of 1952, is to apply with any necessary
adaptation to a prosecution under s. 498 as it stood prior to the legislation
of 1952. The “necessary adaptation” is, of course, to read “section four
hundred and ninety-eight of the Criminal Code” as referring to the “old
section” 498.
In my opinion also, the objection raised by the
appellants which is the subject-matter of the second question
[Page 418]
is completely answered by the language of s. 41.
Granted the applicability of the section to the prosecution here in
question, para, (c) of subs. (2) provides that
a document proved to have been in the
possession of a participant or on premises used or occupied by a participant or
in the possession of an agent of a participant
shall not only be “admitted in evidence” without
further proof but
shall be prima facie evidence…
(ii) that anything recorded in or by the
document as having been done, said, or agreed upon by any participant or
by an agent of a participant was done, said or agreed upon as
recorded and, where anything is recorded in or by the document as having
been done, said or agreed upon by an agent of a participant, that it was
done, said or agreed upon with the authority of the participant.
(The italics are mine.)
It is, in my opinion, the plain language of this
legislation that where a document of the character mentioned states, for
example, that two participants agreed upon a thing, that is prima facie evidence
against both notwithstanding that the statement may appear in a document which
is an “inter-office memorandum” which never left the premises of the
participant in whose possession or on whose premises (“used or occupied”) it
was found. This subject does not lend itself to extended comment. There was, accordingly,
no error on the part of either Court below in the respect raised by the second
question.
In this view, the appellants fail, the
cross-appeal succeeds and the conviction made by the learned trial judge should
be restored.
The judgment of Locke and Cartwright JJ. was
delivered by
CARTWRIGHT J. [after quoting the indictment and
setting out the questions on which leave to appeal and to cross-appeal was
given]:—The facts are set out in the reasons for judgment of the learned trial
judge and in
those of the Court of Appeal, and
it is not necessary to repeat them.
[Page 419]
I propose to deal with the questions in regard
to which leave to appeal was granted in the order in which they are set out
above.
As to the first question two submissions were
made. It was argued, first, that s. 41 does not fall within the general rule
that enactments dealing with procedure apply to bygone transactions, that the
radical changes it makes in the law of evidence go beyond any mere matter of
procedure, and that consequently it ought not to be given retrospective effect;
and, secondly, that on the true construction of An Act to Amend the Combines
Investigation Act and the Criminal Code, 1952, 1 Eliz. II, c. 39, s. 41
does not apply to breaches of s. 498 which occurred before the repeal of that
section and its re-enactment, in a slightly different form, by s. 11 of
the 1952 Act.
As to the first of these submissions, it may
well be that the circumstance that a statute deals with a matter of evidence is
not necessarily conclusive as to its having retrospective effect. I agree with
the following observations of the learned author of Phipson on Evidence, 9th
ed. 1952, p. 1:
Law is commonly divided into Substantive
Law, which defines rights, duties and liabilities; and Adjective Law, which
defines the procedure, pleading and proof by which the substantive law is
applied in practice.
The rules of Procedure regulate the
general conduct of litigation; the object of Pleading is to ascertain
for the guidance of the parties and the Court the material facts in issue in
each particular case; Proof is the establishment of such facts by proper
legal means to the satisfaction of the Court, and in this sense includes
disproof. The first-mentioned term is, however, often used to include the other
two.
In Gardner v. Lucas et al., Lord Blackburn says, at p. 603:
Now the general rule, not merely of England
and Scotland, but, I believe, of every civilized nation, is
expressed in the maxim, “Nova constitutio futuris formam imponere debet non
praeteritis”—prima facie, any new law that is made affects future
transactions, not past ones. Nevertheless, it is quite clear that the
subject-matter of an Act might be such that, though there were not any express
words to shew it, it might be retrospective. For instance, I think it is
perfectly settled that if the Legislature intended to frame a new procedure,
that instead of proceeding in this form or that, you should proceed in another
and a different way; clearly there bygone transactions are to be sued for and
enforced according to the new form of procedure. Alterations in the form of
procedure are always retrospective, unless there is some good reason or other
why they
[Page 420]
should not be. Then, again, I think that
where alterations are made in matters of evidence, certainly upon the reason of
the thing, and I think upon the authorities also, those are retrospective,
whether civil or criminal.
