Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue)

Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue)
Collection
Supreme Court Judgments
Date
2007-01-19
Neutral citation
2007 SCC 2
Report
[2007] 1 SCR 38
Case number
30894
Judges
McLachlin, Beverley; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall
On appeal from
British Columbia
Subjects
Civil procedure
Notes
SCC Case Information: 30894
Decision Content
SUPREME COURT OF CANADA
Citation: Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), [2007] 1 S.C.R. 38, 2007 SCC 2
Date: 20070119
Docket: 30894
Between:
Little Sisters Book and Art Emporium
Appellant
and
Commissioner of Customs and Revenue and
Minister of National Revenue
Respondents
‑ and ‑
Attorney General of Ontario, Attorney General of
British Columbia, Canadian Bar Association,
Egale Canada Inc., Sierra Legal Defence Fund
and Environmental Law Centre
Interveners
Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
Joint Reasons for Judgment:
(paras. 1 to 79)
Concurring Reasons:
(paras. 80 to 113)
Dissenting Reasons:
(paras. 114 to 162)
Bastarache and LeBel JJ. (Deschamps, Abella and Rothstein JJ. concurring)
McLachlin C.J. (Charron J. concurring)
Binnie J. (Fish J. concurring)
______________________________
Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), [2007] 1 S.C.R. 38, 2007 SCC 2
Little Sisters Book and Art Emporium Appellant
v.
Commissioner of Customs and Revenue and
Minister of National Revenue Respondents
and
Attorney General of Ontario, Attorney General of
British Columbia, Canadian Bar Association,
Egale Canada Inc., Sierra Legal Defence Fund
and Environmental Law Centre Interveners
Indexed as: Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue)
Neutral citation: 2007 SCC 2.
File No.: 30894.
2006: April 19; 2007: January 19.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the court of appeal for british columbia
Civil procedure — Costs — Advance costs — Whether requirements to award advance costs met.
L is a small corporation that operates a bookstore catering to the lesbian and gay community. Book sales represent 30 to 40 percent of its business. L, which still struggles to make a profit, is engaged in litigation to gain the release of four books prohibited by Customs on the basis that they were obscene. Frustrated after years of court battles with Customs over similar issues, L chose to enlarge the scope of the litigation and to pursue a broad inquiry into Customs’ practices. When this litigation began, L had already fought a protracted legal battle against Customs, which culminated in this Court’s decision in Little Sisters Book and Art Emporium v. Canada (Minister of Justice), [2000] 2 S.C.R. 1120, 2000 SCC 69 (“Little Sisters No. 1”), where it held that Customs’ practices at the time infringed ss. 2 (b) and 15 of the Canadian Charter of Rights and Freedoms . L now seeks to have Customs bear the financial burden of its fresh complaint. It applied for advance costs to cover the four books appeal as well as a systemic review of Customs’ practices. In its appeal, L asks for a reversal of Customs’ obscenity determinations and a declaration that Customs has been construing and applying the relevant legislation in an unconstitutional manner. The chambers judge granted an advance costs order for the appeal and the systemic review, concluding that the three requirements of the Okanagan test were satisfied. The Court of Appeal set aside the order.
Held (Binnie and Fish JJ. dissenting): The appeal should be dismissed.
