3510395 Canada Inc. v. Canada (Attorney General)

3510395 Canada Inc. v. Canada (Attorney General)
Court (s) Database
Federal Court of Appeal Decisions
Date
2020-06-05
Neutral citation
2020 FCA 103
File numbers
A-382-17, A-383-17
Notes
Reported Decision A correction was made on February 1, 2022.
Decision Content
Date: 20200605
Dockets: A-382-17
A-383-17
Citation: 2020 FCA 103
CORAM:
NADON J.A.
WEBB J.A.
WOODS J.A.
Docket: A-382-17
BETWEEN:
3510395 CANADA INC.
Appellant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
Docket: A-383-17
BETWEEN:
3510395 CANADA INC.
Appellant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
Heard at Toronto, Ontario, on April 29, 2019.
Judgment delivered at Ottawa, Ontario, on June 5, 2020.
REASONS FOR JUDGMENT BY:
NADON J.A.
CONCURRED IN BY:
WEBB J.A.
WOODS J.A.
Date: 20200605
Dockets: A-382-17
A-383-17
Citation: 2020 FCA 103
CORAM:
NADON J.A.
WEBB J.A.
WOODS J.A.
Docket:A-382-17
BETWEEN:
3510395 CANADA INC.
Appellant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
Docket: A-383-17
BETWEEN:
3510395 CANADA INC.
Appellant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT
NADON J.A.
I. Introduction
[1] Before us are two appeals by 3510395 Canada Inc., operating as CompuFinder (the appellant) in respect of two related compliance and enforcement decisions of the Canadian Radio-Television and Telecommunications Commission (the CRTC). In the first decision, the CRTC dismissed the appellant’s constitutional challenge to An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, S.C. 2010, c. 23 (CASL or the Act). The CRTC determined that the Act is intra vires Parliament’s trade and commerce power under section 91(2) of the Constitution Act, 1867 (the Constitution Act), and that its infringement of freedom of expression pursuant to section 2(b) of the Canadian Charter of Rights and Freedoms, s 8, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11 (the Charter) is justified under section 1. In the second decision, the CRTC found that the appellant had committed four violations of CASL and imposed a $200,000 administrative monetary penalty (AMP).
[2] The appellant appeals the CRTC’s decisions pursuant to subsection 27(1) of CASL, which permits appeal to this Court of CRTC decisions made under CASL.
[3] For the reasons that follow, I would dismiss the appeals with costs.
II. Applicable Legislation
[4] A full list of CASL’s provisions challenged by the appellant can be found in Appendix A. Key provisions are reproduced throughout the analysis section of these reasons.
III. Facts
[5] CASL was enacted by Parliament in 2010 and came into force in 2014. It provides for the regulation of certain forms of commercial conduct relating to electronic commerce (e-commerce), most notably the sending of commercial electronic messages (CEMs).
[6] The appellant was a small business located in Morin Heights, Québec. It began operations in 1998 and offered approximately 300 professional training courses in areas such as team management, administrative skills, budget planning and effective use of social media. E‑mail marketing was the appellant’s primary means of business development.
[7] The appellant conducted three advertising campaigns between July and September 2014 during which it sent 317 CEMs to various recipients. These CEMs promoted the appellant’s educational and training services and were sent primarily to individuals working in the province of Quebec. On March 5, 2015, following an investigation, the appellant was issued a Notice of Violation (NOV) pursuant to section 22 of CASL. The NOV alleged that the appellant had not obtained recipients’ consent prior to sending the CEMs in question, contrary to paragraph 6(1)(a) of CASL. The NOV also alleged that some of the CEMs did not contain a functioning “unsubscribe” link, contrary to paragraph 6(2)(c) of CASL. The NOV imposed a $1,100,000 AMP on the appellant.
[8] On May 15, 2015, the appellant made representations to the CRTC pursuant to section 24 of CASL. The appellant denied it had violated CASL, complained of bias in the investigation into its activities and argued that it had received inadequate disclosure in relation to the proceedings. The appellant also asserted that CASL is, in any event, unconstitutional. On October 19, 2017, the CRTC rendered a decision in the matter pursuant to subsection 25(1) of CASL. The CRTC bifurcated its decision into Compliance and Enforcement Decision CRTC 2017-367 (the Constitutional Decision) addressing CASL’s constitutionality, and Compliance and Enforcement Decision CRTC 2017-368 (the Notice of Violation Decision) addressing the appellant’s alleged violations of CASL.