It will be observed that Lord Blackburn
differentiates between enactments making alterations in the form of procedure
and those making alterations in matters of evidence but appears to regard both
as prima facie retrospective; he continues:
But where the effect would be to alter a
transaction already entered into, where it would be to make that valid which
was previously invalid—to make an instrument which had no effect at all, and
from which the party was at liberty to depart as long as he pleased, binding—I
think the prima facie construction of the Act is that it is not to be
retrospective, and it would require strong reasons to shew that is not the
case.
The very question raised in this first
submission is dealt with by Casey J., giving the unanimous judgment of the
Court of Queen’s Bench, Appeal Side, in Eddy Match Co. Ltd. et al. v. The
Queen,
particularly at p. 13, which was followed by the learned trial judge. I am in
substantial agreement with the reasons of Casey J. on this point. While s. 41
makes a revolutionary change in the law of evidence, it creates no offence, it
takes away no defence, it does not render criminal any course of conduct which
was not already so declared before its enactment, it does not alter the
character or legal effect of any transaction already entered into; it deals
with a matter of evidence only and, in my opinion, the learned trial judge was
right in holding that it applied to the trial of the charge before him.
As to the second submission of the appellants,
in regard to the effect of s. 11 of the 1952 Act, set out above, for the
reasons given by my brother Kellock I agree with his conclusion that this
submission must be rejected.
It follows that I would answer question 1 in the
negative.
As to question 2, I am in agreement with the
reasons and conclusion of my brother Kellock.
Questions 3 and 4 may conveniently be dealt with
together. In opening his argument on these questions Mr. Robinette called
attention to the fact that the very point involved appears to have been
decided, adversely to his
[Page 421]
contention, by the judgment of this Court in Belyea
v. The King; Weinraub v. The King,
particularly at pp. 281-2; but he argued that the judgment of this Court in Archer
v. The Queen is
inconsistent with that in Belyea v. The King and that we are free to
examine the matter de novo. The question raised in the Archer case
was as to the validity of a conviction in proceedings under The Summary
Convictions Act, R.S.O. 1950, c. 379. This Court was unanimously of opinion
that a conviction on an information charging two offences in the alternative
was invalid and that the defect was not cured by s. 723 or s. 725 of the 1927 Criminal
Code. The governing principle is stated by my brother Locke at p. 40,
quoting from the judgment of Avory J. in Rex v. Surrey Justices; Ex parte
Witherick:
It is an elementary principle that an
information must not charge offences in the alternative, since the defendant
cannot then know with precision with what he is charged and of what he is
convicted and may be prevented on a future occasion from pleading autrefois
convict.
That this principle, except in so far as it may
have been modified by statute, is equally applicable to a count in an
indictment does not appear to me to admit of doubt. It is so decided in many
cases and it is sufficient to refer to the statement of Humphreys J. giving the
unanimous judgment of the Court of Criminal Appeal in Rex v. West et al:
...it is elementary law that no more than
one offence may be charged in any one count of an indictment.
I can find nothing in the judgments of this
Court or of the Court of Appeal in the Belyea case to indicate that
those Courts decided whether the fifth count in the indictment, which is set
out in the report of the trial judgment,
and was in substance identical with that in the case at bar, charged only one
offence or charged in the alternative more offences than one; although there is
a sentence in the judgment of the trial judge, Wright J., which suggests that
he assumed for the purposes of his decision that the count contained charges of
separate offences.
[Page 422]
That learned judge said, at p. 205:
I do not think the fact that the offences
were stated in the alternative, under the particular circumstances of this
case, leaves the indictment open to be quashed.