Per Bastarache, LeBel, Deschamps, Abella and Rothstein JJ.: Bringing an issue of public importance to the courts will not automatically entitle a litigant to preferential costs treatment. Public interest advance costs orders must be granted with caution, as a last resort, in circumstances where their necessity is clearly established. The standard is a high one: only the “rare and exceptional” case is special enough to warrant an advance costs award. Accordingly, when applying the three requirements set out in Okanagan, a court must decide, with a view to all the circumstances, whether the case is sufficiently special that it would be contrary to the interests of justice to deny the advance costs application. The injustice that would arise if the application is not granted must relate both to the individual applicant and to the public at large. Since an advance costs award is an exceptional measure, the applicant must explore all other possible funding options, including costs immunities. If the applicant cannot afford the litigation as a whole, but is not completely impecunious, the applicant must commit to making a contribution to the litigation. No injustice can arise if the matter at issue could be settled, or the public interest could be satisfied, without an advance costs award. Likewise, courts should consider whether other litigation is pending and may be conducted for the same purpose, without requiring an interim order of costs. If advance costs are granted, the litigant must relinquish some manner of control over how the litigation proceeds. An advance costs award is meant to provide a basic level of assistance necessary for the case to proceed. Accordingly, courts should set limits on the rates and hours of legal work chargeable and cap advance costs awards at an appropriate global amount. The possibility of setting the advance costs award off against damages actually collected at the end of the trial should also be contemplated. [35‑43]
L’s claim is insufficient to support a finding that the requirement of special circumstances is met. The context in which merit is considered is conditioned by the need to show that the case is exceptional. The four books appeal, in which L alleges a discriminatory attitude on the part of Customs to some of its merchandise, is extremely limited in scope. L has advanced no evidence suggesting that these four books are integral, or even important, to its operations. In this context, it is impossible to conclude that L is in the extraordinary position that would justify an award of advance costs. With the systemic review, L is essentially attempting to expand the scope of the litigation in the hope of bolstering its legal rights in individual cases. This approach does not bring the case within the scope of the advance costs remedy. Specifically, the systemic review is not necessarily based on the prohibition, detention, or even delay of any books belonging to L. [51‑53]
While L’s constitutional rights should not be understated, it has not provided prima facie evidence that it remains the victim of unfair targeting. The fact that Customs continues to detain large quantities of imported material, including high proportions of gay and lesbian material, is not, in itself, prima facie evidence that Customs officials are performing their task improperly, much less unconstitutionally. With respect to the systemic review, the efficacy of Customs’ changes to its practices in the wake of Little Sisters No. 1 cannot be determined to be insufficient on the basis of the number of decisions that have been unfavourable to L. [54-56]
The history of L’s relations with Customs should not be understated either, but it does not justify the advance costs application. This history cannot be used to establish that an injustice will result if insufficient funds preclude L from arguing the systemic review. The battle L seeks to fight through the systemic review is, strictly speaking, unnecessary. It is the four books appeal that lies at the heart of L’s claim against Customs; the systemic review is simply an attempt by L to investigate Customs’ practices independently of this context. [57‑58]
In the present case, the issues raised do not transcend the litigant’s individual interests. Because L has chosen to investigate Customs’ general operations under the systemic review, the four books appeal concerns no interest beyond that of L itself and, as a consequence, is not special enough to justify an award of advance costs. The legal issues being raised by L in the four books appeal were already considered, and ruled upon, in Little Sisters No. 1. At most, the four books appeal deals with the application of Little Sisters No. 1 to a specific set of facts. Moreover, the constitutional issues underlying L’s claim do not satisfy the public importance criterion. The four books appeal does not address the issue of whether Customs is, in general, correctly applying the legal test for obscenity; rather, it is limited to the question of whether Customs reached the right result in prohibiting four specific titles. While evidence about Customs’ general practices may arise incidentally in the course of the four books appeal, the broader issues raised by L are being considered separately, as part of the systemic review. Under the systemic review, L has sought to demonstrate the far‑reaching importance of this litigation by arguing that proof that Customs has disobeyed a court order would have great ramifications. However, short of imputing bad faith to Customs, a finding that its present practices do not meet this Court’s dictates would not impugn the integrity of the government at large. Such a finding does not rise to the level of general public importance simply because it concerns a public body. Finally, not all Charter litigation is of exceptional public importance, even if it involves allegations of infringements of freedom of expression. What must be proved is that the alleged Charter breach begs to be resolved in the public interest. Where, as here, only one of the possible results on the merits could render the case publicly important, the court should not conclude that the public importance requirement is met. It is in general only when the public importance of a case can be established regardless of the ultimate holding on the merits that a court should consider the public importance requirement satisfied. [60‑66]
