R. v. Nova Scotia Pharmaceutical Society

R. v. Nova Scotia Pharmaceutical Society
Collection
Supreme Court Judgments
Date
1992-07-09
Report
[1992] 2 SCR 606
Case number
22473
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; Iacobucci, Frank
On appeal from
Nova Scotia
Subjects
Appeal
Competition law
Constitutional law
Notes
SCC Case Information: 22473
Decision Content
R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606
Nova Scotia Pharmaceutical Society,
Pharmacy Association of Nova Scotia,
Lawtons Drug Stores Limited,
William H. Richardson, Empire Drugstores
Limited, Woodlawn Pharmacy Limited,
Nolan Pharmacy Limited,
Christopher D.A. Nolan, Blackburn Holdings
Limited, William G. Wilson,
Woodside Pharmacy Limited and Frank Forbes Appellants
v.
Her Majesty The Queen Respondent
and
The Attorney General for Ontario
and the Attorney General for Alberta Interveners
and
The Association québécoise des
pharmaciens propriétaires, Cumberland
Drugs (Merivale) Ltd., Kane's Super
Drugmart Corp. Ltd., Les Entreprises
Norpharm Inc., Escompte Chez Lafortune Inc.,
Famili‑Prix Inc., Le Groupe Jean Coutu (P.J.C.)
Inc., Groupe Pharmaceutique Focus Inc.,
Les Magasins Koffler de l'Est Inc.,
McMahon Essaim Inc., Super Escompte
Brouillet Inc., B. Mayrand Inc.,
Superpharm (Montréal) Ltée, Uniprix Inc.,
Pierre Bossé, François‑Jean Coutu,
Claude Gagnon, Guy Lanoue, Michel Lesieur,
Guy‑Marie Papillon and Jean‑Guy Prud'Homme Interveners
Indexed as: R. v. Nova Scotia Pharmaceutical Society
File No.: 22473.
1991: December 4; 1992: July 9.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and Iacobucci JJ.
on appeal from the nova scotia supreme court, appeal division
Constitutional law ‑‑ Charter of Rights ‑‑ Fundamental justice ‑‑ Vagueness ‑‑ Conspiracy to prevent or lessen competition unduly ‑‑ Whether word "unduly" in s. 32(1)(c) of Combines Investigation Act so vague as to infringe principles of fundamental justice ‑‑ Canadian Charter of Rights and Freedoms, s. 7 ‑‑ Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 32(1)(c), (1.1).
Constitutional law ‑‑ Charter of Rights ‑‑ Fundamental justice ‑‑ Mens rea ‑‑ Conspiracy to prevent or lessen competition unduly ‑‑ Whether mens rea required by s. 32(1)(c) of Combines Investigation Act inconsistent with principles of fundamental justice ‑‑ Canadian Charter of Rights and Freedoms, s. 7 ‑‑ Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 32(1)(c).
Appeal ‑‑ Supreme Court of Canada ‑‑ Jurisdiction ‑‑ Arguments on appeal ‑‑ Respondent seeking variation of Court of Appeal's reasons on mens rea issue ‑‑ No leave to appeal sought on this issue ‑‑ Issue arising from respondent's notice of intention ‑‑ Whether mens rea issue properly before Court ‑‑ Rules of the Supreme Court of Canada, SOR/ 83‑74, Rule 29(1), (2).
Combines ‑‑ Conspiracy to prevent or lessen competition unduly ‑‑ Mens rea ‑‑ Whether Crown must prove that accused intended to restrict competition unduly ‑‑ Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 32(1)(c) -- Canadian Charter of Rights and Freedoms, s. 7 .
Combines ‑‑ Conspiracy to prevent or lessen competition unduly ‑‑ Determination of "undueness" ‑‑ Distinction between questions of fact and questions of law ‑‑ Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 32(1)(c).
The appellants were charged with two counts of conspiracy to prevent or lessen competition unduly, contrary to s. 32(1)(c) of the Combines Investigation Act. Both counts related to the sale and offering for sale of prescription drugs and pharmacists' dispensing services prior to June 16, 1986. They moved for an order quashing the indictment, on the basis that ss. 32(1)(c), 32(1.1) and 32(1.3) of the Act violated ss. 7 , 11 (a) and 11 (d) of the Canadian Charter of Rights and Freedoms and were therefore invalid. The arguments raised revolved essentially on the issues of vagueness and mens rea. The Nova Scotia Supreme Court, Trial Division granted the motion and quashed the indictment. The Appeal Division allowed the Crown's appeal. The main issues raised in this appeal were (1) whether s. 32(1)(c) of the Act infringed s. 7 of the Charter because of vagueness arising from the use of the word "unduly"; and (2) whether s. 32(1) (c) infringed s. 7 by reason of the mens rea required by the offence.
Held: The appeal should be dismissed. Section 32(1)(c) does not violate s. 7 of the Charter .