IV. CRTC’s Decisions
[9] In the Constitutional Decision, the CRTC determined that CASL is both valid and Charter compliant. The CRTC then found, in the Notice of Violation Decision, that the appellant had indeed violated CASL.
A. Constitutional Decision
(1) Jurisdiction
[10] The CRTC cited Hunt v. T&N plc, [1993] 4 S.C.R. 289, 109 D.L.R. (4th) 16 and Nova Scotia (Workers’ Compensation Board) v. Martin, 2003 SCC 54, [2003] 2 S.C.R. 504 in support of its jurisdiction to determine the division of powers and Charter issues respectively. The key requirement to ground a tribunal’s jurisdiction over either type of constitutional question is that the tribunal must have the authority to determine questions of law. Subsection 34(1) of CASL grants the CRTC the ability to decide any question of law or fact in any proceeding under the Act. The parties agree that the CRTC had jurisdiction to address both constitutional questions.
(2) CASL is Intra Vires Parliament
[11] The CRTC found that CASL is intra vires Parliament after a two-step division of powers analysis, looking first at the Act’s pith and substance and secondly at its proper classification under the heads of power enumerated in the Constitution Act.
[12] The CRTC found that the main thrust of the Act “deals with electronic commerce” (Constitutional Decision at para. 43). In reaching this conclusion, the CRTC considered that CASL regulates other online threats besides CEMs. The CRTC determined that the direct effect of CASL is to regulate not just CEMs, but also the alteration of transmission data in electronic messages and the installation of unwanted computer programs in the course of commercial activities. The overall effect of CASL, according to the CRTC, is to implement a scheme to help ensure “the viability of e-commerce throughout Canada” (Constitutional Decision at para. 47).
[13] At the classification stage of its analysis, the CRTC considered the five indicia of valid general trade and commerce legislation set out in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641, 58 D.L.R. (4th) 255 [General Motors]. The CRTC determined that CASL is a general regulatory scheme under the oversight of a regulatory agency, and that it deals with issues of crucial importance to the national economy. Central to the latter conclusion was the CRTC’s finding that electronic threats are not confined to a set or group of participants in any economic sector or to a specific region in Canada. The CRTC also determined that the provinces would be unable to achieve the scheme’s goals for two reasons: first, because the matters regulated have national effects implicating all sectors of Canada’s digital economy, and, secondly, because of the provinces’ inherent prerogative to resile from any interprovincial scheme. Finally, the CRTC found that the absence of any province from a CASL-like scheme would jeopardize its successful operation.
[14] The CRTC ultimately concluded that CASL’s pith and substance falls within Parliament’s power over general trade and commerce pursuant to section 91(2) of the Constitution Act. The CRTC thus found CASL intra vires Parliament.
(3) CASL Violates Section 2(b) of the Charter, but Is Justified Under Section 1
[15] The Attorney General conceded that CASL’s impugned provisions infringe section 2(b) of the Charter because they prohibit the sending of unsolicited CEMs that convey meaning. The CRTC accepted this concession.
[16] The CRTC conducted a section 1 analysis according to the test set out in R. v. Oakes, [1986] 1 S.C.R. 103, 26 D.L.R. (4th) 200 and modified in Dagenais v. Canadian Broadcasting Corp., [1994] 3 S.C.R. 835, 120 D.L.R. (4th) 12.
[17] The CRTC first determined that CASL is a limit prescribed by law. The CRTC held that the definition of CEM, though broad, is not vague as it focuses on electronic messages that encourage participation in a commercial activity, provides a list of examples of targeted conduct and several of its key terms are defined in the Act. The CRTC found that the definition was sufficiently precise to limit enforcement discretion and delineate a zone of risk. The CRTC cited Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927, 58 D.L.R. (4th) 577 for the proposition that certainty is not the applicable standard: “[a]bsolute 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.” (Constitutional Decision at para. 90). The CRTC answered this question in the affirmative.
