Date: 20050630
Docket: T-1572-04
Citation: 2005 FC 924
Ottawa, Ontario, June 30, 2005
PRESENT: THE HONOURABLE MR. JUSTICE de MONTIGNY
BETWEEN:
FALLS MANAGEMENT COMPANY
Applicant
and
CANADA (MINISTER OF HEALTH)
Respondent
REASONS FOR ORDER
[1] This is an application for judicial review of a decision (the "Decision") made on July 26, 2004 by the Acting Manager, Tobacco Control Program, on behalf of the Minister of Health ("Health Canada") and for resultant declaratory relief.
[2] By the Decision, Health Canada determined that Falls Management, by allowing its casino patrons to redeem accumulated reward amounts for tobacco products, is contravening subsection 29(b) of the Tobacco Act, S.C. 1997, c. 13 (the "Act"). That subsection provides that no "retailer" shall "furnish a tobacco product without monetary consideration or in consideration of the purchase of a product or service or in consideration of the performance of a service". Health Canada ordered Falls Management to "cease offering complimentary tobacco product coupons to ...[its]... patrons" and "disallow the redemption of tobacco products with the points accumulated from the player's gaming" or face further enforcement action.
BACKGROUND
[3] The facts relevant to this application are, for the most part, uncontested. Falls Management Company is a Nova Scotia company which operates two casinos in Niagara Falls, Ontario, Casino Niagara and Niagara Fallsview Casino Resort (collectively, the "Casinos").
[4] The Casinos offer an affinity program to their patrons. This program is known as the Players Advantage Club (the "Club"). One does not have to be a member of the Club to engage in gaming activities in the Casinos. In point of fact, the evidence is to the effect that of the 6.1 million patrons of Casino Niagara in 2002, only 2.1 million were Club members.
[5] The Casinos' objective in offering the Club to patrons is to identify and obtain information about patrons of the Casinos for marketing purposes. This gathering of information is of significant value to the Casinos. In order to establish and maintain the affinity relationship by encouraging patrons to join the Club and maintain their membership over protracted periods of time, the Casinos offer Club members several benefits.
[6] These benefits include free goods and services (such as discounts on merchandise at the Casinos' retail stores, free parking at the Casinos, and special direct mail offers), as well as the opportunity to participate in the Club's Rewards Program (the "Rewards Program"). The Rewards Program includes the following benefits: a) the ability to earn "cash back" on slot machine play; (b) the ability to accumulate points based on gaming activity and to redeem them on selected food products, retail merchandise or accommodation; and (c) discounts on logo merchandise at the Casino's retail stores.
[7] Neither the free goods and service program, nor the cash back or discounts on logo merchandise of the Rewards Program are issues in this application. Only tobacco products, insofar as they are amongst the products that Club members can obtain by redeeming reward amounts in their accounts, are at stake.
[8] As stated above, the Rewards Program is only one aspect of Club membership and Club members are not required to participate in order to engage in gaming at the Casinos. Club members who choose to participate in the program accumulate reward value by inserting their membership card into a slot machine or asking casino staff to rate their table play. According to the website describing the Club and the Rewards Program that is annexed to the affidavit of Mr. Anthony Annunziate, Executive Director of Marketing of the Falls Management Company, the patron earns points when playing slots and video poker based on the type of machine and the number of coins inserted. Every 100 points is worth $6.00. When playing table games, the Table Game Supervisor will rate the play based upon the average bet and length of play.
[9] Once Club members have accumulated reward value in their membership accounts, they can use that reward value to purchase a wide variety of goods and services, ranging from food services, to hotel rooms and trips ("complimentaries"). When a member requests any of these goods and services, the good or service in question will generally be provided as long as the Club member has sufficient value in his or her account. When a good or service is provided, the members' Club account is reduced by an amount equivalent to the value of the item, plus the applicable Goods and Services Tax.
