2021 QCCA 730, 2021 QCCA 730

Official English Translation of the Judgment of the Court Procureur général du Québec c. Association canadienne des télécommunications sans fil 2021 QCCA 730 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-027771-187 (500-17-094929-166) DATE: May 5, 2021 CORAM: THE HONOURABLE GUY GAGNON, J.A. MICHEL BEAUPRÉ, J.A. BENOÎT MOORE, J.A. ATTORNEY GENERAL OF QUEBEC APPELLANT - Defendant v.

CANADIAN WIRELESS TELECOMMUNICATIONS ASSOCIATION RESPONDENT - Plaintiff JUDGMENT [ 1 ] The Attorney General of Quebec (the “AGQ”) appeals against a judgment rendered on July 18, 2018 by the Superior Court, District of Montreal (the Honourable Mr.

Justice Pierre Nollet), [1] which declared that s. 260.35 of the Consumer Protection Act [2] (“ CPA ”) is constitutionally invalid. [ 2 ] This provision is one of five sections in the new title dealing with “Online Gambling”, which was added to the CPA by the Quebec legislature when it enacted An Act respecting mainly the implementation of certain provisions of the Budget Speech of 26 March 2015 on May 17, 2016. [3] [ 3 ]

Section 260.35, which should be read together with s. 260.34 for a proper understanding, reads as follows:

12. The Consumer Protection Act (chapter P- 40.1 ) is amended by inserting the following after

section 260.32: TITLE III.4 ONLINE GAMBLING […] 260.34. The Société des loteries du Québec shall oversee the accessibility of online gambling. It shall draw up a list of online gambling sites not authorized under the laws of Québec and provide the list to the Régie des alcools, des courses et des jeux, which shall notify it to Internet service providers . 260.35. An Internet service provider that receives the list of unauthorized online gambling sites in accordance with

section 260.34 shall, within 30 days after receiving the list, block access to those sites . […] 12. La

Loi sur la protection du consommateur (chapitre P-40.1 ) est modifiée par l’insertion, après l’article 260.32, de ce qui suit :

TITRE III.4 JEU D’ARGENT EN LIGNE […] 260.34. La Société des loteries du Québec assure la surveillance de l’accessibilité des jeux d’argent en ligne. Elle établit la liste des sites de jeu d’argent en ligne non autorisés par une loi du Québec et fournit cette liste à la Régie des alcools, des courses et des jeux afin qu’elle la notifie aux fournisseurs de services Internet . 260.35.

Le fournisseur de services Internet qui reçoit la liste des sites non autorisés de jeu d’argent en ligne conformément à l’article 260.34 doit, dans les 30 jours suivant sa réception, bloquer l’accès à ces sites . […] [Emphasis added] [ 4 ] The judge concluded that the pith and substance of s. 260.35 is to compel Internet service providers (“ISPs”) to block web users’ access to gaming sites that the Société des loteries du Québec (“Loto-Québec”) considers illegal, and that pursuant to the Constitution Act, 1867 [4] (the “ 1867 Act ”), the

section therefore falls under Parliament’s exclusive legislative powers over telecommunications and criminal law. [ 5 ] According to the judge, the connection of s. 260.35 to the provincial jurisdiction over consumer protection, as stated by the Minister of Finance during the legislative proceedings, is [ translation ] “superficial, not to say opportunistic”. [5] As for the powers over the administration of justice, property and civil rights, health, and any matters of a local or private nature in the province, the judge was of the opinion that none could support the provision’s constitutionality. [ 6 ] The Court finds that the judge did not commit a reviewable error in concluding that the pith and substance of s. 260.35 enacted by the provincial legislature essentially constitutes an exercise of the exclusive federal telecommunications power and is therefore constitutionally invalid.

The Court, however, is of the opinion that this finding was sufficient to settle the dispute and that there was no need for the judge to examine whether s. 260.35 fell under the federal criminal law power, nor whether the constitutional doctrines of double aspect and federal paramountcy, or the doctrine of ancillary powers, could apply in order to save the provincial provision. [ 7 ] That being said, in order to understand the outcome of this appeal, it would be useful to begin with an overview of the context and of part of the legislative backdrop to the dispute.

Specific facts will also be mentioned further on during the specific analysis of the issues raised by the appeal. 1.

Context 1.1 ISPs, their activities and the legislative framework for games of chance and gambling [ 8 ] The respondent Association comprises over twenty Canadian telecommunication, radiocommunication and broadcasting companies, including ISPs such as Bell Mobility, Telus and Rogers, to name but a few. [ 9 ] The ISPs own and operate sophisticated facilities and equipment, including antennas, or use those of other Canadian or foreign ISPs, for the wireless or wire-based reception and transmission of data or information, also referred to as “signals” for telecommunication purposes. [6] To put it simply and in a manner that is more relevant to this case, these facilities and equipment enable their subscribers, that is, web users, to access online gaming sites offered by private operators from Quebec, from Canada, and even from outside the country. [7] [ 10 ] In certain cases, the transmission of signals and their receipt by web users in Quebec are made possible through the antennas, or antenna sites, owned or used by an ISP and located outside the province, such as in Ontario.

These antennas, or antenna sites, also allow the transmission and reception of signals—even the same signals—for the benefit of Ontario web users. These short excerpts from the affidavit of Frédéric Dallaire, Vice President, Procurement – Technology of the ISP Rogers, provide a useful description of this type of network: [8] [ translation ] 14.

Just as with rail networks, oil pipelines and gas pipelines, each segment of the wireless telecommunications network serves a limited purpose unless it is connected to a properly laid out network; this is the only way to provide the maximum coverage and high quality telecommunications services to Rogers subscribers.

15. In order to be able to offer such wireless telecommunications services, which must be provided on a continuous and regular basis, Rogers has, in particular, built a network comprised of over 6,700 antenna sites across Canada, be they wireless telecommunications towers or antennas on existing structures. […] 18. Each antenna structure sends and receives signals within a given radius from the site. In order to provide complete coverage, each radius must join up with another radius (and so on), creating the equivalent of the alveoli of a bee hive (each of them being referred to as a “cell”), […]. […] 27.

The telecommunications network never knows the precise location of each user; when a telecommunication is initiated on the network, signals are sent across the switches so as to provide the best path for completing the communication. This path does not take geographic boundaries into consideration, such as the territory of Quebec, for example.

A switch outside Quebec and a cell situated in Ontario close to the Quebec border could, for example, provide the entire service for a given communication of a subscriber physically situated in the province of Quebec. […] 49. […], as previously stated, Rogers does not configure its network based on the territorial boundaries of the provinces nor does it manage communications and the transmission of data originating from its Quebec subscribers in a compartmentalized manner. [9] [ 11 ] Paragraphs 7 ( a ), ( b ), (

c) and (

e) and

section 36 of the federal Telecommunications Act [10] (“ TA ”) read as follows:

Canadian Telecommunications Policy Objectives 7 It is hereby affirmed that telecommunications performs an essential role in the maintenance of Canada’s identity and sovereignty and that the Canadian telecommunications policy has as its objectives (

a) to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions; (

b) to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada ; (

c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; […] (

e) to promote the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada; […] Politique canadienne de télécommunication Politique 7 La présente loi affirme le caractère essentiel des télécommunications pour l’identité et la souveraineté canadiennes; la politique canadienne de télécommunications vise à :

a) favoriser le développement ordonné des télécommunications partout au Canada en un système qui contribue à sauvegarder, enrichir et renforcer la structure sociale et économique du Canada et de ses régions ;

b) permettre l’accès aux Canadiens dans toutes les régions — rurales ou urbaines — du Canada à des services de télécommunication sûrs, abordables et de qualité ;

c) accroître l’efficacité et la compétitivité, sur les plans national et international, des télécommunications canadiennes; […]

e) promouvoir l’utilisation d’installations de transmission canadiennes pour les télécommunications à l’intérieur du Canada et à destination ou en provenance de l’étranger; […] 36. Except where the Commission approves otherwise , a Canadian carrier shall not control the content or influence the meaning or purpose of telecommunications carried by it for the public. 36.