[18] The CRTC next determined that CASL’s objective is sufficiently important to warrant limiting a Charter right. The CRTC located CASL’s objective in the Act’s title: “to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities…” The CRTC found this objective to be pressing and substantial based on evidence of the negative impacts that unsolicited commercial electronic messages (spam) and related electronic threats can have on e-commerce in Canada.
[19] At the first stage of the three-pronged proportionality analysis the CRTC found that CASL’s limits on free expression are rationally connected to its objectives. The CRTC considered it logical and reasonable to conclude that a prohibition against unsolicited CEMs would reduce spam and therefore spam’s adverse effects on Canadian businesses and consumers. The CRTC also noted that, based on the record, CASL appears to be having its intended effect.
[20] The CRTC next determined that CASL passes the minimal impairment test. The CRTC found the Act sufficiently tailored to impair Charter rights no more than necessary. Although less restrictive alternatives exist, the CRTC considered that these would not be equally effective at achieving the government’s objective of preventing the negative effects associated with spam. According to the CRTC, CASL’s various exceptions and exclusions substantially lessen its deleterious effects on section 2(b) and bring it within a range of reasonable alternatives as per RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199, 127 D.L.R. (4th) 1.
[21] Finally, the CRTC found CASL’s benefits proportional to its deleterious effects on free expression. The CRTC first noted that CASL’s infringement relates specifically to commercial expression. The CRTC cited R. v. Keegstra, [1990] 3 S.C.R. 697, [1991] 2 W.W.R. 1 [Keegstra] for the proposition that this type of expression lies outside the core values protected by section 2(b). The CRTC then considered that the record shows that CASL’s negative effects include causing some businesses to adjust, curtail or even terminate their e-mail marketing practices, and creating a perception among some Canadian businesses that they can no longer compete with their American counterparts. However, the CRTC considered that the evidence also shows no material lessening of the effectiveness of electronic marketing and, at the same time, a 37% drop in spam originating from Canada. The CRTC furthermore observed that, while CASL does infringe freedom of expression, the targeted conduct is still permitted so long as the sender obtains recipient consent, identifies itself and includes an unsubscribe mechanism. Thus, CASL is far from a total ban on commercial speech in general or CEMs in particular.
[22] The CRTC found that the Attorney General had met its burden of showing that the deleterious effects of CASL’s limits on free expression do not outweigh the limitations’ benefits to the greater public good, which include increasing confidence in e-commerce and thereby benefitting the economy as a whole.
[23] The CRTC concluded that CASL’s violation of freedom of expression guaranteed by section 2(b) of the Charter is justified under section 1.
(4) Impugned Provisions Do Not Trigger Section 11 of the Charter
[24] The CRTC held that the impugned provisions of CASL do not create an offence for the purposes of section 11 of the Charter. The CRTC applied the two-part test from Guindon v. Canada, 2015 SCC 41, [2015] 3 S.C.R. 3 [Guindon] for determining whether a statutory infraction constitutes an offence within the meaning of section 11. First, the CRTC examined the objectives of the legislation and the process leading to the imposition of the sanction and concluded that the proceedings were not criminal in nature. According to the CRTC, the objectives of the proceedings, considered in their full legislative context, have a regulatory purpose namely deterring spam and other electronic threats. The purpose of the proceedings, in the CRTC’s view, amounts to regulating a limited sphere of activity. The CRTC also found that the process leading to a sanction does not bear any of the hallmarks of a criminal proceeding. For instance, CASL does not use language typically associated with the criminal process, such as “guilt”, “acquittal”, “indictment”, “summary conviction”, “prosecution”, or “accused”, but instead uses terms such as “balance of probabilities”, “due diligence”, “penalty”, “undertaking”, and “representations”. Neither do proceedings under CASL involve arrest, the laying of charges, a summons to a criminal court nor the possibility of a criminal record. Finally, section 30 of CASL explicitly states that a violation of the Act is not an offence and that section 126 of the Criminal Code R.S.C. 1985, c. C-46 does not apply.