As at present advised, I do not think that the
judgment of this Court in the Belyea case requires us to hold that more
offences than one can validly be charged in a single count whether in the
alternative or otherwise and I desire to reserve my opinion on that question
until it becomes necessary to decide it. The reason that I do not find it necessary
to pursue the matter further is that I agree with the conclusion reached by my
brother Kellock and by Roach J.A., that the indictment in the case at bar
charges only one offence, a single conspiracy. I would accordingly answer
questions 3 and 4 in the negative.
As to question 5, I agree with the reasons and
conclusion of my brother Kellock.
Questions 6 and 7 may conveniently be dealt with
together as the answers to them depend upon the interpretation of s. 498(1)(d)
of the Criminal Code.
In approaching these questions it is convenient
to consider first how they were dealt with in the Courts below. We must proceed
upon the facts as found in those Courts. These are summarized in the following
passages in the reasons of Roach J.A.:
On all the evidence, the trial judge made
specific findings of fact as follows:
1. “...that well before the year 1933 these
seven accused companies [the Mills] and the J.R. Booth company had entered into
a firm agreement to control and fix prices and deal with many other elements.
and that agreement has continued from then until the end of the period charged
in the indictment, the 31st October 1952”. (O.R., p. 579.) (I should perhaps
here state that the E.B. Eddy Company leased the assets of J.R. Booth Company
on 1st January 1945 and purchased those assets, except certain Crown leases and
water-rights, in April 1946.)
2. “...with the exception of some very
unimportant merchants…these accused merchants controlled all of the wholesale
trade in fine paper in Ontario
and Quebec. The co‑conspirator
merchants occupied a similar position in the remainder of Canada, and the accused merchants and
co-conspirator merchants through their membership in the Canadian Paper Trade
Association engaged actively in agreeing amongst themselves as to the complete
and absolute control of the wholesale paper trade in the Dominion of Canada.”
(O.R., p. 580.)
[Page 423]
3. That the two groups came together
through the agency of the Mills Relation Committee of the Merchants; “that the
merchants and the mills on many occasions did make agreements and that those
agreements were merely supplementary to and carrying out the main mill-merchant
agreement to lessen competition in fine paper throughout the whole of Canada
(O.R., p. 585); that the accused corporations [both Mills and Merchants] and
Mr. Turgeon, were parties to the main agreement lessening competition, and
that the accused Moffitt aided and abetted the original creation of that
agreement and was, if anything, the most effective agent—so far as the merchants
were concerned—in carrying out the agreement…”
* *
*
In my opinion the learned trial judge was
right in holding that the Mills as a group and the Merchants as a group did
conspire with one another to lessen or prevent competition in the fine paper industry
in Canada; the Mills at the production level, the Merchants at the wholesale
level. Within that broad, over-all, all-embracing agreement each group had its
part to play in accomplishing their common purpose.
The Mills, pursuant to a common understanding
between them and the Merchants, co‑operated with the Merchants to
prevent, if possible, any inroads by others into the wholesale field in which
the Merchants operated; and the Merchants in turn, pursuant to a common
understanding between them and the Mills, co-operated with the Mills to
prevent, if possible, any mill competition from the only source where it really
existed, namely, foreign manufacturers.
At p. 733, Roach J.A. concludes that, on the
evidence as to what happened in the case at bar, “the consumer or whoever buys
from the wholesaler does not get the benefit of any competition at either the
manufacturing or the wholesale level”.
The learned trial judge having rightly held that
the interpretation of s. 498(1)(d) and particularly of the word
“unduly” is a matter of law proceeds to a careful review of most of the
decisions of the Courts of this country which deal with the meaning of the
section and, while he does not, in any one passage, formulate a positive
interpretation of the clause, he reaches the conclusion which he expresses as
follows:
Therefore I have come to the conclusion
that in determining whether an agreement had as its object to lessen
competition unduly, I must be guided by the interpretation of that adverb
assigned in the decisions of the Courts to which I have referred, and in
considering the evidence adduced I am not free to find that the lessening
intended was not undue on the basis of any necessity of the industry,
reasonableness of prices resulting or reasonableness of profits obtained.
