R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154

The Wholesale Travel Group Inc. Appellant

v.

Her Majesty The Queen Respondent

and

The Attorney General for Ontario,

the Attorney General of Quebec,

the Attorney General for New Brunswick,

the Attorney General of Manitoba,

the Attorney General for Saskatchewan,

the Attorney General for Alberta,

Ellis‑Don Limited and Rocco Morra Interveners

and between

Her Majesty The Queen Appellant

v.

The Wholesale Travel Group Inc. Respondent

and

The Attorney General for Ontario,

the Attorney General of Quebec,

the Attorney General for New Brunswick,

the Attorney General of Manitoba,

the Attorney General for Saskatchewan,

the Attorney General for Alberta,

Ellis‑Don Limited and Rocco Morra Interveners

Indexed as: R. v. Wholesale Travel Group Inc.

File Nos.: 21779, 21786.

1991: February 18; 1991: October 24.

Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Stevenson and Iacobucci JJ.

on appeal from the court of appeal for ontario

Constitutional law ‑‑ Charter of Rights ‑‑ Fundamental justice ‑‑ Regulatory provisions ‑‑ Strict liability ‑‑ Corporation charged with misleading advertising under Competition Act ‑‑ Conviction possible without fault on part of regulated party ‑‑ Imprisonment possible penalty on breach of provisions ‑‑ Whether ss. 36(1)(a) and 37.3(2) of Competition Act infringe s. 7 of Charter ‑‑ If so, whether infringement justifiable under s. 1 of Charter ‑‑ Canadian Charter of Rights and Freedoms, ss. 1, 7, 11(d) ‑‑ Competition Act, R.S.C. 1970, c. C‑23, ss. 36(1)(a), 37.3(2).

Constitutional law ‑‑ Charter of Rights ‑‑ Presumption of innocence ‑‑ Reverse onus provisions ‑‑ Corporation charged with misleading advertising under Competition Act ‑‑ Statutory defences comprising defence of due diligence coupled with timely retraction ‑‑ Statutory defences to be established by accused on balance of probabilities ‑‑ Whether reverse onus infringes s. 11(d) of Charter ‑‑ If so, whether infringement justifiable under s. 1 of Charter ‑‑ Canadian Charter of Rights and Freedoms, ss. 1, 7, 11(d) ‑‑ Competition Act, R.S.C. 1970, c. C‑23, ss. 36(1)(a), 37.3(2).

Constitutional law ‑‑ Charter of Rights ‑‑ Corporations ‑‑ Standing ‑‑ Corporation charged with misleading advertising under Competition Act ‑‑ Whether corporation has standing to challenge validly of federal legislation under ss. 7 and 11(d) of Charter ‑‑ If so, whether a corporation entitled to benefit from a finding that federal legislation unconstitutional ‑‑ Canadian Charter of Rights and Freedoms, ss. 1, 7, 11(d) ‑‑ Competition Act, R.S.C. 1970, c. C‑23, ss. 36(1)(a), 37.3(2).

Wholesale Travel Group Inc. (a travel agency) was charged with false or misleading advertising, contrary to s. 36(1)(a) of the Competition Act. The advertisements referred to vacations at "wholesale prices" but the advertised "wholesale price" was not the price at which Wholesale Travel acquired its vacation packages. The Crown elected to proceed by way of summary conviction and the accused pleaded not guilty. At the outset of the trial, the accused brought a motion for a declaration that ss. 36(1)(a) and 37.3(2) of the Competition Act were inconsistent with ss. 7 and 11(d) of the Canadian Charter of Rights and Freedoms and were, therefore, of no force or effect. Section 36(1)(a) created the offence and s. 37.3(2) set forth a statutory defence. This defence, which was to be established by the accused (s. 37.3(2)), included essentially the common law defence of due diligence (s. 37.3(2)(a) and (b)) coupled with the requirement of a timely retraction (s. 37.3(2)(c) and (d)).

The trial judge held that ss. 36(1)(a) and 37.3(2) were inconsistent with ss. 7 and 11(d) and could not be upheld under s. 1 of the Charter and dismissed the charges. The Supreme Court of Ontario, on appeal, found impugned provisions constitutional and remitted the case to the Provincial Court. The Ontario Court of Appeal allowed the appeal in part. The majority held that s. 37.3(2)(c) and (d) of the Competition Act were severable from the rest of s. 37.3(2) and declared them to be of no force or effect. The majority further held that the words "he establishes that" in s. 37.3(2) were severable and declared them to be of no force or effect. Both Wholesale Travel and the Crown appealed.

The constitutional questions stated here queried: (1) whether s. 37.3(2) of the Competition Act in whole or in part violated ss. 7 or 11(d) of the Charter; (2) whether s. 36(1)(a), in and of itself or when read in combination with s. 37.3(2), violated ss. 7 or 11(d) of the Charter; and (3) if either were answered in the affirmative, whether the impugned provision was saved by s. 1 of the Charter? An issue not encompassed by the constitutional questions was whether a corporation had "standing" to challenge the constitutionality of these statutory provisions under the Charter and, if so, was a corporation entitled to benefit from a finding that the provisions violated a human being's constitutional rights.

Held: The appeal by Wholesale should be dismissed.

Held (Lamer C.J., La Forest, Sopinka and McLachlin JJ. dissenting in the result): The Crown's appeal should be allowed.

The issues are decided as follows:

1. It is not an infringement of s. 7 of the Charter to create an offence for which the mens rea component is negligence, so that a due diligence defence (s. 37.3(2)(a) and (b)) is available. Unanimous.

2. The timely retraction provisions (s. 37.3(2)(c) and (d)) infringe s. 7, are not justified under s. 1, and are accordingly unconstitutional. Unanimous.

3. (a) On a majority reasoning by Lamer C.J. (and La Forest, Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci JJ.), the reverse onus provision ("he establishes that" in s. 37.3(2)) infringes s. 11(d) of the Charter; L'Heureux‑Dubé and Cory JJ. (dissenting on this issue) would find no infringement, and would in any event, have found an infringement justified under s. 1.

(b) Per Gonthier, Stevenson and Iacobucci JJ.: The provision is justified under s. 1 of the Charter.

(c) Per Lamer C.J. and La Forest, Sopinka and McLachlin JJ. (dissenting on this issue): The provision is not justified under s. 1 of the Charter.

(d) Per L'Heureux‑Dubé, Gonthier, Cory, Stevenson and Iacobucci JJ. (Lamer C.J. and La Forest, Sopinka and McLachlin JJ. dissenting in the result): The reverse onus provision is constitutional.

4. The matter is therefore remitted to trial on the bases that:

(a) a negligence mens rea regulatory offence is constitutional;

(b) the timely retraction provisions are unconstitutional; and

(c) the reverse onus provision is constitutional.

I. Standing

Per Lamer C.J. and La Forest and Sopinka JJ.: Wholesale Travel has standing to challenge the constitutionality of the false/misleading advertising provisions under ss. 7 and 11(d) of the Charter and may benefit the finding that these provisions are unconstitutional. However, this is not to say that if the same provisions were enacted so as to apply exclusively to corporations, a corporation would be entitled to raise the Charter arguments which have been raised in the case at bar. Sections 36(1) and 37.3(2) of the Competition Act encompass both individual and corporate accused. If the provisions violate an individual's Charter rights they must be struck down (to the extent of the inconsistency) and cannot apply to any accused, whether corporate or individual. If the provisions in question applied only to corporations, the Charter analysis would be very different.

Per Gonthier, Stevenson and Iacobucci JJ.: The conclusions of Lamer C.J. on standing were agreed with.

Per McLachlin J.: It was not necessary to consider the application of the Charter to a provision dealing with corporations only.

II. Sections 7 and 11(d) of the Charter

Per Lamer C.J. and Sopinka J.: Section 37.3(2)(c) and (d) infringes s. 7 of the Charter and the words "he establishes that" in s. 37.3(2) infringe the presumption of innocence in s. 11(d) of the Charter.

The offence of false/misleading advertising is punishable by imprisonment. The offence therefore must not be one of absolute liability and must command at least a fault requirement of negligence, in that at least a defence of due diligence must always be open to an accused.

While there are some offences for which the special stigma attaching to conviction is such that subjective mens rea is necessary in order to establish the moral blameworthiness which justifies the stigma and sentence, the offence of false/misleading advertising is not such an offence.

The issue here centred on the fault requirement constitutionally required where an accused faces possible imprisonment. An element of subjective mens rea is not always required by s. 7 of the Charter. Whether a fault requirement higher than this constitutional minimum of negligence ought to be adopted where an accused faces possible imprisonment or conviction of any offence under the Criminal Code is a question of public policy which must be determined by Parliament.

The inclusion of the word "and" after s. 37.3(2)(c) clearly indicates that all four components of s. 37.3(2) must be established for the accused to be acquitted. If a situation could arise where an accused would be unable to establish all four components of s. 37.3(2) but had nonetheless been duly diligent (i.e., not negligent), the constitutionally required element of negligence is not fulfilled by the statutory defence contained in s. 37.3(2).

The additional requirement of "timely retraction" in paras. (c) and (d) means that the statutory defence is considerably more narrow than the common law defence of due diligence and could result in the conviction of an accused who was not negligent. The consequence of paras. (c) and (d) is to remove the constitutionally required fault level in the false/misleading advertising provisions and s. 7 of the Charter is therefore offended.

Whether this offence (or the Act generally) is better characterized as "criminal" or "regulatory" is not the issue. A person whose liberty has been restricted by way of imprisonment has lost no less liberty because he or she is being punished for the commission of a regulatory offence as opposed to a criminal offence. It is the fact that the state has resorted to the restriction of liberty through imprisonment for enforcement purposes which is determinative of the principles of fundamental justice. These principles do not take on a different meaning simply because the offence can be labelled as "regulatory". A regulatory context may well influence the Charter analysis in particular cases but negligence nevertheless is the minimum level of fault which will accord with s. 7 of the Charter whenever a conviction gives rise to imprisonment.

The presumption of innocence is protected expressly by s. 11(d) and inferentially by s. 7 because this presumption is a principle of fundamental justice. Section 11(d) requires, where a person faces penal consequences, that the individual be proven guilty beyond a reasonable doubt, the state bear the burden of proof, and that the prosecution be carried out lawfully. Section 11(d) is offended if an accused may be convicted notwithstanding a reasonable doubt on an essential element of the offence. The real concern, therefore, is not that the accused must disprove an element or prove an excuse, but that an accused may be convicted while a reasonable doubt exists.

The words "he establishes that" in s. 37.3(2) require the accused to prove the two elements set out on a balance of probabilities and failure to so prove either element will result in conviction. The absence of due diligence is necessary for conviction and yet an accused could be convicted under s. 37.3(2) notwithstanding a reasonable doubt as to whether or not the accused was duly diligent. The impugned words therefore infringe s. 11(d).

Since constitutional difficulties arise only from the operation of s. 37.3(2)(c) and (d) and from the words "he establishes that" in s. 37.3(2), s. 36(1)(a) raises no constitutional problem either by itself or in combination with the remainder of s. 37.3(2).

Per La Forest J.: Substantial agreement was expressed for the reasons of Lamer C.J. Nevertheless, there is a broad divide between true criminal law and regulatory offences. The possible imposition of a term of imprisonment necessitates much stricter requirements to conform with the principles of fundamental justice than mere monetary penalties. In the regulatory context here, a requirement that a reasonable doubt be raised by the accused that he or she exercised due diligence meets the requirements of fundamental justice under s. 7 of the Charter. A requirement that the accused prove such diligence on the balance of probabilities goes too far. The same holds true under s. 1 if the issue is approached in terms of s. 11(d).

The requirement of due diligence is sufficient for Charter purposes for regulatory offences and some criminal offences having a significant regulatory base. However, a lower level of mens rea than criminal negligence should not be accepted for most criminal cases.

Per McLachlin J.: The modified due diligence defence embodied in s. 37.3(2)(c) and (d) permits conviction in the absence of even the minimum fault of negligence and so infringes s. 7 of the Charter. The requirement of s. 37.3(2) that the accused establish due diligence on a balance of probabilities, through the inclusion of the phrase "he establishes that", permits conviction despite a reasonable doubt as to an essential element of the offence. Combined with the sanction of imprisonment, the application of this onus violates s. 11 (d) of the Charter. When the offending provision in s. 37.3(2)(c) and (d) is removed, along with the phrase "he establishes that" in s. 37.3(2), the remaining provision at issue, s. 36(1)(a), does not infringe the Charter.

Per L'Heureux‑Dubé and Cory JJ.: Strict liability offences, as exemplified in this case by the combination of s. 36(1)(a) and s. 37.3(2)(a) and (b) of the Competition Act, do not infringe either s. 7 or s. 11(d) of the Charter. Neither the absence of a mens rea requirement nor the imposition of an onus on the accused to establish due diligence on a balance of probabilities offends the Charter rights of those accused of regulatory offences.

The common law has long acknowledged a distinction between truly criminal conduct and conduct, otherwise lawful, which is prohibited in the public interest. Regulatory offences and crimes embody different concepts of fault. The mens rea requirement is not required in regulatory offences. Since regulatory offences are directed primarily not to conduct itself but to the consequences of conduct, conviction of a regulatory offence imports a significantly lesser degree of culpability than conviction of a true crime. The concept of fault in regulatory offences is based upon a reasonable care standard and, as such, does not imply moral blameworthiness in the same manner as criminal fault. Conviction for breach of a regulatory offence suggests nothing more than failure to meet a prescribed standard of care.

The Competition Act is regulatory in character. Here, the offence did not focus on dishonesty but rather on the harmful consequences of otherwise lawful conduct. Conviction would only suggest that the defendant has made a representation to the public which was in fact misleading and that the defendant was unable to establish the exercise of due diligence in preventing the error. This connotes a fault element of negligence rather than one involving moral turpitude.

The Charter is to be interpreted in light of the context in which the claim arises. The rights asserted by the appellant must be considered in light of the regulatory context, acknowledging that a Charter right may have different scope and implications in a regulatory context than in a truly criminal one. Under this contextual approach, constitutional standards developed in the criminal context cannot be applied automatically to regulatory offences. Rather, the content of the Charter right must be determined only after an examination of all relevant factors and in light of the essential differences between the two classes of prohibited activity. The appellant's claim must also be considered and weighed in light of the realities of a modern industrial society, where the regulation of innumerable activities is essential for the benefit of all. It is vital that the fundamentally important role of regulatory legislation in the protection of individuals and groups in Canadian society today be recognized and accepted.

