2020 FCA 103, 2020 FCA 103

2020 FCA 103 A-382-17 3510395 Canada Inc. ( Appellant ) v. The Attorney General of Canada (Respondent) A-383-17 3510395 Canada Inc. ( Appellant ) v. The Attorney General of Canada (Respondent) Indexed as: 3510395 Canada Inc. v. Canada (Attorney General) Federal Court of Appeal, Nadon, Webb and Woods JJ.A.—Toronto, April 29, 2019; Ottawa, June 5, 2020.

Telecommunications — Appeal from Canadian Radio-Television and Telecommunications Commission (CRTC) decision finding that appellant violating Canada’s anti-spam legislation [1] ( CASL or the Act ), imposing administrative monetary penalty (AMP) — Act regulating, inter alia, sending of commercial electronic messages (CEMs) — E -mail marketing primary means of business development for appellant — Appellant sending promotional CEMs to various recipients — Later issued notice of violation (NOV) pursuant to Act , s. 22 for violating Act , ss. 6(1) (a) (not obtaining recipients’ consent prior to sending CEMs), 6(2)(c) (some CEMs not containing functioning “unsubscribe” link) — CRTC finding Act intra vires Parliament — Determining that impugned provisions’ violation of Canadian Charter of Rights and Freedoms ( Charter ), s. 2(

b) justified under Charter, s. 1 — Further holding that impugned provisions not creating offence for purposes of Charter, s. 11 — Finding that Act not violating Charter, ss. 7 , 8 — CRTC holding, inter alia, that appellant failing to establish that “business-to-business” exemption applying to any CEMs under consideration — Of view that appellant not providing sufficient evidence of relationships with organizations CEMs sent to — Issues: whether Act ultra vires Parliament; whether Act ’s violation of Charter, s. 2(

b) justified under Charter, s. 1 ; whether Act violating Charter, ss. 7 , 8 , 11 ; whether CRTC erring in its

interpretation, application of business-to-business exemption, of Act ’s implied consent requirements regarding conspicuous publication — Five indicia of valid general trade, commerce legislation set out in General Motors of Canada Ltd. v.

City National Leasing considered to determine vires of CASL — CASL ’s CEM scheme constituting valid exercise of Parliament’s power over general trade, commerce affecting Canada as a whole pursuant to second branch of Constitution Act, 1867, s. 91(2) — With respect to Charter, s. 2(b) , while impugned provisions infringing freedom of expression, infringement justified under Charter, s. 1 — Act ’s benefits outweighing its detrimental effects on freedom of expression — Appellant having no standing to bring claim under Charter, s. 7 as appellant corporation not defending against criminal charge — Charter, s. 8 finding application but no unreasonable seizure arising herein — Act ’s administrative monetary penalty (AMP) not violating Charter, s. 11(d) — AMP proceedings having regulatory purpose, not criminal in nature —CRTC not erring in its

interpretation, application of business-to-business exemption — “Contractual relationship” not determinative of whether Act ’s business-to-business exemption applicable — Contractual relationships comprehending limited number of transactions affecting few employees not constituting relationships for purposes of business-to-business exemption — Evidentiary requirements for establishing relationship for purposes of business-to-business exemption more demanding than for existing business relationship — Appellant failed to demonstrate relationships with the recipient organizations — Finally, CRTC not erring in interpreting, applying Act ’s implied consent requirements regarding conspicuous publication, unsubscribe mechanisms — Appeals dismissed.

Constitutional Law — Distribution of Powers — Canadian Radio-Television and Telecommunications Commission (CRTC) dismissing appellant’s constitutional challenge to Canada’s anti-spam legislation [2] ( CASL or the Act ) — Act regulating, inter alia, sending of commercial electronic messages (CEMs) — Appellant sending promotional CEMs to various recipients in violation of Act , ss. 6(1) (a), 6(2) (c) — CRTC finding Act intra vires Parliament — Considering five indicia of valid general trade, commerce legislation set out in General Motors of Canada Ltd. v.

City National Leasing (General Motors) — Concluding Act’s pith, substance falling within Parliament’s power over general trade, commerce pursuant to Constitution Act, 1867, s. 91(2) — Whether Act ultra vires Parliament — Act ’s CEM scheme valid exercise of Parliament’s power over general trade, commerce — Impugned provisions constituting distinct regulatory scheme relating to unsolicited CEMs — Parliament’s intending to create scheme to regulate CEMs in order to prevent, inter alia, impairment of e-economy, costs to businesses and consumers — Act not intruding on provincial jurisdiction by interfering with contractual terms — Impugned CEM scheme meeting first two indicia of General Motors test — Impugned legislation concerned with trade as whole, thus satisfying third General Motors indicium — Provinces, jointly or severally, constitutionally incapable of enacting CEM scheme — Scheme’s successful operation jeopardized by failing to include all provinces — CASL ’s CEM scheme constituting valid exercise of Parliament’s power over general trade, commerce affecting Canada as a whole pursuant to second branch of Constitution Act, 1867, s. 91(2) Constitutional Law — Charter of Rights — Fundamental Freedoms — Canadian Radio-Television and Telecommunications Commission (CRTC) dismissing appellant’s constitutional challenge to Canada’s anti-spam legislation [3] ( CASL or the Act ) — Act regulating, inter

alia, sending of commercial electronic messages (CEMs) — Appellant sending promotional CEMs to various recipients in violation of Act , ss. 6(1) (a), 6(2) (c) — CRTC determining that Act ’s impugned provisions violating Charter , s. 2(b) — Concluding this violation justified under Charter , s. 1 — Whether Act’s violation of s. 2(

b) justified under s. 1 — CEMs protected under s. 2(b) — Impugned provisions infringing freedom of expression — However, violation justified under Charter , s. 1 — Act meeting threshold for passing “prescribed by law” stage of s. 1 analysis — Impugned provisions not vague — Act ’s legislative objective not too broad — Act passing rational connection stage of s. 1 inquiry — Act establishing partial, rather than absolute, prohibition on CEMs — Establishing complex legislative scheme to achieve its objectives — CRTC correctly rejecting less impairing alternatives proposed by appellant — Act ’s benefits outweighing its detrimental effects on freedom of expression — Act presenting obstacle to non-commercial forms of speech only where such speech having commercial purpose — Harm to other forms of speech de minimis — Commercial expression lying some distance from core of s. 2(b), warranting reduced level of protection.

Constitutional Law — Charter of Rights — Criminal Process — Canadian Radio-Television and Telecommunications Commission (CRTC) dismissing appellant’s constitutional challenge to Canada’s anti-spam legislation [4] ( CASL or the Act ) — Act ’s administrative monetary penalty (AMP) not violating Charter , s. 11(d) — AMP proceedings having regulatory purpose, not criminal in nature — Relevant provisions of Act not using words associated with criminal process — AMP regime promoting compliance with Act ’s regulatory scheme.

Constitutional Law — Charter of Rights — Life, Liberty and Security — Canadian Radio-Television and Telecommunications Commission (CRTC) dismissing appellant’s constitutional challenge to Canada’s anti-spam legislation [5] ( CASL or the Act ) — Whether Act violating Charter , s. 7 — Appellant, as corporation, having no standing to bring claim under s. 7 because not defending against criminal charge.

Constitutional Law — Charter of Rights — Unreasonable Search or Seizure — Canadian Radio-Television and Telecommunications Commission (CRTC) dismissing appellant’s constitutional challenge to Canada’s anti-spam legislation [6] ( CASL or the Act ) — Whether Act violating Charter , s. 8 — S. 8 finding application in present circumstances — However, no unreasonable seizure arising — Appropriate standard for reasonable seizure under Act , s. 17 articulated in Thomson Newspapers Ltd. v.

Canada (Director of Investigation and Research, Restrictive Trade Practices Commission) — Notice to produce issued to appellant meeting this modest standard. These were appeals from two related compliance and enforcement decisions of the Canadian Radio-Television and Telecommunications Commission (CRTC). In the first decision, the CRTC dismissed the appellant’s constitutional challenge to Canada’s anti-spam legislation [7] ( CASL or the Act ). In the second decision, the CRTC found that the appellant had committed four violations of the Act and imposed a $200,000 administrative monetary penalty (AMP).