[Page 424]
As to the meaning of the word “unduly”, the
views expressed by Roach J.A. do not appear to me to differ in any matter of
substance from those expressed by the learned trial judge. The learned Justice
of Appeal deals with the matter as follows:
As to what is meant by “unduly”, we can
start with the decision of this Court in Rex v. Elliott (1905), 9 O.L.R.
648 at 657... Osler J.A. delivering the judgment of this Court said that
competition is lessened or prevented “unduly” if it is lessened or prevented
“in an undue manner or degree, wrongly, improperly, excessively, inordinately”.
In Weidman et al. v. Shragge (1912),
46 S.C.R. 1 at 37...Duff J., as he then was, said: “... I have no hesitation in
holding that as a rule an agreement having for one of its direct and governing
objects the establishment of a virtual monopoly in the trade in an important
article of commerce throughout a considerable extent of territory by
suppressing competition in that trade, comes under the ban of the enactment”.
In the same case at p. 42, Anglin J., as he
then was, said: “...the prime question certainly must be, does it, however
advantageous or even necessary for the protection of the business interests of
the parties, impose improper, inordinate, excessive, or oppressive restrictions
upon that competition the benefit of which is the right of every one”.
What Duff J. and Anglin J. there said was
quoted with approval later in Stinson-Reeb Builders Supply Company et al. v.
The King, [1929] S.C.R. 276...
In Rex v. Container Materials Ltd. et
al., 76 C.C.C 18 at 43...Robertson C.J.O. said: “Competition from which
everything that makes for success is eliminated except salesmanship is not the
free competition that s. 498 is mainly designed to protect”.
In the same case in the Supreme Court of
Canada, sub nom. Container Materials, Limited et al. v. The King, [1942]
S.C.R. 147...Kerwin J., as he then was, with whom Hudson and Taschereau JJ.
concurred, having first referred to the Stinson-Reeb case and Weidman
et al. v. Shragge, continued: “Under the decision of the Stinson-Reeb case,
the public is entitled to the benefit of free competition except in so far as
it may be interfered with by valid legislation, and any party to an
arrangement, the direct object of which is to impose improper, inordinate,
excessive or oppressive restrictions upon that competition, is guilty of an
offence,...the matter must be looked at in each case as a question of fact to
be determined by the tribunal of fact upon a common sense view as to the direct
object of the arrangement complained of”.
The defence introduced evidence which was
intended to show that the prices charged by the Mills were reasonable having
regard to the necessities of the Mills. Such evidence, in my opinion, is no
answer to a charge laid under s. 498 for the reason stated by Anglin J. in Weidman
et al. v. Shragge, supra.
Applying the test laid down in the cases to
which I have referred the agreement between the two groups was one to lessen or
prevent competition unduly.
[Page 425]
In the last sentence in this passage Roach J.A.
appears to regard the decisions from which he has quoted as laying down a
single test for he speaks of “the test laid down”. I must confess that I have
found difficulty in discerning just what that test is. As was pointed out by
Anglin J., in Weidman et al. v. Shragge, supra, at p. 41, the conclusion
is inescapable that Parliament contemplated that there may be agreements to
prevent or lessen competition which do not fall within the prohibition of s.
498(1)(d); the intended prevention or lessening must be “undue” to
render the agreement criminal. “Undue” and “unduly” are not absolute terms
whose meaning is self-evident. Their use presupposes the existence of a rule or
standard defining what is “due”. Their interpretation does not appear to me to
be assisted by substituting the adjectives “improper”, “inordinate”,
“excessive”, “oppressive” or “wrong”, or the corresponding adverbs, in the
absence of a statement as to what, in this connection, is proper, ordinate,
permissible or right.