Absent exceptional circumstances, it is not necessary to address L’s impecuniosity. Had the three parts of the Okanagan test been met, the court would still have to exercise its discretion to decide whether advance costs ought to be awarded or whether another type of order is justified. In exercising its discretion, the court must remain sensitive to any concerns that did not arise in its analysis of the test. In the case at bar, these concerns would have prompted the chambers judge to exercise her discretion against an advance costs award in respect of the systemic review since the possibility of hearing the four books appeal before conducting the systemic review was an alternative to her advance costs award. [67] [72] [75]
Per McLachlin C.J. and Charron J.: In certain cases raising special circumstances, judges, invoking their equitable jurisdiction, may order one party to pay the other’s interim costs where it is necessary to avoid unfairness or injustice. When interim costs are ordered in public interest cases, the issues raised must transcend the individual interests of the particular litigant and have special interest for the broader community. However, even in public interest litigation, the common law requirement for special circumstances must still be established as a pre‑condition of interim costs. The three criteria for an order for advance costs therefore are: (1) impecuniosity; (2) a meritorious case; and (3) special circumstances making this extraordinary exercise of the court’s power appropriate. The order is in the court’s discretion, provided the conditions are made out. [83] [86‑88]
Here, the chambers judge failed to consider whether the case displayed special circumstances and the Court of Appeal correctly set aside the interim costs order. While the chambers judge’s findings concerning L’s inability to finance the litigation and the merit of the case should not be disturbed, the third pre‑condition for an order of interim costs is not met, not because the case entirely lacks public interest, but because it does not rise to the level of the special circumstances required to give the court jurisdiction to make the order. At stake in this case is the prospect of not learning how Customs proceeded on the four books appeal. The possible insight into Customs’ practices and the limited potential remedy do not rise to the level of compelling public importance or demonstrate systemic injustice. This case does not fall into the narrow class of cases where one party may be ordered to pay the interim costs of the other party. [89‑90] [94] [99] [101] [109]
Per Binnie and Fish JJ. (dissenting): The ramifications of Little Sisters No. 1 go to the heart and soul of L’s present application. Systemic discrimination by Customs officials and unlawful interference with free expression were clearly established in the earlier case, and numerous Charter violations and systemic problems in the administration of Customs legislation were found. In its application for advance costs in this case, L contended that the systemic abuses established in the earlier litigation have continued, and that Customs has shown itself to be unwilling to administer the Customs legislation fairly and without discrimination. The question of public importance is this: was the Minister as good as his word in 2000 when his counsel assured the Court that the appropriate reforms had been implemented? The chambers judge, from whose decision the present appeal has been taken, concluded that L had established a prima facie case that the promised reforms had not been implemented. Having listened to evidence and argument, she ordered interim funding subject to a stringent costs control order, the terms of which have now been agreed to. The present proceeding is not the beginning of a litigation journey. It is 12 years into it. [114] [116] [120]
If shown to be true, L’s allegations mean that it has suffered special damage as a result of a systemic failure of Customs to respect the constitutional rights of readers and writers as well as importers. The public has an interest in whether its government respects the law and operates in relation to its citizens in a non‑discriminatory fashion. That is where the interest of this litigation transcends L’s private interest. [130]
In this case, the pre‑conditions set out in Okanagan for an order of advance costs are satisfied. First, as found by the chambers judge, and as accepted by the Chief Justice, the impecuniosity requirement is met. Alternate sources of funding were explored, and a finding of impecuniosity should not depend on the existence of other parties able to bring a similar claim. Second, as the Chief Justice also agrees, the claim to be adjudicated is prima facie meritorious. Third, the issues raised are of public importance and transcend individual interests. Given that 70 percent of Customs detentions are of gay and lesbian material, there is unfinished business of high public importance left over from Little Sisters No. 1. While the proposed systemic review would be an impermissible expansion of the four books appeal, the four books appeal permits L to explore, within a limited context, the process under which the importation of these books was banned, and to that extent provides an opportunity for the systemic issues to be canvassed. Whether the chambers judge’s discretion is formulated in terms of “rare and exceptional” circumstances (as held in Okanagan), or the “special circumstances” formulated by the Chief Justice in this case, the test is satisfied. Although the chambers judge erred in principle in ordering advance costs for the so‑called systemic review (because there is no such action pending), she properly exercised her discretion in awarding advance costs with respect to the four books appeal. There is no basis on which to interfere with the exercise of her discretion that this is an exceptional case of special public importance that should not be defeated by L’s lack of funds. [131] [133] [141] [145] [148] [153] [156‑158]
It is appropriate to cap the maximum potential public contribution to the four books appeal at $300,000, subject to further order of the case management judge. To the extent that L can make a contribution to the costs, it should also be required to do so. If L is successful and substantial damages are awarded, it should be obligated to repay the entire amount of the advance costs plus interest at the usual prejudgment rate as a first charge on any such award of damages. [159‑161]
Cases Cited
By Bastarache and LeBel JJ.