(1) Vagueness
Vagueness can be raised under s. 7 of the Charter , since it is a principle of fundamental justice that laws may not be too vague. It can also be raised under s. 1 of the Charter in limine, on the basis that an enactment is so vague as not to satisfy the requirement that a limitation on Charter rights be "prescribed by law". Vagueness is also relevant to the "minimal impairment" stage of the Oakes test. Vagueness, when raised under s. 7 or under s. 1 in limine, involves similar considerations and should be considered a single concept. Vagueness as it relates to the "minimal impairment" branch of s. 1 merges with the related concept of "overbreadth".
What is referred to as "overbreadth", whether it stems from the vagueness of a law or from another source, remains no more than an analytical tool to establish a violation of a Charter right. It is always established by comparing the ambit of the provision touching upon a protected right with such concepts as the objectives of the State, the principles of fundamental justice, the proportionality of punishment or the reasonableness of searches and seizures, to name a few. Overbreadth has no autonomous value under the Charter and references to such a doctrine are superfluous.
The "doctrine of vagueness" is founded on the rule of law, particularly on the principles of fair notice to citizens and limitation of enforcement discretion. Fair notice to the citizen comprises a formal aspect ‑‑ an acquaintance with the actual text of a statute ‑‑ and a substantive aspect ‑‑ an understanding that certain conduct is the subject of legal restrictions. The crux of the concern for limitation of enforcement discretion is that a law must not be so devoid of precision in its content that a conviction will automatically flow from the decision to prosecute. The threshold for finding a law vague is relatively high. The factors to be considered include (a) the need for flexibility and the interpretative role of the courts; (b) the impossibility of achieving absolute certainty, a standard of intelligibility being more appropriate, and (c) the possibility that many varying judicial interpretations of a given disposition may exist and perhaps coexist.
The doctrine of vagueness can be summed up in one proposition: a law will be found unconstitutionally vague if it so lacks in precision as not to give sufficient guidance for legal debate -- that is, for reaching a conclusion as to its meaning by reasoned analysis applying legal criteria. The term "legal debate" is not used to express a new standard or one departing from that previously outlined by this Court. It is rather intended to reflect and encompass the same standard and criteria of fair notice and limitation of enforcement discretion viewed in the fuller context of an analysis of the quality and limits of human knowledge and understanding in the operation of the law. The criterion of absence of legal debate relates well to the rule of law principles that form the backbone of our polity. Legal provisions by stating certain propositions outline permissible and impermissible areas, and they also provide some guidance to ascertain the boundaries of these areas. They provide a framework, a guide as to how one may behave, but certainty is only reached in instant cases, where law is actualized by a competent authority. By setting out the boundaries of permissible and non‑permissible conduct, these norms give rise to legal debate. They bear substance, and they allow for a discussion as to their actualization. They therefore limit enforcement discretion by introducing boundaries, and they also sufficiently delineate an area of risk to allow for substantive notice to citizens. No higher requirement as to certainty can be imposed on law in our modern State. The modern State intervenes today in fields where some generality in the enactments is inevitable. The substance of these enactments must remain nonetheless intelligible. The standard of "absence of legal debate" applies to all enactments, irrespective of whether they are civil, criminal, administrative or other. Once the minimal general standard has been met, any further arguments as to the precision of the enactments should be considered at the "minimal impairment" stage of the s. 1 analysis.
Section 32(1)(c) of the Act and its companion interpretative provision s. 32(1.1) do not violate s. 7 of the Charter on grounds of vagueness. Section 32(1) (c) provides that "[e]very one who conspires, combines, agrees or arranges with another person . . . to prevent, or lessen, unduly, competition . . . is guilty of an indictable offence". This section embodies a general standard which represents an intelligible principle, one that carries meaning and that has conceptual force. While the word "unduly" does not have a precise technical meaning, it is a word of common usage which denotes a sense of seriousness. Considering further that s. 32(1) (c) is one of the oldest and most important parts of Canadian public policy in the economic field, and that it mandates a partial rule of reason inquiry into the seriousness of the competitive effects of the agreement, Parliament has sufficiently delineated the area of risk and the terms of debate to meet the constitutional standard. Moreover, s. 32(1)(c) is made even more precise when the content of the inquiry it mandates is considered. The rest of the Act and the case law have outlined a process of examination of market structure and behaviour of the parties to the agreement which eliminates any vagueness that might remain.
In light of the above, the indictment did not infringe s. 11 (a) of the Charter .
(2) Mens Rea
The mens rea issue is properly before this Court. Upon filing a notice of intention, the respondent Crown could request a variation of the Court of Appeal judgment on this issue, as long as it ultimately sought to uphold the disposition of the case in the Court of Appeal. Even if the Crown had not filed a notice of intention, the Court would have retained under Rule 29(1) of the Supreme Court Rules complete discretion to treat the whole case as open. A respondent may advance any argument to sustain the judgment below, and he is not limited to the appellant's points of law. This case fell plainly within Rule 29(1), and Rule 29(2), dealing with cross‑appeals, had no application.