The Act provides for the regulation of certain forms of commercial conduct relating to electronic commerce (e-commerce), most notably the sending of commercial electronic messages (CEMs). The appellant was a small business offering courses in areas such as team management. E-mail marketing was the appellant’s primary means of business development. The appellant conducted three advertising campaigns in 2014 during which it sent promotional CEMs to various recipients in Quebec. The appellant was later issued a notice of violation (NOV) pursuant to

section 22 of the Act because the appellant had not obtained the recipients’ consent prior to sending the CEMs (paragraph 6(1)(

a) of the Act ) and some of the CEMs did not contain a functioning “unsubscribe” link ( paragraph 6(2) (

c) of the Act ). In representations to the CRTC, the appellant denied that it had violated the Act . It asserted that the Act was unconstitutional. The CRTC found that the Act is intra vires Parliament after a two-step division of powers analysis. The CRTC considered the five indicia of valid general trade and commerce legislation set out in the Supreme Court decision of General Motors of Canada Ltd. v. City National Leasing ( General Motors ).

The CRTC ultimately concluded that the Act ’s pith and substance falls within Parliament’s power over general trade and commerce pursuant to subsection 91(2) of the Constitution Act, 1867 . The CRTC determined that the Act ’s impugned provisions violate paragraph 2(

b) of the Canadian Charter of Rights and Freedoms ( Charter ) because they prohibit the sending of unsolicited CEMs that convey meaning. After conducting a

section 1 analysis according to the test set out in R. v. Oakes , the CRTC concluded that the Act ’s violation of freedom of expression is justified under

section 1 . The CRTC further held that the impugned provisions of CASL do not create an offence for the purposes of

section 11 of the Charter . As a result, the CRTC found that the rights provided by sections 7 and 8 of the Charter to individuals subject to penal proceedings also did not apply. The CRTC therefore held that the Act does not violate sections 7 and 8 . As to the second decision, the CRTC held, inter alia , that the appellant failed to establish that the “business-to-business” exemption, as set out in subparagraph 3 (a)(ii) of the Electronic Commerce Protection Regulations SOR/2013- 221 , applied to any CEMs under consideration.

In the CRTC’s view, the appellant failed to provide sufficient evidence of relationships with any of the organizations to which the appellant had sent CEMs. The appellant argued, inter alia , that the CRTC’s pith and substance analysis was flawed because it considered CASL as a whole rather than focusing on the specific provisions at issue; that the Act ’s violation of paragraph 2(

b) of the Charter is not saved under

section 1 ; and that the Act violates the right against self-incrimination in sections 11 and 7 of the Charter as well as the right against unreasonable search and seizure in

section 8 . The appellant claimed that the CRTC adopted a restrictive approach to the business-to-business exemption as to render it almost ineffectual. The issues regarding the constitutional challenge were whether the Act is ultra vires Parliament; whether the Act ’s violation of paragraph 2(

b) of the Charter is justified under

section 1 ; and whether the Act violates sections 7 , 8 and 11 of the Charter . The main issue regarding the NOV decision was whether the CRTC erred in its

interpretation and application of the business-to-business exemption. Held , the appeals should be dismissed. The Act ’s CEM scheme is a valid exercise of Parliament’s power over general trade and commerce affecting Canada as a whole pursuant to the second branch of subsection 91(2) of the Constitution Act. To determine whether the impugned legislation properly fell within Parliament’s legislative competence, a division of powers analysis was required. A line of jurisprudence culminating in General Motors established five indicia of validity for matters falling under the second branch of subsection 91(2) .

The Supreme Court’s method of integrating the General Motors test into the division of powers analysis was employed herein, i.e. conducting a pith and substance

analysis of the relevant legislation and then employing the General Motors test at the classification stage. The Act contains three separate regulatory schemes, each centered on one of the distinct forms of prohibited conduct enumerated in sections 6 , 7 and 8 of the Act , respectively. On this reading, the impugned provisions constitute a distinct regulatory scheme relating to unsolicited CEMs, separate and apart from the Act ’s schemes targeting the alteration of transmission data and unauthorized installation of computer programs. There is no purpose clause for the Act ’s CEM scheme in particular. However,

section 3 of the Act states that the Act ’s purpose is “to promote the efficiency and adaptability of the Canadian economy by regulating commercial conduct that discourages reliance on electronic means of carrying out commercial activities”. It is because certain commercial activities can give rise to undesirable consequences that impact the economy that Parliament undertook to regulate those activities through the Act .

Parliament’s intention in legislating the impugned provisions was to create a scheme regulating the sending of CEMs in order to prevent impairment of the e-economy and costs to businesses and consumers, as well as to protect confidential information and Canadians’ confidence in e-commerce. The impugned scheme regulates only a narrow aspect of the targeted type of messaging. It does not seek to regulate any other aspect of commercial messaging nor does it regulate the contracts of any particular business or trade.

The scheme’s effects apply to the exceedingly wide array of businesses and trades that participate in e-commerce. These effects do not include the regulation of contracts nor the frustration of contractual rights. Accordingly, the Act does not intrude on provincial jurisdiction by interfering with contractual terms. The main thrust of the impugned scheme is to regulate the public’s ability to send unsolicited CEMs in order to guard against the threats that such messages can pose to Canada’s e-economy.

The impugned CEM scheme meets the first two indicia of the General Motors test regarding the existence of a regulatory scheme under the oversight of a regulatory agency. E-commerce has become a pillar of Canada’s national economy, one that transcends industries, sectors and categories of market participants as well as provincial borders. Unsolicited emails can carry a number of electronic threats, such as phishing attacks, malware, identity theft, and online scams.

Once it is accepted that e- commerce permeates Canada’s economy and is not confined to any specific industry or sector, it must follow that the impugned legislation is concerned with trade as a whole and thus satisfies the third General Motors indicium . The Act ’s CEM scheme also satisfies the fourth indicium , as the provinces, jointly or severally, would be constitutionally incapable of enacting it. Finally, the failure to include one or more provinces in the legislative scheme would jeopardize its successful operation in other parts of the country.

If one province were to have more lenient laws respecting unsolicited CEMs, spammers using cloud computing or other methods could easily arrange to disseminate their CEMs from servers located in that province. This would fundamentally handicap any interprovincial scheme aimed at guarding Canada’s e-economy from the online threats associated with unsolicited CEMs. In the context of Parliament’s power over general trade and commerce, the five General Motors indicia of validity are tailored to assess validity under this particular head of power. The CRTC did not err in eschewing the national concern test.

CEMs fall within the scope of activity protected under paragraph 2(

b) of the Charter . The impugned provisions restrict that activity and therefore infringe freedom of expression guaranteed by paragraph 2(b) . However, this violation is justified under

section 1 of the Charter .

Section 1 requires that a limit on a Charter right or freedom be “prescribed by law”. It must next be determined whether the objective of the impugned measures is pressing and substantial, or, in other words, sufficiently important to warrant limiting a Charter right. The Act more than meets the threshold for passing the “prescribed by law” stage of the

section 1 analysis. The Act is sufficiently precise to delineate an area or zone of risk, which is all that can be realistically expected and all that is constitutionally required of legislation. The impugned provisions are intelligible, offer a grasp to the judiciary, and provide an adequate basis for legal debate and therefore do not bear the characteristics of vague legislation. The objective of the prohibition on CEMs not meeting the Act ’s consent and content requirements or otherwise falling under an exception is not simply to ban CEMs.

Rather, the Act ’s legislative objective is to stymie certain negative effects to which unsolicited CEMs give rise. This is not too broad an objective. The objective of promoting the efficiency and adaptability of the Canadian economy by regulating CEMs is sufficiently important to warrant limiting a constitutionally protected right or freedom.

The three prongs of the proportionality analysis require a rational connection between the restricting measures and the measures’ objective; that the impugned measures impair the right or freedom as little as possible; and overall proportionality between the benefits of the impugned measures and the deleterious effects to which they give rise. The Act ’s complex legislative scheme sufficiently tailors means to objectives to pass the rational connection stage of the

section 1 inquiry. At this stage of the

section 1 analysis, the government must establish a rational connection between the law’s objective and the means chosen to achieve it. While it is correct to state that an overinclusive prohibition is not rationally connected to its legislative objective to the extent of its overinclusiveness, the nuanced legislative scheme created by the Act can be distinguished from the categorical, rigid approach taken by the impugned legislation in other cases. The Act does not create an absolute prohibition on electronic messages that aim to encourage participation in commercial activity.

The Act , and subsection 6(1) in particular, establish a partial, rather than absolute, prohibition on CEMs. There are a number of exceptions and exclusions to this partial prohibition. The Act thus establishes a complex legislative scheme that evinces a considerable degree of tailoring to achieve its objectives. A proper appreciation of the Act ’s objectives makes clear that it may validly restrict messages that may seem innocuous relative to “the most damaging and deceptive forms of spam” without being arbitrary or unfair.