Applied: British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71; referred to: Little Sisters Book and Art Emporium v. Canada (Minister of Justice), [2000] 2 S.C.R. 1120, 2000 SCC 69; R. v. Butler, [1992] 1 S.C.R. 452; R. v. Sharpe, [2001] 1 S.C.R. 45, 2001 SCC 2; Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, 2003 SCC 69; Office and Professional Employees’ International Union, Local 378 v. British Columbia (Hydro and Power Authority), [2005] B.C.J. No. 9 (QL), 2005 BCSC 8; MacDonald v. University of British Columbia (2004), 26 B.C.L.R. (4th) 190, 2004 BCSC 412; Canadian Foundation for Children, Youth and the Law v. Canada (Attorney General), [2004] 1 S.C.R. 76, 2004 SCC 4; Valhalla Wilderness Society v. British Columbia (Ministry of Forests) (1997), 4 Admin. L.R. (3d) 120; Sierra Club of Western Canada v. British Columbia (Chief Forester) (1994), 117 D.L.R. (4th) 395, aff’d (1995), 126 D.L.R. (4th) 437; R. (Corner House Research) v. Secretary of State for Trade and Industry, [2005] 1 W.L.R. 2600, [2005] EWCA Civ 192; Hamilton v. Open Window Bakery Ltd., [2004] 1 S.C.R. 303, 2004 SCC 9; R. v. Keating (1997), 159 N.S.R. (2d) 357.
By McLachlin C.J.
Referred to: British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71, aff’g (2001), 95 B.C.L.R. (3d) 273, 2001 BCCA 647; Little Sisters Book and Art Emporium v. Canada (Minister of Justice), [2000] 2 S.C.R. 1120, 2000 SCC 69; Jones v. Coxeter (1742), 2 Atk. 400, 26 E.R. 642; Organ v. Barnett (1992), 11 O.R. (3d) 210; B. (R.) v. Children’s Aid Society of Metropolitan Toronto, [1995] 1 S.C.R. 315, aff’g (1992), 10 O.R. (3d) 321.
By Binnie J. (dissenting)
Little Sisters Book and Art Emporium v. Canada (Minister of Justice), [2000] 2 S.C.R. 1120, 2000 SCC 69; Little Sisters Book and Art Emporium v. Canada (Minister of Justice) (1996), 18 B.C.L.R. (3d) 241; R. v. C. Coles Co., [1965] 1 O.R. 557; British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms, ss. 2 (b), 15(1) , 24(1) .
Criminal Code, R.S.C. 1985, c. C‑46, s. 163(8) .
Customs Act, R.S.C. 1985, c. 1 (2nd Supp .), ss. 67 , 71 .
Customs Tariff, S.C. 1987, c. 49, Sch. VII, Code 9956.
Customs Tariff, S.C. 1997, c. 36.
Rules of Court, B.C. Reg. 221/90, r. 57(9).
Authors Cited
Orkin, Mark M. The Law of Costs, vol. I, 2nd ed. Aurora, Ont.: Canada Law Book, 1987 (loose‑leaf updated November 2005).
APPEAL from a judgment of the British Columbia Court of Appeal (Saunders, Thackray and Oppal JJ.A.) (2005), 249 D.L.R. (4th) 695, 208 B.C.A.C. 246, 344 W.A.C. 246, 38 B.C.L.R. (4th) 288, 193 C.C.C. (3d) 491, 7 C.P.C. (6th) 333, 127 C.R.R. (2d) 165, [2005] B.C.J. No. 291 (QL), 2005 BCCA 94, setting aside a decision of Bennett J. (2004), 31 B.C.L.R. (4th) 330, [2004] B.C.J. No. 1241 (QL), 2004 BCSC 823. Appeal dismissed, Binnie and Fish JJ. dissenting.