The distinction between criminal and regulatory offences and their differential treatment for Charter purposes is in some ways explained by a "licensing argument" and by the vulnerability of those being protected by the regulatory measures. The regulated person chose to enter the regulated field and accordingly can be taken to have known of, in most cases, and to have accepted certain terms and conditions of entry. The nature of the conduct will largely determine if the licensing argument should apply. The procedural and substantive protections a person can reasonably expect may vary depending upon the activity that brings that person into contact with the state. The extent of Charter protection may differ depending upon whether the activity in question is regulatory or criminal in nature. Vulnerability is also a component in the contextual approach to Charter interpretation and should be considered whenever regulatory legislation is subject to Charter challenge.

The principles of fundamental justice referred to in s. 7 of the Charter prohibit the imposition of penal liability and punishment without proof of fault. The level of fault constitutionally required for every type of offence, however, has not been determined and will vary with the nature of the offence and the penalties available upon conviction. It has only been established that where imprisonment is available as a penalty, absolute liability cannot be imposed since it removes the fault element entirely and, in so doing, permits the punishment of the morally innocent.

Section 7 requires proof of mens rea in connection with true crimes. With respect to regulatory offences, however, proof of negligence satisfies the s. 7 fault requirement. Although the element of fault may not be removed completely, the demands of s. 7 will be met in the regulatory context where liability is imposed for conduct which breaches the standard of reasonable care required of those operating in the regulated field.

Mens rea and negligence are both fault elements which provide a basis for the imposition of liability. Mens rea focuses on the mental state of the accused and requires proof of a positive state of mind such as intent, recklessness or wilful blindness. Negligence, on the other hand, measures the conduct of the accused on the basis of an objective standard, irrespective of the accused's subjective mental state. Where negligence is the basis of liability, the question is not what the accused intended but rather whether the accused exercised reasonable care. The application of the contextual approach suggests that negligence is an acceptable basis of liability in the regulatory context which fully meets the fault requirement in s. 7 of the Charter. To place regulatory offences in a separate category from criminal offences, with a lower fault standard, does not violate the principles of fundamental justice under s. 7 by allowing the defendant to go to jail without having had the protection of proof of mens rea by the Crown which is available in criminal prosecutions.

Governments must have the ability to enforce a standard of reasonable care in activities affecting public welfare. The laudable objectives served by regulatory legislation should not be thwarted by the application of principles developed in another context. The tremendous importance of regulatory legislation in modern Canadian industrial society requires that courts be wary of interfering unduly with the regulatory role of government through the application of inflexible standards.

The government cannot adequately monitor every industry so as to be able to prove actual intent or mens rea in each case. It can, as a practical matter, do no more than to demonstrate that it has set reasonable standards to be met by persons in the regulated sphere, and to prove beyond a reasonable doubt that there has been a breach of those standards by the regulated defendant. The regulated person is taken to be aware of and to have accepted the imposition of a certain objective standard of conduct as a pre‑condition engaging the regulated activity. It misses the mark to speak in terms of the "unfairness" of an attenuated fault requirement because the standard of reasonable care has been accepted by the regulated actor upon entering the regulated sphere.

Strict liability offences accordingly do not violate s. 7 of the Charter. The requirements of s. 7 are met in the regulatory context by the imposition of liability based on a negligence standard.

The imposition of a reverse persuasive onus on the accused to establish due diligence on a balance of probabilities does not run counter to the presumption of innocence, notwithstanding the fact that the same reversal of onus would violate s. 11(d) in the criminal context. The section 11(d) standard which has been developed and applied in the criminal context should not be applied to regulatory offences. The importance of regulatory legislation and its enforcement strongly supports the use of a contextual approach in the interpretation of the s. 11(d) right as applied to regulatory offences. Quite simply, the enforcement of regulatory offences would be rendered virtually impossible if the Crown were required to prove negligence beyond a reasonable doubt. The means of proof of reasonable care will be peculiarly within the knowledge and ability of the regulated accused. Only the accused will be in a position to bring forward evidence relevant to the question of due diligence. There is a practical difference between requiring the accused to prove due diligence on a balance of probabilities and requiring only that the accused raise a reasonable doubt as to the exercise of due diligence. The presumption of innocence for a regulated accused is not meaningless because the Crown must still prove the actus reus. Fault is presumed from the bringing about of the proscribed result and the onus shifts to the defendant to establish reasonable care on a balance of probabilities.

The availability of imprisonment does not alter the conclusion that strict liability does not violate either ss. 7 or 11(d) of the Charter. The Charter does not guarantee an absolute right to liberty; rather, it guarantees the right not to be deprived of liberty except in accordance with the principles of fundamental justice. It is whether the principles of fundamental justice have been violated, not the availability of imprisonment, which is the determinative consideration. There is a difference or variation between what the principles of fundamental justice require in regard to true crimes and what they require in the regulatory context. Imprisonment is not unreasonable, given the danger that can accrue to the public from breaches of regulatory statutes, and can be challenged under s. 12 of the Charter if grossly disproportionate to the offence committed.

Section 37.3(2)(c) and (d) imposes an obligation on the accused to make a timely retraction as a precondition to relying on the defence of due diligence. Conviction therefore may be required in some circumstances where there is no fault on the part of the accused. Even where an accused can establish the absence of negligence in the making of misleading representations, paras. (c) and (d) nonetheless require conviction if the accused has failed to make a timely prompt correction or retraction. In these circumstances, the accused would be deprived of the defence of due diligence and the offence would be tantamount to absolute liability, and thereby violate s. 7.

Section 37.3(2)(a) and (b) put forward the common law defence of due diligence. They do not violate s. 7 of the Charter because of the removal of the mens rea requirement in strict liability offences. Where imprisonment is available as a penalty for breach of a statute, s. 7 of the Charter requires a proof of fault before liability can be imposed. Fault in the regulatory context should be imposed on the basis of negligence.

The imposition in strict liability offences of a reverse persuasive onus on the accused to establish due diligence is proper and permissible and does not constitute a violation of the s. 11(d) presumption of innocence. Section 37.3(2)(a) and (b) do not violate s. 11(d) of the Charter.

Per Gonthier, Stevenson and Iacobucci JJ.: Section 37.3(2)(c) and (d) infringe s. 7 of the Charter. The section 11(d) presumption of innocence has a different scope and meaning in relation to public welfare or regulatory offences as opposed to criminal offences.

The reverse onus on the accused to establish due diligence on a balance of probabilities (via the words "he establishes that" in s. 37.3(2)) infringes s. 11(d) (but is justified under s. 1 of the Charter).

III. Section 1 of the Charter

Per Gonthier, Stevenson and Iacobucci JJ.: Section 37.3(2)(c) and (d) is not justified under s. 1.

The reverse onus provision is justified under s. 1 of the Charter. The objective of convicting those guilty of false or misleading advertising and of avoiding loss of convictions because of evidentiary problems because the facts are in the hands of the accused warrants overriding the right guaranteed by s. 11(d) of the Charter.

There is a rational connection between the desired objective and the means chosen to attain it. The alternative means by use of a mandatory presumption of negligence would not achieve the objective as effectively nor would it go a long way in achieving the objective. In practice it would be virtually impossible for the Crown to prove public welfare offences and would effectively prevent governments from seeking to implement public policy through prosecution.

Given that those regulated choose to participate in these regulated activities, and accordingly have accepted the attendant responsibilities, and taking into account the fundamental importance of the legislative objective and the fact that the means chosen impair the right guaranteed by s. 11(d) as little as is reasonably possible, the effects of the reverse onus on the presumption of innocence are proportional to the objective.

Per L'Heureux‑Dubé and Cory JJ.: Sections 36(1)(a) and 37.3(2)(a) and (b) do not infringe either s. 7 or s. 11(d) of the [Charter](https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-11/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-11.html> and would have been justified under s. 1 had there been a Charter infringement.

Section 37.3(2)(c) and (d) violate s. 7 of the Charter and cannot be justified under s. 1 of the Charter. Assuming that there is a rational connection between the requirement of corrective advertising and the legislative objective of seeking to prevent the harm resulting from misleading representations, there is no proportionality between means and ends. The impugned provisions do not constitute a minimal impairment of the rights of the accused. Further, the availability of imprisonment as a sanction far outweighs the importance of the regulatory objective in correcting false advertising after the fact.

Per Lamer C.J. and Sopinka J. (dissenting in the result): Section 37.3(2)(c) and (d) are not justified under s. 1. Section 37.3(2)(c) and (d) were enacted to prevent false/misleading advertisers from benefiting from advertising and to protect consumers from the detrimental effects of advertising. This is sufficiently important to warrant overriding constitutionally protected rights. The means chosen were rationally connected to this objective. The modified due diligence defence embodied in paras. (c) and (d), however, does not fall within the constitutionally acceptable range. These paragraphs may "catch" even those who have been duly diligent in preventing false advertising. Alternative means could achieve the objective of encouraging advertisers to undertake corrective advertising without convicting the innocent.

An absolute liability component to the offence of false advertising would perhaps be more effective in facilitating convictions than would the alternatives proposed. Parliament, however, could have retained the absolute liability component and, at the same time, infringed Charter rights to a much lesser extent, had it not combined this with the possibility of imprisonment.

The reverse onus provision is not justified under s. 1. The reverse onus provision was intended to facilitate the convictions of false/misleading advertisers. This is a "pressing and substantial objective". The means chosen are rationally connected to this objective. The provision, however, does not infringe constitutionally protected rights as little as is reasonably possible. Parliament could have employed alternative means which would have resulted in a lesser impairment.

Per McLachlin J.: The infringements caused by s. 37.3(2)(c) and (d) and the reverse onus provision cannot be justified under s. 1.

Cases Cited

By Cory J.

Considered: Re B.C. Motor Vehicle Act, 1985 81 (SCC), [1985] 2 S.C.R. 486; R. v. Vaillancourt, 1987 2 (SCC), [1987] 2 S.C.R. 636; R. v. City of Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299; Lambert v. California, 355 U.S. 225 (1957); United States v. International Minerals and Chemical Corp., 402 U.S. 558 (1971); R. v. Logan, 1990 84 (SCC), [1990] 2 S.C.R. 731; referred to: R. v. Holmes, 1988 84 (SCC), [1988] 1 S.C.R. 914; R. v. Whyte, 1988 47 (SCC), [1988] 2 S.C.R. 3; R. v. Keegstra, 1990 24 (SCC), [1990] 3 S.C.R. 697; Sherras v. De Rutzen, [1895] 1 Q.B. 918; R. v. Pierce Fisheries Ltd., 1970 178 (SCC), [1971] S.C.R. 5; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425; General Motors of Canada Ltd. v. City National Leasing, 1989 133 (SCC), [1989] 1 S.C.R. 641; R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295; Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326; Rocket v. Royal College of Dental Surgeons of Ontario, 1990 121 (SCC), [1990] 2 S.C.R. 232; Committee for the Commonwealth of Canada v. Canada, 1991 119 (SCC), [1991] 1 S.C.R. 139; McKinney v. University of Guelph, 1990 60 (SCC), [1990] 3 S.C.R. 229; Morissette v. United States, 342 U.S. 246 (1952); United States v. Freed, 401 U.S. 601 (1971); R. v. Edwards Books and Art Ltd., 1986 12 (SCC), [1986] 2 S.C.R. 713; Irwin Toy Ltd. v. Quebec (Attorney General), 1989 87 (SCC), [1989] 1 S.C.R. 927; Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038; R. v. Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541; Woolmington v. Director of Public Prosecutions, [1935] A.C. 462; R. v. Lyons, 1987 25 (SCC), [1987] 2 S.C.R. 309; United States v. Balint, 258 U.S. 250 (1922); United States v. Dotterweich, 320 U.S. 277 (1943); Patterson v. New York, 432 U.S. 197 (1977); Martin v. Ohio, 480 U.S. 228 (1987).

By Iacobucci J.

Referred to: R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103; R. v. Keegstra, 1990 24 (SCC), [1990] 3 S.C.R. 697; R. v. Chaulk, 1990 34 (SCC), [1990] 3 S.C.R. 1303.

By Lamer C.J.

Considered: Re B.C. Motor Vehicle Act, 1985 81 (SCC), [1985] 2 S.C.R. 486; R. v. Vaillancourt, 1987 2 (SCC), [1987] 2 S.C.R. 636; Irwin Toy Ltd. v. Quebec (Attorney General), 1989 87 (SCC), [1989] 1 S.C.R. 927; R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295; R. v. Whyte, 1988 47 (SCC), [1988] 2 S.C.R. 3; Dywidag Systems International, Canada Ltd. v. Zutphen Brothers Construction Ltd., 1990 140 (SCC), [1990] 1 S.C.R. 705; R. v. City of Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299; R. v. Chaulk, 1990 34 (SCC), [1990] 3 S.C.R. 1303; referred to: R. v. Consumers Distributing Co. (1980), 1980 2877 (ON CA), 57 C.C.C. (2d) 317; R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103; R. v. Holmes, 1988 84 (SCC), [1988] 1 S.C.R. 914; R. v. Schwartz, 1988 11 (SCC), [1988] 2 S.C.R. 443; R. v. Morgentaler, 1988 90 (SCC), [1988] 1 S.C.R. 30; R. v. Lippé, 1990 18 (SCC), [1991] 2 S.C.R. 114; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425; R. v. Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541.

By La Forest J.

Distinguished: Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425; referred to: R. v. Lyons, 1987 25 (SCC), [1987] 2 S.C.R. 309; R. v. Tutton, 1989 103 (SCC), [1989] 1 S.C.R. 1392; R. v. Schwartz, 1988 11 (SCC), [1988] 2 S.C.R. 443.

Statutes and Regulations Cited

Canadian Charter of Rights and Freedoms, ss. 1, 2(a), 7, 11(d), 8 to 14.

Competition Act, R.S.C. 1970, c. C‑23, ss. 36(1)(a), 5(a), (b), 37.3(2)(a), (b), (c), (d) [am. S.C. 1974-75, c. 76, s. 18].

Constitution Act, 1982, s. 52(1).

Consumer Protection Act, R.S.Q., c. P‑40.1.

Criminal Code, R.S.C. 1970, c. C‑34, ss. 21(2), 251.

Lord's Day Act, R.S.C. 1970, c. L‑13.

Narcotic Control Act, R.S.C. 1970, c. N‑1, s. 8.

Authors Cited

Canada. Law Reform Commission. Criminal Responsibility for Group Action. Working Paper 16. Ottawa: 1976.

Canada. Law Reform Commission. The Meaning of Guilt -- Strict Liability. Working Paper 2. Ottawa: 1974.

Canada. Law Reform Commission. "The Size of the Problem". In Studies in Strict Liability. Ottawa: 1974.

LaFave, Wayne R. and Austin W. Scott, Jr. Substantive Criminal Law, vol. 1. St. Paul, Minn.: West Publishing Co., 1986.

Ontario. Law Reform Commission. Report on the Basis of Liability for Provincial Offences. Toronto: 1990.