[10] Tobacco products are amongst the products that Club members can obtain by redeeming reward amounts in their accounts. According to Mr. Annunziate's affidavit, it appears that only 5,086 Club members (out of 2.1 million Club members) redeemed their points for tobacco products between December 19, 2003 and September 14, 2004. The sale of tobacco products account for approximately a million dollars, out of approximately 30 million dollars of complimentaries over a period of twelve months.
THE DECISION UNDER REVIEW
[11] On November 12, 2003, Mr. John Zawilinski, Ontario/Nunavut Regional Manager of the Tobacco Control Program, sent a letter to Falls Management, advising the applicant that he had violated section 2(b) of the Act by offering free tobacco products. Mr. Zawilinski made reference to an enclosed document which he described as an "advertisement for free tobacco products". He demanded that the applicant take steps to "correct" the violation or further enforcement action would be taken.
[12] The Applicant responded by letter dated December 18, 2003. By the letter, Mr. Bruce Caughill, Falls Management's General Counsel and Chief Compliance Officer, advised and explained that casinos often establish player accounts into which amounts are directly deposited based on the player's gaming activity and that those amounts can then be drawn upon by the player to purchase goods and services. He further illustrated how a tobacco acquisition transaction occurs, stating that reward accounts are debited and tobacco products are not given away for free.
[13] On July 29, 2004, Falls Management received a letter from Mr. David Kohoko, Acting Manager of the Tobacco Control Program. Mr. Kohoko wrote in response to Mr. Caughill's letter that, after conducting "further review of your correspondence and Casino Niagara's website", the Tobacco Control Program had decided that the "coupon offer and the Rewards Rrogram which allows for the redemption of tobacco products" violated section 29(b) of the Act. As a result, and to ensure compliance with the Tobacco Act, Falls Management was "requested to cease offering complimentary tobacco product coupons to your patrons and to disallow the redemption of tobacco products with the points accumulated from the player's gaming". This is the decision that is now under review.
[14] It bears nothing that the Respondent, both in his written submissions and at the hearing, focused his argument on the Rewards Program and did not put much emphasis on the alleged offering of complementary tobacco product coupons. In his affidavit, Mr. Kohoko defines the Respondent's position that, though their Rewards Program, the Casinos provide tobacco products in exchange solely for the patrons having purchased gambling services at the Casinos with no other source of consideration, contrary to section 29(b) of the Act. For that reason, and because the evidence is far from clear as to the true nature of the coupon, which Mr. Annunziata describes in his affidavit as "an internal product slip evidencing a certain type of tobacco sale transaction" that is not shown or provided to the patrons of the casinos, I will refrain from making any finding in this respect.
THE POINTS IN ISSUE
[15] The issues to be determined on this application are the following:
[1] Is judicial review the appropriate form of proceeding to challenge the correctness of the Decision?
[2] What is the standard of review to be applied to the Decision?
[3] Is the Decision lawful and valid, or should it be set aside?
THE STATUTORY FRAMEWORK
[16] Parliament adopted the Tobacco Act in 1997, in the wake of the Supreme Court decision invalidating the Tobacco Products Control Act (RJR-MacDonald Inc. v. Canada (A.G.), [1995] 3 S.C.R. 199). Its purpose, as stated in the summary of the Act, is "to protect the health of Canadians and, in particular, to protect young persons from inducement to use tobacco products and to restrict access to tobacco products". Section 4 of the Act sets out more explicitly Parliament's intent in adopting this new legislation:
4. The purpose of this Act is to provide a legislative response to a national public health problem of substantial and pressing concern and, in particular,
(a) to protect the health of Canadians in light of conclusive evidence implicating tobacco use in the incidence of numerous debilitating and fatal diseases;
(b) to protect young persons and others from inducements to use tobacco products and the consequent dependence on them;
(c) to protect the health of young persons by restricting access to tobacco products; and
(d) to enhance public awareness of the health hazards of using tobacco products.