Joseph J. Arvay, Q.C., and Irene Faulkner, for the appellant.
Cheryl J. Tobias and Brian McLaughlin, for the respondents.
Janet E. Minor and Mark Crow, for the intervener the Attorney General of Ontario.
George H. Copley, Q.C., for the intervener the Attorney General of British Columbia.
J. J. Camp, Q.C., and Melina Buckley, for the intervener the Canadian Bar Association.
Cynthia Petersen, for the intervener Egale Canada Inc.
Chris Tollefson and Robert V. Wright, for the interveners the Sierra Legal Defence Fund and the Environmental Law Centre.
The judgment of Bastarache, LeBel, Deschamps, Abella and Rothstein JJ. was delivered by
Bastarache and LeBel JJ. —
1. Introduction
1 The appellant, Little Sisters Book and Art Emporium, is a corporation that operates a bookstore serving the gay and lesbian community in Vancouver. The issue in this appeal is whether it is proper for the appellant to have the costs of its court battle against the respondents (collectively referred to as “Customs”) funded by the public purse by means of the exceptional advance (or interim) costs order contemplated in British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71. In our view, the appellant cannot succeed.
2 The situation in Okanagan was clearly out of the ordinary. The bands had been thrust into complex litigation against the government that they could not pay for, and the case raised issues vital both to their survival and to the government’s approach to aboriginal rights. The issue before the Court in that case was whether the bands’ inability to pay should have the effect of leaving constitutional rights unenforceable and public interest issues unresolved. Mindful of the serious consequences to the bands and of the contours of the anticipated litigation, this Court decided that a real injustice would result if the courts refused to exercise their equitable jurisdiction in respect of costs and if, as a consequence, the bands’ impecuniosity prevented the trial from proceeding.
3 The situation in the present case differs from that in Okanagan. A small business corporation is in particular engaging in litigation to gain the release of merchandise that was stopped at the border. On its face, this dispute is no different from any other one that could be initiated by the many Canadians whose shipments may be detained and scrutinized by Customs before they are allowed to receive them. But the history of this case reveals more. Understandably frustrated after years of court battles with Customs over similar issues, this corporation has chosen to enlarge the scope of the litigation and to pursue a broad inquiry into Customs’ practices. The appellant wants its present interests, as well as its (and other importers’) future interests, settled for good, and it wants to stop Customs from prohibiting any more imports until its complaints are resolved.
4 The question in this appeal is not whether the appellant has a good cause of action, but whether the cost of the corporation’s attempt to get Customs to release its merchandise, or the costs of its broad inquiry into Customs’ practices, should be borne by the Canadian taxpayer. An exceptional order such as this can be made only in special circumstances, like those in Okanagan, subject to stringent conditions and to the appropriate procedural controls. In our opinion, the appellant’s application meets none of the requirements developed by the Court in that decision.
5 The fact that the appellant’s claim would not be summarily dismissed does not suffice to establish that interim costs should be granted to allow it to proceed. That is not the proper test. Quite unfortunately, financial constraints put potentially meritorious claims at risk every day. Faced with this dilemma, legislatures have offered some responses, although these may not address every situation. Legal aid programs remain underfunded and overwhelmed. Self-representation in courts is a growing phenomenon. Okanagan was not intended to resolve all these difficulties. The Court did not seek to create a parallel system of legal aid or a court-managed comprehensive program to supplement any of the other programs designed to assist various groups in taking legal action, and its decision should not be used to do so. The decision did not introduce a new financing method for self-appointed representatives of the public interest. This Court’s ratio in Okanagan applies only to those few situations where a court would be participating in an injustice — against the litigant personally and against the public generally — if it did not order advance costs to allow the litigant to proceed.
2. Facts
6 The appellant is a business corporation that operates the Little Sisters Book and Art Emporium, an establishment that caters to the lesbian and gay community of Vancouver. Book sales represent 30 to 40 percent of the appellant’s business. Although the appellant’s asset value has grown significantly in recent years, from $218,446 in 2000 to $324,618 in 2003, it still struggles to make a profit. It has never netted more than $25,000 in one year, and in 2003 it lost almost $60,000. Recent losses are at least partly attributable to an embezzlement of $85,000.