Packer, Hebert L. "Mens Rea and the Supreme Court" (1962), Sup. Ct. Rev. 107.

Richardson, Genevra. "Strict Liability for Regulatory Crime: the Empirical Research," [1987] Crim. L.R. 295.

Saltzman, A. "Strict Criminal Liability and the United States Constitution: Substantive Criminal Law Due Process" (1978), 24 Wayne L. Rev 1571.

Webb, Kernaghan R. "Regulatory Offences, the Mental Element and the Charter: Rough Road Ahead" (1989), 21 Ottawa L. Rev. 419.

APPEALS from a judgment of the Ontario Court of Appeal (1989), 1989 4250 (ON CA), 70 O.R. (2d) 545, 63 D.L.R. (4th) 325, 52 C.C.C. (3d) 9, 73 C.R. (3d) 320, 35 O.A.C. 331, 46 C.R.R. 73, 27 C.P.R. (3d) 129, allowing an appeal in part from a judgment of Montgomery J. (1988), 1988 10226 (ON SC), 46 C.R.R. 100, allowing an appeal from a finding of Mercer Prov. Ct. J. (1988), 1988 10297 (ON CJ), 22 C.P.R. (3d) 328. The appeal by Wholesale Travel Group Inc. is dismissed; the Crown's appeal is allowed, Lamer C.J., La Forest, Sopinka and McLachlin JJ. dissenting in the result.

Ian Binnie, Q.C., Kevin McLaughlin and George Dolhai, for The Wholesale Travel Group Inc.

Michael R. Dambrot, Q.C., Robert W. Hubbard and Robert J. Frater, for Her Majesty The Queen.

M. P. Tunley and Kenneth L. Campbell, for the intervener the Attorney General for Ontario.

P. Monty, Gilles Laporte and Paule Grenier, for the intervener the Attorney General of Quebec.

Paul Hawkins, for the intervener the Attorney General for New Brunswick.

Shawn Greenberg and Lawrence MacInnes, for the intervener the Attorney General of Manitoba.

Graeme Mitchell, for the intervener the Attorney General for Saskatchewan.

R. C. Maybank, for the intervener the Attorney General for Alberta.

Earl A. Cherniak, Q.C., and Kirk F. Stevens, for the interveners Ellis‑Don Limited and Rocco Morra.

//Lamer C.J.//

The reasons of Lamer C.J. and Sopinka J. were delivered by

Reasons of Lamer C.J.

Lamer C.J. -- This case involves a constitutional challenge, under ss. 7 and 11(d) of the Canadian Charter of Rights and Freedoms, to the false or misleading advertising provisions of the Competition Act, R.S.C. 1970, c. C-23 (as amended), ss. 36(1)(a), 36(5) and 37.3(2):

36. (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

(a) make a representation to the public that is false or misleading in a material respect;

(5) Any person who violates subsection (1) is guilty of an offence and is liable

(a) on conviction on indictment, to a fine in the discretion of the court or to imprisonment for five years or to both; or

(b) on summary conviction, to a fine of twenty-five thousand dollars or to imprisonment for one year or to both.

37.3 ...

(2) No person shall be convicted of an offence under section 36 or 36.1, if he establishes that,

(a) the act or omission giving rise to the offence with which he is charged was the result of error;

(b) he took reasonable precautions and exercised due diligence to prevent the occurrence of such error;

(c) he, or another person, took reasonable measures to bring the error to the attention of the class of persons likely to have been reached by the representation or testimonial; and

(d) the measures referred to in paragraph (c), except where the representation or testimonial related to a security, were taken forthwith after the representation was made or the testimonial was published.

The Facts

The Facts

Wholesale Travel Group Inc. (a travel agency) and Mr. Colin Chedore were jointly charged with five counts of false or misleading advertising, contrary to s. 36(1)(a) of the Competition Act, supra. The Crown elected to proceed by way of summary conviction and the accused pleaded not guilty. The advertisements in question referred to vacations at "wholesale prices". Apparently, the Crown intended to argue at trial that "wholesale price" refers to the price at which Wholesale Travel acquired its travel packages and that the advertisements were therefore false or misleading. This argument was never made because, at the outset of the trial, the accused brought a motion pursuant to s. 52(1) of the Constitution Act, 1982 for a declaration that ss. 36(1) and 37.3(2) of the Competition Act were inconsistent with ss. 7 and 11(d) of the Charter and were, therefore, of no force or effect.

The trial judge ruled in favour of the accused's motion and held that ss. 36(1) and 37.3(2) were inconsistent with ss. 7 and 11(d) and could not be upheld under s. 1 of the Charter. Consequently, he dismissed the charges against both accused. On appeal to the Supreme Court of Ontario, Montgomery J. held that the impugned provisions did not violate the Charter and remitted the case to the Provincial Court for trial before another judge. The accused, Wholesale Travel, appealed this ruling to the Ontario Court of Appeal. The individual accused, Mr. Colin Chedore, did not appeal this ruling and therefore he is not a party before this Court.

The Ontario Court of Appeal (Zuber J.A. dissenting in part) affirmed the remittance of the case to the Provincial Court for trial but allowed the appeal in part. Indeed, Tarnopolsky and Lacourcière JJ.A. (the majority) held that s. 37.3(2)(c) and (d) of the Competition Act were severable from the rest of s. 37.3(2) and declared them to be of no force or effect, pursuant to s. 52(1) of the Constitution Act, 1982. The majority further held that the words "he establishes that" in s. 37.3(2) were severable and declared that they were of no force or effect.

Both Wholesale Travel and the Crown have appealed from the judgment of the Ontario Court of Appeal. Constitutional questions were stated on July 26, 1990. A number of provinces have intervened in these cases: Alberta, Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick. Two other interested parties were also granted intervener status in these appeals: Ellis-Don Limited and Rocco Morra.

Judgments Below

Judgments Below

Ontario Provincial Court -- Criminal Division (1988), 1988 10297 (ON CJ), 22 C.P.R. (3d) 328

Mercer Prov. Ct. J. stated that the effect of paras. (a) and (b) of s. 37.3(2) was to provide an accused with the common law defence of due diligence. However, paras. (c) and (d) of s. 37.3(2) detracted from the common law defence by requiring an accused not only to prove due diligence on a balance of probabilities, but also to make a "timely retraction" of the advertisement. Mercer Prov. Ct. J. was of the view, at p. 331, that paras. (c) and (d) required an accused to "admit the wrongful act before he is permitted to enter a defence of due diligence" and that in situations where an accused was unable to make a retraction, the offence would become one of absolute liability. Given that a possible penalty of five years' imprisonment attached to this offence, Mercer Prov. Ct. J. held (on the basis of Re B.C. Motor Vehicle Act, 1985 81 (SCC), [1985] 2 S.C.R. 486) that paras. (c) and (d) of s. 37.3(2) violated s. 7 of the Charter.

With respect to paras. (a) and (b) of s. 37.3(2), Mercer Prov. Ct. J. held (on the basis of R. v. Vaillancourt, 1987 2 (SCC), [1987] 2 S.C.R. 636) that lack of due diligence (i.e., negligence) was not a sufficient mens rea under s. 7 of the Charter, given that the penalty and stigma attached to the offence was "considerable". Accordingly, Mercer Prov. Ct. J. held that paras. (a) and (b) of s. 37.3(2) violated ss. 7 and 11(d) of the Charter.

Mercer Prov. Ct. J. stated that ss. 36 and 37.3 constituted a "legislative scheme" and that they "must stand or fall together". He rejected the Crown's argument, at p. 333, that the impugned provisions were justified as reasonable limits under s. 1 because the prevalence of misleading advertising was of "epidemic proportion[s]" and he therefore held that ss. 36(1) and 37.3(2) of the Competition Act were of no force or effect.

Supreme Court of Ontario (1988), 1988 10226 (ON SC), 46 C.R.R. 100

Montgomery J. characterized the offence of false/misleading advertising as follows, at p. l02:

The false or misleading character of the representation constitutes the actus reus of the offence and is determined by an objective assessment of the meaning of the representation, without reference to the culpability of the accused's conduct. The section encompasses innocent, negligent, reckless and intentionally false misrepresentation.

He noted that in R. v. Consumers Distributing Co. (1980), 1980 2877 (ON CA), 57 C.C.C. (2d) 317, the Ontario Court of Appeal held that false/misleading advertising is a strict liability offence and that the burden of proof is, therefore, on the defendant to establish the defence of due diligence on a balance of probabilities. Moreover, under s. 37.3(2), it was necessary to meet all four requirements in order to sustain the statutory defence.

Montgomery J. referred to R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103, and to R. v. Holmes, 1988 84 (SCC), [1988] 1 S.C.R. 914, and upheld the impugned provisions on the basis of Holmes. He stated, at p. 103:

Just as possession of housebreaking instruments for an innocent purpose can be argued by an accused charged under s. 309 of the Code, so can due diligence be argued by the accused under s. 37.3 of the Competition Act. Further, for the Crown to secure a conviction under s. 36 of the Competition Act, all elements of the offence must be proved beyond a reasonable doubt.

Montgomery J. concluded that ss. 36(1)(a) and 37.3(2)(c) and (d) did not violate s. 11(d) of the Charter since the modified due diligence defence did not relieve the Crown of proving, beyond a reasonable doubt, any of the essential elements of the offence. Consequently, Montgomery J. remitted the case to the Provincial Court for trial before another judge.

Ontario Court of Appeal (1989), 1989 4250 (ON CA), 70 O.R. (2d) 545

Majority (Tarnopolsky and Lacourcière JJ.A.)

The majority first addressed the Crown's contention that Wholesale Travel could not raise s. 7 of the Charter in its defence because, according to this Court's judgment in Irwin Toy Ltd. v. Quebec (Attorney General), 1989 87 (SCC), [1989] 1 S.C.R. 927, a corporation cannot avail itself of the protection offered by s. 7 of the Charter. Tarnopolsky J.A. stated that Irwin Toy Ltd. was distinguishable from R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, because Irwin Toy Ltd. concerned an application for a declaration that certain provisions of the Quebec Consumer Protection Act, R.S.Q., c. P-40.1, were ultra vires, whereas R. v. Big M Drug Mart Ltd. concerned a criminal prosecution. Therefore, the holding in R. v. Big M Drug Mart Ltd. at pp. 313-14 that "[a]ny accused, whether corporate or individual, may defend a criminal charge by arguing that the law under which the charge is brought is constitutionally invalid" was preserved. He noted that in Irwin Toy Ltd., the majority explicitly stated that because there were no penal proceedings involved in the case, the principle articulated in R. v. Big M Drug Mart Ltd. was not involved. Tarnopolsky J.A. concluded as follows, at p. 558:

Once charged with an offence, a corporation is entitled to submit that the legislation under which it is charged is unconstitutional because it infringes the right to life, liberty and security of a human being, and thus violates s. 7 of the Charter.

Turning to the substantive Charter issues, Tarnopolsky J.A. reviewed this Court's decisions in Re B.C. Motor Vehicle Act and Vaillancourt and noted that these judgments require that an accused who risks imprisonment upon conviction must always have a defence of due diligence open to him or her. Tarnopolsky J.A. stated that paras. (c) and (d) of s. 37.3(2) could have the effect of depriving an accused of the defence of due diligence because they required that an accused who did not make a prompt retraction be convicted even where the failure to make a prompt retraction was not negligent. Consequently, the defence of due diligence was not always open to an accused charged with false/misleading advertising despite the fact that such an accused risks imprisonment upon conviction. Tarnopolsky J.A. therefore concluded that paras. (c) and (d) of s. 37.3(2) were contrary to s. 7 of the Charter.

The majority went on to consider whether the paragraphs could be upheld under s. 1 of the Charter. It cited extensively from Re B.C. Motor Vehicle Act and noted at p. 560 that there was a very high standard for saving what amounted to an "absolute liability offence" (with penal consequences) under s. 1 of the Charter. In any event, the Crown had indicated to the Court of Appeal that it would not be relying on s. 1 in the event that a s. 7 violation was found. Consequently, the majority held that s. 37.3(2)(c) and (d) were unconstitutional and were, pursuant to s. 52(1), of no force or effect.

The majority then considered the constitutionality of s. 36(1)(a) combined with the remainder of s. 37.3(2). It stated that these remaining provisions constituted a strict liability offence (paras. (a) and (b) providing the usual due diligence defence) and that they required an accused to carry the "persuasive burden" with respect to the due diligence defence (i.e., establish due diligence on a balance of probabilities).

Tarnopolsky J.A. stated that the issue with respect to the "reverse onus" was whether it violated s. 11(d) of the Charter, and that because ss. 8 to 14 address specific deprivations of the right to life, liberty and security of the person afforded by s. 7, it was unnecessary to consider this issue further under s. 7 itself. Tarnopolsky J.A. reviewed the decisions of this Court in Oakes, supra, Holmes, supra, R. v. Whyte, 1988 47 (SCC), [1988] 2 S.C.R. 3, and R. v. Schwartz, 1988 11 (SCC), [1988] 2 S.C.R. 443, and stated at p. 567:

Throughout its decisions, from Oakes, supra, to Schwartz, supra, the Supreme Court of Canada has held consistently that a statutory provision which makes it possible for an accused to be convicted despite the existence of a reasonable doubt in the mind of the trier as to the guilt of the accused violates the presumption of innocence in s. 11(d) of the Charter.

The majority distinguished the present case from Schwartz on the basis that in Schwartz, Justice McIntyre held that even though there was a burden on the accused to prove that he held a registration certificate on a balance of probabilities, there was no risk that a conviction would result despite the existence of a reasonable doubt as to guilt because the production or non-production of the registration certificate was determinative as to guilt. Conversely, in the case at bar, it would clearly be possible for an accused to raise a reasonable doubt that he or she acted with due diligence without being able to establish that defence on a balance of probabilities. Consequently, the persuasive burden imposed by s. 37.3(2) could operate so as to permit a conviction despite a reasonable doubt as to the culpability of the accused and therefore was inconsistent with s. 11(d) of the Charter.

With respect to s. 1, Tarnopolsky J.A. stated that because the Crown had not attempted to establish that the "reverse onus" was a reasonable limit under s. 1 of the Charter, it must be held to be of no force or effect.

In the result, the majority held that paras. (c) and (d) of s. 37.3(2) were severable from the rest of s. 37.3(2) and were of no force or effect. The words "he establishes that" were also severed from the rest of s. 37.3(2) and declared to be of no force or effect. The majority stated that because the Charter motion had been made at trial before any evidence was heard, it was necessary to remit the case back to the Provincial Court for a new trial on the basis of the provisions as they now stood.

Dissent (Zuber J.A.)