[17] In order to achieve these objectives, the Act provides for a number of measures designed to restrict access to tobacco products and to limit their attractiveness. In that respect, the provisions dealing with "promotion" are a key feature of the Act. They are found in Part IV, the relevant portion of which reads as follows:
| 18. (1) In this Part, "promotion" means a representation about a product or service by any means, whether directly or indirectly, including any communication of information about a product or service and its price and distribution, that is likely to influence and shape attitudes, beliefs and behaviours about the product or service.
18. (2) Application This Part does not apply to:
(a) a literary, dramatic, musical, cinematographic, scientific, educational or artistic work, production or performance that uses or depicts a tobacco product or tobacco product-related brand element, whatever the mode or form of its expression, if no consideration is given directly or indirectly for that use or depiction in the work, production or performance;
(b) a report, commentary or opinion in respect of a tobacco product or a brand of tobacco product if no consideration is given by a manufacturer or retailer, directly or indirectly, for the reference to the tobacco product or brand in that report, commentary or opinion; or
(c) a promotion by a tobacco grower or a manufacturer that is directed at tobacco growers, manufacturers, persons who distribute tobacco products or retailers but not, either directly or indirectly, at consumers.
Prohibition 19. No person shall promote a tobacco product or a tobacco product-related brand element except as authorized by this Act or the regulations.
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Sales promotions 29. No manufacturer or retailer shall
(a) offer or provide any consideration, direct or indirect, for the purchase of a tobacco product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, lottery or contest;(b) furnish a tobacco product without monetary consideration or in consideration of the purchase of a product or service or the performance of a service; or
(c) furnish an accessory that bears a tobacco product-related brand element without monetary consideration or in consideration of the purchase of a product or service or the performance of a service. |
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18. (1) Dans la présente partie, « _promotion_ » s'entend de la présentation, par tout moyen, d'un produit ou d'un service - y compris la communication de renseignements sur son prix ou sa distribution -, directement ou indirectement, susceptible d'influencer et de créer des attitudes, croyances ou comportements au sujet de ce produit ou service.
18. (2) Application La présente partie ne s'applique pas_:
a) aux oeuvres littéraires, dramatiques, musicales, cinématographiques, artistiques, scientifiques ou éducatives - quels qu'en soient le mode ou la forme d'expression - sur ou dans lesquelles figure un produit du tabac ou un élément de marque d'un produit du tabac, sauf si un fabricant ou un détaillant a donné une contrepartie, directement ou indirectement, pour la représentation du produit ou de l'élément de marque dans ces oeuvres;
b) aux comptes rendus, commentaires et opinions portant sur un produit du tabac ou une marque d'un produit du tabac et relativement à ce produit ou à cette marque, sauf si un fabricant ou un détaillant a donné une contrepartie, directement ou indirectement, pour la mention du produit ou de la marque;
c) aux promotions faites par un tabaculteur ou un fabricant auprès des tabaculteurs, des fabricants, des personnes qui distribuent des produits du tabac ou des détaillants, mais non directement ou indirectement auprès des consommateurs.
Interdiction 19. Il est interdit de faire la promotion d'un produit du tabac ou d'un élément de marque d'un produit du tabac, sauf dans la mesure où elle est autorisée par la présente loi ou ses règlements.
***
Promotion des ventes 29. Il est interdit au fabricant et au détaillant_:
a) d'offrir ou de donner, directement ou indirectement, une contrepartie pour l'achat d'un produit du tabac, notamment un cadeau à l'acheteur ou à un tiers, une prime, un rabais ou le droit de participer à un tirage, à une loterie ou à un concours; b) de fournir un produit du tabac à titre gratuit ou en contrepartie de l'achat d'un produit ou d'un service ou de la prestation d'un service;
c) de fournir un accessoire sur lequel figure un élément de marque d'un produit du tabac à titre gratuit ou en contrepartie de l'achat d'un produit ou d'un service ou de la prestation d'un service.