7 The appellant’s claim for advance costs must be considered in the context of the history of litigation between these two parties. When the present litigation began, the appellant had already fought a protracted legal battle against Customs, which culminated in this Court’s decision in Little Sisters Book and Art Emporium v. Canada (Minister of Justice), [2000] 2 S.C.R. 1120, 2000 SCC 69 (“Little Sisters No. 1”). In that case, the appellant, along with its shareholders, James Eaton Deva and Guy Bruce Smyth, challenged the constitutionality of Customs’ procedures for detaining obscene material and of the legislative foundation for those procedures. Writing for the majority of this Court, Binnie J. agreed that Customs’ practices at the time infringed ss. 2 (b) and 15(1) of the Canadian Charter of Rights and Freedoms . He also determined that the burden of proving obscenity rested with the person alleging it. However, Binnie J. held that the provisions of the Customs Act themselves were constitutional.
8 The remedy sought by the appellant and its shareholders in Little Sisters No. 1 was an injunction whose terms were generally the same as those of the injunction requested by the appellant in the case at bar. Binnie J. felt that a remedy of this nature was not warranted. He wrote the following, at para. 157:
I conclude, with some hesitation, that it is not practicable to [offer a structured s. 24(1) remedy]. The trial concluded on December 20, 1994. We are told that in the past six years, Customs has addressed the institutional and administrative problems encountered by the appellants. In the absence of more detailed information as to what precisely has been done, and the extent to which (if at all) it has remedied the situation, I am not prepared to endorse my colleague’s conclusion that these measures are “not sufficient” (para. 262) and have offered “little comfort” (para. 265). Equally, however, we have not been informed by the appellants of the specific measures (short of declaring the legislation invalid or inoperative) that in the appellants’ view would remedy any continuing problems.
He added that the “findings [in that case] should provide the appellants with a solid platform from which to launch any further action in the Supreme Court of British Columbia should they consider that further action is necessary” (para. 158). Costs were awarded to the appellant and its shareholders on a party-and-party basis.
9 The present litigation, the appellant suggests, is the “further action” that Binnie J. anticipated. Counsel for the appellant drew a direct line tracing his client’s current legal battle to this Court’s refusal to offer injunctive relief back in 2000. Still arguing that it was denied the appropriate remedy nearly six years ago, the appellant seeks to have Customs bear the financial burden of its fresh complaint on these new facts.
10 This dispute over costs is related to litigation spawned by Customs’ July 5, 2001 detention of books destined for the appellant. On that date, eight titles — comprising 34 books — were detained by Customs on the basis that they were obscene. The appellant was able to obtain the release of four of these titles within a month. With four titles still being detained, the appellant chose to request a redetermination for only two: Meatmen, vol. 18, Special S&M Comics Edition and Meatmen, vol. 24, Special SM Comics Edition (the “Meatmen comics”). Customs again determined that these two titles were obscene. Arguing that they were incorrectly classified, on February 14, 2002, the appellant appealed the redetermination to the British Columbia Supreme Court, as it was entitled to do pursuant to ss. 67 and 71 of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp .).
11 While the litigation with respect to the Meatmen comics proceeded, Customs detained another shipment of books destined for the appellant. Once again, some of the titles detained by Customs were released without the need for a redetermination. But after a redetermination, Customs still found two titles to be obscene: Of Men, Ropes & Remembrance — The Stories from Bound & Gagged Magazine and Of Slaves & Ropes & Lovers (the “Townsend books”). On September 26, 2003, the appellant appealed this decision to the British Columbia Supreme Court, seeking the same relief it was seeking with respect to the Meatmen comics.
12 The parties have agreed to have the appeals relating to the Meatmen comics and the Townsend books heard together. The prohibition of these four titles provides the factual basis for the appellant’s claim on the merits.
13 In its appeals, the appellant asks for a reversal of the Customs’ obscenity determinations, as well as a declaration that Customs has been construing and applying the relevant legislation in an unconstitutional manner. As a remedy, it seeks an injunction restraining Customs from applying certain sections of the Customs Tariff, S.C. 1997, c. 36 , and the Customs Act to its goods. The appellant also requests damages and “[s]pecial or increased costs”.