It is reasonable to conclude that the Act ’s prohibition captures conduct that can reasonably be said to offend a purpose of the Act and accommodates conduct that does not so offend. The next stage of the

section 1 analysis assesses whether “the measures at issue impair the right of free expression as little as reasonably possible in order to achieve the legislative objective.” A law may fail this stage where “the government fails to explain why a significantly less intrusive and equally effective measure was not chosen”. The appellant misapprehended that the existence of less impairing alternatives cannot cause the impugned measures to fail the minimal impairment stage if those alternatives do not also provide sufficient protection to the government’s goals.

The CRTC was correct to reject the appellant’s alternatives. While alternatives need not satisfy the legislature’s objectives to the exact same extent as the impugned measures, the opt-out model—where messages must include an unsubscribe mechanism allowing recipients to opt-out of receiving further messages—fails to provide sufficient protection to more than one, if not all, of the Act ’s objectives set out in

section 3. The fundamental issue with the opt-out model is that it permits spammers to continue sending spam. The opt-out model could be safely discarded as a viable alternative to the Act for the purposes of the minimal impairment analysis. A second alternative to the Act raised by the appellant and considered by the CRTC was Australia’s Spam Act 2003 (Cth). The differential in expression captured by CASL relative to the Australian act is narrow enough to find that both the open and closed approaches to defining CEM fall within the range of reasonable alternatives.

This prevents CASL from foundering at the minimal impairment stage. It was clear that additional suggestions made by the appellant would not provide sufficient protection to render them viable alternatives for the purposes of the minimal impairment test. Finally, none of the recommendations made by the Parliamentary Standing Committee on Industry, Science and Technology in its report on the Act could be classified as an “alternative” for the purposes of the minimal impairment stage, nor did they suggest that the Act is not minimally impairing.

The Act ’s benefits outweigh its detrimental effects on freedom of expression. The constitutionally protected expression implicated by the Act is not banned, but regulated. With respect to non-commercial forms of speech such as political and religious speech, outreach to disadvantaged communities, and charitable and public benefit endeavors, the Act presents an obstacle only where such speech has a commercial purpose. The harm to these other forms of speech is therefore de minimis since the Act does not impede their expression in non-commercial forms.

The Act ’s impact on commercial expression is mitigated by numerous exceptions and a prescribed method of compliance. Commercial expression lies some distance from the core of

section 2(

b) of the Charter and warrants a commensurately reduced level of protection. Restrictions on commercial expression are more easily justifiable than limits on some other types of expression, like political expression, that lie closer to the core of the guarantee in paragraph 2 (b). The Act ’s AMP regime does not violate paragraph 11(

d) of the Charter . The Act ’s AMP proceedings are part of a regulatory framework for the protection of the public and are “generally not the sort of proceedings that engage [section] 11 ”. Examined in their full legislative context, the AMP proceedings have a regulatory purpose and are not criminal in nature. The process associated with the Act ’s AMP regime does not bear any of the hallmarks of a criminal proceeding, nor do the relevant provisions of the Act use any of the words traditionally associated with the criminal process.

The purpose of the Act ’s AMP regime is to promote compliance with the Act ’s regulatory scheme. The magnitude of fines levied under the Act do not necessarily signal that the sanction’s purpose is to denounce or punish morally or socially reprehensible conduct. The appellant, as a corporation, had no standing to bring a claim under

section 7 of the Charter . The appellant corporation was not defending against a criminal charge.

Section 8 of the Charter , unlike

section 7, did find application in the present circumstances. However, no unreasonable seizure arose on the facts of this case.

Section 17 of the Act only grants authority for compelling production of documents rather than physical searches of premises—the former being a far less intrusive power than the latter. The standard articulated by the Supreme Court in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission) is the appropriate standard for a reasonable seizure under

section 17 of the Act . The notice to produce issued to the appellant met this modest standard. The CRTC did not err in its

interpretation and application of the business-to-business exemption. Whether or not a “contractual relationship” arose between the appellant and an organization that paid for a course on behalf of one of its employees was not determinative of whether this created a relationship for the purposes of the Act ’s business-to-business exemption. There was nothing wrong with the CRTC’s determination that contractual relationships comprehending a very limited number of transactions affecting very few employees do not constitute relationships for the purposes of the business-to-business exemption.

Merely because “existing business relationship” is a defined term and “relationship” is not, does not mean that the latter must have a broader scope, or, in other words, must be easier to make out, than the former. In assessing the threshold for establishing each type of relationship, consideration must be given to the relative effects, in the context of the Act ’s objectives, attendant upon a finding that each type of relationship exists.

The evidentiary requirements for establishing a relationship for the purposes of the business-to-business exemption should be more demanding than for an existing business relationship. It is too narrow an

interpretation of the word “activities” in the text of the exemption to suggest that a recipient organization’s “activities” with which a CEM must be concerned should not extend beyond the organization’s core business operations. Organizations engage in many activities that are not directly related to their core business operations and maintain relationships with other organizations to facilitate those supplementary activities.

There is nothing in the text, context or purpose of the exemption that justifies reading-in qualifiers to circumscribe the vast universe of an organization’s potential business activities into a shortlist of “activities” to which CEMs from partner organizations must relate in order for the business-to- business exemption to apply. Where an organization pays for employee training courses—whether or not it is legally obligated to do so —the activities of that organization can include the purchase of employee training courses.

A second organization that provides training courses, and has a relationship with the first organization based on providing it with such courses, could thus send the first organization CEMs under the auspices of the business-to-business exemption. In the present case, the CEMs would have satisfied the relevance requirement if the appellant had been able to show that the recipient organizations purchased similar courses in the past or planned to do so in future. However, the appellant failed to demonstrate relationships with the recipient organizations. Finally, the CRTC did not err in its

interpretation and application of the Act’s implied consent requirements regarding conspicuous publication, and in the Act ’s requirements regarding unsubscribe mechanisms. STATUTES AND REGULATIONS CITED Act to promote workforce skills development and recognition, CQLR, c. D-8.3 .

An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, S.C. 2010, c. 23, ss. 1(1) , (2) , (3) , 3 , 6 , 7 , 8 , 9 , 10(1) , (9) , (10) , (13) , 11(1) , 12(1) , (2) , 13 , 14 , 15 , 17 , 19 , 20(1) , (2) , (3) , (4) , (5) , 22 , 24 , 25 , 27 , 29(1) , 30 , 31 , 32 , 34(1) .

Bankruptcy and Insolvency Act , R.S.C., 1985, c. B-3, s. 69.6(2) . Canadian Charter of Rights and Freedoms , being

Part I of the Constitution Act, 1982 ,

Schedule B, Canada Act 1982 , 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 1, 2 (b), 7 , 8 , 11. Combines Investigation Act , R.S.C. 1970, c. C-23, ss. 17, 31.1. Competition Act , R.S.C., 1985, c. C - 34 . Constitution Act, 1867 , 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982 , 1982, c. 11 (U.K.),

Schedule to the Constitution Act, 1982 , Item 1) [R.S.C., 1985, Appendix II, No. 5], s. 91(2) .

Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, 15 U.S.C. 103. Criminal Code, R.S.C., 1985, c. C-46, ss. 126, 718. Electronic Commerce Protection Regulations, SOR/2013-221, ss. 1, 2, 3, 4, 5, 6, 7, 8. Electronic Commerce Protection Regulations (CRTC), SOR/2012-36, ss. 1, 2, 3, 4, 5, 6. Health and Social Services Delivery Improvement Act, S.B.C. 2002, c. 2. Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 248(1). Personal Information Protection Act, S.A. 2003, c. P-6.5. Proposed Canadian Securities Act, Order in Council P.C. 2010-667.

Regulation respecting the determination of total payroll, CQLR, c. D-8.3, r. 4, s. 1. Spam Act 2003 (Cth.), s. 6, Sch. 2, s. 2(b). CASES CITED APPLIED: General Motors of Canada Ltd. v. City National Leasing, (SCC), [1989] 1 S.C.R. 641, (1989), 58 D.L.R. (4th) 255; R.v. Oakes, (SCC), [1986] 1 S.C.R. 103, (1986), 26 D.L.R. (4th) 200; Irwin Toy Ltd. v. Quebec (Attorney General), (SCC), [1989] 1 S.C.R. 927, (1989), 58 D.L.R. (4th) 577; RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199, (1995), 127 D.L.R. (4th) 1; R. v.

Keegstra, (SCC), [1990] 3 S.C.R. 697, (1990), 114A.R. 81, [1991] 2 W.W.R. 1; Guindon v. Canada, 2015 SCC 41, [2015] 3 S.C.R. 3; Canada (Minister of Citizenship and Immigration) v.Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Dunsmuir v. New Brunswick, 2008SCC 9, [2008] 1 S.C.R. 190; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837 (as to how to integrate the General Motorstest into the division of powers analysis); Thomson Newspapers Co. v.