[25] Turning to the second prong of the Guindon test, the CRTC found that CASL does not prescribe a true penal consequence. The CRTC considered that, though the maximum quantum possible for an AMP under CASL is high, the jurisprudence has avoided placing an arbitrary upper limit on AMPs. Furthermore, the maximum need not be applied except where truly warranted. The CRTC pointed to case law where it was found that AMPs of similar magnitudes to those under CASL did not trigger section 11. The CRTC also observed that the quantum of an AMP under CASL is determined according to the factors set out in subsection 20(3), which, according to the CRTC, reflect regulatory considerations rather than principles of criminal sentencing. The CRTC further found that no stigma attaches to the imposition of an AMP under CASL. Finally, although AMPs are paid into the Consolidated Revenue Fund, which could suggest a true penal consequence, the CRTC found that this factor alone was not dispositive.
(5) CASL Does Not Violate Sections 7 and 8 of the Charter
[26] The CRTC found that, because CASL does not create an offence for the purposes of section 11 of the Charter, the rights provided by sections 7 and 8 to individuals subject to penal proceedings also do not apply. The CRTC therefore held that CASL does not violate sections 7 and 8 of the Charter.
B. Notice of Violation Decision
[27] In the second of its two decisions, the CRTC applied CASL to the facts set out in the NOV issued to the appellant and concluded that the appellant did, in fact, violate the Act. The CRTC considered 317 electronic messages sent by the appellant to various recipients between July and September 2014. These messages formed the basis of three alleged violations of paragraph 6(1)(a) of CASL for sending CEMs without the consent of recipients and one alleged violation of paragraph 6(2)(c) for sending CEMs without a functioning unsubscribe mechanism. The CRTC ultimately concluded that the appellant had committed all four violations.
(1) Preliminary Issues
(a) Effect of Appellant’s Bankruptcy Proceedings
[28] The CRTC found that its review of the NOV was unaffected by the appellant having filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the Bankruptcy Act) on August 9, 2016. The appellant listed the CRTC as an unsecured creditor on November 28, 2016.
(b) The Appellant Did Not Suffer Prejudice During or After the Investigation
[29] The CRTC rejected the appellant’s claim that it suffered prejudice at the investigation stage because it was not asked whether any exemptions applied to its circumstances. The CRTC also rejected the appellant’s argument that the investigation report supporting the NOV failed to properly consider whether any exemptions applied. The CRTC recalled that the appellant was informed that it was free to submit information regarding potentially applicable exemptions during the production stage of the investigation. The appellant was given another opportunity when making representations to the CRTC. The appellant took advantage of the latter opportunity and the CRTC considered its submissions on exemptions in its decisions. The CRTC therefore determined that the appellant was not prejudiced during the investigation or afterward.
(c) Evidence Supporting the Investigation Report
[30] The CRTC reduced the number of CEMs under consideration from the 451 identified in the investigation report to 317 based on, inter alia, evidentiary deficiencies in the investigation report and the fact that some CEMs appeared to fall outside the relevant time period set out in the NOV.
(2) Violations of CASL
[31] To decide whether the appellant committed the alleged violations, the CRTC first determined that none of CASL’s exclusions applied to exempt the appellant’s CEMs from the consent and content requirements set out in section 6. The CRTC then found that providing a non-functioning link in addition to a functioning link in a CEM violated CASL’s requirements regarding unsubscribe mechanisms. Finally, the CRTC held that the appellant could not rely on the defense of due diligence.
(a) CEMs Did Not Qualify for Business-to-Business Exemption
[32] The CRTC held that the appellant failed to establish that the “business-to-business” exemption applied to any CEMs under consideration. Subparagraph 3(a)(ii) of the Electronic Commerce Protection Regulations S.O.R./2013-221 (Governor in Council Regulations) provides that section 6 of CASL does not apply to CEMs sent between members of organizations where those organizations have a relationship and the messages relate to the activities of the recipient organization. The CRTC found that the appellant’s evidence that an organization had paid the appellant for a training course on behalf of one of its employees did not, on its own, establish a relationship that would allow the appellant to directly solicit every other employee in that organization. At most, such a transaction might be evidence of a business relationship between the appellant and the single employee for the purposes of implied consent pursuant to paragraph 10(9)(a) of CASL.