Il est interdit à l’entreprise canadienne, sauf avec l’approbation du Conseil , de régir le contenu ou d’influencer le sens ou l’objet des télécommunications qu’elle achemine pour le public. [Underlining and bold added] [ 12 ] Gaming, including games of chance, lotteries and draws (hereinafter “GCGs”, that is, games of chance and gambling), which Parliament has defined broadly, [11] are prohibited by s. 206 of the Criminal Code (“ Cr.C . ”), subject to certain specific exemptions and exceptions that are not relevant for purposes of this appeal, save for those set out in s. 207 Cr.C . [ 13 ]

Section 207 Cr.C . provides an exception to the prohibition against conducting and managing a lottery for those conducted by a province or by a third party authorized to do so by means of a licence granted by the province. The same exception applies to agreements between two or more provinces for conducting and managing a lottery in their respective territories, whether such lottery is conducted and managed by one or more of those provinces or by a third party authorized to do so by licence.

In Quebec, the legislature has delegated the conduct and management of lotteries to Loto-Québec, a Crown corporation. [12] [ 14 ] Pursuant to s. 207(4)( c ), however, the definition of “lottery”, whose conduct and management can be entrusted by a province to a person by way of licence, excludes “a game or proposal, scheme, plan, means, device, contrivance or operation” prohibited by s. 206 “that is operated on or through a computer, video device, slot machine or a dice game”. [ 15 ] Thus, GCGs offered on the Internet through sites operated by private operators are prohibited in Canada and , unlike the lotteries

that provinces are authorized to conduct and manage themselves, the Criminal Code does not set out an exception allowing provinces to license the operators of such sites to offer them to web users residing within their respective territories. 1.2 Loto-Québec, GCGs, the Nadeau report and the Quebec legislature’s enactment of amendments to the Consumer Protection Act [ 16 ] On February 3, 2010, at which point Loto-Québec’s revenues and the royalties paid by it to the Quebec government had been declining since 2008, the government authorized the Crown corporation to develop online GCG offerings and channel existing online gaming activities to a secure website to be operated by it. [ 17 ] On July 9, 2010, the government established an online gaming monitoring committee, whose mandate was (

i) to analyze the social impact of the development of online gaming in Quebec, (ii) to propose strategies to prevent pathological gaming and (iii) to analyze regulatory, technical, economic and legal measures for countering illegal gaming.

The committee, chaired by Professor Louise Nadeau, was to submit its report no later than three years after the launching of Loto-Québec’s online gaming site. [ 18 ] In December 2010, Loto-Québec launched its online gaming site: Espacejeux.com . [ 19 ] In the years that followed, its revenues nevertheless continued to decline. [ 20 ] On November 20, 2012, the Minister of Finance issued a press release announcing the tabling of a balanced budget for 2013- 2014, while indicating that in order to achieve this objective, adjustments would be required due to the state of public finances.

The fourth paragraph of the press release stated the following: He [the Minister] stressed that the government at large, including the agencies and special funds, is being called on to help balance the budget: “ We are also calling for major efforts on the part of government corporations ”.

The Société des alcools du Québec, Loto-Québec and Hydro-Québec will be asked to do their share. [Emphasis added] [ 21 ] In 2013, in order for Loto-Québec to attract more players and try to increase its market share, the government authorized it to sell alcohol in the game lounges and casinos it managed. [ 22 ] In its 2014-2017 strategic plan, Loto-Québec, which pays all of the profits from its activities to the Quebec government, reported a decline in its market and revenues between 2008-2009 and 2013-2014, notwithstanding the technological changes made to its gaming offerings and the right to sell alcohol.

It emphasized the need to revamp its clientele in an increasingly younger, diversified and competitive entertainment market and in light of increasingly fierce competition, particularly from private, and therefore illegal, online GCG sites.

Relying on a 2012 study that estimated total online gaming revenues in Quebec at $250,000,000, Loto-Québec underscored that channelling GCG offerings onto its website was still a fundamental objective. [13] [ 23 ] The Nadeau report was published on November 6, 2014. [14] [ 24 ] At that time, Quebeckers had access to over 2,000 online GCG sites run by private operators in violation of the prohibition contained in the Criminal Code . [15] Incidentally, more than 70 of those illegal sites were hosted and operated in Quebec “with impunity” by private operators running them on or from the Mohawk territory of Kahnawake, on the South Shore of Montreal. [16] [ 25 ] The report’s authors thus noted that the advent of Loto-Québec on the Internet did not make it possible to channel illegal gaming offerings into a controlled network and that websites deemed illegal were still visible and popular among Quebeckers.

Chapter 2 of the report, dealing with the “Sociosanitary Hypothesis”, mentioned in particular (

i) the higher gaming rate among minors over time and the fact that the authors could not exclude “that the younger generation will adopt in the future higher risk online gambling practices [17] as well as (ii) the $22 million remitted annually by Loto-Québec to the Ministry of Health and Social Services to support the implementation of the measures outlined in the Plan d’action gouvernemental sur le jeu pathologique. [18] [ 26 ] The report also noted that the Criminal Code and federal legislation did not allow the implementation of the solution deemed most appropriate by the committee, that is, the creation of a provincial licensing system providing private online gaming operators with regulated access to this market.

Given these circumstances, the report made the following suggestion: Accordingly, the first step to take to set up a licensing system is to amend the Criminal Code . Despite the complexity of this task, the Working Group firmly maintains that the licensing system solution is the most promising to control the online gambling market.

For this reason, the Working Group suggests that Québec assume a leadership role in the realm of gambling with the other provinces and the federal government so that the Criminal Code is amended to allow the provinces the possibility of adopting a licensing system. [19] [ 27 ] Among the subsidiary measures that could be implemented, the report identified one, based on the Italian model, whereby the government adopts “legislation that empowers the authorities to systematically order Internet service providers to block websites that offer allegedly illegal products and services”. [20] Moreover, given that over the previous three years “no police initiative targeting online gambling [appeared] to have been carried out”, [21] the authors suggested that the Sûreté du Québec be given the mandate and the necessary resources to enable it to investigate and intervene in criminal activities linked to online gaming offered to Quebeckers “regardless of the origin of such activities”. [22] [ 28 ] In a press release dated November 6, 2014, the Minister of Finance confirmed that he welcomed the Nadeau report. [ 29 ] Less than five month later, in its March 26, 2015 Economic Plan pertaining to the 2015-2016 budget, and “[w]ith a view to public health and in order to further channel the revenues that escape the government”, the government announced the following measure: A legislative amendment will be proposed to introduce an illegal website filtering measure.

In accordance with this measure, Internet

service providers will not be allowed to provide access to an online gaming and gambling website whose name is on a list of websites that are to be blocked, drawn up by Loto-Québec.

This measure will be applied by the Régie des alcools, des courses et des jeux, which should have the necessary resources to fulfil its new responsibilities. [23] [ 30 ] To justify this measure, the government stated that illegal sites pose a risk to the population, particularly young people, and, moreover, that the measure would enable the government to recover revenues that are escaping it so as to fund public services for the benefit of all Quebeckers, i.e. revenue estimates amounting to $13.5 million in 2016-2017 and $27.0 million a year thereafter. [24] [ 31 ] On November 12, 2015, Bill 74, An Act respecting mainly the implementation of certain provisions of the Budget Speech of 26 March 2015 (the “ Budget Act ”) was introduced.