14 On August 14, 2002, the appellant also filed a Notice of Constitutional Question. Alleging a breach of s. 2 (b) of the Charter , it is seeking the same remedies as specified above, but is using the constitutional question to broaden the scope of the injunction it seeks. In its Notice of Constitutional Question, the appellant states that it wants an order preventing Customs from applying the relevant sections of the Customs Tariff and the Customs Act to “anyone or, in the alternative, to the Appellant, until such time as the Court is satisfied that the unconstitutional administration will cease”.
15 Bennett J. of the British Columbia Supreme Court, who is both the presiding judge in this case and the case management judge, defined the scope of the litigation in her ruling of February 6, 2003 ((2003), 105 C.R.R. (2d) 119, 2003 BCSC 148). Specifically, she approved the appellant’s constitutional question and found that the appeal of Customs’ decision to prohibit the appellant’s books “gives a factual context to the issues raised by Little Sisters” (para. 24). That decision was not appealed.
16 On January 22, 2004, about a month after this Court released its decision in Okanagan, the appellant applied for advance costs, claiming, in the words of Bennett J., that it had “run out of money to pursue the litigation” (para. 6). As James Eaton Deva, a shareholder in the appellant, stated in his affidavit:
After hearing [the testimony of Anne Kline, the official of Canada Customs who is responsible for making the final determination of obscenity], we were convinced that if her testimony reflected the way Canada Customs approached this issue, then it still had deep systemic problems. If true, then our ten-year battle, and partial victory in the Supreme Court of Canada, had failed to effect any significant change. In that case, a court determination that the Meatmen comics were not obscene would not be sufficient. Instead, we became convinced that the only way to rectify the problems in Canada Customs was a systemic remedy, not simply a ruling on individual books. We decided that we had an obligation to seek that remedy.
3. Judicial History
3.1 British Columbia Supreme Court (2004), 31 B.C.L.R. (4th) 330, 2004 BCSC 823
17 On the application for advance costs in the British Columbia Supreme Court, Bennett J. ruled in favour of the appellant. She identified three “discrete, yet linked, arguments” being advanced by the appellant (para. 15). The first issue for which the appellant sought an advance costs award was whether Customs had properly prohibited four titles that the appellant wanted to import (the “Four Books Appeal”). The second issue was whether Customs had addressed the systemic problems identified in Little Sisters No. 1 (the “Systemic Review”). The third issue was whether the definition of obscenity established by this Court in R. v. Butler, [1992] 1 S.C.R. 452, is unconstitutional (the “Constitutional Question”).
18 Focussing first on the question of financial capacity, Bennett J. linked the “prohibitive” cost of appealing prohibition decisions to the fact that so few of them are brought to court (para. 19). In her brief analysis on this point, she applied a test of whether the litigant “genuinely cannot afford to pay for the litigation” and concluded that the appellant could not (paras. 21-22). Bennett J. also found that replacing the appellant’s current counsel was not a “realistic option” (para. 24).
19 Bennett J. then turned to apply this Court’s analysis from Okanagan separately to each of the three issues raised by the appellant. On the prima facie merit requirement, Bennett J. found that there was prima facie evidence that Customs was not applying the obscenity test from Butler correctly (para. 29). She also gave some credence to the argument that Customs’ procedures, under which the decision maker in the internal appeal did not look at the materials presented to the adjudicators at first instance, were flawed (para. 30). This convinced her that the Four Books Appeal satisfied the prima facie merit prong of the Okanagan test. Bennett J. then disposed of this requirement in respect of the Systemic Review and the Constitutional Question, referring, on the former, to her holding on public importance and, on the latter, to changes in the decade since Butler (paras. 32-33).
20 Bennett J. turned next to the question of whether the issues raised “[go] beyond individual interests, are of public importance and have not been decided in other cases” (para. 34). For the Four Books Appeal, she concentrated on the detentions that continue to affect the appellant, the “dearth of case law in this area” and the importance of freedom of expression in a democracy (paras. 35-43). She concluded that, if Customs is indeed applying the legal test for obscenity incorrectly, the issue affects all book importers and is therefore of public importance.