[33] The CRTC indicated that evidence of a relationship for the purposes of the business-to-business exemption might include evidence that the member of an organization with whom the appellant had dealings had the authority and intent to create such a relationship on behalf of the organization. The CRTC also indicated that a history of correspondence with an organization could, depending on its contents, support the existence of such a relationship. However, in the CRTC’s view, the appellant failed to provide sufficient evidence of relationships with any of the organizations to which the appellant had sent CEMs.
(b) Non-functioning Unsubscribe Mechanisms
[34] The investigation into the appellant’s activities revealed that 87 CEMs contained a non-functioning unsubscribe link, contrary to paragraph of 6(2)(c) of CASL. More specifically, these CEMs contained two unsubscribe links: one that appeared to function properly and one that produced an error message when accessed.
[35] The CRTC found that the non-functioning links created confusion and frustration among recipients and made some believe that they were unable to unsubscribe. According to the CRTC, the 87 CEMs failed to meet the standards set out in subsections 3(1) and 3(2) of the Electronic Commerce Protection Regulations (CRTC) S.O.R./2012-36 (the CRTC Regulations), which respectively require that unsubscribe mechanisms be “set out clearly and prominently” and “must be able to be readily performed.” The CRTC therefore found that these CEMs violated paragraph 6(2)(c) of CASL, which requires that unsubscribe mechanisms “conform[] to the prescribed requirements” just mentioned.
(c) Implied Consent from Conspicuous Publication Not Established
[36] The CRTC rejected the appellant’s argument that 132 of the 317 messages under review were sent with the implied consent of recipients due to the conspicuous publication of the recipients’ email addresses. Paragraph 10(9)(b) of CASL states that consent is implied for the purposes of section 6 of the Act where the recipient “has conspicuously published, or has caused to be conspicuously published, the electronic address to which the message is sent, the publication is not accompanied by a statement that the person does not wish to receive unsolicited commercial electronic messages at the electronic address and the message is relevant to the person’s business, role, functions, or duties in a business or official capacity”.
[37] The CRTC found that much of the evidence relied on by the appellant did not demonstrate that recipients had conspicuously published their electronic addresses within the meaning of paragraph 10(9)(b). The appellant obtained some addresses from third-party directory websites that gave no indication that listings were user-submitted. The appellant took other addresses from online directories comprised of user-submitted information, but which contained disclaimers stating that unsolicited CEMs were not to be sent to the listed addresses. In other cases, the CRTC found that the appellant merely assumed or speculated what the recipient organization or individual’s role, functions or duties might be, without supporting evidence. In none of these situations, in the CRTC’s view, were the requirements of the conspicuous publication exemption in paragraph 10(9)(b) of CASL met.
(d) Due Diligence Defence Not Applicable
[38] The CRTC rejected the appellant’s alternative argument that, if it had violated CASL, it should not be found liable because it had exercised due diligence to prevent the violations. Steps taken by the appellant included hiring new employees expressly to obtain recipients’ consent to receive CEMs; contacting the CRTC for guidance on the business-to-business exemption; achieving nearly perfect compliance with unsubscribe mechanisms; and hiring a consulting firm to develop a compliance program.
[39] The CRTC found some of these measures irrelevant to a due diligence defence because they were taken after the alleged violations. Other measures, in the CRTC’s view, demonstrated the appellant’s awareness of CASL’s requirements, but it was not clear that the measures had, or could have had, any impact on avoiding the violations at issue. The CRTC also found some of the appellant’s claims unpersuasive, such as the claim to a nearly perfect compliance rate with unsubscribe mechanisms—the appellant was sending CEMs with non-functioning links so it is impossible to know how many unsubscribe requests never reached the appellant. The CRTC concluded that the appellant had taken some steps in preparation for the coming into force of CASL, but failed to show it had taken all reasonable steps during the relevant period to avoid the violations at issue. The CRTC therefore rejected the appellant’s due diligence defence.