Its s. 13 incorporated amendments to the CPA under an entirely new title, including the disputed s. 260.35: 13. The Consumer Protection Act (chapter P- 40.1 ) is amended by inserting the following after

section 260.32: TITLE III.4 ONLINE GAMBLING 260.33. For the purposes of this Title, “online gambling site” means a website on which a person may make wagers and bets through an interactive mechanism. 260.34. The Société des loteries du Québec shall oversee the accessibility of online gambling. It shall draw up a list of online gambling sites not authorized under the laws of Québec and provide the list to the Régie des alcools, des courses et des jeux, which shall notify it to Internet service providers. 260.35. An Internet service provider that receives the list of unauthorized online gambling sites in accordance with

section 260.34 shall, within 30 days after receiving the list, block access to those sites. 260.36. If the Société des loteries du Québec becomes aware that an Internet service provider is not complying with

section 260.35, it shall report the non-compliance to the Régie des alcools, des courses et des jeux. In such a case, the Régie des alcools, des courses et des jeux shall send a notice to the non-compliant Internet service provider and send a copy of the notice to the Société des loteries du Québec. 260.37. For the purposes of this Title, the Régie des alcools, des courses et des jeux and the Société des loteries du Québec may enter into an agreement on the frequency at which the list of unauthorized online gambling sites is to be updated and sent and on any other terms relating to the carrying out of this Title. 13. La

Loi sur la protection du consommateur (chapitre P-40.1 ) est modifiée par l’insertion, après l’article 260.32, de ce qui suit :

TITRE III.4 JEU D’ARGENT EN LIGNE 260.33. Aux fins du présent titre, on entend par « site de jeu d’argent en ligne » un site Internet par lequel une personne peut faire des mises et des paris par l’entremise d’un mécanisme interactif. 260.34. La Société des loteries du Québec assure la surveillance de l’accessibilité des jeux d’argent en ligne. Elle établit la liste des sites de jeu d’argent en ligne non autorisés par une loi du Québec et fournit cette liste à la Régie des alcools, des courses et des jeux afin qu’elle la notifie aux fournisseurs de services Internet. 260.35.

Le fournisseur de services Internet qui reçoit la liste des sites non autorisés de jeu d’argent en ligne conformément à l’article 260.34 doit, dans les 30 jours suivant sa réception, bloquer l’accès à ces sites. 260.36. Lorsque la Société constate qu’un fournisseur de services Internet ne se conforme pas à l’article 260.35, elle en fait rapport à la Régie. La Régie transmet alors un avis au fournisseur de services Internet en défaut et en transmet une copie à la Société. 260.37.

Pour l’application du présent titre, la Régie et la Société peuvent conclure une entente concernant la fréquence relative à la mise à jour et à la transmission de la liste des sites non autorisés de jeu d’argent en ligne et toute autre modalité rattachée à l’application du présent titre. [ 32 ]

Section 14 of the Bill proposed an amendment to s. 277 of the CPA to provide that any ISP that contravenes s. 260.36 commits a penal offence and is liable to a fine of $600 to $15,000 in the case of a natural person and $2,000 to $100,000 in the case of a legal person. [ 33 ] The Budget Act was passed on May 17, 2016 and assented to the following day.

Sections 13 and 14 of Bill 74 became ss. 12 and 13 of the Budget Act . [25] [ 34 ] On July 27, 2016, the respondent filed an originating application seeking a [ translation ] “declaration of constitutional invalidity, inapplicability and inoperability” (the “Application”) of s. 12 of the Budget Act and of ss. 260.33 to 260.37 of the CPA and gave notice to the appellant and to the Attorney General of Canada pursuant to arts. 76 and 77 of the Code of Civil Procedure . [ 35 ] The trial was held on May 1, 2 and 3, 2018 and the Superior Court rendered judgment on July 18, 2018. 2. The judgment under appeal

[ 36 ] The judge found s. 260.35 to be constitutionally invalid without ruling on the other provisions of Title III.4 of the CPA . The appellant asks only that the judgment be overturned and the respondent has not filed an incidental appeal against the judge’s decision not to rule on the validity of ss. 260.33, 260.34, 260.36 and 260.37.

The Court therefore need not examine this matter, all the more so given that, at the hearing, the parties agreed that, without s. 260.35, the other provisions of Title III.4 lose their purpose. [ 37 ] The judge’s reasons for declaring s. 260.35 constitutionally invalid may be summarized as follows: - The pith and substance, or essential purpose, of the provision is to compel ISPs to block the GCG sites that Loto-Québec determines to be illegal, and therefore prevent Quebec web users from accessing them, the whole in order to increase provincial revenues; [26] - This pith and substance cannot validly be connected to any of the provincial powers over consumer protection, health, gaming, the administration of justice, property and civil rights or other matters of a local or private nature, including health; [27] - Rather, it falls under exclusive federal heads of power, namely, telecommunications [28] and criminal law, in the latter case by creating an additional punishment in the area of illegal GCGs; [29] - Recognizing a double aspect in the present case and thereby connecting s. 260.35 to separate heads of power falling under federal jurisdiction on the one hand, and provincial jurisdiction on the other hand, would run counter to precedents confirming exclusive federal jurisdiction over telecommunications systems and networks [30] and over the criminal law with respect to GCGs. [31] Moreover, it would effectively support interference with the federal telecommunications objectives set out, among other things, in the Canadian telecommunications policy found in s. 7 of the TA ; - Even if the stated purpose of s. 260.35 is connected to a matter under provincial jurisdiction, consumer protection in this particular case, the doctrine of ancillary powers cannot save the constitutional validity of the provision given the extent to which it encroaches on federal powers, not to mention that its incorporation in the CPA is but [ translation ] “superficial and absolutely unnecessary”; [32] - in addition, by allowing Loto-Québec to order ISPs to block access to certain GCG websites it deems illegal, the provincial legislature, which does not have jurisdiction to do so, is effectively forcing ISPs to interfere with the content of these sites and thereby infringe the freedom of expression of the websites’ operators under s. 2(

b) of the Canadian Charter of Rights and Freedoms . [33] [ 38 ] The judge then concluded his analysis as follows: [ translation ] [165] The Court has no hesitation in finding that, notwithstanding the social legislation in which the provincial legislature has chosen to insert the Provincial Measure, both its purpose and effects make it a provision that encroaches directly on two areas under exclusive federal jurisdiction, namely, telecommunications and the criminal law. [166] The legal and practical effects of the Provincial Measure are to regulate online gaming through ISPs, which none of the provincial powers authorizes.

Its pith and substance is not consumer protection or health, but, rather, to prevent the [ translation ] “communication” by ISPs of online GCGs not conducted and managed by the province. [ 39 ] Given these decisive findings regarding the outcome of the case and based on the principles enunciated by the Supreme Court, [34] the judge refrained from adjudicating the subsidiary issues argued by the parties with respect to the applicability/inapplicability or operability/inoperability of s. 260.35. [35] 3. The issues in dispute [ 40 ] The constitutional issues the appellant raises can be restated as follows: 1.

Is s. 260.35, which was added to the CPA by s. 12 of the Budget Act , constitutionally valid? 2. If so, is it nevertheless inapplicable to ISPs? 3. If it is applicable, is it nevertheless inoperative? 4.

The positions of the parties [ 41 ] Although the Court need not consider all the issues, given its conclusion on the first one, the following are the parties’ arguments on each of them. 4.1 The appellant [ 42 ] The judge failed to consider the scope and requirements of cooperative federalism, a concept the Supreme Court has often reasserted in recent years and, consequently, he erred in law in applying the relevant constitutional doctrines. [ 43 ] The pith and substance of s. 260.35 can be connected to more than one of the areas of jurisdiction conferred on the provincial legislatures by ss. 92(9), [36] (13), [37] (14), [38] (15) [39] and (16) [40] of the 1867 Act, or arising therefrom pursuant to the case law, namely, gaming, [41] consumer protection, public health [42] and the administration of justice as regards crime prevention. [43]

Section 260.35 is therefore constitutionally valid . [ 44 ] It is also fully applicable , because there is no precedent establishing Parliament’s exclusive jurisdiction over Internet communications and because it does not impair an essential aspect or the core of the federal power over telecommunications or over the

criminal law. [ 45 ] Lastly, s. 260.35 is operative , because the permission it grants to the Régie des alcools, des courses et des jeux (the “Régie”) and to Loto-Québec to order ISPs to block access to Internet sites does not give rise to an operational conflict with s. 36 of the federal TA , nor does it frustrate the purpose of the Canadian telecommunications policy set out in s. 7 of the TA . 4.2 The respondent [ 46 ] The judge did not err in determining the pith and substance of s. 260.35 and in ruling that it cannot be connected to any provincial head of power.