The conclusion of the learned trial judge in the
case at bar, affirmed by the Court of Appeal, appears to me to be that because
the purpose and effect of the agreement of the appellants was the virtual
elimination or prevention of all competition which would otherwise have entered
into wholesale dealings in the products in question in Canada, the object of
the agreement is necessarily “undue”, and the making of it is criminal, even
although it be affirmatively proved (a) that the prevention of competition
intended to be brought about, and in fact brought about, was no more than was
necessary to permit the industry to develop and survive in Canada, (b) that the
participants derived only reasonable profits, and (c) that the prices charged
to the purchasers of the products were at all times reasonable. I do not intend
to imply that I regard these three matters as having been proved; the question
of law is whether the Courts below were right in holding that, if proved, they
would afford no answer to the charge, and in treating the evidence tendered to
prove them as irrelevant.
[Page 426]
Had the matter been one with which we were
called upon to deal unaided by earlier decisions which are binding upon us, I
would have found this conclusion a surprising one. As was said by my brother
Rand in Re The Farm Products Marketing Act:
The provisions of the Combines
Investigation Act and the Criminal Code envisage voluntary
combinations or agreements by individuals against the public interest that
violate their prohibitions.
A similar view was expressed by Lord Atkin in Proprietary
Articles Trade Association et al. v. Attorney-General for Canada et al.
Had the three matters mentioned above, which the
learned trial judge regarded as irreleveant, been proved, I would have found it
difficult to regard the agreement as being in either intention or operation
“against the public interest”. But the matter is not res integra; and,
in my view, the learned judges in the Courts below are right in interpreting
the decisions to which they refer as supporting the conviction of the
appellants on the findings of fact which are summarized in the passages quoted
above from the reasons of Roach J.A.
In essence the decisions referred to appear to
me to hold that an agreement to prevent or lessen competition in commercial
activites of the sort described in the section becomes criminal when the
prevention or lessening agreed upon reaches the point at which the participants
in the agreement become free to carry on those activities virtually unaffected
by the influence of competition, which influence Parliament is taken to regard
as an indispensable protection of the public interest; that it is the
arrogation to the members of the combination of the power to carry on their
activities without competition which is rendered unlawful; that the question
whether the power so obtained is in fact misused is treated as irrelevant; and
that the Court, except I suppose on the question of sentence, is neither
required nor permitted to inquire whether in the particular case the intended
and actual results of the agreement have in fact benefited or harmed the
public,
[Page 427]
In other words, once it is established that
there is an agreement to carry the prevention or lessening of competition to
the point mentioned, injury to the public interest is conclusively presumed,
and the parties to the agreement are liable to be convicted of the offence
described in s. 498(1)(d). The relevant question thus becomes the
extent to which the prevention and limitation of competition are agreed to be
carried and not the economic effect of the carrying out of the agreement. In
each case which arises under the section the question whether the point
described has been reached becomes one of fact.
In the case at bar, accepting the interpretation
of s. 498(1)(d) set out above, to which I think the authorities
bind us, the agreement made by the appellants appears to me, on the facts as
found, to fall within the terms of the section.
I conclude that questions 6 and 7 must be
answered in the negative.
Nothing would be gained by my attempting to form
an opinion as to whether the state of the law, brought about by the
interpretation of the section to which I think we are bound, is a
desirable one. If it should be that in construing the word “unduly” the Courts
have failed to discern the true intention of Parliament it is, under the
principle of stare decisis, too late for us to reopen the question, and
the remedy, if one is required, lies in the hands of Parliament.
It follows from what I have said above that, in
my opinion, the appeals should be dismissed.
In view of the dismissal of the appeals, the
cross-appeal ceases to have any great importance. Having concluded for the
reasons given above in dealing with questions 3 and 4 that the indictment,
following as it does the words of s. 498(1)(d), charges only one
offence, although it describes alternative modes of committing it, I am of
opinion that
[Page 428]
the amendment of the conviction ordered by the
Court of Appeal was not necessary and I concur in the disposition of the
cross-appeal proposed by my brother Kellock.
Appeals dismissed; cross-appeal
allowed.
Agents for the appellants’ solicitors:
Gowling, MacTavish, Osborne & Henderson, Ottawa.
Solicitor for the respondent: F.P. Varcoe,
Ottawa.
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