(3) Conclusions on Appellant’s Violations
[40] The CRTC found that the appellant sent 317 CEMs to recipients without their prior consent contrary to paragraph 6(1)(a) of CASL. The CRTC determined that the business-to-business exemption in subparagraph 3(a)(ii) of the Governor in Council Regulations did not apply to these CEMs and that none of the recipients had conspicuously published their electronic addresses within the meaning of paragraph 10(9)(b) of CASL. The CRTC also held that 87 of the 317 messages contravened paragraph 6(2)(c) of CASL by containing a non-functioning unsubscribe mechanism. The CRTC held that the appellant could not rely on the defense of due diligence to excuse these violations. The CRTC therefore concluded that, on a balance of probabilities, the appellant had committed three violations of 6(1)(a) CASL and one violation of 6(2)(c) CASL, as set out in the NOV.
(4) CRTC Reduced AMP from $1,100,000 to $200,000
[41] The CRTC concluded that the appropriate amount for an AMP in this case is $200,000 rather than the $1,100,000 set out in the NOV. To reach this conclusion, the CRTC compared the appellant’s conduct against the factors in subsection 20(3) of CASL for determining the amount of an AMP.
[42] The appellant had no history of violations or undertakings under CASL or associated acts. Neither had it obtained any financial benefit from committing the violations. However, there was no indication that the appellant had compensated any persons affected by its violations.
[43] The CRTC held that the purpose of CASL’s AMP regime is to achieve compliance through deterrence. However, in the CRTC’s view, the $1,100,000 AMP proposed in the NOV over-emphasized general deterrence and was out of proportion to the amount necessary to promote the appellant’s compliance specifically. The CRTC considered that a lower amount would be appropriate.
[44] The CRTC found that the nature and scope of the appellant’s violations also suggested a lower penalty was appropriate. The CRTC acknowledged that the harm caused by the appellant’s messages was not the worst type of harm that unsolicited CEMs can cause. However, the messages were generally disruptive and unwelcome, and the frustration they caused was compounded by recipients’ inability to unsubscribe due to non-functioning links. The CRTC also noted that it had already circumscribed the range of messages under consideration from 451 to 317. In the CRTC’s view, the appellant’s conduct still warranted a penalty, albeit in a lesser amount than suggested in the NOV.
[45] The CRTC next considered the appellant’s ability to pay the proposed penalty, a factor that the CRTC found also favored a reduction from the initial $1,100,000 AMP. The CRTC placed greater weight on the appellant’s annual revenues than its profits as an indicator of the appellant’s ability to pay as it considered the latter could be more easily manipulated to appear smaller. The CRTC found that the appellant’s claims that the proposed penalty would have drastic impacts on its owners and on the company’s continued viability lacked detailed support. In the CRTC’s view, there were some indications that the appellant was able to pay the proposed penalty and others that it could not. The CRTC concluded that the appellant had some ability to pay, but the extent of this ability suggested a lower penalty was appropriate.
[46] The CRTC found that the appellant’s non-cooperation with the investigation into its activities, as mentioned in the investigation report, should not be a significant factor in calculating the size of the AMP necessary to promote the appellant’s compliance. The CRTC was cognizant that procedures under CASL were still very new when the appellant was attempting to navigate the investigation process, and the CRTC did not view the appellant as having attempted to frustrate or forestall the investigation.
[47] The CRTC considered that the appellant’s efforts to improve compliance following the investigation into its conduct were positive indicators of self-correction. Although these efforts did not negate the need for a penalty, in the CRTC’s view, they supported imposition of a lower penalty than the one set out in the NOV.
[48] The final factor considered by the CRTC was the overall proportionality between the AMP’s magnitude and the foregoing factors, as applied to the circumstances of the appellant’s case. The CRTC concluded that the $1,100,000 AMP set out in the NOV was out of proportion to what was required to promote the appellant’s compliance and decided to lower the amount to $200,000.
[49] Despite finding the initial $1,100,000 AMP disproportionate to both the appellant’s violations and the amount necessary to promote compliance, the CRTC rejected the appellant’s argument that the AMP in this case constituted a true penal consequence and thereby triggered section 11 of the Charter. The CRTC based this conclusion on the same grounds on which it held, in the Constitutional Decision, that CASL, in general, does not prescribe true penal consequences.
[50] The CRTC concluded that the appropriate penalty, in light of all relevant circumstances, was an AMP of $200,000.