Zuber J.A. reviewed the decisions of this Court in Re B.C. Motor Vehicle Act and Vaillancourt and concluded that s. 36(1)(a) could stand as long as a defence of due diligence would be available to anyone charged with contravening that provision. He stated that paras. (a) and (b) of s. 37.3(2) provided an accused with a statutory due diligence defence, but noted that an accused was required to establish due diligence on a balance of probabilities. After reviewing this Court's decisions in Holmes, Whyte, and Schwartz, Zuber J.A. stated that there appeared to be two conflicting theories underlying these cases and that the only way to reconcile these cases was to draw a distinction between elements of an offence and defences with respect to s. 11(d). In other words, Zuber J.A. concluded that it was only when a statutory provision placed the persuasive burden on an accused with respect to an essential element (as opposed to a defence) that the provision limited s. 11(d) of the Charter. Consequently, since due diligence is a defence, the persuasive burden contained in s. 37.3(2) did not violate s. 11(d).

With respect to paras. (c) and (d) of s. 37.3(2), Zuber J.A. at p. 555 agreed with Tarnopolsky J.A. that these provisions "constricted" the offence spelled out in s. 36(1)(a) in such a way that it "becomes tantamount to an absolute liability offence". Consequently, Zuber J.A. agreed that the case should be remitted to the Provincial Court for a new trial.

Issues

Issues

The following constitutional questions were stated on July 26, 1990:

1.Does s. 37.3(2) of the Competition Act, R.S.C. 1970, c. C-23, as amended, in whole or in part violate ss. 7 or 11(d) of the Canadian Charter of Rights and Freedoms?

2.Does s. 36(1)(a) of the Competition Act, in and of itself or when read in combination with s. 37.3(2) of the Competition Act, violate ss. 7 or 11(d) of the Charter?

3.If either question 1 or question 2 is answered in the affirmative, is (are) the impugned provision(s) saved by s. 1 of the Charter?

There are two other main issues which were raised by the parties but which are not encompassed by the constitutional questions:

Does a corporation have "standing" to challenge the constitutionality of these statutory provisions on the basis of ss. 7 and 11(d) and if so, is a corporation entitled to benefit from a finding that the provisions violate a human being's constitutional rights?

Did the Ontario Court of Appeal err in "rewriting" the offence in that it struck down only paras. (c) and (d) of s. 37.3(2) and deleted the words "he establishes that" rather than declaring the entire provision to be of no force or effect?

Analysis

Does Wholesale Travel Group Inc. Have Standing to Raise the Constitutional Issue and can it Benefit From a Finding of Unconstitutionality?

Analysis

This Court has held on a number of occasions that a corporation charged with an offence has "standing" to challenge the constitutionality of the offence (as it applies to a human being) as part of its own defence. In R. v. Big M Drug Mart Ltd., supra, a corporation which was charged with unlawfully carrying on the sale of goods on a Sunday contrary to the Lord's Day Act, R.S.C. 1970, c. L-13, successfully invoked s. 2(a) of the Charter to strike down the Act and was acquitted on the basis that the Act was, pursuant to s. 52(1) of the Constitution Act, 1982, of no force or effect. The majority, per Dickson C.J., acknowledged that a corporation could not exercise or enjoy freedom of religion, but stated that this was irrelevant to the disposition of the case. Dickson C.J. stated, at pp. 313-14:

Section 52 sets out the fundamental principle of constitutional law that the Constitution is supreme. The undoubted corollary to be drawn from this principle is that no one can be convicted of an offence under an unconstitutional law. The respondent did not come to court voluntarily as an interested citizen asking for a prerogative declaration that a statute is unconstitutional. If it had been engaged in such "public interest litigation" it would have had to fulfill the status requirements laid down by this Court in the trilogy of "standing" cases ... but that was not the reason for its appearance in Court.

Any accused, whether corporate or individual, may defend a criminal charge by arguing that the law under which the charge is brought is constitutionally invalid. [Emphasis added.]

Thus, in R. v. Big M Drug Mart Ltd., the corporation clearly benefitted from the holding that the Lord's Day Act was constitutionally invalid because it violated an individual's right to freedom of religion.

In Irwin Toy Ltd. v. Quebec (Attorney General), supra, this Court held that only human beings can enjoy the right to life, liberty and security of the person guaranteed by s. 7 of the Charter, and that a corporation was therefore unable to seek a declaration that certain provisions of the Consumer Protection Act infringed s. 7 of the Charter and could not be upheld under s. 1 of the Charter. However, the majority was careful to note that there were no penal proceedings pending in the case and that the principle enunciated in R. v. Big M Drug Mart Ltd. was therefore not involved.

Finally, in this Court's recent decision in Dywidag Systems International, Canada Ltd. v. Zutphen Brothers Construction Ltd., 1990 140 (SCC), [1990] 1 S.C.R. 705, Justice Cory (for the Court) referred at p. 709 to the holding in R. v. Big M Drug Mart Ltd. as an "exception to this general principle" that a corporation cannot avail itself of the protection offered by s. 7 of the Charter.

A number of parties contended, in oral argument, that while this Court has held that a corporation which has been charged with a penal provision has standing to challenge the constitutionality of that provision, this does not necessarily mean that the corporation can benefit from a finding that the provision violates a human being's constitutional rights. In other words, when a corporation's constitutional challenge gives rise to a finding that a statutory provision violates a human being's Charter rights, the appropriate remedy under s. 52(1) of the Constitution Act, 1982 is that the provision is of no force or effect with respect to human beings (because this is the extent of the inconsistency between the Constitution and the law), but the provision remains of force and effect with respect to corporations (because the provision as applied to corporations is not inconsistent with the Constitution).

Such an interpretation of the words "to the extent of the inconsistency" contained in s. 52(1) would be inconsistent with this Court's holding in R. v. Big M Drug Mart Ltd., supra, and would not accord with this Court's general approach to s. 52(1). For example, in R. v. Morgentaler, 1988 90 (SCC), [1988] 1 S.C.R. 30, this Court restored Dr. Morgentaler's acquittal on the basis that s. 251 (the abortion provision) of the Criminal Code, R.S.C. 1970, c. C-34, limited women's rights under s. 7 of the Charter, could not be upheld under s. 1 and was therefore of no force or effect. Dr. Morgentaler, as an accused person, was entitled to challenge the constitutionality of s. 251 on the basis that it violated women's Charter rights. Moreover, he was entitled to benefit from the finding that the provision was inconsistent with the Constitution and was, therefore, of no force or effect. I am not prepared to depart from this approach to s. 52(1).

Thus, it is my view that Wholesale Travel does have standing to challenge the constitutionality of the false/misleading advertising provisions under ss. 7 and 11(d) of the Charter and may benefit from a finding that these provisions are unconstitutional. However, this is not to say that if the same provisions were enacted so as to apply exclusively to corporations, a corporation would be entitled to raise the Charter arguments which have been raised in the case at bar. The problem with ss. 36(1) and 37.3(2) of the Competition Act is that they are worded so as to encompass both individual and corporate accused; in this sense, they are "over-inclusive". Therefore, if the provisions violate an individual's Charter rights they must be struck down (to the extent of the inconsistency) under s. 52(1). Once the provisions are held to be of no force or effect, they cannot apply to any accused, whether corporate or individual. While this result must follow from a finding that an over-inclusive statutory provision violates Charter rights, I do not wish to be taken as having ruled on the issue of the appropriate remedy where an under-inclusive statutory provision (e.g., one which confers a benefit to some but not to others) is found to violate Charter rights. The question of the appropriate Charter remedy in such circumstances will be decided when the facts of the case raise the issue and the matter is fully argued before the Court.

As I have said, these provisions apply to both individual and corporate accused. However, if the provisions in question applied only to corporations, the Charter analysis would, in my view, be very different. For example, provisions which applied exclusively to corporations could not be challenged on the basis that they combined absolute liability with imprisonment, for the simple reason that a corporation cannot be imprisoned. Furthermore, as I stated in Re B.C. Motor Vehicle Act, supra, at p. 518:

Even if it be decided that s. 7 does extend to corporations, I think the balancing under s. 1 of the public interest against the financial interests of a corporation would give very different results from that of balancing public interest and the liberty or security of the person of a human being.

In my opinion, when the criminal law is applied to a corporation, it loses much of its "criminal" nature and becomes, in essence, a "vigorous" form of administrative law. With the possibility of imprisonment removed, and the stigma which attaches to conviction effectively reduced to loss of money, the corporation is in a completely different situation than is an individual. While it might be argued that in closely held corporations, where there are only two or three shareholders who themselves manage the company, the stigma which attaches to the corporation will carry over to those individuals and will, therefore, affect human interests, it is my view that this consideration should not alter the analysis. The corporate form of business organization is chosen by individuals because of its numerous advantages (legal and otherwise). Those who cloak themselves in the corporate veil, and who rely on the legal distinction between themselves and the corporate entity when it is to their benefit to do so, should not be allowed to deny this distinction in these circumstances (where the distinction is not to their benefit).

In summary, given that the false/misleading advertising provisions encompass both individual and corporate accused and given this Court's interpretation of s. 52(1), Wholesale Travel does have standing to challenge these provisions under ss. 7 and 11(d) of the Charter and is entitled to benefit from a finding that the provisions violate a human being's constitutional rights.

Do ss. 36(1)(a) and 37.3(2) of the Competition Act Violate the Charter?

Section 7

Section 7

In Re B.C. Motor Vehicle Act, supra, this Court held that the combination of absolute liability and possible imprisonment violates s. 7 of the Charter and will rarely be upheld under s. 1. This is because an absolute liability offence has the potential of convicting a person who really has done nothing wrong (i.e., has acted neither intentionally nor negligently). In R. v. Vaillancourt, supra, I stated that whenever the state resorts to the restriction of liberty, such as imprisonment, to assist in the enforcement of a law, even a mere provincial regulatory offence, there is, as a principle of fundamental justice, a minimum mental state (or fault requirement) which is an essential element of the offence. Re B.C. Motor Vehicle Act inferentially decided that even for a mere provincial regulatory offence at least negligence is required, in that at least a defence of due diligence must always be open to an accused who risks imprisonment upon conviction. The rationale for elevating mens rea from a presumed element in R. v. City of Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299, to a constitutionally required element, was that it is a principle of fundamental justice that the penalty imposed on an accused and the stigma which attaches to that penalty and/or to the conviction itself, necessitate a level of fault which reflects the particular nature of the crime. In Vaillancourt, this Court held that for certain crimes, the special nature of the stigma attaching to a conviction and/or the severity of the available punishment necessitate subjective mens rea. I stated, at p. 654:

It is thus clear that there must be some special mental element with respect to the death before a culpable homicide can be treated as a murder. That special mental element gives rise to the moral blameworthiness which justifies the stigma and sentence attached to a murder conviction. [Emphasis added.]

Thus, the question to be addressed under s. 7 in this case is whether the offence of false/misleading advertising is missing any "elements" (i.e., level of fault) which are constitutionally required by s. 7 of the Charter.

Given that the offence of false/misleading advertising is punishable by up to five years' imprisonment, it is clear from the developing jurisprudence of this Court that the offence must not be one of absolute liability and that it commands a minimum fault requirement of negligence, in that at least a defence of due diligence must always be open to an accused in order for the provision to conform to the requirements of s. 7 of the Charter. Therefore, it will be necessary to examine the components of s. 37.3(2) ((a) through (d)) in order to determine whether they, in fact, provide a defence of due diligence to an accused.

Before addressing this question however, it is necessary to address a further argument put forward by the appellant, Wholesale Travel. Counsel for Wholesale Travel has argued that the offence of false/misleading advertising is one of those offences, contemplated by this Court in Vaillancourt, for which the special nature of the stigma attaching to a conviction and/or the severity of the available punishment is such that subjective mens rea is constitutionally required by s. 7.

Counsel for Wholesale Travel argued that the stigma attaching to a conviction of false/misleading advertising is akin to the stigma of dishonesty which attaches to a conviction of theft. Given that the stigma attaching to theft was explicitly contemplated in Vaillancourt as one which may well necessitate a subjective mens rea, it was argued that the offence of false/misleading advertising also requires an element of subjective mens rea in order to comply with the principles of fundamental justice. In my view, while a conviction for false/misleading advertising carries some stigma, in the sense that it is not morally neutral behaviour, it cannot be said that the stigma associated with this offence is analogous to the stigma of dishonesty which attaches to a conviction for theft. A conviction for false/misleading advertising will rest on a variety of facts, many of which will not reveal any dishonesty but, rather, carelessness and the conviction of same does not brand the accused as being dishonest. In my opinion, the same cannot be said for a conviction for theft.

Thus, while it is clear that there are some offences for which the special stigma attaching to conviction is such that subjective mens rea is necessary in order to establish the moral blameworthiness which justifies the stigma and sentence, the offence of false/misleading advertising is not such an offence. I note that the general question of the appropriate standard of fault was recently addressed, in relation to provincial offences, by the Ontario Law Reform Commission in its Report on the Basis of Liability for Provincial Offences (1990). The Commission was of the view that "mere carelessness should not result in a prison sentence" (at p. 46) and recommended that where the possibility of imprisonment arises upon conviction of a provincial offence, the standard of fault must be more than ordinary negligence and must be either an aware state of mind (subjective mens rea) or a "marked and substantial departure from the standard of care expected of a reasonably prudent person in the circumstances" (at p. 46). The Law Reform Commission of Canada made a similar recommendation in its earlier Working Paper 2, The Meaning of Guilt -- Strict Liability (1974), wherein the Commission stated that for regulatory offences allowing for a defence of due diligence with a reverse onus of proof, "imprisonment should generally be excluded as a punishment, though regulatory offences committed deliberately or recklessly could, in appropriate cases, constitute offences under the Code and merit imprisonment" (at p. 37). It must be remembered that in making these recommendations, the Law Reform Commissions were advising their respective governments on matters of policy. Conversely, the question raised in the appeal before this Court is not what is the most appropriate government policy, but rather, what fault requirement is constitutionally required where an accused faces possible imprisonment. While an aware state of mind may well be the most appropriate minimum standard of fault for imprisonment or for any offence included in the Criminal Code, a matter upon which I refrain from expressing any view, it does not follow that this standard of fault is entrenched in the Charter. As I stated in R. v. Lippé, 1990 18 (SCC), [1991] 2 S.C.R. 114, at p. 142, "the Constitution does not always guarantee the "ideal"". As this Court stated in Vaillancourt, supra, the principles of fundamental justice dictate that negligence is the minimum fault requirement where an accused faces possible imprisonment upon conviction except for certain offences such as murder. For the reasons given above, it is my view that s. 7 of the Charter does not dictate the higher fault requirement contemplated by the Ontario Law Reform Commission for the offence of false/misleading advertising. Whether a fault requirement higher than this constitutional minimum ought to be adopted where an accused faces possible imprisonment or conviction of any offence under the Criminal Code is a question of public policy which must be determined by Parliament, and for the courts to pronounce upon this would be contrary to what this Court has said in Re B.C. Motor Vehicle Act, supra, at p. 498-99: that we refrain from "adjudicating upon the merits or wisdom of enactments". It is not the role of this Court to "second guess" the policy decisions made by elected officials.