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ANALYSIS
[18] There is no dispute between the parties as to the answers to be given to the first two questions. More specifically, this court has recently held that a letter issued by Health Canada stating a violation of the Tobacco Act, and warning of further enforcement action is a "decision, order, act or proceeding" of a "federal board, commission or other tribunal", and thus properly subject to judicial review and declaratory relief.
[19] I agree wholeheartedly with the remarks of Nadon J. (as he then was) in Larny Holdings Ltd. v. Canada (Minister of Health) ([2003] 1 F.C. 541, at par. 18). Relying on two previous decisions from the Federal Court of Appeal (Morneault v. Canada (A.G.), [2001] 1 F.C. 30 and Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services) [1995] 2 C.F. 694), Justice Nadon wrote:
...judicial review under section 18 of the Act must be given a broad and liberal interpretation, as a result of which a wide range of administrative actions will fall within the Court's judicial review mandate. It is also clear that judicial review is no longer restricted to decisions or orders that a decision maker was expressly charged to make under the enabling legislation. Rather, judicial review will extend to decisions or orders that determine a party's rights, even if the decision at issue is not the ultimate decision. It also follows from the Court of Appeal's decision in Morneault, supra, that the word "matter" found in section 18.1 of the Act is not restricted to "decisions or orders", but encompasses any matter in regard to which a remedy might be available under section 18 or subsection 18.1(3).
[20] This precedent is particularly apposite since the decision under review in Larny was made by the same decision-maker as in this case, involved similar issues and was not reversed. It bears noting, moreover, that Justice Nadon's decision was subsequently followed in other decisions from this Court: see Eiba v. Canada (A.G.), [2004] C.F. 250; Peter G. White Management Ltd. v. Canada (Minister of Canadian Heritage), [2004] F.C. 597. And as previously mentioned, the Respondent has not taken any issue with that proposition.
[21] As for the standard of review, it is now well settled that the Court must apply the pragmatic approach developed by the Supreme Court of Canada in a number of cases, starting with U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048, subsequently followed in Pushpanathanv. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982 and Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226.
[22] The central inquiry in determining the standard of review, as indicated by Bastarache J. in Pushpanathan, supra, is the legislative intent behind the statute creating the tribunal whose decision is being reviewed. The pragmatic and functional approach requires consideration of four contextual factors in assessing that intent: (i) the presence or absence of a privative clause or statutory right of appeal; (ii) the expertise of the tribunal relative to that of the reviewing court on the issue in question; (iii) the purposes of the legislation and the provision in particular; and (iv) the nature of the question - law, fact or mixed law and fact. The overall aim of this approach is to discern the degree of deference that the legislature intended the administrative body's decisions to attract.
[23] I am in agreement with the analysis of the Applicant on this question, and I will therefore adopt his reasoning in the following paragraphs. First of all, there is no privative clause in the Act. While it is true that the absence of a privative clause does not imply, in an of itself, a high standard of scrutiny, it is nevertheless an indicia that the decisions attract little deference unless other factors bespeak a low standard of review.
[24] Secondly, the Respondent does not possess greater relative expertise than this Court on the ultimate issue in question, that is, the proper construction and interpretation of section 29 of the Act and an application of that construction to the actual facts. Specialized technical or scientific knowledge is not required and as a general rule, statutory interpretation is a purely legal question, ultimately within the province of the judiciary. It cannot be said that Health Canada has greater expertise in the interpretation of the Act than does this Court (Barrie Public Utilities v. Canadian Cable Television Assn., [2003] 1 S.C.R. 476; Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), (2004), 242 D.L.R.(4th) 193 (S.C.C.)).