The mens rea required by s. 32(1)(c) is not inconsistent with s. 7 of the Charter . While an element of fault must exist before punishment can be justified, a minimum fault requirement with respect to every criminal or regulatory offence satisfies the requirements of s. 7 . That fault may be demonstrated by proof of intent, whether subjective or objective, or by proof of negligent conduct, depending on the nature of the offence. Here, the offence set out in s. 32(1) (c) requires the proof of two fault elements: one subjective, the other objective. To satisfy the subjective element of the offence, the Crown must prove that the accused had the intention to enter into the agreement and had knowledge of the terms of that agreement. To satisfy the objective element, the Crown must prove that on an objective view of the evidence adduced the accused intended to lessen competition unduly -- i.e., that the evidence, viewed by a reasonable business person, establishes that the accused was aware or ought to have been aware that the effect of the agreement entered into would be to prevent or lessen competition unduly. Section 32(1) (c) does not therefore violate s. 7 of the Charter .
Cases Cited
Applied: R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154; considered: Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.), [1990] 1 S.C.R. 1123; Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; R. v. Keegstra, [1990] 3 S.C.R. 697; R. v. Oakes, [1986] 1 S.C.R. 103; Canada (Human Rights Commission) v. Taylor, [1990] 3 S.C.R. 892; Committee for the Commonwealth of Canada v. Canada, [1991] 1 S.C.R. 139; Osborne v. Canada (Treasury Board), [1991] 2 S.C.R. 69; R. v. Butler, [1992] 1 S.C.R. 452; R. v. Morgentaler, [1988] 1 S.C.R. 30; referred to: Container Materials Ltd. v. The King, [1942] S.C.R. 147; R. v. Vaillancourt, [1987] 2 S.C.R. 636; Howard Smith Paper Mills Ltd. v. The Queen, [1957] S.C.R. 403; Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486; Knox Contracting Ltd. v. Canada, [1990] 2 S.C.R. 338; R. v. Hess, [1990] 2 S.C.R. 906; Atlantic Sugar Refineries Co. v. Attorney General of Canada, [1980] 2 S.C.R. 644; Aetna Insurance Co. v. The Queen, [1978] 1 S.C.R. 731; Perka v. The Queen, [1984] 2 S.C.R. 232; Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489 (1982); Broadrick v. Oklahoma, 413 U.S. 601 (1973); R. v. Smith, [1987] 1 S.C.R. 1045; R. v. Goltz, [1991] 3 S.C.R. 485; R. v. Zundel (1987), 58 O.R. (2d) 129; Maynard v. Cartwright, 486 U.S. 356 (1988); Grayned v. City of Rockford, 408 U.S. 104 (1972); R. v. MacDougall, [1982] 2 S.C.R. 605; Papachristou v. City of Jacksonville, 405 U.S. 156 (1972); Kolender v. Lawson, 461 U.S. 352 (1983); Smith v. Goguen, 415 U.S. 566 (1974); Eur. Court H. R., Sunday Times case, judgment of 26 April 1979, Series A No. 30; Eur. Court H. R., Malone case, judgment of 2 August 1984, Series A No. 82; Eur. Court H. R., Kruslin case, judgment of 24 April 1990, Series A No. 176‑A; Eur. Court H. R., Huvig case, judgment of 24 April 1990, Series A, No. 176‑B; Eur. Court H. R., case of Silver and others, judgment of 25 March 1983, Series A No. 61; Eur. Court H. R., Barthold case, judgment of 25 March 1985, Series A No. 90; Eur. Court H. R., case of Müller and others, judgment of 24 May 1988, Series A No. 133; Eur. Court H. R., Leander case, judgment of 26 March 1987, Series A No. 116; R. v. Wigglesworth, [1987] 2 S.C.R. 541; R. v. Shubley, [1990] 1 S.C.R. 3; Weidman v. Shragge (1912), 46 S.C.R. 1; Stinson‑Reeb Builders Supply Co. v. The King, [1929] S.C.R. 276; R. v. Elliott (1905), 9 C.C.C. 505; R. v. J. J. Beamish Construction Co. (1967), 65 D.L.R. (2d) 260; General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641; R. v. J. W. Mills & Son Ltd., [1968] 2 Ex. C.R. 275; R. v. Canadian Coat and Apron Supply Ltd., [1967] 2 Ex. C.R. 53; R. v. Anthes Business Forms Ltd. (1975), 26 C.C.C. (2d) 349; R. v. Canadian General Electric Co. (1976), 34 C.C.C. (2d) 489; Association québécoise des pharmaciens propriétaires v. Canada (Procureur général), [1991] R.J.Q. 205; R. v. Metropolitan Toronto Pharmacists' Association (1984), 3 C.P.R. (3d) 233; R. v. Abitibi Power & Paper Co. (1960), 131 C.C.C. 201; NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984); Federal Trade Commission v. Indiana Federation of Dentists, 476 U.S. 447 (1986); C.J.E.C., Völk v. Établissements J. Vervaecke S.p.r.l., Case 5/69, [1969] E.C.R. 295; C.J.E.C., S.A. Cadillon v. Firma Höss Maschinenbau K.G., Case 1/71, [1971] C.J.E.C. Rep. 351; R. v. McGavin Bakeries Ltd. (1951), 3 W.W.R. 289; R. v. Northern Electric Co., [1955] 3 D.L.R. 449; Hills v. Canada (Attorney General), [1988] 1 S.C.R. 513.