Therefore, an element of subjective mens rea is not required by s. 7 of the Charter and the provisions in question are not inconsistent with s. 7 on the basis that they do not require intent or knowledge on the part of an accused. I turn now to the question posed above: namely, do paras. (a) through (d) of s. 37.3(2) provide an accused with a defence of due diligence?

Section 37.3(2) (a) through (d) sets out the only defence, under the Act, to false/misleading advertising, once it has been established that the advertisement is objectively false or misleading (i.e., once the actus reus is established). It is clear from the inclusion of the word "and" after s. 37.3(2)(c) that all four components of s. 37.3(2) must be established in order for the accused to be acquitted. While the Crown has suggested that, in certain circumstances, only paras. (a) and (b) must be fulfilled (relying on certain dicta of the Ontario Court of Appeal in R. v. Consumers Distributing Co., supra, it is my respectful view that this is an incorrect interpretation of the provision.

Thus, the question becomes whether a situation could arise where an accused would be unable to establish all four components of s. 37.3(2) but would nonetheless be duly diligent (i.e., not negligent). If the answer to this question is yes, it means that the constitutionally required element of negligence is not fulfilled by the statutory defence contained in s. 37.3(2).

The Crown has conceded that the statutory defence afforded by s. 37.3(2) is "more restricted" than the common law defence of due diligence, but nonetheless argues that the limited nature of the statutory defence does not render it unconstitutional. Although paras. (a) and (b) of s. 37.3(2) refer specifically to an "error" and to the exercise of due diligence to prevent an "error", they, in my view, largely correspond to the usual due diligence defence. In other words, paras. (a) and (b) operate so as to provide a defence to an accused who has taken reasonable precautions to prevent false/misleading advertising and who has been duly diligent in ensuring that advertising is not false or misleading in nature. However, the additional requirement of "timely retraction" embodied in paras. (c) and (d) means that the statutory defence is considerably more narrow than the common law defence of due diligence.

An accused who did not realize, and could not reasonably have been expected to realize, that the representation in question was false or misleading until it was too late to comply with paras. (c) and (d) or who was, for some reason, unable to comply with paras. (c) and (d), but who had nonetheless taken reasonable precautions and who had exercised due diligence in preventing false/misleading advertising, would not fall within the statutory defence and would be convicted of false/misleading advertising. I agree with the majority of the Ontario Court of Appeal that paras. (c) and (d) of s. 37.3(2) could have the effect of depriving an accused of the defence of due diligence and could therefore require the conviction of an accused who was not negligent. Paragraphs (c) and (d) make the failure to undertake corrective advertising (a component of the offence of false/misleading advertising) an "offence" of absolute liability. Consequently, the constitutionally required fault level is not present in the false/misleading advertising provisions.

In light of the above discussion, I agree with the majority of the Court of Appeal that it is the presence of paras. (c) and (d) alone which offends s. 7 of the Charter. Thus, unless the limitation on s. 7 can be upheld under s. 1 of the Charter, these two paragraphs must be held to be of no force or effect, pursuant to s. 52(1) of the Constitution Act, 1982.

The Crown, along with a number of interveners, has argued that this result should not necessarily follow where the offence in question is a "regulatory offence" as opposed to a criminal offence and that the constitutional fault requirement, as contemplated by Re B.C. Motor Vehicle Act and Vaillancourt, should not necessarily apply in a regulatory setting. Much has been made in this case of the fact that the Competition Act is aimed at economic regulation. In my view, whether this offence (or the Act generally) is better characterized as "criminal" or "regulatory" is not the issue. The focus of the analysis in Re B.C. Motor Vehicle Act and Vaillancourt was on the use of imprisonment to enforce the prohibition of certain behaviour or activity. A person whose liberty has been restricted by way of imprisonment has lost no less liberty because he or she is being punished for the commission of a regulatory offence as opposed to a criminal offence. Jail is jail, whatever the reason for it. In my view, it is the fact that the state has resorted to the restriction of liberty through imprisonment for enforcement purposes which is determinative of the principles of fundamental justice. I cannot agree that these principles take on a different meaning simply because the offence can be labelled as "regulatory". Indeed, while I agree that this offence can be characterized as "regulatory", the label loses much of its relevance when one considers that an accused faces up to five years' imprisonment upon conviction.

While a regulatory context may well influence the Charter analysis in particular cases (see the judgment of La Forest J. in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425, it is my view that the jurisprudence of this Court indicates that negligence is the minimum level of fault which will accord with s. 7 of the Charter whenever a conviction gives rise to imprisonment.

In light of the above, I will now consider whether paras. (c) and (d) of s. 37.3(2) can be upheld as a reasonable limit under s. 1 of the Charter.

Section 1

The procedure to be followed when the state is attempting to justify a limit on a right or freedom under s. 1 was set out by this Court in Oakes, supra, and was summarized in R. v. Chaulk, 1990 34 (SCC), [1990] 3 S.C.R. 1303, as follows at pp. 1335-36:

1. The objective of the impugned provision must be of sufficient importance to warrant overriding a constitutionally protected right or freedom; it must relate to concerns which are pressing and substantial in a free and democratic society before it can be characterized as sufficiently important.

2. Assuming that a sufficiently important objective has been established, the means chosen to achieve the objective must pass a proportionality test; that is to say they must:

(a) be "rationally connected" to the objective and not be arbitrary, unfair or based on irrational considerations;

(b) impair the right or freedom in question as "little as possible"; and

(c) be such that their effects on the limitation of rights and freedoms are proportional to the objective.

Objective

The Crown submits that the objective of the law is to promote vigorous and fair competition. While this may well be the overall objective of the Competition Act in general, it is my view that the objective of the modified due diligence defence embodied by paras. (c) and (d) is significantly more narrow than that which the Crown has stated.

The Crown has argued that "corrective advertising" requirements are necessary to prevent undue harm to consumers and to prevent advertisers from reaping an economic windfall from a false or misleading representation. The Crown points out that while the offence of false/misleading advertising may be complete as soon as a representation is made, the detrimental effects of this advertising may persist until corrective measures are taken. In other words, the dual objectives of the modified due diligence defence are both to protect consumers from the effects of false/misleading advertising and to prevent false/misleading advertisers from reaping the benefits of false/misleading advertising. Furthermore, to the extent that the modified due diligence defence renders a component of the offence one of absolute liability, it facilitates proof of the offence of false/misleading advertising and thereby eases the "burden" on the Crown.

While the Crown submitted little evidence at trial to directly support the contention that these objectives are "pressing and substantial", I am prepared to accept that preventing false/misleading advertisers from benefiting from false/misleading advertising and protecting consumers from the detrimental effects of false/misleading advertising is sufficiently important to warrant overriding constitutionally protected rights and freedoms. It remains to be seen, however, whether the means chosen by Parliament to achieve this objective pass the "proportionality test" set out in Oakes, supra.

Given that all four components of s. 37.3(2) must be established in order for an accused to be acquitted on the basis of due diligence, paras. (c) and (d) will not be triggered unless it has already been established that the accused was duly diligent in preventing the false/misleading advertisement (i.e., under paras. (a) and (b)). With this in mind, the means chosen by Parliament to achieve the objectives set out above can be characterized as follows: to convict those who would otherwise be acquitted under paras. (a) and (b) but who did not undertake corrective advertising "forthwith" after the representation was published whether or not they knew or ought to have discovered that a correction was required because the advertisement was, in fact, false or misleading. In other words, the means chosen by Parliament to achieve the dual objectives was to make the "failure to undertake corrective advertising" component of the offence one of absolute liability, thereby facilitating proof of the offence.

These, then, are the means which must be justified under the proportionality test which was set out in Oakes, supra.

Proportionality Test

1. Rational Connection

The question to be addressed at this stage of the Oakes analysis is whether there is a rational connection between the objectives, which were identified above under the first branch of the test, and the means which have been chosen to attain these objectives.

Requiring an accused to make a "timely retraction" of the representation in question, in order to avail itself of the only statutory defence to the offence of false/misleading advertising, will surely encourage advertisers to undertake "corrective advertising" as soon as they discover there may be a problem with the advertisement. This, in turn, will lessen the detrimental effects on consumers and will reduce the gains to advertisers from false/misleading advertisements. Of course, these means will not encourage those who do not know that there is a problem to undertake corrective advertising. A person who doesn't think that an advertisement is false or misleading or who is not aware of an error will not contemplate the statutory defence nor will that person contemplate taking corrective measures. Thus, the means are a rational way of achieving these objectives with respect to some accused, but not with respect to others.

These means will, however, clearly facilitate proof of the offence of false/misleading advertising. Assuming that part of Parliament's objective in enacting paras. (c) and (d) was to facilitate convictions of false/misleading advertising, the means chosen are rationally connected to this objective.

It has been further suggested that an absolute liability approach to the failure to undertake corrective advertising will generally encourage all advertisers to be careful about their future advertisements. In my view, this argument ignores the fact that those accused persons who are "caught" by paras. (c) and (d) are persons who have been duly diligent in preventing false/misleading advertising. Had these individuals not been duly diligent in preventing false advertising, they would have been "caught" by paras. (a) and (b). I cannot see how removing the statutory defence from these individuals, who have been careful, will encourage other advertisers to be careful. Other advertisers will merely perceive that whether or not they are careful in preventing false/misleading advertising, they will be convicted of false/misleading advertising if the representation is, in fact, false or misleading and they failed to undertake corrective advertising "forthwith" -- whether or not they knew or ought to have discovered that the advertisement was false/misleading.

Taking all of the above into account, there is, in my view, a rational connection between the objectives and the means chosen to attain the objectives, and paras. (c) and (d) therefore pass the first part of the proportionality test in Oakes.

2. As Little as Possible

The question under this part of the proportionality test is whether the impugned law (in this case, the modified due diligence defence embodied in paras. (c) and (d) of s. 37.3(2)) violates Charter rights as little as possible in order to achieve the "pressing and substantial" objectives. In other words, while the means chosen may be rationally connected to the objectives, they may, at the same time, be unnecessarily intrusive on constitutional rights in light of alternative means.

In R. v. Chaulk, supra, I stated that while Parliament need not choose the absolutely least intrusive means of attaining its objective, the means chosen must come within a range of means which impair Charter rights as little as is reasonably possible. In my view, the modified due diligence defence embodied in paras. (c) and (d) does not fall within the constitutionally acceptable range.

It is not necessary to convict of false/misleading advertising those who did not undertake corrective advertising because they did not realize (and ought not to have realized) that the advertisement was false/misleading, in order to achieve the objectives set out above. If Parliament wished to encourage corrective advertising in order to meet the objectives set out above, it could have:

(a) enacted a separate offence of "failure to correct false/misleading advertising" under which an accused who discovers or who ought to have discovered that an advertisement was false or misleading is required to be duly diligent in taking the corrective measures set out in paras. (c) and (d) in order to come within the statutory defence to this offence; or

(b) maintained the component of "failure to correct false/misleading advertising" within the existing statutory defence to false advertising, but worded paras. (c) and (d) in such a way that the requirement for corrective advertising would arise upon the accused's discovery that the advertisement was false or misleading (or upon a finding that the accused ought to have discovered that the advertisement was false/misleading).

In my view, either of these alternative means would, without convicting the innocent, achieve the objective of encouraging advertisers to undertake corrective advertising and would therefore achieve the dual objectives of protecting consumers from the effects of false advertising and of preventing advertisers from benefiting from false/misleading representations. Given that these two alternatives were clearly open to Parliament, it can be seen that the existing paragraphs are unnecessarily intrusive on constitutional rights.

While an absolute liability component to the offence of false advertising would perhaps be more effective in facilitating convictions than would the alternatives proposed above, the simple answer to this contention is that Parliament could have retained the absolute liability component and, at the same time, infringed Charter rights to a much lesser extent, had it not combined this absolute liability with the possibility of imprisonment. In this sense, removing the possibility of imprisonment and leaving paras. (c) and (d) unchanged was a further less intrusive means which was available to Parliament.

While it is unnecessary, given the conclusion reached above, to address the third part of the proportionality test, I would like to point out that the removal of a constitutionally required level of fault is, in my view, a very serious limitation on an accused's s. 7 rights and an objective would have to be very "pressing and substantial" in order for the detrimental effects on the limitation of these rights to be proportional to the objective.

In summary, it is my view that the modified due diligence defence embodied in paras. (c) and (d) limits an accused's rights under s. 7 of the Charter and cannot be upheld as a reasonable limit under s. 1. Consequently, paras. (c) and (d) of s. 37.3(2) of the Competition Act must be held to be of no force or effect, pursuant to s. 52(1) of the Constitution Act, 1982.

I will now consider whether the false/misleading advertising provisions limit an accused's rights under s. 11(d) of the Charter.

Section 11(d)

Section 11(d)

In Oakes, supra, this Court held that the presumption of innocence is protected expressly by s. 11(d) of the Charter and inferentially by the s. 7 right to life, liberty and security of the person (since the presumption of innocence is a principle of fundamental justice). In analyzing the meaning and content of s. 11(d), this Court held that, where an accused faces penal consequences, the right to be presumed innocent until proven guilty requires, at a minimum, that: an individual must be proven guilty beyond a reasonable doubt, that the state must bear the burden of proof and that criminal prosecutions must be carried out in accordance with lawful procedures and fairness. This Court held that s. 8 of the Narcotic Control Act, R.S.C. 1970, c. N-1, infringed s. 11(d) by requiring the accused to prove (on a balance of probabilities) that he was not guilty of trafficking once the basic fact of possession had been proven.

In R. v. Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541, this Court held that the rights guaranteed by s. 11 of the Charter are available to persons prosecuted by the state for public offences involving punitive sanctions, i.e., criminal, quasi-criminal, and regulatory offences, either federally or provincially enacted. Wilson J. (for the majority) stated that s. 11 is intended to provide procedural safeguards in proceedings which may attract penal consequences even if not criminal in the strict sense.

In Vaillancourt, supra, this Court held that s. 11(d) is offended when an accused may be convicted despite the existence of a reasonable doubt on an essential element of the offence (including those elements required by s. 7 of the Charter).

