Date: 20100723
Docket: A-242-10
Citation: 2010 FCA 200
Present: LAYDEN-STEVENSON
J.A.
BETWEEN:
UNITED STATES
STEEL CORPORATION and
U.S. STEEL CANADA
Appellants
and
ATTORNEY
GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT
LAYDEN-STEVENSON J.A.
[1] The Attorney General (the Crown)
filed an application in the Federal Court (Court File No. T-1162-09) (the
T-1162 application) under section 40 of the Investment Canada Act,
R.S.C. 1985, c. 28 (1st Supp.) (ICA) alleging that United States Steel
Corporation and U.S. Steel Canada Inc. (U.S.
Steel) had failed to comply with certain undertakings given
to the Minister of Industry in connection with U.S. Steel’s acquisition of
Stelco Inc..
[2] U.S. Steel moved to
challenge the validity of sections 39 and 40 of the ICA on the basis that they
contravened section 11(d) of the Canadian Charter of Rights and Freedoms (the
Charter) and paragraph 2(e) of the Canadian Bill of Rights, R.S.C. 1985
(the Bill of Rights). The T-1162 application was held in abeyance pending the
disposition of U.S. Steel’s motion.
[3] On June 14, 2010, the
Federal Court dismissed U.S. Steel’s motion (the validity order). On June 24,
2010, U.S. Steel filed a notice of appeal from the validity order. U.S. Steel
now seeks to stay the T-1162 application in the Federal Court pending this
Court’s disposition of the appeal from the validity order. For the reasons that
follow, I conclude that U.S. Steel’s motion should be dismissed.
Stay of Proceeding
[4] To obtain a stay, U.S.
Steel must satisfy all three components of the tri-partite test articulated in RJR-MacDonald
v. Canada (Attorney General), [1994] 1 S.C.R. 311 (RJR). That
is, U.S. Steel must demonstrate that:
(i) a serious issue exists;
(ii) it would suffer irreparable harm is the stay is
not granted; and
(iii) the balance of convenience favours the granting
of the stay.
Serious Issue
[5] The serious issue
component imposes a low threshold. It requires only a preliminary assessment of
the merits to ensure that the appeal is neither frivolous nor vexatious: RJR,
pp. 337-338. The Crown conceded that U.S. Steel’s appeal of the validity order
is not frivolous or vexatious and therefore meets the low threshold. I agree
that U.S. Steel’s appeal cannot be characterized as frivolous or vexatious,
therefore it meets the requisite threshold to establish the existence of a
serious issue.
Irreparable Harm
[6] RJR described
the central question regarding irreparable harm as “whether a refusal to grant
relief could so adversely affect the applicants’ own interests that the harm
could not be remedied if the eventual decision on the merits does not accord
with the result of the interlocutory application”: para. 63. Irreparable harm
refers to the nature of the harm, not the magnitude. The nature of the harm
must be such that it cannot be quantified in monetary terms or cannot be cured:
para. 64.
[7] The jurisprudence of
this Court holds that the party seeking the stay must adduce clear and
non-speculative evidence that irreparable harm will follow if the motion for a
stay is denied. It is not sufficient to demonstrate that irreparable harm is
“likely” to be suffered. The alleged irreparable harm may not be simply based
on assertions: Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129;
126 N.R. 114 (F.C.A.), leave to appeal refused 39 C.P.R. (3d) v, 137 N.R. 391n;
Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d)
34 (F.C.A.); Canada (Attorney General) v. Canada (Information
Commissioner), 2001 FCA 25, 268 N.R. 328.
[8] U.S. Steel’s written
memorandum of fact and law focussed on the serious nature of the remedies at
issue in the T-1162 application as the basis for the irreparable harm. It
submitted that it will be deprived of its right of appeal from the validity
order if the stay is not granted. More specifically, it asserted that if the
stay is not granted, the validity appeal will be moot because the hearing of
the T-1162 application will have proceeded on the basis of a provision and
process that is unconstitutional and inconsistent with the Bill of
Rights. It also alleged that it will incur significant pecuniary loss and waste
considerable legal resources. The last assertion was not pursued at the hearing
and I will say no more about it.
[9] At the hearing of the
motion, U.S. Steel centered its argument on the process, arguing that if it has
to proceed on the T-1162 application and produce evidence (which will be
required within seven days of the denial of the stay), its constitutional
rights will be irreparably harmed. It relies, by analogy, on cases where the
production of documents was held to constitute irreparable harm because the
right to be accorded protection was one of privacy or confidentiality: Bisaillon
v. R. (1999), 251 N.R. 225; 990 D.T.C. 5517 (F.C.A.) (Bisaillon) and
Bining v. R., 2003 FCA 286, 4 C.T.C. 165 (Bining).