V. Appellant’s Submissions
A. Constitutional Decision
(1) CASL is Ultra Vires Parliament
[51] The appellant argues that the CRTC erred in finding CASL intra vires Parliament’s trade and commerce power. According to the appellant, the CRTC’s pith and substance analysis was flawed because it considered CASL as a whole rather than focusing on the specific provisions at issue. The CRTC began its analysis from too broad a starting point, and this error compromised the remainder of its analysis.
[52] The appellant argues that the pith and substance of CASL’s “messaging portions”—the provisions at issue—go beyond trade and commerce. These provisions, according to the appellant, capture all messages that might have a minor commercial purpose, regulate purely local messaging and interfere with contractual terms. The pith and substance of CASL’s messaging provisions is therefore, in the appellant’s view, to regulate unsolicited messages generally. The impugned provisions thus fall squarely within provincial jurisdiction over municipalities, local matters and property and civil rights.
[53] The appellant argues that the impugned provisions cannot come under Parliament’s general trade and commerce power merely because certain aspects of CEMs have a national dimension. The appellant points out that CASL’s CEM provisions displace provincial regulation concerning consumer protection, privacy and marketing. The appellant also argues the provinces are capable of adopting laws addressing the concerns targeted by CASL.
(2) CASL Violates Section 2(b) and Is Not Saved Under Section 1
[54] The appellant argues that CASL’s violation of section 2(b) of the Charter is not saved under section 1.
(a) CASL Too Vague to Constitute “Limit Prescribed by Law”
[55] The appellant argues that CASL’s key definitions are too broad and open-ended to delineate a clear zone of risk. CASL’s exemptions and regulations also cause confusion and make compliance difficult. The appellant says that, because content accessible via a link can convert a message into a CEM, CASL creates an “unknowable risk”. The appellant also contends that CASL creates an unintelligible standard due to the absence of “factors helping the public or courts understand the ambit of risk” (Appellant’s Constitutional Memorandum at para. 43). Finally, the appellant argues that the requirement that CEMs contain contact information for any person “on whose behalf” the message is sent is too vague.
(b) Objective of Impugned Provisions Not Pressing and Substantial
[56] The appellant asserts that the objective of the infringing measures is to eliminate unsolicited electronic messages with any arguable commercial element. The appellant says this is not a pressing and substantial objective. The CRTC is said to have erred by locating CASL’s objective in the Act’s title and its section 3 purpose clause. According to the appellant, the section 1 analysis is only concerned with the objective of the infringing measures, specifically.
[57] The infringing measures do not just guard against the most damaging and deceptive forms of spam, which, the appellant agrees, would constitute a pressing and substantial objective. Rather, the challenged provisions presumptively ban all messages with any arguable commercial content, including a variety of beneficial messages. The appellant argues that the objective of these measures cannot be to protect the economy, since they actually impede e-commerce.
(c) Impugned Provisions Not Rationally Connected to CASL’s Objective
[58] The appellant argues that the CRTC erred in considering that a “rational, logical link between the infringing measures and the government’s objectives” was sufficient to pass the rational connection stage. The appellant says that the CRTC overlooked CASL’s many “arbitrary, unfair” and “irrational considerations” that should have caused the Act to founder at the rational connection stage (Appellant’s Constitutional Memorandum at para. 52). The appellant argues that CASL’s prohibition on unsolicited CEMs is overbroad and captures messages that are not detrimental to e-commerce, such as messages that send coupons or rally support for victims of natural disasters. The appellant provides a list of further examples of messages that it says would be captured by CASL’s prohibition and that demonstrate the arbitrary, unfair and irrational nature of the prohibition.
(d) CASL Not Minimally Impairing
[59] The appellant again relies on overbreadth arguments to support its position that CASL should fail the minimal impairment stage. The appellant asserts that the CRTC erred by failing to engage with each specific allegation of CASL’s overreach. The CRTC thus failed to consider whether CASL truly represents the least drastic means of achieving the government’s objectives. The appellant suggests that, instead of having an open-ended definition of “CEM” and a closed set of exemptions, CASL could have employed a closed definition of “CEM” and open-ended exemptions, similar to the approach taken in Australia. CASL also could have adopted an opt-out rather than an opt-in model for recipient consent. Other suggestions include, inter alia, excluding messages between individuals from the definition of CEM, exempting beneficial actors from the prohibition on unsolicited CEMs and excluding linked content from review in determining whether a message is a CEM. The appellant argues that any one of these suggestions represents a less drastic alternative to CASL. The Act is therefore not minimally impairing of section 2(b).