Consequently, he did not commit a reviewable error in finding the provision constitutionally invalid . [ 47 ] Subsidiarily, if the Court finds that the

section comes within the legislative authority of the province, it is nevertheless inapplicable pursuant to the doctrine of interjurisdictional immunity and pursuant to case law leading to the conclusion that the regulation of the transmission and reception of the signals transmitted by the ISPs’ networks and facilities falls under federal jurisdiction. [ 48 ] If, however, the Court finds s. 260.35 constitutionally valid and applicable, it is, at the very least, inoperative .

Indeed, by permitting Loto-Québec and the Régie to order an ISP to block access to an online gaming site by Quebec web users, it creates an operational conflict with s. 36 of the TA , which requires an ISP to obtain the CRTC’s approval before blocking access to a website, and it frustrates the purpose of the Canadian policy and the pan-Canadian objectives set out in s. 7 of the TA . 5.

Analysis 5.1 Constitutional division of powers: analytical framework [ 49 ] The 1867 Act , the case law of the Privy Council and that of the Supreme Court support the conclusion that Parliament has exclusive jurisdiction over telecommunications, radiocommunications, broadcasting, [44] and the criminal law. [45] [ 50 ] It is important to note, however, that, contrary to the jurisdiction over criminal law expressly conferred on Parliament in s. 91(27) of the 1867 Act , like other heads of power positively referred to in the other subsections of that section, federal jurisdiction over telecommunications, radiocommunications and broadcasting results, instead, from the introductory paragraph of s. 91 and from the exclusion of provincial jurisdiction set out in ss. 92(10)(

a) and ( c ), as well as from the

interpretation of those provisions by the Privy Council, the Supreme Court and commentators: VI. DISTRIBUTION OF LEGISLATIVE POWERS POWERS OF THE PARLIAMENT 91. It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces ; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this

Section , it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say , […] 27. The Criminal Law, except the Constitution of Courts of Criminal Jurisdiction, but including the Procedure in Criminal Matters. […] VI. DISTRIBUTION DES POUVOIRS LÉGISLATIFS POUVOIRS DU PARLEMENT 91 .

Il sera loisible à la Reine, de l’avis et du consentement du Sénat et de la Chambre des Communes, de faire des lois pour la paix, l’ordre et le bon gouvernement du Canada, relativement à toutes les matières ne tombant pas dans les catégories de sujets par la présente loi exclusivement assignés aux législatures des provinces ; mais, pour plus de garantie, sans toutefois restreindre la généralité des termes ci- haut employés dans le présent

article , il est par la présente déclaré que (nonobstant toute disposition contraire énoncée dans la présente loi) l’autorité législative exclusive du parlement du Canada s’étend à toutes les matières tombant dans les catégories de sujets ci-dessous énumérés, savoir : […] 27. La loi criminelle, sauf la constitution des tribunaux de juridiction criminelle, mais y compris la procédure en matière criminelle. […] POUVOIRS EXCLUSIFS DES LÉGISLATURES PROVINCIALES

EXCLUSIVE POWERS OF PROVINCIAL LEGISLATURES 92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, […] 10. Local Works and Undertakings other than such as are of the following Classes : (

a) Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province : (b) […] (

c) Such Works as, although wholly situate within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the Provinces . […] 92 . Dans chaque province la législature pourra exclusivement faire des lois relatives aux matières tombant dans les catégories de sujets ci-dessous énumérés, savoir: […] 10. Les travaux et entreprises d’une nature locale, autres que ceux énumérés dans les catégories suivantes : (

a) Lignes de bateaux à vapeur ou autres bâtiments, chemins de fer, canaux, télégraphes et autres travaux et entreprises reliant la province à une autre ou à d’autres provinces, ou s’étendant au-delà des limites de la province ; (b) […] (

c) Les travaux qui, bien qu’entièrement situés dans la province, seront avant ou après leur exécution déclarés par le Parlement du Canada être pour l’avantage général du Canada, ou pour l’avantage de deux ou d’un plus grand nombre des provinces ; […] [Emphasis added] [ 51 ] The 1867 Act and the case law establish the jurisdiction of the legislatures over the establishment, maintenance, and management of hospitals, the administration of justice, property and civil rights and, generally, all matters of a merely local or private nature in the province. [46] The latter two heads of power are the principal basis for the general provincial jurisdiction over health and public health in the province, [47] although the Supreme Court has recognized that health, a diffuse subject, is a jurisdiction that may be shared by both the provinces and the federal government. [48] In short, as Professor Hogg noted: “A law dealing with some aspect of health will come within […] provincial jurisdiction depending upon the purpose and effect of the law”. [49] [ 52 ] As for gaming itself and the regulation thereof, Major, J., writing for a unanimous Supreme Court in Siemens v.

Manitoba (Attorney General) , [50] concluded as follows: 22 […] As Stevenson J. wrote for this Court in Furtney , supra , at p. 103, gaming is a matter that falls within the “double aspect” doctrine. Accordingly, gaming can be subject to legislation by both the federal and provincial governments: In my view, the regulation of gaming activities has a clear provincial aspect under s. 92 of the Constitution Act, 1867 subject to Parliamentary paramountcy in the case of a clash between federal and provincial legislation. . . .

Altogether apart from features of gaming which attract criminal prohibition, lottery activities are subject to the legislative authority of the province under various heads of s. 92 , including, I suggest, property and civil rights (13), licensing (9), and maintenance of charitable institutions (7)[…].

Provincial licensing and regulation of gaming activities is not per se legislation in relation to criminal law. […] [Emphasis added] [ 53 ] That said, the first step in the analysis of a dispute involving a division of powers, and its potential constitutional effects, was summarized as follows by the Supreme Court in Rogers Communications Inc. v.

Châteauguay (City) . [51] [34] The first step in a division of powers analysis is to determine whether the level of government or the entity exercising delegated powers possesses the authority under the Constitution to enact the impugned statute or adopt the impugned measure : […] This is achieved by characterizing the “ pith and substance ” of the statute or measure : […] [35] A court must conduct the pith and substance analysis before inquiring into the application of the doctrines of interjurisdictional immunity and federal paramountcy , both of which are predicated on the constitutional validity of the impugned statute or measure.

If the doctrine of interjurisdictional immunity applies, the impugned measure remains valid but has no application with regard to the core

of the power of the other level of government that it impairs : […] Similarly, where the doctrine of federal paramountcy applies, the impugned provincial measure is rendered inoperative to the extent of its incompatibility with the federal legislation […]. [Underlining and bold added; references omitted] [ 54 ] In determining the “pith and substance” of a statute or provision, that is, “what it is really about”, [52] or “the matter to which it essentially relates”, [53] courts must consider two elements in their analysis, namely (

i) the legislature’s purpose in enacting it and (ii) its legal and practical effects. [54] [ 55 ] Determining the enacting body’s purpose and the effects of the impugned provision can involve not only an examination of the provision itself, its stated general objectives and the general structure of the legislation in which it has been inserted (the “intrinsic evidence”), but also the circumstances in which it was enacted, [55] and the parliamentary proceedings and other accounts of the enactment process [56] (the “extrinsic evidence”), as long as such extrinsic evidence is relevant and reliable and is not assigned undue weight. [57] In making this determination, courts must seek to ascertain the true purpose of the impugned provision, as opposed to its mere stated or apparent purpose. [58] To this end, they are not bound by a purpose clause, [59] although such a statement of legislative intent can often be useful, nor are they bound by a minister’s remarks during parliamentary proceedings, which remarks, while they may also be useful, do not necessarily reflect the legislature’s true intent. [60] [ 56 ] In terms of the legal effects of the impugned provision, the court must analyze the manner in which the provision affects the rights and liabilities of those subject thereto. [61] As for the practical effects, beyond those resulting directly from the terms of the provision, they are the actual effects of the provision in operation. [62] [ 57 ] Moreover, the Supreme Court pointed out that in seeking out the pith and substance, courts must avoid endorsing a “colourable” statute, that is, one that in form appears to relate to a matter within the legislative competence of the enacting order of government, but in substance addresses a matter falling outside its competence. [63] In some cases, it is the effects of the law that will allow the court to determine what matter it really addresses and to conclude that its true purpose is other than that which is stated. [64] [ 58 ] The pith and substance of the impugned provision, as determined, then plays an essential role in the second step of the analysis, namely, classification .