Statutes and Regulations Cited
1984 Merger Guidelines, 49 Fed. Reg. 26823.
Act for the Prevention and Suppression of Combinations formed in restraint of Trade, S.C. 1889, c. 41.
Canadian Charter of Rights and Freedoms, ss. 1 , 2 , 7 , 8 , 11 (a), (d), (h).
Civil Code of Lower Canada, art. 1053.
Combines Investigation Act, R.S.C. 1970, c. C‑23 [am. 1974‑75‑76, c. 76, s. 14], ss. 30(2) [rep. & subs. 1986, c. 26, s. 28], 32(1)(c), (1.1), (1.3) [ad. idem, s. 30(3)], (2), (3), (6), 32.01 [ad. idem, s. 31], 51(7) [ad. idem, s. 47], 70 [idem].
Commission notice of 3 September 1986 on agreements of minor importance which do not fall under Article 85(1) of the Treaty establishing the European Economic Community, O.J.E.C., 12 September 1986, No. C 231/2.
Commission Regulation (EEC) No. 1983/83 of 22 June 1983 on the application of Article 85(3) of the Treaty to categories of exclusive distribution agreements, O.J.E.C., 30 June 1983, No. L 173/1, arts. 1, 2.
Competition Act, R.S.C., 1985, c. C‑34 [am. c. 19 (2nd Supp.), s. 19 ], ss. 34(2) [rep. & subs. idem, s. 28 ], 45(1)(c), (2), (2.2) [ad. idem, s. 30(3) ], 45.1 [ad. idem, s. 31 ], 79(7) [idem, s. 45 ], 98 [idem].
Constitution of the United States, First Amendment, Fifth Amendment, Eighth Amendment, Fourteenth Amendment.
Criminal Code, R.S.C., 1985, c. C‑46, ss. 19 , 219 , 222 ‑240.
European Convention for the Protection of Human Rights and Fundamental Freedoms, 213 U.N.T.S. 222, Arts. 8(2), 9(2), 10(2), 11(2).
Protocol No. 4 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, securing certain rights and freedoms other than those included in the Convention and in the first Protocol thereto, Europ. T.S. No. 46, Art. 2(3).
Rules of the Supreme Court of Canada, SOR/83‑74, r. 29(1) [rep. & subs. SOR/88‑247, s. 10], (2).
Sherman Act, c. 647, 26 Stat. 209 (1890), s. 1 (codified as amended 15 U.S.C. §§ 1‑7 (1982)).
Treaty establishing the European Economic Community, Art. 85.
Authors Cited
Amselek, Paul. "La teneur indécise du droit" (1991), 107 Rev. dr. publ. 1199.
Areeda, Phillip E. Antitrust Law: An Analysis of Antitrust Principles and Their Application, vol. 7. Boston: Little, Brown & Co., 1987.
Areeda, Phillip E. and Herbert Hovenkamp. Antitrust Law: An Analysis of Antitrust Principles and Their Application (1990 Supplement). Boston: Little, Brown & Co., 1990.
Baudouin, Jean‑Louis. Les obligations, 3rd ed. Cowansville, Qué.: Éditions Yvon Blais Inc., 1989.
Blaau, Loammi C. "The Rechtsstaat Idea Compared with the Rule of Law as a Paradigm for Protecting Rights" (1990), 107 S. Afr. L.J. 76.
Carré de Malberg, R. Contribution à la théorie générale de l'État, t. 1. Paris: Sirey, 1920.
Chevallier, Jacques. "L'État de droit" (1988), 104 Rev. dr. publ. 313.
Chitty on Contracts: General Principles, 25th ed. London: Sweet & Maxwell, 1983.
Colvin, Eric. "Criminal Law and The Rule of Law". In Patrick Fitzgerald, ed., Crime, Justice & Codification: Essays in commemoration of Jacques Fortin. Toronto: Carswell, 1986, 125.
Dunlop, Bruce, David McQueen and Michael Trebilcock. Canadian Competition Policy: A Legal and Economic Analysis. Toronto: Canada Law Book Inc., 1987.
Henry, Jean‑Pierre. "Vers la fin de l'État de droit ?" (1977), 93 Rev. dr. publ. 1207.
Jeffries, Jr., John Calvin. "Legality, Vagueness, and the Construction of Penal Statutes" (1985), 71 Va. L. Rev. 189.