Canada (Attorney General), (SCC), [1998] 1S.C.R. 877, (1998), 159 D.L.R. (4th) 385; Greater Vancouver Transportation Authority v. Canadian Federation of Students, 2009 SCC31, [2009] 2 S.C.R. 295 (as to whether a limitation is “prescribed by law”); Osborne v. Canada (Treasury Board), (SCC), [1991] 2 S.C.R. 69, (1991), 82 D.L.R. (4th) 321; R. v. Nova Scotia Pharmaceutical Society, (SCC), [1992] 2S.C.R. 606, (1992), 93 D.L.R. (4th) 36; Health Services & Support-Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC27, [2007] 2 S.C.R. 391; Alberta v.

Hutterian Brethren of Wilson Colony, 2009 SCC 37, [2009] 2 S.C.R. 567; Rocket v. Royal College ofDental Surgeons (Ontario), (SCC), [1990] 2 S.C.R. 232, (1990), 71 D.L.R. (4th) 68; Thomson Newspapers Ltd. v.Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), (SCC), [1990] 1 S.C.R.425, (1990), 67 D.L.R. (4th) 161. DISTINGUISHED: Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837 (as to the vires of the CASL scheme); Greater Vancouver TransportationAuthority v. Canadian Federation of Students, 2009 SCC 31, [2009] 2 S.C.R. 295 (as to overbreadth).

CONSIDERED: Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65, [2005] 3 S.C.R. 302; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R.3; Parsons v. Citizens’ Insurance Co. of Canada (1881), 7 App. Cas. 96; Maritime National Fish Ltd. v. Ocean Trawlers Ltd., (UK JCPC), [1935] A.C. 524, [1935] 3 D.L.R. 12 (P.C.); R. v. Sharpe, 2001 SCC 2, [2001] 1 S.C.R. 45; R. v. Guignard,2002 SCC 14, [2002] 1 S.C.R. 472; Ford v. Quebec (Attorney General), (SCC), [1988] 2 S.C.R. 712, (1988), 54 D.L.R.(4th) 577; R. v. Edwards Books and Art Ltd., [1986] 2 S.C.R. 713, 35 D.L.R. (4th) 1, ; Mahjoub v.

Canada (Citizenshipand Immigration), 2017 FCA 157, [2018] 2 F.C.R. 344, 281 A.C.W.S. (3d) 297; R. v. Wholesale Travel Group Inc., (SCC), [1991] 3 S.C.R. 154, (1991), 84 D.L.R. (4th) 161. REFERRED TO: Hunt v. T&N plc, (SCC), [1993] 4 S.C.R. 289, (1993), 109 D.L.R. (4th) 16; Nova Scotia (Workers’ CompensationBoard) v. Martin; Nova Scotia (Workers’ Compensation Board) v. Laseur, 2003 SCC 54, [2003] 2 S.C.R. 504; Dagenais v. CanadianBroadcasting Corp., (SCC), [1994] 3 S.C.R. 835, (1994), 120 D.L.R. (4th) 12; Alberta (Information and PrivacyCommissioner) v.

United Food and Commercial Workers, Local 401, 2013 SCC 62, [2013] 3 S.C.R. 733; Newfoundland and Labrador v.AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443; Benhaim v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352; Reference reFirearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783; R. v. Morgentaler, (SCC), [1993] 3 S.C.R. 463, (1993), 157N.R. 97; British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473; R. v. Crown Zellerbach Canada Ltd., (SCC), [1988] 1 S.C.R. 401, (1988), 49 D.L.R. (4th) 161; Little Sisters Book & Art Emporium v.

Canada (Minister ofJustice), 2000 SCC 69, [2000] 2 S.C.R. 1120; Trociuk v. British Columbia (Attorney General), 2003 SCC 34, [2003] 1 S.C.R. 835;Edmonton Journal v. Alberta (Attorney General), (SCC), [1989] 2 S.C.R. 1326, (1989), 64 D.L.R. (4th) 577; R. v.Wigglesworth, (SCC), [1987] 2 S.C.R. 541, (1987), 45 D.L.R. (4th) 235; Dywidag Systems International, Canada Ltd. v.Zutphen Brothers Construction Ltd., (SCC), [1990] 1 S.C.R. 705, (1990), 68 D.L.R. (4th) 147; Vancouver Society ofImmigrant and Visible Minority Women v. Minister of National Revenue, [1999] 1 S.C.R. 10, ; R. v.

Big M Drug MartLtd., (SCC), [1985] 1 S.C.R. 295, (1985), 18 D.L.R. (4th) 321; R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757; R. v.Fitzpatrick, (SCC), [1995] 4 S.C.R. 154, (1995), 129 D.L.R. (4th) 129; 143471 Canada Inc. v. Quebec (AttorneyGeneral); Tabah v. Quebec (Attorney General), (SCC), [1994] 2 S.C.R. 339, (1994), 48 A.C.W.S. (3d) 64.

AUTHORS CITED Canada. House of Commons Debates , 40th Parl., 2nd Sess., No. 053 (7 May 2009). Canada. House of Commons Debates , 40th Parl., 2nd Sess., No. 105 (2 November 2009). Canada. House of Commons Debates , 40th Parl., 2nd Sess., No. 106 (3 November 2009). Canada. Task Force on Spam. Stopping Spam: Creating a stronger, safer Internet , Ottawa: Industry Canada, May 2005. Canadian Radio-television and Telecommunications Commission. Compliance and Enforcement Information Bulletin CRTC 2012-548. “Guidelines on the

interpretation of the Electronic Commerce Protection Regulations (CRTC ) , October 10, 2012. Organisation for Economic Co-operation and Development (OECD) (2006-04-19), « Report of the OECD Task Force on Spam: Anti- Spam Toolkit of Recommended Policies and Measures », OECD Digital Economy Papers, No. 114, OECD Publishing, Paris, online: https://doi.org/10.1787/231503010627 . Oxford English Dictionary , (last visited May 13, 2020) online: www.oed.com , “activity” , “commercial”.

APPEALS from compliance and enforcement decisions [8] of the Canadian Radio-Television and Telecommunications Commission dismissing the appellant’s constitutional challenge to Canada’s anti spam legislation [9] , finding that the appellant had committed four violations of the Act , and imposed an administrative monetary penalty. Appeals dismissed. APPEARANCES Barry B. Sookman , Noah Zucker , Charles S. Morgan and Daniel G.C. Glover for appellant. Lynn Marchildon , Craig Collins-Williams and Joanie Roy for respondent. SOLICITORS OF RECORD McCarthy Tétrault LLP , Montréal, for appellant.

Deputy Attorney General of Canada for respondent. The following are the reasons for judgment rendered in English by Nadon J.A.: I. INTRODUCTION [ 1 ] Before us are two appeals by 3510395 Canada Inc., operating as CompuFinder (the appellant) in respect of two related compliance and enforcement decisions of the Canadian Radio-Television and Telecommunications Commission (the CRTC).

In the first decision, the CRTC dismissed the appellant’s constitutional challenge to An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, S.C. 2010, c. 23 ( CASL or the Act ).

The CRTC determined that the Act is intra vires Parliament’s trade and commerce power under subsection 91(2) of the Constitution Act, 1867 (the Constitution Act ), and that its infringement of freedom of expression pursuant to paragraph 2(

b) of the Canadian Charter of Rights and Freedoms , being

Part 1 of the Constitution Act, 1982,

Schedule B, Canada Act 1982 , 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]) (the Charter )

section 8 , is justified under

section 1 . In the second decision, the CRTC found that the appellant had committed four violations of CASL and imposed a $200,000 administrative monetary penalty (AMP). [ 2 ] The appellant appeals the CRTC’s decisions pursuant to subsection 27(1) of CASL , which permits appeal to this Court of CRTC decisions made under CASL . [ 3 ] For the reasons that follow, I would dismiss the appeals with costs. II. APPLICABLE LEGISLATION [ 4 ] A full list of CASL ’s provisions challenged by the appellant can be found in Appendix A. Key provisions are reproduced throughout the analysis

section of these reasons. III. FACTS [ 5 ] CASL was enacted by Parliament in 2010 and came into force in 2014. It provides for the regulation of certain forms of commercial conduct relating to electronic commerce (e-commerce), most notably the sending of commercial electronic messages (CEMs). [ 6 ] The appellant was a small business located in Morin Heights, Quebec. It began operations in 1998 and offered approximately 300 professional training courses in areas such as team management, administrative skills, budget planning and effective use of social media.