In Whyte, supra, a majority of this Court held that the distinction between elements of the offence and other aspects of the charge is irrelevant to the s. 11(d) inquiry. Thus, the real concern is not whether the accused must disprove an element or prove an excuse, but that an accused may be convicted while a reasonable doubt exists. When that possibility exists, there is a breach of the presumption of innocence. It is the final effect of a provision on the verdict that is decisive. This aspect of Whyte was affirmed in R. v. Chaulk, supra, wherein I stated (at pp. 1330-31):

If an accused is found to have been insane at the time of the offence, he will not be found guilty; thus the "fact" of insanity precludes a verdict of guilty. Whether the claim of insanity is characterized as a denial of mens rea, an excusing defence, or more generally, as an exemption based on criminal incapacity, the fact remains that sanity is essential for guilt. Section 16(4) allows a factor which is essential for guilt to be presumed, rather than proven by the Crown beyond a reasonable doubt. Moreover, it requires an accused to disprove sanity (or prove insanity) on a balance of probabilities; it therefore violates the presumption of innocence because it permits a conviction in spite of a reasonable doubt in the mind of the trier of fact as to the guilt of the accused. [Emphasis added.]

Thus, the question to be determined here is whether the words "he establishes that" contained in s. 37.3(2) could operate so as to permit a conviction in spite of a reasonable doubt in the mind of the trier of fact as to the guilt of the accused.

Again, both the Crown and a number of interveners have argued that this interpretation of s. 11(d) should not apply in a regulatory setting. I can only reiterate my earlier comment that it is the fact that the state has resorted to the restriction of liberty through imprisonment for enforcement purposes which is determinative of the Charter analysis. A person whose liberty has been restricted by way of imprisonment has lost no less liberty because he or she is being punished for the commission of a regulatory offence as opposed to a criminal offence. A person whose liberty interest is imperilled is entitled to have the principles of fundamental justice fully observed. The presumption of innocence, guaranteed by s. 11(d), is clearly a principle of fundamental justice.

Given that I have determined, above, that paras. (c) and (d) of s. 37.3(2) must be held to be of no force or effect, the words "he establishes that" must be considered with respect to paras. (a) and (b) of s. 37.3(2). In this context, the words "he establishes that" place a burden on an accused to prove the two elements delineated thereafter on a balance of probabilities (see R. v. Chaulk, supra, at pp. 1317-18). Thus, if an accused fails to prove either of these elements on a balance of probabilities, (assuming the Crown has proved the actus reus) that accused will be convicted of false/misleading advertising. The absence of due diligence (presence of negligence) is clearly necessary for a finding of guilt. Thus, it seems clear to me that under s. 37.3(2) an accused could be convicted of false/misleading advertising despite the existence of a reasonable doubt as to whether the accused was duly diligent and, therefore, despite the existence of a reasonable doubt as to guilt.

In light of the above, I fully agree with the following statement of Tarnopolsky J.A. in the court below (at p. 568):

It is clearly possible for an accused to raise a reasonable doubt that he or she acted with due diligence without being able to establish that defence on a balance of probabilities. As a result, the imposition, in s. 37.3(2)(a) and (b), of a persuasive burden on the accused to prove that he or she acted with due diligence violates s. 11(d) because it permits conviction despite a reasonable doubt as to the culpability of the accused.

Accordingly, unless this persuasive burden can be justified under s. 1 of the Charter, the words "he establishes that" in s. 37.3(2) must be held to be of no force or effect.

Section 1

Objective

As was the case under s. 7, the Crown submits that the objective of the law is to promote vigorous and fair competition. As I have indicated above, this may well be the overall objective of the Competition Act in general, but it is not the specific objective of placing a persuasive burden on an accused to prove due diligence (disprove negligence).

The specific objective of placing a persuasive burden on an accused via the words "he establishes that" is to ensure that all those who are guilty of false/misleading advertising are convicted and to ensure that convictions are not lost due to evidentiary problems in proving guilt. I am prepared to accept that this is a "pressing and substantial objective" for the purposes of the Oakes analysis.

The means chosen to achieve this objective can be characterized as follows: to facilitate convictions by removing the burden on the Crown to prove negligence (lack of due diligence) beyond a reasonable doubt. In other words, the means chosen to achieve the objective essentially amounts to a decision by Parliament to convict all those who do not establish that they were duly diligent, including some accused who were duly diligent (and for whom a reasonable doubt exists in that regard) but who are unable to prove due diligence on a balance of probabilities. This, then, is the means which must be considered under the proportionality part of the Oakes test.

Proportionality Test

1. Rational Connection

Convicting all those who are unable to establish due diligence on a balance of probabilities, including those who were duly diligent, is one way of ensuring that all those guilty of false/misleading advertising are convicted, and is therefore one way of ensuring that the overall goal of ensuring fair and vigorous competition is attained. While this method of achieving the objective may raise certain problems and may not be the preferred method of achieving the objective, it is nonetheless a logical means of achieving the desired objective.

Thus, in my view, there is a rational connection between the objectives and the means chosen to attain the objectives, and the persuasive burden embodied in the words "he establishes that" in s. 37.3(2) therefore passes the first part of the proportionality test in Oakes.

2. As Little as Possible

While the imposition of a persuasive burden is rationally connected to the objective, it does not, in my view, infringe constitutionally protected rights as little as is reasonably possible. The Crown has not established that it is necessary to convict those who were duly diligent in order to "catch" those accused who were not duly diligent.

Parliament clearly had the option of employing a mandatory presumption of negligence (following from proof of the actus reus) which could be rebutted by something less than an accused's establishing due diligence on a balance of probabilities. This option was, in fact, recommended by the Ontario Law Reform Commission in its Report on the Basis of Liability for Provincial Offences (1990). The Commission stated (at p. 48):

With respect to the burden of proof for strict liability offences, the Commission proposes a compromise solution that balances the fundamental rights of the accused with the need for effective law enforcement. We recommend the enactment of a mandatory presumption rather than a reverse onus. In other words, in the absence of evidence to the contrary, negligence will be presumed. The Crown will continue to bear the burden of establishing the physical element or actus reus beyond a reasonable doubt. However, in a strict liability case, it will be necessary that evidence of conduct capable of amounting to reasonable care be adduced, either by the testimony of the accused, through the examination or cross-examination of a Crown or defence witness, or in some other way. The accused will merely have an evidentiary burden and will no longer be required to satisfy the persuasive burden of establishing, on a balance of probabilities, that he was not negligent. Where evidence of reasonable care has been adduced, thereby rebutting the presumption, in order to secure a conviction the prosecution should be required to establish the accused's negligence beyond a reasonable doubt. [Emphasis added.]

I note that the presence of such a mandatory presumption alongside the accused's evidentiary burden would, in effect, require the accused to adduce evidence capable of amounting to evidence of due diligence, either through the testimony of the accused or that of other witnesses, including the cross-examination of Crown witnesses or by other means. It goes without saying that if the Crown has adduced such evidence, the accused can rely on it in discharge of the evidentiary burden. This will ensure that the information as to what steps, if any, were taken to avoid the occurrence of the prohibited act is in the record and will relieve the Crown of the obligation to bring forward evidence on a matter that is exclusively in the possession of the accused. On the other hand, the Crown will bear the risk of non-persuasion if the conclusions and inferences to be drawn from such information leave the trier of fact in a state of reasonable doubt on the issue of due diligence.

In view of the foregoing, this alternative would not raise the problem discussed in R. v. Chaulk, supra, of imposing an "impossibly onerous burden" on the Crown. A requirement that the Crown prove lack of due diligence (negligence) beyond a reasonable doubt once an accused has rebutted a mandatory presumption is not akin to a requirement that the Crown prove an accused's sanity once the accused has raised a reasonable doubt about his or her sanity. In R. v. Chaulk, I indicated that the tremendous difficulties which would be faced by the Crown in proving sanity beyond a reasonable doubt flowed largely from the uncertainty of our scientific knowledge in this area. In my view, these difficulties are qualitatively different than the kinds of evidentiary difficulties which would be faced by the Crown in proving lack of due diligence beyond a reasonable doubt (once the accused has discharged the evidentiary burden).

The use of such a mandatory presumption in s. 37.3(2) would be less intrusive on s. 11(d) and would go a long way in achieving the objective: namely, ensuring that those who are not duly diligent are convicted (either because those accused would be unable to rebut the mandatory presumption or because the Crown would be able to prove a lack of due diligence). While the over-inclusive persuasive burden may bring about more convictions than would an evidentiary burden, the general objective of convicting the guilty would be attained by a less intrusive, evidentiary burden.

While a mandatory presumption with an evidentiary burden on the accused would be far less intrusive on s. 11(d) than would the existing persuasive burden, it must be recognized that a mandatory presumption would itself to some degree infringe the presumption of innocence. As discussed above, this Court stated in Oakes, supra, that the presumption of innocence includes both the right of an accused to be presumed innocent until proven guilty, and the right to have the state bear the burden of proving guilt beyond a reasonable doubt. Unless it can be said that proof of the actus reus of false/misleading advertising, in and of itself and in all cases, leads inexorably to the conclusion that the accused was negligent in carrying out that actus reus, a mandatory presumption of negligence leaves open the possibility that the accused will be convicted despite the fact that the Crown's evidence leaves a reasonable doubt about the accused's negligence.

In the absence of a mandatory presumption, the Crown would be required to raise some evidence of negligence in order to secure a conviction. If the Crown failed to address the element of negligence, the accused could successfully raise a "no evidence motion" or (in a jury trial) a motion for a "directed verdict". The presence of a mandatory presumption means that the usual requirement for Crown evidence has been replaced by a presumption of negligence (which can only be rebutted if the accused can point to some evidence capable of raising a reasonable doubt about negligence). It follows from this that an accused who chose to remain silent and lead no defence evidence would, in the absence of some other evidence capable of raising a reasonable doubt, be deemed to have been negligent (a fault requirement which I have just concluded is constitutionally required) and would, therefore, be convicted. Such would not be the case in the absence of a mandatory presumption and evidentiary burden. It can be seen from the above discussion that a mandatory presumption can operate so as to indirectly force an accused into the stand in order to avoid being convicted. If proof of the actus reus itself necessarily established negligence in all cases, this would not conflict with the presumption of innocence because the accused would then be "forced" into the stand only as a result of the Crown's evidence of actus reus effectively constituting evidence of negligence (the necessary inference of negligence being drawn from the Crown's evidence of actus reus). However, mere proof of the actus reus of false advertising does not inexorably lead to the conclusion that the accused was negligent in committing the actus reus. Thus, the indirect compulsion of an accused into the stand which arises from a mandatory presumption of negligence infringes on an accused's s. 11(d) right to have the Crown prove his or her guilt beyond a reasonable doubt.

At the same time, it is my view that any such infringement of s. 11(d) would be clearly justified as a reasonable limit prescribed by law under s. 1 of the Charter. The objective of incorporating a mandatory presumption and evidentiary burden into s. 37.3(2) would be to avoid placing an impossible burden on the Crown. Like most public welfare offences, false/misleading advertising is of such a nature that the accused will be in the best position to garner evidence of due diligence. In the absence of some explanation by the accused, it will nearly always be impossible for the Crown to prove the absence of due diligence. Indeed, without an evidentiary burden on the accused, the Crown may well be put in the difficult situation which was addressed in R. v. Chaulk, supra, whereby the burden of adducing evidence of negligence on an ongoing basis could give rise to intrusions of other Charter rights, such as the right to be free from unreasonable search and seizure (s. 8). Thus, the use of a mandatory presumption in s. 37.3(2) would be rationally connected to avoiding this impossible burden, would fall well within the range of means which impair Charter rights as little as is reasonably possible, and would be proportional in its effect on the presumption of innocence.

In summary, while the use of a mandatory presumption in s. 37.3(2) would also infringe s. 11(d), it constitutes a less intrusive alternative which would not violate the Charter (in that it would constitute a justifiable limit under s. 1).

In light of this alternative, it is my view that the words "he establishes that" do not limit constitutionally protected rights as little as is reasonably possible and that the persuasive burden cannot, therefore, be upheld as a reasonable limit under s. 1. However, even if it can be said that a mandatory presumption along with an evidentiary burden would not attain the objective as effectively as a persuasive burden and that the words in question therefore do limit Charter rights as little as is reasonably possible, it is my view that any marginal increase in the obtaining of the objective (via a persuasive burden on the accused) would be clearly outweighed by the detrimental effect on the presumption of innocence. In other words, if I am wrong in finding that the words in question do not pass the second branch of the proportionality test in Oakes, it is my view that the persuasive burden does not pass the third branch of the proportionality test in Oakes because the effect of the means chosen on Charter rights and freedoms is not proportional to the objective. Indeed, here we are postulating legislation enabling the imprisonment of those who were duly diligent but could not prove it on a balance of probabilities, even though there might well have existed a reasonable doubt thereof. Sending the innocent to jail is too high a price.

I also wish to point out that Parliament had the further option of maintaining the persuasive burden on the accused but removing the possibility of imprisonment. The use of a persuasive burden in circumstances where imprisonment was not a possible punishment would be far less intrusive on constitutional rights.

In light of the alternative means open to Parliament, I am of the view that the use of a persuasive burden in s. 37.3(2) cannot be justified under the proportionality part of the Oakes test.

In summary, it is my view that the words "he establishes that" contained in s. 37.3(2) limit s. 11(d) of the Charter and cannot be upheld as a reasonable limit under s. 1. Consequently, the words "he establishes that" must be held to be of no force or effect, pursuant to s. 52(1) of the Constitution Act, 1982.

Once the words "he establishes that" are deleted from s. 37.3(2), the question becomes, who proves what under the remaining provision? Parliament may well choose to re-enact the offence of false/misleading advertising within constitutionally acceptable parameters but, until such time, how is this offence to be proven? In my opinion, the answer to this question requires the Court to consider this Court's judgment in R. v. City of Sault Ste. Marie, supra, but this time in light of the Charter.

In R. v. City of Sault Ste. Marie, supra, this Court set out a classification of offences to be followed where the legislature had not expressly addressed the requirement of fault. The Court drew a general distinction between "true crimes" and "public welfare offences". While the Court contemplated public welfare offences which carried relatively light sentences, it would seem that the offence of false/misleading advertising would be one which would fall within the "public welfare" classification in Sault Ste. Marie. For "public welfare offences", the Court held that the standard of fault was that of "strict liability". This meant that conviction would follow proof (by the Crown) of the actus reus, unless the accused proved, on a balance of probabilities, that he or she took all reasonable care and was duly diligent.