[10] More particularly, U.S.
Steel claims that the process under section 40 of the ICA violates the right to know the case it
has to meet and to make full answer and defence. It must respond to the Crown’s
case without having had any opportunity to cross-examine the Crown’s witnesses.
As U.S. Steel’s counsel put it, if a stay of the T-1162 application is not
granted, the egg will have already been scrambled.
[11] Turning to the evidence,
U.S. Steel relied upon the affidavit of its Executive Vice President and Chief
Operating Officer, John H. Goodish, sworn June 29, 2010. In addressing the
issue of irreparable harm at paragraphs 18 and 19 of his affidavit, Mr. Goodish
attested as follows:
If the relief sought in
the pending appeal is granted in whole or in part, it will either dispose of
this Application or fundamentally alter the manner in which it proceeds.
However, in the absence of a stay, by the time the pending appeal of the
[validity] order is decided, the substantive hearing will be nearly, or fully completed.
The pending appeal will then be moot. Accordingly, in the absence of a stay,
[U.S. Steel] will be effectively deprived of its right to appeal the [validity]
order, thus suffering irreparable harm through the loss of an appeal granted as
of right under the Rules.
In light of the expected
deadlines under which the present application will proceed in the absence of a
stay, by the time the appeal of the [validity] order is resolved, the issues at
its core will become moot.
[12] These paragraphs, in my view,
constitute a combination of opinion and argument. There is no factual
foundation to support the bare and conclusive assertions. There is no
specificity regarding the application process, no disclosure as to known or
anticipated timelines and no information regarding any expedited deadline.
There are no facts contained within the affidavit as it pertains to irreparable
harm.
[13] Absent evidence of
irreparable harm, the second component of RJR is not met. Even accepting
the submissions of U.S. Steel’s counsel (which are not evidence) as to the
application process prescribed by the Federal Courts Rules,
S.O.R/98-106, (the Rules), there is no basis for a finding of irreparable harm.
Counsel complained that U.S. Steel does not know the case it has to meet and
cannot cross-examine the Crown’s witnesses before it has to respond. The
Crown’s application (filed July 17, 2009) must be supported by an affidavit. U.S.
Steel advanced neither evidence nor argument that the Crown’s documentation was
deficient to the extent that U.S. Steel did not know the case it had to meet,
or at all. If such deficiency exists, U.S. Steel ought to have addressed it on
this motion.
[14] As to cross-examination,
it is correct that, under the Rules, in matters proceeding as applications,
cross-examination is conducted after the affidavit evidence has been served.
Again, there was neither evidence nor argument regarding the nature of the
irreparable harm that would result because of this process. Even if this were a
situation where irreparable harm was self-evident (and it is not), it must be
stated as such.
[15] In relation to the
allegation of mootness, U.S. Steel’s position is that, if the very procedure
that is the subject of the appeal is implemented (in the T-1162 application),
the appeal as to process is rendered moot. This, it is said, renders any remedy
this Court could grant nugatory and accordingly, constitutes irreparable harm.
[16] The first difficulty in
this respect is, as discussed above, U.S. Steel’s failure to explain on this
motion what deficiencies exist with respect to the procedure. While counsel
spoke of a right to full answer and defence and a right of full disclosure,
there was no disclosure of the perceived frailties of the impugned procedure.
[17] Second, even if, for the
purposes of this motion, I were to accept U.S. Steel’s position as correct, it
assumes that an appeal rendered moot automatically gives rise to a finding of
irreparable harm. That is not so. As Rothstein J.A. (as he then was) explained
in El Quardi v. Canada (Solicitor General), 2005 FCA 42, 332 N.R. 76, if
such a proposition were adopted, it would apply to virtually all circumstances
in which a stay is sought and would essentially deprive the court of the
discretion to decide questions of irreparable harm on the facts of each case.
[18] Third, I am not
persuaded, if the T-1162 application continues and the application is
determined before the disposition of the appeal from the validity order (which
is speculative at this point) that this Court could not fashion an appropriate
remedy. It is not insignificant that U.S. Steel sought declaratory relief in
the Federal Court. Specifically, as noted earlier, with respect to section 40
of the ICA, it sought a declaration of
invalidity on the basis that it contravened section 11(d) of the Charter and
paragraph 2(e) of the Bill of Rights. If U.S. Steel were to succeed on appeal
(which is speculative at this point), it would be open to this Court to grant a
declaration of invalidity. If that were to occur, and U.S. Steel had been
unsuccessful in the T-1162 application (which is speculative at this point),
the declaration of invalidity would constitute grounds upon which to set aside
the judgment in the T-1162 application.