E-mail marketing was the appellant’s primary means of business development. [ 7 ] The appellant conducted three advertising campaigns between July and September 2014 during which it sent 317 CEMs to various recipients. These CEMs promoted the appellant’s educational and training services and were sent primarily to individuals

working in the province of Quebec. On March 5, 2015, following an investigation, the appellant was issued a notice of violation (NOV)pursuant to

section 22 of CASL. The NOV alleged that the appellant had not obtained recipients’ consent prior to sending the CEMs inquestion, contrary to paragraph 6(1)(

a) of CASL. The NOV also alleged that some of the CEMs did not contain a functioning“unsubscribe” link, contrary to paragraph 6(2)(

c) of CASL. The NOV imposed a $1 100 000 AMP on the appellant. [8] On May 15, 2015, the appellant made representations to the CRTC pursuant to

section 24 of CASL. The appellant denied it hadviolated CASL, complained of bias in the investigation into its activities and argued that it had received inadequate disclosure in relationto the proceedings. The appellant also asserted that CASL is, in any event, unconstitutional. On October 19, 2017, the CRTC rendered adecision in the matter pursuant to subsection 25(1) of CASL.

The CRTC bifurcated its decision into Compliance and EnforcementDecision CRTC 2017-367 [Canada’s Anti-Spam Legislation 3510395 Canada Inc., operating as Compu.Finder – Constitutionalchallenge to Canada’s Anti-Spam Legislation – File number: PDR 9094-201400302-001] (the Constitutional Decision) addressingCASL’s constitutionality, and Compliance and Enforcement Decision CRTC 2017-368 [Canada’s Anti-Spam Legislation 3510395Canada Inc., operating as Compu.Finder – Violations of Canada’s Anti-Spam Legislation – File number: PDR 9094-201400302-001](the Notice of Violation Decision) addressing the appellant’s alleged violations of CASL.

IV. CRTC’s Decisions [9] In the Constitutional Decision, the CRTC determined that CASL is both valid and Charter compliant. The CRTC then found, inthe Notice of Violation Decision, that the appellant had indeed violated CASL. A. Constitutional Decision

(1) Jurisdiction [10] The CRTC cited Hunt v. T&N plc, (SCC), [1993] 4 S.C.R. 289, (1993), 109 D.L.R. (4th) 16 and Nova Scotia(Workers’ Compensation Board) v. Martin; Nova Scotia (Workers’ Compensation Board) v. Laseur, 2003 SCC 54, [2003] 2 S.C.R. 504in support of its jurisdiction to determine the division of powers and Charter issues respectively.

The key requirement to ground atribunal’s jurisdiction over either type of constitutional question is that the tribunal must have the authority to determine questions of law.Subsection 34(1) of CASL grants the CRTC the ability to decide any question of law or fact in any proceeding under the Act. The partiesagree that the CRTC had jurisdiction to address both constitutional questions.

(2) CASL is Intra Vires Parliament [11] The CRTC found that CASL is intra vires Parliament after a two-step division of powers analysis, looking first at the Act’s pithand substance and secondly at its proper classification under the heads of power enumerated in the Constitution Act. [12] The CRTC found that the main thrust of the Act “deals with electronic commerce” (Constitutional Decision, at paragraph 43). Inreaching this conclusion, the CRTC considered that CASL regulates other online threats besides CEMs.

The CRTC determined that thedirect effect of CASL is to regulate not just CEMs, but also the alteration of transmission data in electronic messages and the installationof unwanted computer programs in the course of commercial activities. The overall effect of CASL, according to the CRTC, is toimplement a scheme to help ensure “the viability of e-commerce throughout Canada” (Constitutional Decision, at paragraph 47). [13] At the classification stage of its analysis, the CRTC considered the five indicia of valid general trade and commerce legislationset out in General Motors of Canada Ltd. v.

City National Leasing, (SCC), [1989] 1 S.C.R. 641, (1989), 58 D.L.R.(4th) 255 (General Motors). The CRTC determined that CASL is a general regulatory scheme under the oversight of a regulatoryagency, and that it deals with issues of crucial importance to the national economy.

Central to the latter conclusion was the CRTC’sfinding that electronic threats are not confined to a set or group of participants in any economic sector or to a specific region in Canada.The CRTC also determined that the provinces would be unable to achieve the scheme’s goals for two reasons: first, because the mattersregulated have national effects implicating all sectors of Canada’s digital economy, and, secondly, because of the provinces’ inherentprerogative to resile from any interprovincial scheme.

Finally, the CRTC found that the absence of any province from a CASL-likescheme would jeopardize its successful operation. [14] The CRTC ultimately concluded that CASL’s pith and substance falls within Parliament’s power over general trade andcommerce pursuant to subsection 91(2) of the Constitution Act. The CRTC thus found CASL intra vires Parliament.

(3) CASL Violates Paragraph 2(

b) of the Charter, but Is Justified Under

Section 1 [15] The Attorney General conceded that CASL’s impugned provisions infringe paragraph 2(

b) of the Charter because they prohibitthe sending of unsolicited CEMs that convey meaning. The CRTC accepted this concession. [16] The CRTC conducted a

section 1 analysis according to the test set out in R. v. Oakes, (SCC), [1986] 1 S.C.R.103, (1986), 26 D.L.R. (4th) 200 and modified in Dagenais v. Canadian Broadcasting Corp., (SCC), [1994] 3 S.C.R.835, (1994),120 D.L.R. (4th) 12. [17] The CRTC first determined that CASL is a limit prescribed by law. The CRTC held that the definition of CEM, though broad, isnot vague as it focuses on electronic messages that encourage participation in a commercial activity, provides a list of examples oftargeted conduct and several of its key terms are defined in the Act.

The CRTC found that the definition was sufficiently precise to limitenforcement discretion and delineate a zone of risk. The CRTC cited Irwin Toy Ltd. v. Quebec (Attorney General), (SCC), [1989] 1 S.C.R. 927, (1989), 58 D.L.R. (4th) 577 for the proposition that certainty is not the applicable standard: “[a]bsoluteprecision in the law exists rarely, if at all. The question is whether the legislature has provided an intelligible standard according to whichthe judiciary must do its work” (Constitutional Decision, at paragraph 90).

The CRTC answered this question in the affirmative. [18] The CRTC next determined that CASL’s objective is sufficiently important to warrant limiting a Charter right. The CRTClocated CASL’s objective in the Act’s title: “to promote the efficiency and adaptability of the Canadian economy by regulating certain

activities that discourage reliance on electronic means of carrying out commercial activities.” The CRTC found this objective to bepressing and substantial based on evidence of the negative impacts that unsolicited commercial electronic messages (spam) and relatedelectronic threats can have on e-commerce in Canada. [19] At the first stage of the three-pronged proportionality analysis the CRTC found that CASL’s limits on free expression arerationally connected to its objectives.

The CRTC considered it logical and reasonable to conclude that a prohibition against unsolicitedCEMs would reduce spam and therefore spam’s adverse effects on Canadian businesses and consumers. The CRTC also noted that,based on the record, CASL appears to be having its intended effect. [20] The CRTC next determined that CASL passes the minimal impairment test. The CRTC found the Act sufficiently tailored toimpair Charter rights no more than necessary.

Although less restrictive alternatives exist, the CRTC considered that these would not beequally effective at achieving the government’s objective of preventing the negative effects associated with spam. According to theCRTC, CASL’s various exceptions and exclusions substantially lessen its deleterious effects on paragraph 2(

b) and bring it within arange of reasonable alternatives as per RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199,(1995), 127 D.L.R. (4th) 1. [21] Finally, the CRTC found CASL’s benefits proportional to its deleterious effects on free expression. The CRTC first noted thatCASL’s infringement relates specifically to commercial expression. The CRTC cited R. v. Keegstra, (SCC), [1990] 3S.C.R. 697, (1990), 114 A.R. 81, [1991] 2 W.W.R. 1 (Keegstra) for the proposition that this type of expression lies outside the corevalues protected by paragraph 2(b).

The CRTC then considered that the record shows that CASL’s negative effects include causing somebusinesses to adjust, curtail or even terminate their e-mail marketing practices, and creating a perception among some Canadianbusinesses that they can no longer compete with their American counterparts. However, the CRTC considered that the evidence alsoshows no material lessening of the effectiveness of electronic marketing and, at the same time, a 37 percent drop in spam originatingfrom Canada.

The CRTC furthermore observed that, while CASL does infringe freedom of expression, the targeted conduct is stillpermitted so long as the sender obtains recipient consent, identifies itself and includes an unsubscribe mechanism.