Neumann, Franz. The Rule of Law: Political Theory and the Legal System in Modern Society. Leamington Spa, Warwirckshire: Berg Publishers Ltd., 1986.
Rogerson, Carol. "The Judicial Search for Appropriate Remedies Under the Charter : The Examples of Overbreadth and Vagueness". In Robert J. Sharpe, ed., Charter Litigation. Toronto: Butterworths, 1987, 233.
Stanbury, W. T. Legislation to Control Agreements in Restraint of Trade in Canada: Review of the Historical Record and Proposals for Reform. National Conference on the Centenary of Competition Law and Policy in Canada, October 1989.
Stanbury, W. T., and G. B. Reschenthaler. "Reforming Canadian Competition Policy: Once More unto the Breach" (1981), 5 Can. Bus. L.J. 381.
Tribe, Laurence H. American Constitutional Law, 2nd ed. Mineola, N.Y.: Foundation Press, Inc., 1988.
APPEAL from a judgment of the Nova Scotia Supreme Court, Appeal Division (1991), 102 N.S.R. (2d) 222, 279 A.P.R. 222, 80 D.L.R. (4th) 206, 64 C.C.C. (3d) 129, 36 C.P.R. (3d) 173, 7 C.R.R. (2d) 352, setting aside a judgment of the Trial Division (1990), 98 N.S.R. (2d) 296, 263 A.P.R. 296, 73 D.L.R. (4th) 500, 59 C.C.C. (3d) 30, 32 C.P.R. (3d) 259, allowing the appellants' motion to quash the indictment. Appeal dismissed.
Joel Fichaud, H. E. Wrathall, Q.C., and Catherine Walker, for the appellants.
Michael R. Dambrot, Q.C., Calvin S. Goldman, Q.C., and John S. Tyhurst, for the respondent.
M. Philip Tunley and David B. Butt, for the intervener the Attorney General for Ontario.
Bart Rosborough, for the intervener the Attorney General for Alberta.
Yves Bériault and Madeleine Renaud, for the interveners the Association québécoise des pharmaciens propriétaires et al.
//Gonthier J.//
The judgment of the Court was delivered by
Gonthier J. --
I. Facts and Proceedings
The twelve appellants were indicted on May 31, 1990, with two counts of conspiracy to prevent or lessen competition unduly, contrary to s. 32(1)(c) of the Combines Investigation Act, R.S.C. 1970, c. C-23. Both counts related to the sale and offering for sale of prescription drugs and pharmacists' dispensing services between January 1, 1974 and June 16, 1986, for the first, and between July 1, 1976 and June 16, 1986, for the second. The trial was set to begin in October of 1990.
On August 21, 1990, the appellants made a motion for an order to quash the indictment, on the basis that ss. 32(1)(c), 32(1.1) and 32(1.3) of the Act violated ss. 7 , 11 (a) and 11 (d) of the Canadian Charter of Rights and Freedoms and were therefore invalid. The arguments raised revolved essentially on the issues of vagueness and mens rea. On September 5, 1990, Roscoe J. of the Nova Scotia Supreme Court, Trial Division, allowed the motion and quashed the indictment: (1990), 98 N.S.R. (2d) 296, 263 A.P.R. 296, 73 D.L.R. (4th) 500, 59 C.C.C. (3d) 30, 32 C.P.R. (3d) 259. The respondent appealed to the Nova Scotia Supreme Court, Appeal Division. On April 24, 1991, a unanimous bench (Clarke C.J.N.S., Jones and Hallett JJ.A.) allowed the appeal: (1991), 102 N.S.R. (2d) 222, 279 A.P.R. 222, 80 D.L.R. (4th) 206, 64 C.C.C. (3d) 129, 36 C.P.R. (3d) 173, 7 C.R.R. (2d) 352. A notice of appeal was filed in this Court on May 22, 1991.
II. Relevant Statutory Provisions
Combines Investigation Act
32. (1) Every one who conspires, combines, agrees or arranges with another person
. . .
(c) to prevent, or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance upon persons or property,
. . .
is guilty of an indictable offence and is liable to imprisonment for five years or a fine of one million dollars or to both.
The Act was amended in 1976 by S.C. 1974-75-76, c. 76, also known as "Stage I" of competition law reform. Section 32(1.1) was then added:
(1.1) For greater certainty, in establishing that a conspiracy, combination, agreement or arrangement is in violation of subsection (1), it shall not be necessary to prove that the conspiracy, combination, agreement or arrangement, if carried into effect, would or would be likely to eliminate, completely or virtually, competition in the market to which it relates or that it was the object of any or all of the parties thereto to eliminate, completely or virtually, competition in that market.
In 1986, in the course of "Stage II" of the reform, S.C. 1986, c. 26, further added s. 32(1.3) to the Act (renamed the Competition Act ):
(1.3) For greater certainty, in establishing that a conspiracy, combination, agreement or arrangement is in contravention of subsection (1), it is necessary to prove that the parties thereto intended to and did enter into the conspiracy, combination, agreement or arrangement, but it is not necessary to prove that the parties intended that the conspiracy, combination, agreement or arrangement have an effect set out in subsection (1).