Thus, once the provision’s pith and substance has been ascertained, the classification step involves connecting it to one or more of the federal and/or provincial areas of legislative authority listed in ss. 91 and 92 of the 1867 Act so as to decide whether it lies within the jurisdiction of the enacting government. [65] It is therefore important to identify the pith and substance as precisely as possible. [66] [ 59 ] That said, while it is possible that the constitutional doctrine of cooperative federalism will result in an overlap of two separate heads of power when a given subject can be approached from two different perspectives, one supporting the exercise of federal authority and the other supporting the exercise of provincial authority, [67] the application of the doctrine has its limits.

These limits are justified by the essential principle underlying the division and exclusivity of powers in the Constitution: [22] This Court’s approach to the division of powers has evolved to embrace the possibility of intergovernmental cooperation and overlap between valid exercises of provincial and federal authority.

In keeping with the movement of constitutional law towards a more flexible view of federalism that reflects the political and cultural realities of Canadian society, the fixed “watertight compartments” approach has long since been overtaken and the doctrine of interjurisdictional immunity has been limited: […].

Indeed, the more flexible principle of “co-operative federalism” and the doctrines of double aspect and paramountcy have been developed in part to account for the increasing complexity of modern society: […] The modern view of federalism “accommodates overlapping jurisdiction and encourages intergovernmental cooperation”: […]. […] [25] This Court has also emphasized that the principle of cooperative federalism does not override or modify the scope of the legislative authority conferred by the Constitution: […].

Where the Constitution empowers one level of government to take unilateral action, cooperative federalism will not stand in its way : […] [68] [Emphasis added] [ 60 ] Recently, Chief Justice Wagner, writing for the majority in References re Greenhouse Gas Pollution Pricing Act , [69] reiterated these limits: [50] As this Court observed in Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island , […] courts, as impartial arbiters, are charged with resolving jurisdictional disputes over the boundaries of federal and provincial powers on the basis of the principle of federalism.

Although early Canadian constitutional decisions by the Judicial Committee of the Privy Council applied a rigid division of federal-provincial powers as watertight compartments, this Court has favoured a flexible view of federalism — what is best described as a modern form of cooperative federalism — that accommodates and encourages intergovernmental cooperation: […]. That being said, the Court has always maintained that flexibility and cooperation, while important to federalism, cannot override or modify the constitutional division of powers .

As the Court remarked in 2011 Securities Reference , “ [t]he ‘dominant tide’ of flexible federalism, however strong its pull may be, cannot sweep designated powers out to sea, nor erode the constitutional balance inherent in the Canadian federal state ”: […]. [Emphasis added; references omitted] [ 61 ] Rowe, J., dissenting in that decision, nevertheless also reiterated that cooperative federalism “however, cannot override the division of powers or ‘make ultra vires legislation intra vires ’”. [70] 5. 2 Application

Is s. 260.35 of the CPA , which was added to the CPA by s. 12 of the Budget Act , constitutionally valid? (

i) The standard of review [ 62 ] The standard of review applicable to decisions involving a constitutional analysis is correctness. [71] When, however, it is possible to treat the constitutional analysis itself separately from its underlying factual findings, which can be determinative on appeal, [72] these findings call for judicial restraint [73] and can be reviewed only pursuant to the standard of palpable and overriding error. [74] [ 63 ] Aside from the adjudicative facts themselves, the “extrinsic” evidence the judge analyzed in order to determine the pith and substance of the legislative provision falls under the notion of “legislative facts”. [75] After some wavering in the case law, [76] in Canada (Attorney General) v.

Bedford , [77] Chief Justice McLachlin, writing for a unanimous Supreme Court, specified that in constitutional matters there is no reason to distinguish between adjudicative facts and legislative facts and that, accordingly, a no- deference standard of appellate review for legislative facts should be rejected. [78] (ii) The first step in the analysis: the pith and substance [ 64 ] As mentioned above, based on the intrinsic evidence, the extrinsic evidence and the legal and practical effects of s. 260.35, the judge concluded that its pith and substance is to [ translation ] “compel ISPs to block the GCG sites that Loto-Québec determines to be illegal […] in order to increase provincial revenues […]”. [79] [ 65 ] Is this so?

The intrinsic evidence [ 66 ] The appellant disputes the judge’s assessment of the intrinsic evidence. He criticizes the judge for not having concluded therefrom that, at the very least, s. 260.35 falls under the provincial jurisdiction over consumer protection and, before this Court, the appellant maintained that the pith and substance of the provincial provision is the regulation of online GCG offerings in order to protect consumers.

The obligation imposed on ISPs to block access to the sites identified as illegal is merely the means chosen to achieve this essential legislative objective. [ 67 ] The Court rejects this position, which is not supported by the intrinsic evidence. [ 68 ] First, the very title of the statute through which the disputed amendments to the CPA were made also supports the conclusion that their pith and substance does not involve consumer protection: “ An Act respecting mainly the implementation of certain provisions of the Budget Speech of 26 March 2015 ”.

Moreover, the Court notes that the disputed amendments to the CPA were made via budgetary legislation tabled by the Minister of Finance, not by the Minister of Justice, who is responsible for the application of the CPA . [80] It is also not insignificant that none of the other legislation amended by the Budget Act was amended other than with respect to financial- or revenue-related matters. [ 69 ] Second, the explanatory notes at the beginning of the Budget Act , as published by the Éditeur officiel du Québec, [81] essentially state that “[t]o monitor online gambling, the Consumer Protection Act is amended to require Internet service providers to block access to illegal gambling sites entered on a list drawn up by the Société des loteries du Québec”.

There is no direct or indirect reference to the legislature’s purpose, such as to curb pathological gambling, promote public health or, more specifically, protect consumers. [ 70 ] Third, in addition to the amendments made to the CPA in order to add new Title III.4, including s. 260.35 which is of particular concern in the case at bar, s. 292 of the CPA was also amended (by s. 15 of the Budget Act ) to specify in its paragraph (

a) that it is the duty of the Office de la protection du consommateur to protect consumers and, to that end, to supervise the application of the CPA “except Title III.4”. [ 71 ] Fourth, s. 17 of the Budget Act also amends s. 352 of the CPA to provide that the Minister of Justice is responsible for its application “except Title III.4, the application of which is under the responsibility of the Minister of Public Security if it concerns the responsibilities of the Régie des alcools, des courses et des jeux, and under the responsibility of the Minister of Finance if it concerns the responsibilities of the Société des loteries du Québec”.

Thus, new Title III.4 is the only part of the CPA that falls under the authority of a minister other than the one responsible for the application of all of the provisions aimed at consumer protection. The extrinsic evidence [ 72 ] The appellant argues that the judge committed a palpable and overriding error by including in the extrinsic evidence the remarks made by the president of Loto-Québec during the 2014 appropriations review of the Minister of Finances more than one year before Bill 74 was tabled.

In the appellant’s view, this is not a fact that forms part of the legislative process having led to the enactment of s. 260.35 and the judge was therefore not entitled to consider it. [ 73 ] In the same breath, the appellant adds that the judge also committed a palpable and overriding error because he failed to consider certain other elements that are truly inherent in the parliamentary proceedings relating to the legislative adoption process.

According to him, it is this extrinsic evidence alone that truly confirms that the pith and substance of s. 260.35 and of the other provisions of new Title III.4 of the CPA falls within the provincial legislature’s authority over the regulation of gaming in the province and consumer protection. [ 74 ] The Court does not share this opinion. [ 75 ] First, as mentioned earlier, there is no middling standard of review for a trial judge’s findings of fact and, therefore, a no- deference standard of appellate review for the legislative facts he relied on should be rejected.