Thus, CASL is farfrom a total ban on commercial speech in general or CEMs in particular. [22] The CRTC found that the Attorney General had met its burden of showing that the deleterious effects of CASL’s limits on freeexpression do not outweigh the limitations’ benefits to the greater public good, which include increasing confidence in e-commerce andthereby benefitting the economy as a whole. [23] The CRTC concluded that CASL’s violation of freedom of expression guaranteed by paragraph 2(

b) of the Charter is justifiedunder

section 1.

(4) Impugned Provisions Do Not Trigger

Section 11 of the Charter [24] The CRTC held that the impugned provisions of CASL do not create an offence for the purposes of

section 11 of the Charter.The CRTC applied the two-part test from Guindon v. Canada, 2015 SCC 41, [2015] 3 S.C.R. 3 (Guindon) for determining whether astatutory infraction constitutes an offence within the meaning of

section 11. First, the CRTC examined the objectives of the legislationand the process leading to the imposition of the sanction and concluded that the proceedings were not criminal in nature. According tothe CRTC, the objectives of the proceedings, considered in their full legislative context, have a regulatory purpose namely deterringspam and other electronic threats. The purpose of the proceedings, in the CRTC’s view, amounts to regulating a limited sphere ofactivity. The CRTC also found that the process leading to a sanction does not bear any of the hallmarks of a criminal proceeding.

Forinstance, CASL does not use language typically associated with the criminal process, such as “guilt”, “acquittal”, “indictment”,“summary conviction”, “prosecution”, or “accused”, but instead uses terms such as “balance of probabilities”, “due diligence”,“penalty”, “undertaking”, and “representations”. Neither do proceedings under CASL involve arrest, the laying of charges, a summons toa criminal court nor the possibility of a criminal record. Finally,

section 30 of CASL explicitly states that a violation of the Act is not anoffence and that

section 126 of the Criminal Code, R.S.C. 1985, c. C-46 does not apply. [25] Turning to the second prong of the Guindon test, the CRTC found that CASL does not prescribe a true penal consequence. TheCRTC considered that, though the maximum quantum possible for an AMP under CASL is high, the jurisprudence has avoided placingan arbitrary upper limit on AMPs. Furthermore, the maximum need not be applied except where truly warranted. The CRTC pointed tocase law where it was found that AMPs of similar magnitudes to those under CASL did not trigger

section 11. The CRTC also observedthat the quantum of an AMP under CASL is determined according to the factors set out in subsection 20(3), which, according to theCRTC, reflect regulatory considerations rather than principles of criminal sentencing. The CRTC further found that no stigma attaches tothe imposition of an AMP under CASL. Finally, although AMPs are paid into the Consolidated Revenue Fund, which could suggest atrue penal consequence, the CRTC found that this factor alone was not dispositive.

(5) CASL Does Not Violate Sections 7 and 8 of the Charter [26] The CRTC found that, because CASL does not create an offence for the purposes of

section 11 of the Charter, the rights providedby sections 7 and 8 to individuals subject to penal proceedings also do not apply. The CRTC therefore held that CASL does not violatesections 7 and 8 of the Charter. B. Notice of Violation Decision [27] In the second of its two decisions, the CRTC applied CASL to the facts set out in the NOV issued to the appellant and concludedthat the appellant did, in fact, violate the Act. The CRTC considered 317 electronic messages sent by the appellant to various recipientsbetween July and September 2014. These messages formed the basis of three alleged violations of paragraph 6(1)(

a) of CASL forsending CEMs without the consent of recipients and one alleged violation of paragraph 6(2)(

c) for sending CEMs without a functioningunsubscribe mechanism. The CRTC ultimately concluded that the appellant had committed all four violations.

(1) Preliminary Issues

(

a) Effect of Appellant’s Bankruptcy Proceedings [ 28 ] The CRTC found that its review of the NOV was unaffected by the appellant having filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act , R.S.C., 1985, c. B-3 (the Bankruptcy Act ) on August 9, 2016. The appellant listed the CRTC as an unsecured creditor on November 28, 2016. (

b) The Appellant Did Not Suffer Prejudice During or After the Investigation [ 29 ] The CRTC rejected the appellant’s claim that it suffered prejudice at the investigation stage because it was not asked whether any exemptions applied to its circumstances. The CRTC also rejected the appellant’s argument that the investigation report supporting the NOV failed to properly consider whether any exemptions applied. The CRTC recalled that the appellant was informed that it was free to submit information regarding potentially applicable exemptions during the production stage of the investigation.

The appellant was given another opportunity when making representations to the CRTC. The appellant took advantage of the latter opportunity and the CRTC considered its submissions on exemptions in its decisions. The CRTC therefore determined that the appellant was not prejudiced during the investigation or afterward. (

c) Evidence Supporting the Investigation Report [ 30 ] The CRTC reduced the number of CEMs under consideration from the 451 identified in the investigation report to 317 based on, inter alia , evidentiary deficiencies in the investigation report and the fact that some CEMs appeared to fall outside the relevant time period set out in the NOV.

(2) Violations of CASL [ 31 ] To decide whether the appellant committed the alleged violations, the CRTC first determined that none of CASL ’s exclusions applied to exempt the appellant’s CEMs from the consent and content requirements set out in

section 6 . The CRTC then found that providing a non-functioning link in addition to a functioning link in a CEM violated CASL ’s requirements regarding unsubscribe mechanisms. Finally, the CRTC held that the appellant could not rely on the defense of due diligence. (

a) CEMs Did Not Qualify for Business-to-Business Exemption [ 32 ] The CRTC held that the appellant failed to establish that the “business-to-business” exemption applied to any CEMs under consideration. Subparagraph 3 (a)(ii) of the Electronic Commerce Protection Regulations SOR/2013-221 (Governor in Council Regulations) provides that

section 6 of CASL does not apply to CEMs sent between members of organizations where those organizations have a relationship and the messages relate to the activities of the recipient organization. The CRTC found that the appellant’s evidence that an organization had paid the appellant for a training course on behalf of one of its employees did not, on its own, establish a relationship that would allow the appellant to directly solicit every other employee in that organization. At most, such a transaction might be evidence of a business relationship between the appellant and the single employee for the purposes of implied consent pursuant to paragraph 10(9) (

a) of CASL . [ 33 ] The CRTC indicated that evidence of a relationship for the purposes of the business-to-business exemption might include evidence that the member of an organization with whom the appellant had dealings had the authority and intent to create such a relationship on behalf of the organization. The CRTC also indicated that a history of correspondence with an organization could, depending on its contents, support the existence of such a relationship. However, in the CRTC’s view, the appellant failed to provide sufficient evidence of relationships with any of the organizations to which the appellant had sent CEMs. (

b) Non-functioning Unsubscribe Mechanisms [ 34 ] The investigation into the appellant’s activities revealed that 87 CEMs contained a non-functioning unsubscribe link, contrary to paragraph of 6(2)(

c) of CASL . More specifically, these CEMs contained two unsubscribe links: one that appeared to function properly and one that produced an error message when accessed. [ 35 ] The CRTC found that the non-functioning links created confusion and frustration among recipients and made some believe that they were unable to unsubscribe.

According to the CRTC, the 87 CEMs failed to meet the standards set out in subsections 3(1) and 3(2) of the Electronic Commerce Protection Regulations (CRTC) , SOR/2012-36 (the CRTC Regulations ), which respectively require that unsubscribe mechanisms be “set out clearly and prominently” and “must be able to be readily performed.” The CRTC therefore found that these CEMs violated paragraph 6(2) (

c) of CASL , which requires that unsubscribe mechanisms “conform[] to the prescribed requirements” just mentioned. (

c) Implied Consent from Conspicuous Publication Not Established [ 36 ] The CRTC rejected the appellant’s argument that 132 of the 317 messages under review were sent with the implied consent of recipients due to the conspicuous publication of the recipients’ email addresses. Paragraph 10(9) (

b) of CASL states that consent is implied for the purposes of

section 6 of the Act where the recipient “has conspicuously published, or has caused to be conspicuously published, the electronic address to which the message is sent, the publication is not accompanied by a statement that the person does not wish to receive unsolicited commercial electronic messages at the electronic address and the message is relevant to the person’s business, role, functions, or duties in a business or official capacity” . [ 37 ] The CRTC found that much of the evidence relied on by the appellant did not demonstrate that recipients had conspicuously published their electronic addresses within the meaning of paragraph 10(9) (b).