It is clear to me from the foregoing discussion of this Court's judgments in Oakes, Wigglesworth, Vaillancourt, Whyte, and Chaulk, supra, that where an accused faces imprisonment upon conviction, the presence of the persuasive burden in the Sault Ste. Marie category of "strict liability" is inconsistent with the principles of fundamental justice. The previous judgments of this Court make clear that, to the extent that imprisonment is a possible penalty, this category of "strict liability", placing a persuasive burden on the accused, cannot withstand Charter scrutiny. It follows from this that when imprisonment is a possible punishment for the commission of a "public welfare offence", the persuasive burden contemplated by this Court in R. v. City of Sault Ste. Marie cannot be operative; in this sense, the developing Charter jurisprudence of this Court has, over the last five years, been modifying this holding in Sault Ste. Marie. At the same time, the reasons for not imposing a fault requirement of subjective mens rea for "public welfare offences", which were discussed at length in Sault Ste. Marie, are still compelling. Therefore, I would characterize the modification of Sault Ste. Marie as follows: where the legislature has not expressly addressed the requirement of fault (or where, as here, it has done so in a manner which violates the Constitution), a "public welfare offence" (such as false/misleading advertising) which carries the possibility of imprisonment will be construed as setting up a rebuttable mandatory presumption of negligence. Once the Crown proves the actus reus, the accused will carry the evidentiary burden of pointing to some evidence (led either by the Crown or the defence) which is capable of raising a reasonable doubt as to his or her negligence, short of which a conviction will properly ensue.

Thus, the remaining words in s. 37.3(2) mean that the offence of false/misleading advertising will be made out once the Crown proves the actus reus beyond a reasonable doubt, unless the accused can meet the aforementioned burden of raising a reasonable doubt. If the accused is able to rebut this presumption, the Crown will carry the burden of proving negligence (lack of due diligence) beyond a reasonable doubt.

As was indicated above, in my discussion of the Oakes analysis, I am of the view that this modified rule in Sault Ste. Marie would not violate the Charter. While the mandatory presumption would constitute a limitation on the presumption of innocence, such limitation would be justified under s. 1 of the Charter.

I turn now to the question of s. 36(1)(a). It is my view that the constitutional difficulties arise only from the operation of paras. (c) and (d) of s. 37.3(2) and from the words "he establishes that" in s. 37.3(2). Consequently, no constitutional problem is raised by s. 36(1)(a) either by itself or in combination with the remainder of s. 37.3(2).

Did the Ontario Court of Appeal err in "Rewriting" the Offence Rather Than Declaring the Entire Provision to be of no Force or Effect?

In applying s. 52(1) of the Constitution Act, 1982 to the facts of this case, it must be kept in mind that s. 52(1) provides that any law which is inconsistent with the provisions of the Constitution is of no force or effect to the extent of the inconsistency. The foregoing analysis reveals that it is only paras. (c) and (d) of s. 37.3(2) and the words "he establishes that" which infringe the provisions of the Constitution. The removal of these paragraphs and words from s. 37.3(2) does not, in my view, defeat a "unitary scheme" envisaged by Parliament; rather, it maintains the overall offence of false/misleading advertising and the related statutory defence as much as is possible, within a constitutionally permissible framework.

I cannot agree with the appellant that in severing the offending words and paragraphs and striking down these portions alone, the Court of Appeal "usurped the function of Parliament". In my opinion, the Court of Appeal took the route which is most consistent with s. 52(1) and which is least intrusive to the overall statutory scheme. It need hardly be said that Parliament always has the option of repealing the provision in question and enacting a new false/misleading advertising provision which conforms with the provisions of the Charter.

Thus, in my view, these paragraphs and words can and should be severed from the remainder of s. 37.3(2) in disposing of this appeal. I note that this Court has taken similar action in previous cases (see: Re B.C. Motor Vehicle Act, R. v. Vaillancourt, and R. v. Holmes, supra).

Disposition

Disposition

In light of the above analysis, I would dismiss the appeal of the accused, Wholesale Travel, and affirm the Ontario Court of Appeal's remittance of the case to the Provincial Court for trial. I would dismiss the Crown's appeal. Paragraphs (c) and (d) of s. 37.3(2) of the Competition Act, and the words "he establishes that" contained in s. 37.3(2) are of no force or effect, pursuant to s. 52(1) of the Constitution Act, 1982.

I would answer the constitutional questions as follows:

Question 1:Does s. 37.3(2) of the Competition Act, R.S.C. 1970, c. C-23, as amended, in whole or in part violate ss. 7 or 11(d) of the Canadian Charter of Rights and Freedoms?

Answer: Yes, paras. (c) and (d) of s. 37.3(2) limit s. 7 of the Canadian Charter of Rights and Freedoms. The words "he establishes that" in s. 37.3(2) limit s. 11(d) of the Canadian Charter of Rights and Freedoms.

Question 2:Does s. 36(1)(a) of the Competition Act, in and of itself or when read in combination with s. 37.3(2) of the Competition Act, violate ss. 7 or 11(d) of the Charter?

Answer: No.

Question 3:If either question 1 or question 2 is answered in the affirmative, is (are) the impugned provision(s) saved by s. 1 of the Charter?

Answer: No.

//La Forest J.//

The following are the reasons delivered by

Reasons of La Forest J.

La Forest J. -- I have had the advantage of reading the reasons of my colleagues Chief Justice Lamer and Justice Cory and, with respect, I am in substantial agreement with the Chief Justice. I would, however, add a few comments.

I agree with Cory J. that there is a broad divide between true criminal law and regulatory offences and I relied on this distinction in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425, to support a demand for business documents as a reasonable seizure within the meaning of s. 8 of the Canadian Charter of Rights and Freedoms. I should observe, however, that what is ultimately important are not labels (though these are undoubtedly useful), but the values at stake in the particular context. Speaking for the Court in R. v. Lyons, 1987 25 (SCC), [1987] 2 S.C.R. 309, at p. 361, I stated:

It is also clear that the requirements of fundamental justice are not immutable; rather, they vary according to the context in which they are invoked. Thus, certain procedural protections might be constitutionally mandated in one context but not in another.

In the present case we are dealing with a provision under which a five-year term of imprisonment may be imposed if an individual is convicted. Such a deprivation requires much stricter requirements to conform with the principles of fundamental justice than mere monetary penalties. I should add that the context and values at stake in Thomson Newspapers Ltd., supra, were profoundly different from those in the present case. Thomson Newspapers Ltd. was really concerned with the procedural protection that should be afforded privacy in relation to business documents. Here the effect of the provisions is the removal of the requirement that an offence involving a serious deprivation of liberty be proved beyond a reasonable doubt. While, in my view, in the regulatory context in which the provisions operate a requirement that a reasonable doubt be raised by the accused that he or she has exercised due diligence meets the requirements of fundamental justice (under s. 7 of the Charter) in these circumstances, a requirement that the accused prove such diligence on the balance of probabilities goes too far. The same is true under s. 1 of the Charter if one approaches the issue in terms of s. 11(d). The provision substantially divests him of the presumption of innocence.

I should also note that the Chief Justice appears to equate the concept of due diligence with negligence. This may well be valid if he has in mind the standard of civil negligence. Criminal negligence, of course, involves recklessness, which in my view requires a subjective component; see R. v. Tutton, 1989 103 (SCC), [1989] 1 S.C.R. 1392, per Wilson J. For my part, I am prepared to accept the requirement of due diligence as sufficient for Charter purposes in the case of regulatory offences and some criminal offences having a significant regulatory base (e.g., gun control R. v. Schwartz, 1988 11 (SCC), [1988] 2 S.C.R. 443). However, for most criminal offences I would be reluctant to accept a lower level of mens rea than criminal negligence.

//Cory J.//

The judgment of L'Heureux Dubé and Cory JJ. was delivered by

Reasons of Cory J.

Cory J. -- The fundamental issue raised on this appeal is whether regulatory statutes which impose a regime of strict liability for breach of their provisions infringe ss. 7 and 11(d) of the Canadian Charter of Rights and Freedoms.

Factual Background and Pertinent Legislation

The Wholesale Travel Group Inc. ("Wholesale Travel") was charged with five counts of false or misleading advertising contrary to s. 36(1)(a) of the Competition Act, R.S.C. 1970, c. C-23 (the "Act"). The charges were laid after Wholesale Travel advertised vacation packages at "wholesale prices" while at the same time charging consumers a price higher than the cost incurred by the company in supplying those vacation packages. The matter proceeded to trial in Provincial Court. Before any evidence was heard, Wholesale Travel brought a motion challenging the validity of ss. 36(1) and 37.3(2) of the Act on the basis that those sections violate ss. 7 and 11(d) of the Charter and are therefore of no force of effect.

The offence of misleading advertising is described in s. 36(1)(a) of the Act. Although the Act has since been amended, the applicable provisions remain unchanged. I shall therefore refer to the old section numbers under which the appellant was charged. Section 36(1)(a) (now R.S.C., 1985, c. C-46, s. 52(1)(a)) reads as follows:

36.(1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

(a) make a representation to the public that is false or misleading in a material respect;

Subsection 5 prescribes the penalties available upon conviction. It states:

(5) Any person who violates subsection (1) is guilty of an offence and is liable

(a) on conviction on indictment, to a fine in the discretion of the court and to imprisonment for five years or to both; or

(b) on summary conviction, to a fine of twenty-five thousand dollars or to imprisonment for one year or to both.

The Act sets forth a statutory defence to the charge. Section 37.3(2) (now R.S.C., 1985, c. C-46, s. 60(2)) provides:

37.3 ...

(2) No person shall be convicted of an offence under section 36 or 36.1, if he establishes that,

(a) the act or omission giving rise to the offence with which he is charged was the result of error;

(b) he took reasonable precautions and exercised due diligence to prevent the occurrence of such error;

(c) he, or another person, took reasonable measures to bring the error to the attention of the class of persons likely to have been reached by the representation or testimonial; and

(d) the measures referred to in paragraph (c), except where the representation or testimonial related to a security, were taken forthwith after the representation was made or the testimonial published.

It is important to note that all four conditions must be met before the statutory defence can prevail.

Wholesale Travel contends that the statutory scheme and, in particular, the combined operation of the offence prescribed in s. 36(1)(a) and the statutory defence set forth in s. 37.3(2), infringes ss. 7 and 11(d) of the Charter.

Positions Taken by the Courts Below

Ontario Provincial Court -- Criminal Division (1988), 1988 10297 (ON CJ), 22 C.P.R. (3d) 328

The trial judge noted that, while paras. (a) and (b) of s. 37.3(2) essentially duplicate the common law defence of due diligence, paras. (c) and (d) detract from that defence by requiring the accused to make a timely retraction. He observed that, where the accused was unable to make a retraction, he or she would be deprived of any defence. At this point the offence would become one of absolute liability since the accused could be convicted even though due diligence had been established. In light of the five-year penalty which could be imposed for a breach of the statute, the trial judge, relying upon Re B.C. Motor Vehicle Act, 1985 81 (SCC), [1985] 2 S.C.R. 486, found that paras. (c) and (d) of s. 37.3(2) infringe s. 7 of the Charter.

The trial judge went on to hold that, in view of the stigma attached to the offence of false advertising and the substantial penalty that could be imposed, an accused person was constitutionally entitled to have the charge proven beyond a reasonable doubt. In the result, he found the statutory due diligence defence contained in paras. (a) and (b) of s. 37.3(2) to violate ss. 7 and 11(d) of the Charter on the ground that it permitted conviction despite the existence of a reasonable doubt as to the exercise of due diligence by the accused. For the same reasons, the trial judge held that the common law defence of due diligence which would exist in the absence of s. 37.3(2) failed to satisfy the Charter rights of the accused. As a result, he found that s. 36(1) of the Act also violated the Charter.

The trial judge determined that the Charter violations could not be justified under s. 1 of the Charter. He therefore held ss. 36(1) and 37.3(2) to be of no force or effect and dismissed the false advertising charges against Wholesale Travel.

Supreme Court of Ontario (Weekly Court) (1988), 1988 10226 (ON SC), 46 C.R.R. 100

The judge presiding in Weekly Court allowed the Crown's appeal and held that the impugned provisions of the Act did not violate the presumption of innocence guaranteed by s. 11(d) of the Charter. Relying on R. v. Holmes, 1988 84 (SCC), [1988] 1 S.C.R. 914, he found that the requirement placed on the accused to establish due diligence on a balance of probabilities did not violate s. 11(d) since the Crown was still required to establish all elements of the offence beyond a reasonable doubt. To the same effect, he held that the modification of the due diligence defence contained in paras. (c) and (d) of s. 37.3(2) did not violate s. 11(d) as it did not alter the Crown's burden of proof with respect to the essential elements. I would note that the Weekly Court judge did not, at the time of his decision, have the benefit of this Court's reasons in R. v. Whyte, 1988 47 (SCC), [1988] 2 S.C.R. 3, or R. v. Keegstra, 1990 24 (SCC), [1990] 3 S.C.R. 697.

Ontario Court of Appeal (1989), 1989 4250 (ON CA), 70 O.R. (2d) 545

The majority agreed with the trial judge that paras. (c) and (d) of s. 37.3(2) potentially rendered the offence one of absolute liability. They came to this conclusion on the basis that these paragraphs would permit conviction even where, in committing the actus reus of the offence, the accused had acted with due diligence and could establish this on a balance of probabilities. This possibility, coupled with the availability of imprisonment as a penalty, indicated to the majority that paras. (c) and (d) infringed s. 7 of the Charter. The majority relied upon the decisions of this Court in Re B.C. Motor Vehicle Act, supra, and in R. v. Vaillancourt, 1987 2 (SCC), [1987] 2 S.C.R. 636, in reaching this conclusion. Since the Crown did not argue that paras. (c) and (d) were justified pursuant to s. 1 of the Charter, the majority of the Court of Appeal declared paras. (c) and (d) invalid.

The majority then considered the remaining statutory defence of due diligence set out in paras. (a) and (b) of s. 37.3(2). The question raised was whether this defence violated the presumption of innocence by requiring the accused to "establish" due diligence on a balance of probabilities. The majority concluded that it did, since it would permit a conviction to be registered against an accused who, though unable to establish due diligence on a balance of probabilities, had been able to raise a reasonable doubt on the issue. On this basis, the majority found that the due diligence defence infringed the accused's s. 11(d) rights. The majority went on to observe that it might be possible to uphold the defence under s. 1 of the Charter, but the Crown had not attempted to do so. Therefore, the reverse onus provision requiring the accused to establish due diligence on a balance of probabilities was held to be of no force or effect.

In addressing the issue of remedy, the majority determined that the s. 11(d) violation was caused by the requirement in s. 37.3(2) that an accused "establish" due diligence. Accordingly, it was held that the offending words "if he establishes that" could be excised and held to be of no force or effect, leaving the offence in s. 36(1)(a) and the due diligence defence in s. 37.3(2)(a) and (b) intact. The result would be to save the offence of false advertising and the statutory defence but to place an evidential rather than a persuasive burden on the accused to establish due diligence.