21 On the public importance of the Systemic Review, Bennett J. began her analysis by noting the “large magnitude of detentions” by Customs (para. 48). She found that there was “some evidence” of continual targeting of gay and lesbian material, noted that the time requirements for review were not being met, and expressed her concern about some alleged inconsistencies in Customs’ detention practices (paras. 49-52). Based on the past litigation between the parties, Bennett J. was sceptical of Customs’ claim that it had recently changed its practices (paras. 53-58). In fact, she stated that there was a prima facie case that the problems in Little Sisters No. 1 had not been “sufficiently addressed” (para. 59). Moving from this finding, Bennett J. held that the third requirement of Okanagan was satisfied, based on the constitutional issues at stake and the public’s interest in knowing whether the government had failed to comply with a court order (para. 61).
22 However, Bennett J. did not find that the public importance requirement had been met with respect to the Constitutional Question. Referring to this Court’s decisions in Butler, R. v. Sharpe, [2001] 1 S.C.R. 45, 2001 SCC 2, and Little Sisters No. 1, she held that the Constitutional Question did not raise an issue of public importance that had not been resolved in a previous case, as required by Okanagan (paras. 75-87). This holding has not been appealed.
23 Having determined that the three requirements in Okanagan were satisfied in respect of the Four Books Appeal and the Systemic Review, Bennett J. exercised her discretion in favour of ordering advance costs (paras. 44 and 63). She left the determination of the structure of the advance costs order and the quantum of the award to a later date (para. 94).
3.2 British Columbia Court of Appeal (2005), 38 B.C.L.R. (4th) 288, 2005 BCCA 94
24 Leave to appeal Bennett J.’s advance costs decision to the British Columbia Court of Appeal was initially denied by Prowse J.A., in chambers. Two months later, a three-member panel of the Court of Appeal varied Prowse J.A.’s order and granted leave.
25 Writing for a unanimous court, Thackray J.A. allowed Customs’ appeal. He began by commenting upon what he considered to be an “incompleteness” in the process (para. 25). Specifically, he felt that Bennett J.’s failure to consider the structure of the advance costs order and the quantum of the award undermined her order. After Bennett J.’s original order, the parties themselves had reached an agreement on structure and quantum.
26 Turning to the Okanagan criteria, Thackray J.A. focussed his attention on the impecuniosity and public importance requirements. On the prima facie merit requirement, he simply held that it was satisfied because the “case has attained a status above that of being merely frivolous” (para. 28).
27 Considering the appellant’s impecuniosity, Thackray J.A. asked whether it might be possible for the court to hear the Four Books Appeal before the Systemic Review. The effect of doing so would be potentially large cost savings for the public purse, insofar as the result on the Four Books Appeal might shed light on whether the Systemic Review needed to be heard at all and, if so, whether it should be publicly funded (paras. 29 and 45). To the Court of Appeal, the inclusion of the Systemic Review in the litigation represented “an enormous escalation from [the case’s] original purpose”, making it proper to consider whether an advance costs award — if necessary — could be confined to the Four Books Appeal, at least at first (paras. 36-39 and 44). The Court of Appeal was also reticent to extend this Court’s decision in Okanagan to a for-profit corporation (para. 41).
28 Thackray J.A. then turned to the public importance requirement. He noted that the Four Books Appeal was a narrow matter that was confined to four specific titles (para. 49). It did not involve broad issues that would affect all book importers.
29 On the Systemic Review, Thackray J.A. canvassed Bennett J.’s reasons in detail. He took issue with the latter’s conclusions based on the fact that Customs continues to detain a large number of books, noting that this fact does not indicate that Customs’ practices are in any way improper (para. 55). He also observed that the appellant was relying on evidence collected before Customs had purportedly changed its system; at most, such evidence could be relied upon to show how quickly Customs had reacted to Little Sisters No. 1, but it could not serve to determine whether all the problems in Little Sisters No. 1 had eventually been addressed. This “efficiency” question was significantly less important to the public than the question of whether the problems were addressed at all (para. 57).
30 Finally, Thackray J.A. pointed out that Bennett J. had not considered whether the present litigation could be defined as “special” enough to merit advan