In either case, the appellate standard of review is palpable and overriding error. [82] Moreover, as the Supreme Court emphasized in Nelson (City) v. Mowatt , the fact that another judge could have made an alternate finding by ascribing a different weight to one or more items of evidence does not mean that

the trier of fact made a palpable and overriding error. An appellate court cannot simply second-guess the weight assigned to the various items of evidence by the trier of fact.

Absent a palpable and overriding error, the appellate court errs if it alters a finding of fact primarily on the basis of a difference of opinion regarding the weight assigned to the various items of evidence by the trial judge. [83] [ 76 ] In the present case, while some of the statements that various key stakeholders made before the Standing Committee on Public Finance, which statements the judge considered, may have been made prior to the legislative process itself, they form part of the “statements made during parliamentary proceedings and drawn from government publications” [84] that are “reliable” [85] and shed useful light on the circumstances and the reasons having led to the enactment of s. 260.35.

Consequently, they constitute relevant extrinsic evidence, among other such evidence, that the judge was entitled to consider. [86] This is all the more so since they form part of a continuum that extended until after Bill 74 was tabled, as evidenced by the other statements made by the same stakeholders before the same Committee in November and December 2015. [ 77 ] The legislative adoption process is an evolving one.

The analysis of the extrinsic evidence must take that into consideration and must not necessarily, and in all cases, be limited to the period immediately contemporaneous with the enactment of the impugned provision.

As with other matters, the admissibility of evidence and its probative value are separate concepts. [ 78 ] In the present case, here is how the official opposition critic for finance and revenue, the president of Loto-Québec and the then Minister of Finance, who later tabled Bill 74, expressed themselves on July 2, 2014 during the appropriations review of the Ministère des Finances by the Standing Committee on Public Finance, with the first stakeholder mentioning in passing the then ongoing work of the Nadeau committee: [ translation ] Mr.

Marceau : […] If we look at Loto-Québec’s numbers for the past several years, we can see that the situation has not been easy for Loto-Québec, just as it has not been easy for other lottery companies across North America, particularly in Canada. Here are some figures: in 2005-2006, the revenues coming from Loto-Québec were $1,537,000,000, and this year, we expect, for 2014-2015, $1,065,000,000. That’s what’s anticipated, at least in the budget plan. So, nearly $500,000,000 less, which is a significant decrease, […]. And we pretty much know the reasons why it’s like that.

One of them is the fact that Loto-Québec now faces gaming competition that is not regulated by Loto-Québec, that we could characterize as illegal gaming . […]. There are several approaches for regulating online gaming. One of them, which was raised here during the appropriations review, last year and two years ago, was the one that consisted in essentially prohibiting this online gaming by blocking access to those sites . […] Having spoken with Ms.

Nadeau this past year, I know that the thought process of the committee members has evolved and that they believe that by moving towards a type of merger of the existing online gaming sites with Loto-Québec’s site we could get better performance. […] Mr. Bibeau (Gérard) : Gérard Bibeau, president of Loto-Québec. If you don’t mind, I could perhaps go over the problem a little bit more. After all, there is some information that is important , you mentioned some. Well, first, it’s clear that, as far as we’re concerned, online gaming not run by Loto-Québec is considered illegal.

It’s the Criminal Code that says that gaming must be run by a province, by the government. So, here, the government delegates to Loto-Québec. So, all gaming on our territory, it’s us who has to run it. It’s the Criminal Code that says that . […] As regards our objectives, we have two objectives for online gaming. The first, is to channel it. “Channel” means, ultimately, that Quebeckers who want to play online, our work, our mandate, is to get them to play through us, not elsewhere. That’s our first mandate .

And, our second mandate, is that it take place on a network that is secure, controlled and responsible . […] So, our mandate to channel, we channel about 10% of online gaming throughout Quebec. That’s our problem . That’s where we have to improve a lot. That’s where we have to find solutions. […] […] Oh! Well, our wish, could be… I’ll go with more than a wish. Our mandate is to get 250 million out of 250 million. That’s our mandate, that’s our job, that’s what we have to do.

But the reality is that we got to 50 million in three years. […] There are 2,000 illegal sites from around the world that Quebec consumers can access from their living rooms. That’s what we’re up against, us, with responsible gaming conditions that, after all, are quite stringent. […] Mr. Leitão : […] What we want to do is make it more difficult for illegal sites . Like – going back to the suggestion of the member for Rousseau – so try to block these sites, try to make their life more difficult .

That doesn’t mean that we, on the sites run by Loto-Québec, that we’ll necessarily facilitate access to online gaming. […] Mr. Bibeau (Gérard): The estimate, to date, that we have, like I said, is 250 million. […] It’s a figure from 2012. All the work we’re doing is to go out and grab as much of our market share as possible . That’s what we’re doing. As I said, we have responsible gaming measures that are robust and significant. When we compare ourselves to other sites, there really is no comparison. That, of course, it’s like the apple of our eye.

It’s part of our mandate here at Loto-Québec. […] But, at our level, at Loto-Québec, at our level, our mandate is to compete with these online gaming sites through responsible gaming, by having the best performance possible. That’s our mandate, and we’re committed to it, and we’ll work with the Ministère des Finances, further to the report, to look at different solutions . […] In our casinos, we have competition, and we compete against it, and we don’t stop people from going elsewhere. Our work is to make sure they

play at our casinos. So it’s the same thing with online gaming . […] […] Mr.

Leitão: I just want to say that, in fact, I, like the previous ministers, will tell you the same thing, that we want to ensure that Loto- Québec maximizes its revenues while being responsible and while also channeling gaming through the regulated public network as much as possible . […] [87] [Emphasis added] [ 79 ] On April 30, 2015, a few months after the publication of the Nadeau report on November 6, 2014, when the Committee on Public Finance continued its appropriations review of the Minister of Finance for the 2015-2016 fiscal year, the same stakeholders reiterated their concerns regarding Loto-Québec’s decreasing revenues and the need to find solutions to that problem, including by blocking private online GCG sites: [ translation ] Mr.

Marceau: O.K. Hello Mr. Bibeau. I’ll start with online gaming. […](…) Perhaps you had the opportunity to discuss it before today’s meeting. So, we want to know how it could work if the Nadeau report were applied, […] And I remind you, I’ll remind you if you want, that the current unregulated market is estimated to be $200 million. In any event, these are the figures you had given me, Mr. Minister.

It was estimated that we could channel about half of that, namely 100 million, roughly, and that it is therefore the channeling of that 100 million that would allow us to get 13 million, 13.5 million. […] I don’t know if we agree on the facts. Do you agree with what I just said or… [ … ] Mr. Leitão: O.K. I’ll try to give you an initial answer and perhaps Mr. Bibeau can complete it. It seems to me that we wanted very conservative forecasts. […] It seems that it’s… therefore 13.5 million and then, in 2016-2017, 27 million. I think that’s a conservative estimate of the potential. […] Mr.

Bibeau: Of course, these are estimates. The way we got to a percentage of 50% is simply by looking at what’s done elsewhere. There are other jurisdictions, we’re far from being the first jurisdiction to block existing online sites .

Throughout the world, there’s no place where they’re blocked 100%, because all sorts of things happen, people bypass it, they come back. […] There’s no doubt that at the beginning, usually when legislation is adopted, the blocking is effective, but over time, all sorts of things happen. […] So what’s needed, therefore, is a combination between blocking sites and providing a good offering . […] We can’t block illegal gaming perfectly, but what we’ll do if, of course, there is legislation, we’ll block and we’ll provide a good offering of games so that Quebeckers quite simply want to play through us, so that they don’t want to circumvent the law. […] Mr.

Marceau: Yes, yes, O.K., perfect. The Nadeau report discusses taking the necessary steps to have the Criminal Code sections amended. Have these steps been taken? […] Mr. Leitão: No, not yet, Mr. President . As you know, measures involving criminal law will necessarily require consultation with the federal government, and, for the time being, we haven’t yet started on that front. But as far as blocking illegal sites, we believe we don’t need to go as far as the Criminal Code , that it can be done another way . Mr.

Marceau: […], but let’s just say that we don’t have a lot of leverage with the current Criminal Code . Is it conceivable that you’ll block before changes to the Criminal Code have been introduced? Mr.