These sections are now respectively known as ss. 45(1) (c), (2) and (2.2) of the Competition Act, R.S.C., 1985, c. C-34 .
III. Judgments Below
Nova Scotia Supreme Court, Trial Division
On the mens rea issue, Roscoe J. reviewed the case law and concluded that s. 32(1)(c) of the Act requires the Crown to prove only that the accused intended to enter into an agreement, the effect of which, if carried out, would be to lessen competition, but not that it also intended to prevent or lessen competition unduly. Relying on R. v. Vaillancourt, [1987] 2 S.C.R. 636, she found that s. 32(1)(c) creates a truly criminal offence, and that the absence of a subjective mens rea requirement with respect to the lessening of competition leaves the possibility that the "morally innocent" be convicted. She therefore concluded that s. 32(1)(c) violates s. 7 of the Charter .
On the vagueness issue, Roscoe J., after having considered the Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.), [1990] 1 S.C.R. 1123 (hereinafter the "Prostitution Reference"), examined the case law interpreting the word "unduly" in s. 32(1)(c) of the Act. She was of the opinion that the only test that provided a sufficient degree of certainty to meet the standards of s. 7 was the "virtual elimination of competition" test enunciated by Cartwright J. in Howard Smith Paper Mills Ltd. v. The Queen, [1957] S.C.R. 403. Since that test had been repealed by the enactment in 1976 of s. 32(1.1), Roscoe J. held that s. 32(1)(c) was too vague and violated s. 7 of the Charter . She also held the indictment too vague, on the basis that the mere repetition of the words of s. 32(1) (c) in the indictment could not give sufficient notice and information to the accused, and deprived them of their right to a full answer and defence under ss. 7 , 11 (a) and 11 (d) of the Charter .
Roscoe J. considered that s. 1 of the Charter could not be applied to cure the violations of s. 7 flowing from the mens rea requirement, following the dictum of Lamer J. (as he then was) in Re B.C. Motor Vehicle Act, [1985] 2 S.C.R. 486, as well as appellate pronouncements on the issue. She also considered that the vagueness of s. 32(1)(c) could not make it a limit "prescribed by law" within the meaning of s. 1 of the Charter , and thus that this violation of s. 7 could not be saved either. She declared ss. 32(1)(c) and 32(1.1) of the Act invalid and of no force and effect, and quashed the indictment.
Supreme Court of Nova Scotia, Appeal Division (1991), 64 C.C.C. (3d) 129
For the Court, on the mens rea issue, Clarke C.J.N.S. viewed Atlantic Sugar Refineries Co. v. Attorney General of Canada, [1980] 2 S.C.R. 644, as having effected a change in law. Following the decision of this Court, he held that s. 32(1)(c) requires the Crown to prove that the accused intended unduly to lessen competition. Furthermore, Clarke C.J.N.S. characterized s. 32(1)(c) as a criminal offence, even though it is found in a regulatory statute, citing Knox Contracting Ltd. v. Canada, [1990] 2 S.C.R. 338, in support. In the light of Vaillancourt and R. v. Hess, [1990] 2 S.C.R. 906, he held that "where a statutory provision creates an offence and imposes the possibility of imprisonment as a penalty upon conviction, some degree of mens rea must attach to each essential element of the offence if the provision is to comply with s. 7 of the Charter " (p. 146). Given his conclusion on the substance of the section, there was no infringement of s. 7 .
Clarke C.J.N.S. did not rule on the validity of s. 32(1.3) of the Act. Since it effected a substantive change in the law by removing the subjective mens rea requirement with respect to the lessening of competition, this section could not have a retroactive effect, and therefore it did not apply to the charges against the accused.
With respect to the vagueness argument, Clarke C.J.N.S. considered that the impugned provision must be assessed in light of the Act as a whole and of the relevant case law. First of all, in ss. 32(2) and 32(3), the Act enumerates subject-matters that will or will not attract the application of s. 32(1). Section 32(1.1) indicates that a virtual elimination of competition is not necessary to constitute the offence.
Secondly, case law has established that the inquiry must focus on the effect of the agreement on competition in the related market. A host of considerations then come into play, constituting a framework for decision. Clarke C.J.N.S. could not find s. 32(1)(c) vague, as it has been given meaning by the courts for a long period of time, leading to convictions and acquittals. The word "unduly" actually benefits the accused; even though it defies precise measurement, it is of common usage, and denotes a sense of seriousness. Parties to an impugned agreement were in the best position to assess the likely effect on competition.
Section 32(1)(c) was held by Clarke C.J.N.S. not to be unconstitutionally vague, and consequently the indictment was held not to violate ss. 7 , 11 (a) or 11 (d) of the Charter . The appeal was allowed.