The appellant obtained some addresses from third-party directory websites that gave no indication that listings were user-submitted. The appellant took other addresses from online directories comprised of user-submitted information, but which contained disclaimers stating that unsolicited CEMs were not to be sent to the listed addresses. In other cases, the CRTC found that the appellant merely assumed or speculated what the recipient organization or individual’s role, functions or duties might be, without supporting evidence. In none of these situations, in the CRTC’s view, were the

requirements of the conspicuous publication exemption in paragraph 10(9) (

b) of CASL met. (

d) Due Diligence Defence Not Applicable [ 38 ] The CRTC rejected the appellant’s alternative argument that, if it had violated CASL , it should not be found liable because it had exercised due diligence to prevent the violations.

Steps taken by the appellant included hiring new employees expressly to obtain recipients’ consent to receive CEMs; contacting the CRTC for guidance on the business-to-business exemption; achieving nearly perfect compliance with unsubscribe mechanisms; and hiring a consulting firm to develop a compliance program. [ 39 ] The CRTC found some of these measures irrelevant to a due diligence defence because they were taken after the alleged violations.

Other measures, in the CRTC’s view, demonstrated the appellant’s awareness of CASL ’s requirements, but it was not clear that the measures had, or could have had, any impact on avoiding the violations at issue. The CRTC also found some of the appellant’s claims unpersuasive, such as the claim to a nearly perfect compliance rate with unsubscribe mechanisms—the appellant was sending CEMs with non-functioning links so it is impossible to know how many unsubscribe requests never reached the appellant.

The CRTC concluded that the appellant had taken some steps in preparation for the coming into force of CASL , but failed to show it had taken all reasonable steps during the relevant period to avoid the violations at issue. The CRTC therefore rejected the appellant’s due diligence defence.

(3) Conclusions on Appellant’s Violations [ 40 ] The CRTC found that the appellant sent 317 CEMs to recipients without their prior consent contrary to paragraph 6(1) (

a) of CASL . The CRTC determined that the business-to-business exemption in subparagraph 3(a)(ii) of the Governor in Council Regulations did not apply to these CEMs and that none of the recipients had conspicuously published their electronic addresses within the meaning of paragraph 10(9) (

b) of CASL . The CRTC also held that 87 of the 317 messages contravened paragraph 6(2) (

c) of CASL by containing a non-functioning unsubscribe mechanism. The CRTC held that the appellant could not rely on the defense of due diligence to excuse these violations. The CRTC therefore concluded that, on a balance of probabilities, the appellant had committed three violations of paragraph 6(1)(

a) of CASL and one violation of paragraph 6(2) (

c) of CASL , as set out in the NOV.

(4) CRTC Reduced AMP from $1 100 000 to $200 000 [ 41 ] The CRTC concluded that the appropriate amount for an AMP in this case is $200 000 rather than the $1 100 000 set out in the NOV. To reach this conclusion, the CRTC compared the appellant’s conduct against the factors in subsection 20(3) of CASL for determining the amount of an AMP. [ 42 ] The appellant had no history of violations or undertakings under CASL or associated acts. Neither had it obtained any financial benefit from committing the violations.

However, there was no indication that the appellant had compensated any persons affected by its violations. [ 43 ] The CRTC held that the purpose of CASL ’s AMP regime is to achieve compliance through deterrence. However, in the CRTC’s view, the $1 100 000 AMP proposed in the NOV overemphasized general deterrence and was out of proportion to the amount necessary to promote the appellant’s compliance specifically. The CRTC considered that a lower amount would be appropriate. [ 44 ] The CRTC found that the nature and scope of the appellant’s violations also suggested a lower penalty was appropriate.

The CRTC acknowledged that the harm caused by the appellant’s messages was not the worst type of harm that unsolicited CEMs can cause. However, the messages were generally disruptive and unwelcome, and the frustration they caused was compounded by recipients’ inability to unsubscribe due to non-functioning links. The CRTC also noted that it had already circumscribed the range of messages under consideration from 451 to 317.

In the CRTC’s view, the appellant’s conduct still warranted a penalty, albeit in a lesser amount than suggested in the NOV. [ 45 ] The CRTC next considered the appellant’s ability to pay the proposed penalty, a factor that the CRTC found also favored a reduction from the initial $1 100 000 AMP. The CRTC placed greater weight on the appellant’s annual revenues than its profits as an indicator of the appellant’s ability to pay as it considered the latter could be more easily manipulated to appear smaller.

The CRTC found that the appellant’s claims that the proposed penalty would have drastic impacts on its owners and on the company’s continued viability lacked detailed support. In the CRTC’s view, there were some indications that the appellant was able to pay the proposed penalty and others that it could not.

The CRTC concluded that the appellant had some ability to pay, but the extent of this ability suggested a lower penalty was appropriate. [ 46 ] The CRTC found that the appellant’s non-cooperation with the investigation into its activities, as mentioned in the investigation report, should not be a significant factor in calculating the size of the AMP necessary to promote the appellant’s compliance.

The CRTC was cognizant that procedures under CASL were still very new when the appellant was attempting to navigate the investigation process, and the CRTC did not view the appellant as having attempted to frustrate or forestall the investigation. [ 47 ] The CRTC considered that the appellant’s efforts to improve compliance following the investigation into its conduct were positive indicators of self-correction.

Although these efforts did not negate the need for a penalty, in the CRTC’s view, they supported imposition of a lower penalty than the one set out in the NOV. [ 48 ] The final factor considered by the CRTC was the overall proportionality between the AMP’s magnitude and the foregoing factors, as applied to the circumstances of the appellant’s case.

The CRTC concluded that the $1 100 000 AMP set out in the NOV was out of proportion to what was required to promote the appellant’s compliance and decided to lower the amount to $200 000. [ 49 ] Despite finding the initial $1 100 000 AMP disproportionate to both the appellant’s violations and the amount necessary to promote compliance, the CRTC rejected the appellant’s argument that the AMP in this case constituted a true penal consequence and thereby triggered

section 11 of the Charter . The CRTC based this conclusion on the same grounds on which it held, in the Constitutional Decision, that CASL , in general, does not prescribe true penal consequences.

[ 50 ] The CRTC concluded that the appropriate penalty, in light of all relevant circumstances, was an AMP of $200 000. V. APPELLANT’S SUBMISSIONS A. Constitutional Decision

(1) CASL is Ultra Vires Parliament [ 51 ] The appellant argues that the CRTC erred in finding CASL intra vires Parliament’s trade and commerce power. According to the appellant, the CRTC’s pith and substance analysis was flawed because it considered CASL as a whole rather than focusing on the specific provisions at issue. The CRTC began its analysis from too broad a starting point, and this error compromised the remainder of its analysis. [ 52 ] The appellant argues that the pith and substance of CASL ’s “messaging portions” —the provisions at issue—go beyond trade and commerce.

These provisions, according to the appellant, capture all messages that might have a minor commercial purpose, regulate purely local messaging and interfere with contractual terms. The pith and substance of CASL ’s messaging provisions is therefore, in the appellant’s view, to regulate unsolicited messages generally.

The impugned provisions thus fall squarely within provincial jurisdiction over municipalities, local matters and property and civil rights. [ 53 ] The appellant argues that the impugned provisions cannot come under Parliament’s general trade and commerce power merely because certain aspects of CEMs have a national dimension. The appellant points out that CASL ’s CEM provisions displace provincial regulation concerning consumer protection, privacy and marketing. The appellant also argues the provinces are capable of adopting laws addressing the concerns targeted by CASL .

(2) CASL Violates

Section 2(

b) and Is Not Saved Under

Section 1 [ 54 ] The appellant argues that CASL ’s violation of paragraph 2(

b) of the Charter is not saved under

section 1 . (

a) CASL Too Vague to Constitute “Limit Prescribed by Law” [ 55 ] The appellant argues that CASL ’s key

definitions are too broad and open-ended to delineate a clear zone of risk. CASL ’s exemptions and regulations also cause confusion and make compliance difficult. The appellant says that, because content accessible via a link can convert a message into a CEM, CASL creates an “unknowable risk” . The appellant also contends that CASL creates an unintelligible standard due to the absence of “factors helping the public or courts understand the ambit of risk” (appellant’s constitutional memorandum, at paragraph 43). Finally, the appellant argues that the requirement that CEMs contain contact information for any person “on whose behalf” the message is sent is too vague. (

b) Objective of Impugned Provisions Not Pressing and Substantial [ 56 ] The appellant asserts that the objective of the infringing measures is to eliminate unsolicited electronic messages with any arguable commercial element. The appellant says this is not a pressing and substantial objective. The CRTC is said to have erred by locating CASL ’s objective in the Act ’s title and its

section 3 purpose clause. According to the appellant, the

section 1 analysis is only concerned with the objective of the infringing measures, specifically. [ 57 ] The infringing measures do not just guard against the most damaging and deceptive forms of spam, which, the appellant agrees, would constitute a pressing and substantial objective. Rather, the challenged provisions presumptively ban all messages with any arguable commercial content, including a variety of beneficial messages. The appellant argues that the objective of these measures cannot be to protect the economy, since they actually impede e-commerce. (

c) Impugned Provisions Not Rationally Connected to CASL ’s Objective [ 58 ] The appellant argues that the CRTC erred in considering that a “rational, logical link between the infringing measures and the government’s objectives” was sufficient to pass the rational connection stage. The appellant says that the CRTC overlooked CASL ’s many “arbitrary, unfair” and “irrational considerations” that should have caused the Act to founder at the rational connection stage (appellant’s constitutional memorandum, at paragraph 52).