[19] Further, the Crown’s
point that U.S. Steel’s validity attack is premised on only two of the seven
options enumerated in paragraph 40(2)(a) of the ICA is well-taken. The prospect exists, if U.S.
Steel’s appeal were successful (which is speculative at this point) that this
Court would sever the offensive elements in which case the Federal Court could
still utilize the remaining options, if U.S. Steel were unsuccessful in the
T-1162 application (which is speculative at this point).
[20] All of which is to say,
the only remedy that would be unavailable to this Court would be to
retroactively alter the process in the T-1162 application. However, it does not
necessarily follow that an appeal from the validity order would be moot. In my
view, sufficient options would remain available to this Court to remedy any
harm sustained by U.S. Steel. That was not the situation in Bisaillon
and Bining where private information would become public and the breach
would be irreversible.
[21] U.S. Steel has not established
that it would suffer irreparable harm.
Balance of Convenience
[22] U.S. Steel argued that
the balance of convenience favours it because the constitutional issues are of
significant importance and widespread impact and there is no prejudice to the
Crown. It claimed that it is in the public interest to have the issues
determined with finality and it would be expedient and efficient to do so.
Last, it asserted that the violations of the Charter and the Bill of Rights
would be perpetrated if a stay is not granted.
[23] At the hearing, there
was debate as to whether the ICA is a public interest statute.
I need not make a determination as to whether it is or is not. It is apparent,
on its face, that it has a public interest dimension because it is aimed at
encouraging investment, economic growth and employment opportunities for the
benefit of Canadians. Additionally, it is aimed at ensuring that proposed
investments will not be injurious to national security. This is sufficient, in
my view, to bring it within the purview of the comments of the Chief Justice in
Harper v. Canada (Attorney General), [2000] 2 S.C.R. 764 (Harper)
that the motions judge must proceed on the basis that the law is directed to
the public good and serves a valid public purpose. The assumption of the public
interest in enforcing the law weighs heavily in the balance. The statement at
paragraph 9 of Harper, reproduced below, is apt.
The assumption of the
public interest in enforcing the law weighs heavily in the balance. Courts will
not lightly order that laws that Parliament or a legislature has duly enacted
for the public good are inoperable in advance of complete constitutional
review, which is always a complex and difficult matter. It follows that only in
clear cases will interlocutory injunctions against the enforcement of a law on
ground of alleged unconstitutionality succeed.
[24] To delay the commencement of
the T-1162 application would effectively suspend the application of the
legislation. U.S. Steel has not persuaded me that such an approach would itself
provide a public benefit. The balance of convenience favours the Crown.
[25] The motion will be
dismissed with costs.
Postscript
[26] Counsel for the parties
indicated at the hearing that they have agreed to an abridged schedule in
relation to the appeal from the validity order. Counsel for U.S. Steel
undertook to file a
formal motion to expedite the hearing of the appeal. I am
confident that the motion will be filed, on consent, forthwith.
“Carolyn
Layden-Stevenson”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-242-10
PLACE OF HEARING: Ottawa,
Ontario
DATE OF HEARING: July 21, 2010
REASONS FOR JUDGMENT BY: LAYDEN-STEVENSON J.A.
DATED: July 23, 2010
APPEARANCES:
|
Michael Barrack
Marie
Henein
Ronald
Podolny
|
FOR
THE APPELLANTS
|
|
John L. Syme
Jeffrey
G. Johnston
|
FOR
THE RESPONDENT
|
|
David
Wilson
|
FOR
THE INTERVENER:
Lakeside Steel
|
|
Paula
Turtle
|
FOR
THE INTERVENER:
United
Steelworkers
|
SOLICITORS OF RECORD:
|
Thornton Grout Finnigan LLP
Henein & Associates
Toronto,
Ontario
|
FOR
THE APPELLANTS
|
|
Myles J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT:
Attorney
General of Canada
|
|
Fasken
Martineau DuMoulin LLP
Toronto, Ontario
|
FOR
THE INTERVENER:
Lakeside
Steel
|
|
Canadian
Counsel for United Steelworkers
Toronto,
Ontario
|
FOR
THE INTERVENER:
United
Steelworkers
|
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