IV. Issues
The following constitutional questions were stated by the Chief Justice on July 11, 1991:
1.Is s. 32(1)(c) of the Combines Investigation Act, R.S.C. 1970, c. C‑23 (now s. 45(1) (c) of the Competition Act, R.S.C., 1985, c. C‑34 ) in whole or in part inconsistent with s. 7 of the Canadian Charter of Rights and Freedoms ?
2.Is s. 32(1.1) of the Combines Investigation Act, R.S.C. 1970, c. C‑23 (now s. 45(2) of the Competition Act, R.S.C., 1985, c. C‑34 ) inconsistent with s. 7 of the Canadian Charter of Rights and Freedoms ?
3.If the answer to questions 1 or 2 is yes, is the infringement nevertheless justified under s. 1 of the Canadian Charter of Rights and Freedoms ?
Given the structure of the arguments presented by the parties, I propose to deal with the various issues as follows:
I.The alleged unconstitutional vagueness of ss. 32(1)(c) and 32(1.1) of the Act and of the indictment;
II.A.The mens rea required by s. 32(1)(c) of the Act; and
B.The constitutionality of the mens rea requirement of s. 32(1)(c) of the Act.
In their notice of appeal, the appellants raised only the vagueness issue as a ground of appeal. By a notice of intention of June 20, 1991, the respondent indicated that it would seek a variation of the appeal judgment on the mens rea issue. The respondent asks this Court to hold that s. 32(1)(c) does not require the Crown to prove intent to lessen competition, and that s. 32(1)(c) nevertheless does not violate the Charter . The appellants contend that the respondent was forbidden to raise the mens rea issue without having obtained prior leave from the Court under Rule 29(2) of the Rules of the Supreme Court of Canada, SOR/83-74, since the respondent is indeed cross-appealing from the appeal judgment.
The respondent through its notice of intention is not in fact launching a cross-appeal from the decision of the Supreme Court of Nova Scotia, Appeal Division. It does not seek to modify the disposition of the case. It only aims at varying the reasons given for that disposition. This case falls plainly within Rule 29(1) of the Rules of the Supreme Court. Rule 29(2), dealing with cross-appeals, has no application here. Upon filing a notice of intention, the respondent could request a variation of the Court of Appeal judgment on the mens rea issue, as long as it ultimately upholds its disposition of the case. Even if the respondent had not filed a notice of intention, the Court would have retained under Rule 29(1) complete discretion to treat the whole case as open, as was done in Perka v. The Queen, [1984] 2 S.C.R. 232. As Dickson J. (as he then was) wrote at p. 240, "it is open to a respondent to advance any argument to sustain the judgment below, and he is not limited to appellants' points of law."
The mens rea issue is therefore properly before this Court.
V.Sections 32(1)(c) and 32(1.1) of the Act and Vagueness under Section 7 of the Charter
Since vagueness is a central issue in this case, it is useful to review the relevant principles and their application before dealing with the merits of the case.
A. Vagueness under the Canadian Charter of Rights and Freedoms
1. The Case Law of this Court
So far eight cases have given rise to discussions of vagueness issues under the Charter . A review of them will show that, while the theme of vagueness and the related notion of overbreadth have appeared in many decisions of this Court, giving rise to some questions as to the proper place of these concepts within Charter analysis, few statements have been made to substantiate the notion of vagueness, and its relationship with overbreadth.
Beetz J., in his opinion in R. v. Morgentaler, [1988] 1 S.C.R. 30, responded to the argument that s. 251(4)(c) of the Criminal Code, R.S.C. 1970, c. C‑34, was vague and offended s. 7 of the Charter . This section made abortions conditional upon the obtention of a doctor's certificate to the effect that the life or health of the woman was in danger. Beetz J. held that the standard of "likely danger to health" was not unduly vague. Since the law contemplated that the danger to health would be assessed by a medical practitioner exercising a medical judgment, some measure of flexibility was acceptable. "Flexibility and vagueness are not synonymous", wrote Beetz J. at p. 107.
In Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927, it was submitted that ss. 248 and 249 of the Quebec Consumer Protection Act, R.S.Q., c. P-40.1, were too vague to constitute a limit prescribed by law. Sections 248 and 249 forbid commercial advertising directed at persons under 13 years of age. Section 249 lists three factors to be taken into account when determining whether an advertisement was so directed, the last of which is the time and place of the advertisement. Then s. 249 enunciates that the mere fact that the advertisement was printed or broadcast in circumstances where it was intended for persons 13 and over or for all persons does not create a presumption that the advertisement is not directed at persons under 13. It was argued that s. 249 was confusing and left too much scope for discretion. The majority of the Court disagreed. It found that the text of the section could be given a sensible construction. On the issue of discretion, Dickson C.J., Lamer J. (as he then was) and Wilson J. wrote at p. 983:
Absolute precision in the law exists rarely, if at all. The question is whether the legislature has provided an intelligible standard according to which the judiciary must do its work. The task of interpreting how that standard applies in particular instances might always be characterized as having a discretionary element, because the standard can never specify all the instances in which it applies. On the other hand, where there is no intelligible standard and where the legislature has given a plenary discretion to do whatever seems best in a wide set of circumstances, there is no "limit prescribed by law".