(e) CASL’s Deleterious Effects Not Proportionate to Benefits
[60] The appellant argues that the CRTC erred in finding that CEMs fall outside the core of section 2(b) and are therefore less worthy of protection than other forms of expression. The appellant says that the CRTC also erred in failing to consider the many kinds of non-commercial speech negatively impacted by CASL’s broad prohibition. The appellant analogizes CASL to Alberta’s Personal Information Protection Act, S.A. 2003, c. P-6.5, which relied on a similar presumptive ban plus exemptions model and which failed the proportionality stage of the section 1 analysis in Alberta (Information and Privacy Commissioner) v. United Food and Commercial Workers, Local 401, 2013 SCC 62, [2013] 3 S.C.R. 733.
[61] The appellant argues that CASL curbs many forms of beneficial speech, including political and religious speech, charitable and public benefit endeavours and advertising by professionals. Conversely, it is not clear that CASL actually produces any benefits. The Act’s severe impact on freedom of expression is therefore not justified.
(3) CASL Violates Sections 11, 7 and 8 of the Charter
[62] The appellant argues that CASL violates the right against self-incrimination in sections 11 and 7 of the Charter as well as the right against unreasonable search and seizure in section 8. The appellant claims that an AMP under CASL constitutes a “true penal consequence” and therefore triggers section 11 (Appellant’s Constitutional Memorandum at para. 85). The appellant asserts that those subject to CASL proceedings are nevertheless denied various procedural safeguards guaranteed by section 11. The appellant also argues that the statutory powers of compulsion granted to designated persons under CASL violate the protection against self-incrimination provided by section 7 and the right to be free from unreasonable search and seizure under section 8. The appellant states that these violations result when designated persons compel production of documents from individuals and organizations and those documents are subsequently used against the same individuals and organizations in CASL’s enforcement proceedings.
B. Notice of Violation Decision
(1) Application and Interpretation of the Bankruptcy Act
[63] The appellant argues that the CRTC erred in finding that the appellant’s proposal to its creditors pursuant to the Bankruptcy Act had no effect on the NOV. The appellant asserts that the liabilities forming the basis of the NOV are unsecured claims that were compromised by the acceptance of the appellant’s proposal by its creditors and the insolvency court. According to the appellant, there was therefore no legal basis for the CRTC to impose an AMP of $200,000.
[64] The appellant argues that the CRTC failed to consider the proper legal test for determining whether the appellant’s liability created by the NOV is a “claim provable” under the Bankruptcy Act. The appellant argues that the three-part test, set out in Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443, is met by the AMP contemplated in the NOV, which constitutes a liability to a creditor (the CRTC), was incurred before the appellant filed its notice of intention, and can be assigned a monetary value. Because its liabilities arising from the NOV were, in fact, provable claims, the appellant argues that it was released from them pursuant to its proposal proceedings under the Bankruptcy Act. The appellant asserts that the CRTC erred in imposing a $200,000 penalty on the basis of liabilities that had been discharged by its proposal.
[65] Notably, the respondent concedes that the AMP is unenforceable against the appellant outside the insolvency process (Respondent’s Notice of Violation Memorandum at paras. 22, 24, 26). Although the enforceability of the AMP is therefore not a contested issue as between the parties, the appellant nevertheless requests that this Court pronounce upon the issue. The appellant points out that the CRTC’s decision still states that the appellant’s penalty was not compromised by its Bankruptcy Act proposal and that the AMP remains enforceable. The appellant acknowledges that steps could be taken in insolvency court to stay the enforcement of the AMP, and that the respondent has conceded its non-enforceability, but notes that such a concession does not carry the same weight as a judgment of this Court.
(2) CRTC’s Treatment of the Business-to-Business Exemption
[66] The appellant argues that the CRTC erred in finding that none of the 317 CEMs under review qualified for the business-to-business exemption set out in subparagraph 3(a)(ii) of the Governor in Council Regulations