Leitão: Yes, I think it’s conceivable because, as a first step, we’ll tackle this issue from another angle, from the perspective of public health, the perspective of controlling gaming . […] So, it’s something we’re working on on two fronts, if you will, one where, in cooperation with our partners in the other provinces, we’ll try to convince the federal government to amend the Criminal Code , but another parallel track, where we’ll tackle this issue of blocking sites from the public health and gaming control perspective where we think we have jurisdiction to act. [ … ] Yes.

Lastly, perhaps, before giving the floor to Mr. Bibeau, there is… As regards the Nadeau report, the Nadeau report goes further than what we are proposing to do here. The Nadeau report really talks about licences, […]. As for us, what we’re talking about here is blocking illegal sites , so it’s not entirely the same thing. Are we going to go completely in the direction of the Nadeau report? To do so, to go in that direction, even if we decided to do that, yes, it would require changes to the Criminal Code .

But what is being proposed here, in the budget, is not the same thing, it’s to block the sites and channel online gaming towards the Loto-Québec site, towards Espacejeux . [88] [Emphasis added] [ 80 ] Lastly, on December 3, 2015, during the detailed review of Bill 74, this is how the Minister of Finance presented the purpose

served by inserting new Title III.4, including s. 260.35 at issue, in the CPA , and these are the questions raised by certain MNA’s, particularly regarding the possibility that the minister’s stated purpose was an attempt to somehow disguise the government’s real purpose: [ translation ] Mr. Leitão: So,

Chapter III of the Bill, which includes sections 13 to 21, provides for measures aimed at controlling access to illegal online gambling sites . To that end, it adds a new title, Title III.4 to the Consumer Protection Act . […] This new title provides that the Société des loteries du Québec, therefore Loto-Québec, will oversee accessibility , in particular by drawing up a list of unauthorized online gambling sites. This list will be sent to the Régie des alcools, des courses et des jeux, which will have to notify it to the Internet service providers.

The latter will then have 30 days to block access to these sites . […] […] So what we want to do here, quite simply, Mr. President, is to block access to unauthorized online gambling sites . Thus, it will be Loto- Québec that will… The President (Mr. Bernier): The powers. Mr. Leitão: …draw up that list. The President: The power to block. Mr. Leitão : Exactly. [ … ] And perhaps I could also say, […] why are we doing all this?

We’re doing all this, ultimately, as we said on the very last past of the budget, it’s not that we wanted to hide anything whatsoever, just that it happened like that in the very last part of the budget for March, that the problem is a proliferation of Internet gaming sites, therefore unregulated, illegal, and that it results in unfair competition with Loto-Québec, which also provides an online gaming site, on the Internet, but which has to abide by a whole slew of rules imposed by the government, rules that are entirely appropriate as regards public security, public health, player identification, etc., things that the unregulated sites don’t have to do, by definition.

So the competition between the unregulated sites and Loto-Québec is totally unfair and therefore we think it’s appropriate to create a fairer environment and, also, issues of public health and consumer protection are very important . […] The President: Before giving the floor to the member for Rousseau, I have a question for you Mr. Minister. Technically, because we know there aren’t many borders here, it comes from just about everywhere.

Technically, therefore, did you consider whether it’s possible to place these controls on these sites if they’re coming from tax havens, if they’re coming from other states […], because when it comes to the Internet anything is possible, so how can we do that? Mr. Leitão : That’s a very good question, Mr. President. In fact, what we propose to do is not to deal directly with these sites, because they are elsewhere . […] So what we propose to do is, together with the Internet service providers, to block access.

Thus, Quebeckers’ access to these sites will be blocked . […] In other words, Quebec consumers won’t have access to a certain number of sites that have been identified as illegal. And so with the cooperation of the Internet service providers, we’ll block access to these sites . […] Mr. Marceau: If I remember correctly, and I could go back and reread the Nadeau report, my understanding is that, in the Nadeau report, it said that it wouldn’t be a good idea to block without signing agreements. From the point of view of the Nadeau report, as far as I remember, they went together. [ … ] [ … ] Mr.

Leitão: […] this activity, arriving at these agreements, it’s much simpler and much more effective once we’ve blocked the sites that don’t want to … So, it’s a matter of strategy, if you will. We block and then we give ourselves six months to negotiate agreements with those who want to comply . [ … ] If, instead, we wanted to go with a licensing system, Loto-Québec would grant licences to other entities, we would have to… Before doing that, the Criminal Code would have to be amended. [89] […] Mr. Spénard: […] For them, these companies that are blocked, does it involve costs for them? […] Mr.

Leitão: Costs for whom, excuse me?

Mr. Spénard: For the companies that are blocked. Mr. President: The companies that will no longer be able to operate. Mr. Spénard: … no, the Internet providers . Mr. Leitão: Oh! The Rogers and Videotrons of the world. Mr. Spénard: Yes, the Rogers, the… Are there costs associated with that? Mr. Leitão: Yes. Yes, there will be costs. I don’t think they’ll be huge costs, it’s a matter of turning the “switch on and off”. […] Mr. Spénard : Who will the costs be passed on to? […] Mr. Leitão: Well, it’s… these companies will bear these costs, in their revenues , costs of $100,000 to $500,000.

We believe these are costs that can be borne by the companies. Mr. Spénard: And you’re sure they won’t be passed on to consumers. Mr. Leitão: Well, you can never be sure about anything , but then again, for revenues in the hundreds of millions of dollars, an additional cost of between $100,000 and $500,000, I don’t think it’s anything significant. […] […], Of course, it’s a government decision, but a government decision driven primarily by public security and public health concerns. These sites that offer illegal gaming don’t follow the rules.

So there is a risk of consumer abuse, there are public health risks, young and very vulnerable people are playing and losing significant amounts. So, yes, there are costs to society in doing that. So, it’s normal for the state to impose certain constraints on Internet service providers so that they limit access to those sites. They’ll absorb it as part of their production costs. […] Mr. Spénard: There are…Well, there are two things. If…There are two things, Mr.

President, here that I find…Yes, there is consumer protection, but I don’t know if that’s the main reason, or if it’s not to help Loto-Québec because Espacejeux is working more or less. […] It all fits together. Loto-Québec isn’t earning enough, so we’ll organize things so it can earn more.

It’s that simple, and it’s done under the cloak of protecting the public . [90] [Emphasis added] [ 81 ] Given this intrinsic and extrinsic evidence, the appellant has failed to meet its burden of showing that the judge’s finding regarding the pith and substance of s. 260.35, namely, to allow Loto-Québec to compel ISPs to block Quebeckers from accessing GCG sites it deems illegal, and not to protect consumers, is tainted by a palpable and overriding error warranting the Court’s intervention.

Indeed, this finding, which can properly be separated from the judge’s subsequent constitutional analysis, is supported by the evidence. [ 82 ] The legal and practical effects of s. 260.35 on ISPs subject to it, do not change this, on the contrary.

The effects of the impugned provision [ 83 ] Beyond the intrinsic evidence and the extrinsic evidence, an examination of the legal ramifications of the words used in s. 260.35 and the practical consequences of its application provides an additional tool for determining its pith and substance. [91] This examination must not look only at the direct effects of the provision, but also at the follow-through effects it may be expected to produce. [92] [ 84 ] That said, the judge’s analysis in this regard is vague and, with all due respect, seems misguided.

Indeed, in paragraph 129 of his judgment, he stated that [ translation ] “[t]he Court need not consider the practical consequences of the Provincial Measure except in order to indicate how it encroaches on the federal head of power”. However, the analysis of the legal and practical ramifications of the impugned provision is intended to establish its pith and substance and is independent of the following step in the constitutional analysis, which is the connection between the pith and substance as identified and one or the other of the heads of power set out in ss. 91 and 92 of the 1867 Act .