[25] Third, the Act does not have a "polycentric" purpose that would attract a higher degree of deference. It has been held that increased deference is generally accorded where legislation is intended to resolve and balance competing policy objectives or the interests of various constituencies. Parliament has already made a determination of what is and what is not acceptable, and the Health Canada officials enforce the provisions of the Act much as a court. In other words, the Act does not confer broad discretionary power or require the decision-maker to balance multiple interests or considerations; we are much closer to the judicial model, with two parties in opposition as to the proper interpretation of a rule.
[26] Finally, the finding under review is not a question of pure fact, but involves the construction to be given to a legal provision. In order to determine whether the Applicant is in compliance with section 29(b) of the Act, one must first come to a conclusion as to what is meant by "monetary consideration" and whether the redeeming of points acquired as a result of a Rewards Program can be considered as a monetary consideration. This is at a very least a mixed question of fact and law, which does not attract the same degree of deference as a pure question of fact.
[27] For all these reasons, I am of the view that the appropriate standard of review is correctness. The Respondent concurs with this conclusion, and submits that the decision is correct in law. The Applicant, obviously, is of the opposite mind. This is the question I must now turn my mind to.
[28] When looking at section 29(b) of the Act, one must not lose sight of the overall objective of the legislation, as enunciated by its title and section 4. As mentioned before, the clear objective of the Act is to protect the health of Canadians in general and of young persons in particular, and to make sure that the health hazards associated with the use of tobacco are well known.
[29] It is well established that a legislative provision cannot be interpreted in a vacuum, but must be construed in light of the overall scheme put in place by the legislator and of the purposes that are being sought (Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27). Section 29 is found in Part IV of the Act, which generally prohibits the promotion of tobacco products except as authorized by the Act or the regulations made thereunder (s. 19). This is but one of the tools designed to achieve the ultimate objective of the Act.
[30] "Promotion" is defined in section 18 of the Act as a representation about a product "that is likely to influence and shape attitudes, beliefs and behaviours about the product". When interpreting and applying section 29(b), one must therefore look not only at the literal wording of the section, but must also consider whether the activities at issue are promoting tobacco products as defined in Part IV.
[31] The evidence reveals that the Rewards Program does not promote the sale or use of tobacco products in any way and makes no direct or indirect representations that would influence and shape attitudes, beliefs or behaviour with respect to tobacco products. The availability of tobacco products as a potential reward is not advertised in any way. It is not listed on the Casinos' website, nor in any promotional materials regarding the Club or the Rewards Program. Needless to say, it would be quite different if the Casinos were handing out "coupons" or "vouchers" for free tobacco products to its patrons or to the public; but as mentioned before, the evidence is at best inconclusive in that respect, and I am not prepared to make a finding on that basis.
[32] The uncontradicted and unchallenged evidence is that the Rewards Program was not created to promote tobacco use or to increase sales of tobacco. Tobacco is merely one of many goods and services available for purchase by eligible Club members. Moreover, the Rewards Program does not promote gaming activity. No association is made between gambling and the use of tobacco products. The use of tobacco products and gaming are not associated in any Rewards Program advertisements or in any promotional material. Finally, one must be 19 years of age or older to apply for membership in the Club.
[33] As a result of the foregoing, one is drawn to the inescapable conclusion that the Rewards Program and, more particularly, the redeeming of points for tobacco products, does not amount to "promotion" pursuant to Part IV of the Act. There is nothing in the program itself or in the way it is administered to suggest that Falls Management, as operators of the casinos, is in the business of promoting the use of tobacco, or endeavours to influence an shape attitudes, beliefs or behaviour with respect to tobacco products. This is neither the primary nor the collateral objective of the Rewards Program.
[34] Be that as it may, can it be said, on a literal reading of s. 29(b) of the Act, that the tobacco products are furnished "without monetary consideration", or "in consideration of the purchase of a product or service or the performance of a service"? I do not think so.