Then came the Prostitution Reference, supra, where it was alleged that ss. 193 and 195.1(1)(c) of the Criminal Code, R.S.C. 1970, c. C-34, were impermissibly vague under s. 7 of the Charter . Lamer J. (as he then was) devoted a long passage in his reasons to the "void for vagueness" doctrine. Lamer J. ascribed two rationales for the invalidation of vague laws under s. 7 of the Charter at p. 1152, that is the need (1) to give citizens fair notice of the consequences of their conduct, so that they may avoid liability and benefit from a full answer and defence should they be tried and (2) to limit law enforcement discretion. He then reviewed the distinction between vagueness and overbreadth. At page 1155, Lamer J. pointed out that vagueness has been argued both under s. 7 and s. 1 of the Charter . He made some remarks on the issue: the vagueness doctrine does not require absolute certainty of laws, the interpretative role of the courts must not be overlooked and the possibility of varying interpretations is not fatal (at pp. 1156-57). He then proceeded to consider the impugned sections of the Code and found them not in violation of s. 7 of the Charter on account of vagueness. For the majority, Dickson C.J. endorsed Lamer J.'s analysis. While in dissent, Wilson J. agreed with the majority on this point.
Lamer J. also stated that even if the section was not unconstitutionally vague, it could nevertheless be found overly broad under s. 1 analysis. The majority did not consider this to be the case, but Wilson J. found the provisions too broad to meet the "minimal impairment" test. The Prostitution Reference established the doctrine of vagueness as one of the fundamental principles of justice under s. 7 of the Charter , and also differentiated vagueness and overbreadth.
This distinction came to the fore in R. v. Keegstra, [1990] 3 S.C.R. 697. This time the question was considered under the "minimal impairment" branch of the Oakes test (developed in R. v. Oakes, [1986] 1 S.C.R. 103). It had been argued that s. 319(2) of the Criminal Code, R.S.C., 1985, c. C-46 , was too broad in its ambit ("wilfully promot[ing] hatred against any identifiable group"), and could include expression that bears no relationship with Parliament's objective in enacting the statute. Furthermore, the vagueness of s. 319(2) was also raised. For the majority, Dickson C.J. blended both concepts. After a careful analysis of the wording of s. 319(2) and of the defences open to the accused in s. 319(3) , Dickson C.J. concluded that the subsection did pass the "minimal impairment" test. McLachlin J. in dissent focused more precisely on the overbreadth of the section in her reasons, even though she relied on the same elements as Dickson C.J. Keegstra does not bring anything new to the principles that had already been developed, and the majority opinion does not distinguish between vagueness and overbreadth quite as clearly as in the Prostitution Reference.
In Canada (Human Rights Commission) v. Taylor, [1990] 3 S.C.R. 892, a companion case to Keegstra, McLachlin J. in dissent commented on the proper place of vagueness within Charter analysis. She wrote at p. 956:
[T]he difficulty in ascribing a constant and universal meaning to the terms used [in the impugned section] is a factor to be taken into account in assessing whether the law is "demonstrably justified in a free and democratic society". But I would be reluctant to circumvent the entire balancing analysis of the s. 1 test by finding that the words used were so vague as not to constitute a "limit prescribed by law", unless the provision could truly be described as failing to offer an intelligible standard.
McLachlin J. seems to envision a relatively stringent standard for vagueness, if it is to cut short the s. 1 analysis through a finding that the disposition is not law within the meaning of "prescribed by law".
In Committee for the Commonwealth of Canada v. Canada, [1991] 1 S.C.R. 139, L'Heureux-Dubé J. discussed the vagueness and overbreadth of s. 7 of the Government Airport Concession Operations Regulations, SOR/79-373. She was of the opinion that a statutory disposition, if too vague, would not constitute a limit "prescribed by law", while if overbroad, may not pass the Oakes test (at p. 208). In her discussion of vagueness, she linked this concept with the rule of law, and restated the dual concerns of fair notice and limitation of enforcement discretion that had been formulated by Lamer J. in the Prostitution Reference. As for overbreadth, L'Heureux-Dubé J. considered that this doctrine was more or less subsumed within the "minimal impairment" branch of the Oakes test.
Further in Osborne v. Canada (Treasury Board), [1991] 2 S.C.R. 69, the vagueness and overbreadth of s. 33 of the Public Service Employment Act, R.S.C., 1985, c. P-33 , were at issue under the s. 1 analysis. For the majority, Sopinka J. adopted the statements made by McLachlin J. in Taylor and added at pp. 94-95:
Vagueness can have constitutional significance in at least two ways in a s. 1 an