By apparently seeking, from the very outset, to connect the effects of the law to one of the exclusive federal heads of power, the judge merged the first and second steps of the analytical framework, thereby altering its structure and affecting its purpose. [ 85 ] In the only excerpt of his reasons in which he expressly characterized the effect of s. 260.35, the judge wrote that it [ translation ] “[…] has practical effects only because it first declares the signal illegal and then punishes the person who refuses to block it”. [93] Moreover, he seems to have concluded that the legal effects of the provision are to infringe the freedom of expression [ translation ] “[…] of the operator using the signal”. [94] [ 86 ] Given the judge’s incomplete analysis, the Court re-examines s. 260.35 and finds as follows regarding its legal and practical effects. [ 87 ] As for its legal effects, it is undeniable that the application of s. 260.35 imposes a strict obligation on ISPs to block Quebeckers’ access to Internet sites that Loto-Québec has previously and unilaterally identified and the list whereof has subsequently been communicated to the ISPs by the Régie. [ 88 ] As for the practical effects of this obligation, based on the affidavit evidence of representatives of the ISPs Rogers, Bell Mobility

and Telus, the judge determined that the requirement that they abide by the obligation set out in s. 260.35 and block access, only by Quebeckers, to the GCG sites considered illegal by Loto-Québec would have a significant impact on the management and operation of their networks and equipment, [95] assuming it were even possible to comply with the obligation. [ 89 ] In making that determination, he made no reviewable error. [ 90 ] For example, Mr. Dallaire, Vice President, Procurement – Technology, at Rogers, stated the following in his affidavit dated November 6, 2017: [ translation ] […] IV.

OBSTACLES TO ROGERS’ ABILITY TO BLOCK ACCESS TO INTERNET SITES a. Obstacles related to the transmission of signals and to the territorial boundaries of the province 46. As previously explained, the configuration of a wireless telecommunications network does not take into account the territorial boundaries of the provinces; the network is deployed from a national perspective so as to ensure continuous and regular national and international telecommunications services, of a similar quality, to all of the network’s subscribers and users, wherever they may be in the country. 47.

I understand that the government of Quebec will ask Internet service providers to block access to the Internet sites it determines and deems illegal. 48. To my knowledge, however, practically speaking, it is impossible for Rogers to comply with this requirement and block access to Internet sites via its network throughout the entire territory of Quebec and only throughout that territory. […] 50.

If Rogers were to block an Internet site designated by the government of Quebec, the location of the telecommunications towers and the configuration of the network would determine which users are impacted by such a block, insofar as such a block is possible. […] 52.

For subscribers living near the provincial border (within approximately 10 km from the border) and to whom the blocking requirement could apply, it would be necessary to do the following: i. review the complete configuration of the entire telecommunications network and make the appropriate modifications, where warranted ii. deploy new antenna structures and add new telecommunications equipment. 53.

Carrying out these steps, which would take several months, if not years, would require the involvement of many Rogers employees and subcontractors, who would have to be dedicated to the project in order to avoid any loss of coverage or capacity within its network. 54. However, even in this scenario, there is no certainty that these initiatives would be possible without impairing Rogers’ ability to maintain at all times its capacity for ensuring continuous and regular telecommunications services. 55.

More importantly, it would not make it any more possible to definitively block access to any Internet site, throughout Quebec and only throughout Quebec. b. Obstacles related to private telecommunications networks (VPNs) 56. Moreover, Rogers has entered into a number of commercial agreements allowing for the operation of private telecommunications networks (VPNs) which are ultimately connected to its telecommunications network. 57. For example, a company with a head office in Ontario could have branches in Quebec, Alberta and Nova Scotia.

In such a case, Rogers would have no access to the telecommunications sent through this VPN. 58. It is therefore impossible for Rogers to identify the origin of requests for access to Internet sites made through a VPN. In this example, if the access request were to originate from the Alberta branch and Rogers were required to block access to Internet sites identified under Quebec legislation, it would therefore block access requests made by persons residing outside Quebec. [96] [ 91 ] In their own affidavits dated November 3 [97] and 2 [98] , 2017, Mr.

Rodin, Vice President, Wireless Networks, at Bell Mobility, and Mr. Benhadid, Vice President, Planning and Engineering, at Telus, also confirmed these obstacles, if not impossibilities, that ISPs would face if the blocking obligations set out in s. 260.35 CPA were imposed on them. [ 92 ] In the affidavit of engineer Lussier dated April 6, 2018, [99] which the appellant produced at trial to support his position, Mr.

Lussier contradicted some of the aforementioned statements made by the representatives of Rogers, Bell Mobility and Telus. [100] He stated the following, with a degree of clarity that is, in some respects, perplexing: [ translation ] 30. By configuring filtering rules on the filtering equipment, it is therefore possible to filter undesirable sites, provided the subscriber is located within a geographical area. This geographical area is defined by an antenna site or a group of antenna sites.

31. The accuracy of the subscriber’s geographical position is relative to the coverage provided by the antenna site. Antenna sites located in urban settings may provide coverage of a few hundred metres and antenna sites in rural settings may provide coverage of several kilometres. 32. It is possible to create a group of antenna sites covering only Quebec exclusively. 33. This group of antenna sites can include less cells than those in Quebec so as to ensure that the cells near the border with other provinces do not cover the territory of the other provinces. 34.

Cell providers are in a position to determine the antenna sites that only cover Quebec exclusively, because they have detailed information on the coverage of each of the antenna sites. 35. To give an order of magnitude for a buffer zone between Quebec and the other territories, this zone could be defined by the size of an antenna site. Consequently, the size of the buffer zone will vary based on the scope of the coverage zone of the antenna site at this location. 36.

There are a number of manufacturers that provide this filtering equipment, but, in general, cellular operators already have this equipment in their networks. [ 93 ] Under these circumstances, it was open to the judge to assess and weigh this contradictory written evidence [101] and draw the conclusions he considered fair and appropriate, save a palpable and overriding error on his part, which the appellant has failed to demonstrate. [ 94 ] Ultimately, after examining the intrinsic evidence, the extrinsic evidence and the legal and practical effects of s. 260.35 CPA , the Court concludes that the judge did not err in deciding that the pith and substance of the provision is, to put it another way, to allow Loto- Québec and the Régie to compel ISPs to block Quebeckers’ access to signals emitted by operators of GCG sites. [ 95 ] The judge’s additional finding that this measure ultimately sought to allow the province to increase its revenues changes nothing and, indeed, is superfluous. (iii) The second step in the analysis: classifying the pith and substance of s. 260.35 [ 96 ] Given the conclusions he drew from the evidence regarding the pith and substance of s. 260.35, the judge found that by enacting it, the Quebec legislature, in the judge’s own words [ translation ] “[…] has involved itself in the operation of telecommunications networks, which has repeatedly been ruled to fall under federal jurisdiction” [102] and, on the same theme, he found that it encroached directly on the exclusive federal jurisdiction over telecommunications. [103] [ 97 ] This finding, which is a matter of constitutional analysis, is correct and does not require the Court’s intervention. [ 98 ] The Privy Council and the Supreme Court have confirmed, over a number of decades and through evolving case law, that the field of interprovincial telecommunications, be it undertakings operating in that field or whose facilities provide the means for supplying interprovincial telegraph or telephone services, audio or video signal transmission services, or cable television services, for example, falls within the exclusive jurisdiction of Parliament pursuant to the introductory paragraph of s. 91 and ss. 92(10)(

a) and (

c) of the 1867 Act . Constitutional law commentators have taken note thereof and, notwithstanding that the highest court in the land has not yet ruled on the issue, they have suggested that the same approach and the same reasoning be applied to the reception and transmission of Internet signals, as we will see below. [ 99 ] In Toronto (City) v.

Bell Telephone Co. , [104] respondent Bell was contesting the City of Toronto’s powers, which had been conferred on it by a statute enacted by the Ontario legislature, to authorize or deny it the right to install on the municipal territory the cables necessary for operating its then still recent telephone network. The Privy Council concluded that a telephone network is part of the natural evolution of the “telegraph” set out in s. 92(10)(

a) of the 1867 Act . [105] It further found that Bell was an interprovincial undertaking within the meaning of the same paragraph and that it and its works fell under the exclusive legislative authority of the federal Parliament. In so doing, it als

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