[35] As for the first leg of s. 29(b), there is obviously a discrepancy between the English and the French versions. While the English version refers to a "monetary consideration", the French version uses the words "à titre gratuit". This is obviously broader, as it implies "without any consideration", monetary or otherwise. It is well established that when the two versions of a bilingual legislative provision seem contradictory, reconciliation must be attempted. In practice, this involves finding a shared or common meaning in the two versions. This, in turn, means that when one version may have a broader meaning than another, one must choose the more narrow as the shared meaning (see P.-A. Côté, The Interpretation of Legislation in Canada, Carswell, 2000, pp. 326-328). As a result, I would think that the consideration has to be monetary in nature, since this is the only construction that can be reconciled with both the English and the French versions.
[36] I am further reinforced in my analysis when looking at section 31 of the Act. It provides that "no person shall, on behalf of another person, with or without consideration, publish, broadcast or otherwise disseminate any promotion that is prohibited by this Part" (my underlining). This is clear evidence that when Parliament decided to qualify "consideration" with the word "monetary" in section 29(b), it did it on purpose and meant something different (and more narrow) than when it used the word "consideration" unqualified as in section 31.
[37] Of course, I am conscious of the fact that "without consideration" and "without monetary consideration" are both translated in French by the words "à titre gratuit". One could argue that this turns my argument on its head, as it seems that the word "monetary" is not of much significance and should not be of critical importance when trying to find the shared meaning of s. 29(b). But upon reflection, I think the answer lies in the fact that the word "gratuit" in French is itself ambiguous, and can refer both to a monetary consideration and more generally to any kind of consideration.
[38] In any event, this is not critical in deciding whether the acquisition of tobacco products in exchange of the redemption of accumulated points contravenes section 29(b) of the Act. While such a transaction is certainly not "à titre gratuit", it can equally be said that it is not "without monetary consideration" either. The reward value that is removed from the member's account is akin to cash and has real monetary value with a direct relationship to the value of the tobacco products. The value debited from the account is a proxy for "money"; this is borne out by the fact that the patron could have used the same points to purchase other goods and services at the Casinos, all of which have a real monetary value.
[39] But, it may be objected, if the points themselves are given away to patrons without any compensation for the casinos, as a kind of bonus for coming to their establishment or for playing, they are merely ¼ a smoke screen! If that were indeed to be the case, it would be tantamount to distribute freely tobacco products to all those coming to the casinos, thus clearly infringing the second part of section 29(b) (furnishing tobacco products in consideration of the purchase of a product or service). As a matter of fact, this is precisely why the free offering of "coupons" or "vouchers" to the public for complementary tobacco products would be a clear violation of the Act.
[40] But this is not what the evidence reveals. The Applicant, through the affidavit of Mr. Annunziata, shows that the Casinos' objective in offering the Club and its Rewards Program to its patrons is to identify and obtain information about patrons of the Casinos for marketing purposes. It was argued that this gathering of information is of significant value to the Casinos, and this has not been disputed by the Respondent. So the clients of the Casinos must agree to provide useful information on their playing habits and preferences in order to receive the reward value that will eventually translate into complementary goods of their choice. There is accordingly a real compensation for the Casinos, and the points earned by patrons while playing are not simply bonuses of free offerings.
[41] In light of the foregoing, I am unable to conclude that by allowing its Club members to redeem Rewards Program points for tobacco products, the Applicant contravenes section 29(b) of the Tobacco Act. As a result, I come to the conclusion that the Decision is invalid and that the Applicant does not need to act upon it.
(s) "Yves de Montigny"
Judge
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
STYLE OF CAUSE: FALLS MANAGEMENT CO. v. THE MINISTER OF HEALTH
PLACE OF HEARING: Toronto, Ontario
REASONS FOR ORDER: de Montigny J.
APPEARANCES:
Joel Richler
Marcy McKee
Blake, Cassels & Graydon LLP FOR APPLICANT
Eric Peterson
The Attorney General of Canada FOR RESPONDENT
SOLICITORS OF RECORD:
Blake Cassels & Graydon LLP
Toronto, Ontario FOR APPLICANT
Mr. John H. Sims