The appellant argues that CASL ’s prohibition on unsolicited CEMs is overbroad and captures messages that are not detrimental to e-commerce, such as messages that send coupons or rally support for victims of natural disasters. The appellant provides a list of further examples of messages that it says would be captured by CASL ’s prohibition and that demonstrate the arbitrary, unfair and irrational nature of the prohibition. (

d) CASL Not Minimally Impairing [ 59 ] The appellant again relies on overbreadth arguments to support its position that CASL should fail the minimal impairment stage. The appellant asserts that the CRTC erred by failing to engage with each specific allegation of CASL ’s overreach. The CRTC thus failed to consider whether CASL truly represents the least drastic means of achieving the government’s objectives.

The appellant suggests that, instead of having an open-ended definition of “CEM” and a closed set of exemptions, CASL could have employed a closed definition of “CEM” and open-ended exemptions, similar to the approach taken in Australia. CASL also could have adopted an opt-out rather than an opt-in model for recipient consent. Other suggestions include, inter alia , excluding messages between individuals from the definition of CEM, exempting beneficial actors from the prohibition on unsolicited CEMs and excluding linked content from review in determining whether a message is a CEM.

The appellant argues that any one of these suggestions represents a less drastic alternative to CASL . The Act is therefore not minimally impairing of paragraph 2 (b). (

e) CASL ’s Deleterious Effects Not Proportionate to Benefits [ 60 ] The appellant argues that the CRTC erred in finding that CEMs fall outside the core of paragraph 2 (

b) and are therefore less

worthy of protection than other forms of expression. The appellant says that the CRTC also erred in failing to consider the many kinds of non-commercial speech negatively impacted by CASL ’s broad prohibition. The appellant analogizes CASL to Alberta’s Personal Information Protection Act , S.A. 2003, c. P-6.5 , which relied on a similar presumptive ban plus exemptions model and which failed the proportionality stage of the

section 1 analysis in Alberta (Information and Privacy Commissioner) v. United Food and Commercial Workers, Local 401 , 2013 SCC 62 , [2013] 3 S.C.R. 733. [ 61 ] The appellant argues that CASL curbs many forms of beneficial speech, including political and religious speech, charitable and public benefit endeavours and advertising by professionals. Conversely, it is not clear that CASL actually produces any benefits. The Act ’s severe impact on freedom of expression is therefore not justified.

(3) CASL Violates Sections 11, 7 and 8 of the Charter [ 62 ] The appellant argues that CASL violates the right against self-incrimination in sections 11 and 7 of the Charter as well as the right against unreasonable search and seizure in

section 8 . The appellant claims that an AMP under CASL constitutes a “true penal consequence” and therefore triggers

section 11 (appellant’s constitutional memorandum, at paragraph 85). The appellant asserts that those subject to CASL proceedings are nevertheless denied various procedural safeguards guaranteed by

section 11 . The appellant also argues that the statutory powers of compulsion granted to designated persons under CASL violate the protection against self- incrimination provided by

section 7 and the right to be free from unreasonable search and seizure under

section 8 . The appellant states that these violations result when designated persons compel production of documents from individuals and organizations and those documents are subsequently used against the same individuals and organizations in CASL ’s enforcement proceedings. B. Notice of Violation Decision

(1) Application and

Interpretation of the Bankruptcy Act [ 63 ] The appellant argues that the CRTC erred in finding that the appellant’s proposal to its creditors pursuant to the Bankruptcy Act had no effect on the NOV. The appellant asserts that the liabilities forming the basis of the NOV are unsecured claims that were compromised by the acceptance of the appellant’s proposal by its creditors and the insolvency court.

According to the appellant, there was therefore no legal basis for the CRTC to impose an AMP of $200 000. [ 64 ] The appellant argues that the CRTC failed to consider the proper legal test for determining whether the appellant’s liability created by the NOV is a “claim provable” under the Bankruptcy Act . The appellant argues that the three-part test, set out in Newfoundland and Labrador v.

AbitibiBowater Inc. , 2012 SCC 67 , [2012] 3 S.C.R. 443, is met by the AMP contemplated in the NOV, which constitutes a liability to a creditor (the CRTC), was incurred before the appellant filed its notice of intention, and can be assigned a monetary value. Because its liabilities arising from the NOV were, in fact, provable claims, the appellant argues that it was released from them pursuant to its proposal proceedings under the Bankruptcy Act .

The appellant asserts that the CRTC erred in imposing a $200 000 penalty on the basis of liabilities that had been discharged by its proposal. [ 65 ] Notably, the respondent concedes that the AMP is unenforceable against the appellant outside the insolvency process (respondent’s notice of violation memorandum, at paragraphs 22, 24 and 26). Although the enforceability of the AMP is therefore not a contested issue as between the parties, the appellant nevertheless requests that this Court pronounce upon the issue.

The appellant points out that the CRTC’s decision still states that the appellant’s penalty was not compromised by its Bankruptcy Act proposal and that the AMP remains enforceable. The appellant acknowledges that steps could be taken in insolvency court to stay the enforcement of the AMP, and that the respondent has conceded its non-enforceability, but notes that such a concession does not carry the same weight as a judgment of this Court.

(2) CRTC’s Treatment of the Business-to-Business Exemption [ 66 ] The appellant argues that the CRTC erred in finding that none of the 317 CEMs under review qualified for the business-to- business exemption set out in subparagraph 3(a)(ii) of the Governor in Council Regulations. The appellant asserts that Parliament’s intent in providing this exemption was to ensure that regular business communications were not unnecessarily regulated by CASL .

The appellant states that, for 168 of the 317 CEMs at issue, it provided evidence that the messages were sent to employees of organizations with which the appellant had either a long history of correspondence or a contractual relationship based on payment for employee training courses. The CRTC erred in holding that such contractual relationships did not constitute relationships for the purposes of the business-to-business exemption. [ 67 ] The appellant claims that the CRTC adopted such a restrictive approach to the exemption as to render it almost ineffectual. The CRTC’s

interpretation is said to be contrary to CASL ’s purpose as it actually discourages use of electronic means of carrying out commercial activities. [ 68 ] The appellant also argues that the CRTC confused the proper legal test for identifying a “relationship” under the business-to- business exemption with the test for ascertaining an “existing business relationship” for the purposes of implied consent under subsection 10(9) of CASL .

The appellant says that, logically, the former term should be given a “significantly broader meaning” than the latter, more “specific’ expression” (appellant’s notice of violation memorandum, at paragraph 64), particularly as Parliament chose not to define the former term in the legislation. [ 69 ] Further, the appellant argues, the CRTC’s

interpretation of the relevance requirement for the business-to-business exemption was overly restrictive. The appellant asserts that its CEMs offered training services to help employees of recipient organizations develop their skills. The recipient organizations were legally required to offer their employees training programs “of the sort marketed and offered” by the appellant (appellant’s notice of violation memorandum, at paragraph 68).

According to the appellant, the exemption does not require that CEMs bear any more specific reference to the activities of recipient organizations. [ 70 ] Finally, the appellant argues that the CRTC invented the requirement that relationships can only be formed with organizations through persons with sufficient authority to bind their organization. The appellant says that such a requirement goes against the text and

spirit of the exemption.

(3) CRTC’s Treatment of Implied Consent from Conspicuous Publication [ 71 ] The appellant contends that the CRTC also erred in its

interpretation and application of paragraph 10(9) (

b) of CASL , which provides that consent for the receipt of CEMs can be implied where the recipient has conspicuously published its electronic address. The appellant provided the CRTC with a table setting out each email address it claims was conspicuously published, where it was published and the recipient’s job title, where known. The appellant points to the table’s inclusion of recipients’ job titles as evidence that the

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