The dissenting judge agreed that the effect of paras. (c) and (d) of s. 37.3(2) was to make the offence one of absolute liability. However he found no violation of s. 11(d) with respect to the remaining due diligence defence. He held that the imposition of a persuasive onus on the accused to establish due diligence was consistent with s. 11(d) reverse onus decisions of this Court, since it did not require the accused to disprove an essential element of the offence. I would note that the Court of Appeal decision was rendered prior to the release of this Court's reasons in Keegstra, supra, which clearly rejected for the purposes of s. 11(d) the distinction between defences and elements of the offence.

Wholesale Travel and the Crown both appealed from the decision of the Court of Appeal. Wholesale Travel argues first that the Court of Appeal ought to have declared the entire legislative scheme invalid rather than merely striking out the offending words from s. 37.3(2). In the alternative, Wholesale Travel submits that the Court of Appeal should have held that s. 7 of the Charter requires the Crown to prove subjective intent or wilful blindness with respect to the alleged falsity of the advertisement rather than requiring only that the Crown establish a lack of due diligence. The Crown's appeal challenges the Court of Appeal's conclusion regarding the constitutional validity of the impugned provisions.

Issues

On July 26, 1990 Chief Justice Lamer stated the following constitutional questions:

1.Does s. 37.3(2) of the Competition Act, R.S.C. 1970, c. C-23, as amended, in whole or in part violate ss. 7 or 11(d) of the Canadian Charter of Rights and Freedoms?

2.Does s. 36(1)(a) of the Competition Act, in and of itself or when read in combination with s. 37.3(2) of the Competition Act, violate ss. 7 or 11(d) of the Charter?

3.If either question 1 or question 2 is answered in the affirmative, is (are) the impugned provision(s) saved by s. 1 of the Charter?

I

Regulatory Offences and Strict Liability

A. The Distinction Between Crimes and Regulatory Offences

Regulatory Offences and Strict Liability

The common law has long acknowledged a distinction between truly criminal conduct and conduct, otherwise lawful, which is prohibited in the public interest. Earlier, the designations mala in se and mala prohibita were utilized; today prohibited acts are generally classified as either crimes or regulatory offences.

While some regulatory legislation such as that pertaining to the content of food and drink dates back to the Middle Ages, the number and significance of regulatory offences increased greatly with the onset of the Industrial Revolution. Unfettered industrialization had led to abuses. Regulations were therefore enacted to protect the vulnerable -- particularly the children, men and women who laboured long hours in dangerous and unhealthy surroundings. Without these regulations many would have died. It later became necessary to regulate the manufactured products themselves and, still later, the discharge of effluent resulting from the manufacturing process. There is no doubt that regulatory offences were originally and still are designed to protect those who are unable to protect themselves.

English courts have for many years supported and given effect to the policy objectives animating regulatory legislation. In Sherras v. De Rutzen, [1895] 1 Q.B. 918, at p. 922, it was held that, while the mens rea presumption applied to true crimes because of the fault and moral culpability which they imply, that same presumption did not apply to offences "which ... are not criminal in any real sense, but are acts which in the public interest are prohibited under a penalty". This case illustrates the essential distinction in the legal treatment of regulatory as opposed to criminal offences -- namely, the removal of the mens rea requirement.

The distinction between true crimes and regulatory offences was recognized in Canadian law prior to the adoption of the Charter. In R. v. Pierce Fisheries Ltd., 1970 178 (SCC), [1971] S.C.R. 5, at p. 13, Ritchie J. referred to "a wide category of offences created by statutes enacted for the regulation of individual conduct in the interests of health, convenience, safety and the general welfare of the public" which are not subject to the common law presumption of mens rea as an essential element to be proven by the Crown.

R. v. City of Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299, affirmed the distinction between regulatory offences and true crimes. There, on behalf of a unanimous Court, Justice Dickson (as he then was) recognized public welfare offences as a distinct class. He held (at pp. 1302-3) that such offences, although enforced as penal laws through the machinery of the criminal law, "are in substance of a civil nature and might well be regarded as a branch of administrative law to which traditional principles of criminal law have but limited application."

The Sault Ste. Marie case recognized strict liability as a middle ground between full mens rea and absolute liability. Where the offence is one of strict liability, the Crown is required to prove neither mens rea nor negligence; conviction may follow merely upon proof beyond a reasonable doubt of the proscribed act. However, it is open to the defendant to avoid liability by proving on a balance of probabilities that all due care was taken. This is the hallmark of the strict liability offence: the defence of due diligence.

Thus, Sault Ste. Marie not only affirmed the distinction between regulatory and criminal offences, but also subdivided regulatory offences into categories of strict and absolute liability. The new category of strict liability represented a compromise which acknowledged the importance and essential objectives of regulatory offences but at the same time sought to mitigate the harshness of absolute liability which was found, at p. 1311, to "violate[s] fundamental principles of penal liability".

The Rationale for the Distinction

It has always been thought that there is a rational basis for distinguishing between crimes and regulatory offences. Acts or actions are criminal when they constitute conduct that is, in itself, so abhorrent to the basic values of human society that it ought to be prohibited completely. Murder, sexual assault, fraud, robbery and theft are all so repugnant to society that they are universally recognized as crimes. At the same time, some conduct is prohibited, not because it is inherently wrongful, but because unregulated activity would result in dangerous conditions being imposed upon members of society, especially those who are particularly vulnerable.

The objective of regulatory legislation is to protect the public or broad segments of the public (such as employees, consumers and motorists, to name but a few) from the potentially adverse effects of otherwise lawful activity. Regulatory legislation involves a shift of emphasis from the protection of individual interests and the deterrence and punishment of acts involving moral fault to the protection of public and societal interests. While criminal offences are usually designed to condemn and punish past, inherently wrongful conduct, regulatory measures are generally directed to the prevention of future harm through the enforcement of minimum standards of conduct and care.

It follows that regulatory offences and crimes embody different concepts of fault. Since regulatory offences are directed primarily not to conduct itself but to the consequences of conduct, conviction of a regulatory offence may be thought to import a significantly lesser degree of culpability than conviction of a true crime. The concept of fault in regulatory offences is based upon a reasonable care standard and, as such, does not imply moral blameworthiness in the same manner as criminal fault. Conviction for breach of a regulatory offence suggests nothing more than that the defendant has failed to meet a prescribed standard of care.

That is the theory but, like all theories, its application is difficult. For example, is the single mother who steals a loaf of bread to sustain her family more blameworthy than the employer who, through negligence, breaches regulations and thereby exposes his employees to dangerous working conditions, or the manufacturer who, as a result of negligence, sells dangerous products or pollutes the air and waters by its plant? At this stage it is sufficient to bear in mind that those who breach regulations may inflict serious harm on large segments of society. Therefore, the characterization of an offence as regulatory should not be thought to make light of either the potential harm to the vulnerable or the responsibility of those subject to regulation to ensure that the proscribed harm does not occur. It should also be remembered that, as social values change, the degree of moral blameworthiness attaching to certain conduct may change as well.

Nevertheless there remains, in my view, a sound basis for distinguishing between regulatory and criminal offences. The distinction has concrete theoretical and practical underpinnings and has proven to be a necessary and workable concept in our law. Since Sault Ste. Marie, this Court has reaffirmed the distinction. Most recently, in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), 1990 135 (SCC), [1990] 1 S.C.R. 425, at pp. 510-11, Justice La Forest adopted the following statement of the Law Reform Commission of Canada (Criminal Responsibility for Group Action, Working Paper 16, 1976, at p. 12):

[The regulatory offence] is not primarily concerned with values, but with results. While values necessarily underlie all legal prescriptions, the regulatory offence really gives expression to the view that it is expedient for the protection of society and for the orderly use and sharing of society's resources that people act in a prescribed manner in prescribed situations, or that people take prescribed standards of care to avoid risks of injury. The object is to induce compliance with rules for the overall benefit of society.

B. The Fundamental Importance of Regulatory Offences in Canadian Society

Regulatory measures are the primary mechanisms employed by governments in Canada to implement public policy objectives. What is ultimately at stake in this appeal is the ability of federal and provincial governments to pursue social ends through the enactment and enforcement of public welfare legislation.

Some indication of the prevalence of regulatory offences in Canada is provided by a 1974 estimate by the Law Reform Commission of Canada (see "The Size of the Problem", in Studies in Strict Liability). The Commission estimated that there were, at that time, approximately 20,000 regulatory offences in an average province, plus an additional 20,000 regulatory offences at the federal level. By 1983, the Commission's estimate of the federal total had reached 97,000. There is every reason to believe that the number of public welfare offences at both levels of government has continued to increase.

Statistics such as these make it obvious that government policy in Canada is pursued principally through regulation. It is through regulatory legislation that the community seeks to implement its larger objectives and to govern itself and the conduct of its members. The ability of the government effectively to regulate potentially harmful conduct must be maintained.

It is difficult to think of an aspect of our lives that is not regulated for our benefit and for the protection of society as a whole. From cradle to grave, we are protected by regulations; they apply to the doctors attending our entry into this world and to the morticians present at our departure. Every day, from waking to sleeping, we profit from regulatory measures which we often take for granted. On rising, we use various forms of energy whose safe distribution and use are governed by regulation. The trains, buses and other vehicles that get us to work are regulated for our safety. The food we eat and the beverages we drink are subject to regulation for the protection of our health.

In short, regulation is absolutely essential for our protection and well being as individuals, and for the effective functioning of society. It is properly present throughout our lives. The more complex the activity, the greater the need for and the greater our reliance upon regulation and its enforcement. For example, most people would have no idea what regulations are required for air transport or how they should be enforced. Of necessity, society relies on government regulation for its safety.

II

The Offence in the Present Case

Competition Legislation Generally

The Offence in the Present Case

The offence of misleading advertising with which Wholesale Travel is charged is found in the Act. This Act, like its predecessor, the Combines Investigation Act, is aimed at regulating unacceptable business activity. In General Motors of Canada Ltd. v. City National Leasing, 1989 133 (SCC), [1989] 1 S.C.R. 641, Dickson C.J. held that the Act embodied a complex scheme of economic regulation, the purpose of which is to eliminate activities that reduce competition in the marketplace.

The nature and purpose of the Act was considered in greater detail in Thomson Newspapers Ltd., supra. La Forest J. pointed out that the Act is aimed at regulating the economy and business with a view to preserving competitive conditions which are crucial to the operation of a free market economy. He observed that the Act was not concerned with "real crimes" but with regulatory or public welfare offences. He put the position this way, at p. 510:

At bottom, the Act is really aimed at the regulation of the economy and business, with a view to the preservation of the competitive conditions which are crucial to the operation of a free market economy. This goal has obvious implications for Canada's material prosperity. It also has broad political overtones in that it is aimed at preventing concentration of power .... It must be remembered that private organizations can be just as oppressive as the state when they gain such a dominant position within their sphere of operations that they can effectively force their will upon others.

The conduct regulated or prohibited by the Act is not conduct which is by its very nature morally or socially reprehensible. It is instead conduct we wish to discourage because of our desire to maintain an economic system which is at once productive and consistent with our values of individual liberty. It is, in short, not conduct which would be generally regarded as by its very nature criminal and worthy of criminal sanction. It is conduct which is only criminal in the sense that it is in fact prohibited by law. One's view of whether it should be so proscribed is likely to be functional or utilitarian, in the sense that it will be based on an assessment of the desirability of the economic goals to which combines legislation is directed or its potential effectiveness in achieving those goals. It is conduct which is made criminal for strictly instrumental reasons. [Emphasis added.]

These decisions make it clear that the Act in all its aspects is regulatory in character.

The Offence of False or Misleading Advertising

Is the offence of false or misleading advertising regulatory in nature? It seems to me that the fact that the provision is located within a comprehensive regulatory framework would ordinarily be sufficient to demonstrate its regulatory nature. Several other considerations point to the same conclusion.

The offence of misleading advertising has existed in Canada since 1914. It is not without significance that it was, in 1969, transferred from the Criminal Code to the Combines Investigation Act, a step which confirms the regulatory nature of the offence. The provision was amended in 1975 to provide for a defence of due diligence, converting the offence from absolute to strict liability.

It is true that the availability of imprisonment as a sanction for breach of a statute might be taken to indicate that the provision is criminal in nature. However, this fact is not itself dispositive of the character of an offence. Rather, one must consider the conduct addressed by the legislation and the purposes for which such conduct is regulated. This view was most recently expressed by La Forest J. in Thomson Newspapers Ltd., supra, at p. 509. He noted that many regulatory offences provide for imprisonment in order to ensure compliance with the terms of the statute and thereby achieve the regulatory goal.

The appellant has argued that conviction for the offence of false advertising carries a stigma of dishonesty, with the inference that the accused falsely advertised for the purposes of obtaining economic advantage. It is said that nothing could be more damaging to a business than the implication that it has made dishonest representations. In my view, however, the offence does not focus on dishonesty but rather on the harmful consequences of otherwise lawful conduct. Conviction suggests only that the defendant has made a representation to the public which was in fact misleading and that the defendant was unable to establish the exercise of due diligence in preventing the error. This connotes a fault element of negligence rather than one involving moral turpitude. Thus, any stigma that might flow from a conviction is very considerably diminished.

In summary, the offence of false advertising possesses the essential characteristics which distinguish regulatory offences from those which are truly criminal. Accordingly, it should be considered to be a regulatory offence rather than a crime in the ordinary sense.

III

A Contextual Approach to Charter Interpretation

A. The Importance of Considering Charter Rights in Context

In R. v. Big M Drug Mart Ltd., 1985 69 (SCC), [1985] 1 S.C.R. 295, Dickson J. (as he then was) set out the general approach to Charter interpretation and the basic principles to be applied. One of his central premises was the need to consider context in order to render the rights and freedoms guaranteed in the Charter meaningful and relevant. He observed that the Charter was not enacted in a vacuum, and emphasized that its provisions had to be placed in their proper linguistic, philosophic and historical contexts.

In Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326, Wilson J. stressed the importance of a contextual approach to Charter interpretation. She recognized that a particular right or freedom may have a different meaning depending upon the context in which it is asserted. She put her position this way, at pp. 1355-56:

One virtue of the contextual approach, it seems to me, is that it recognizes that a particular right or freedom may have a different value depending on the context.... The contextual approach attempts to bring into sharp relief the aspect of the right or freedom which is truly at stake in the case as well as the relevant aspects of any values in competition with it. It seems to be more sensitive to the reality of the dilemma posed by the particular facts and therefore more conducive to finding a fair and just compromise between the two competing values under s. 1.

It is my view that a right or freedom may have different meanings in different contexts.... It seems entirely probable that the value to be attached to it in different contexts for the purpose of the balancing under s. 1 might also be different. It is for this reason that I believe that the importance of the right or freedom must be assessed in context rather than in the abstract and that its purpose must be ascertained in context. This having been done, the right or freedom must then, in accordance with the dictates of this Court, be given a generous interpretation aimed at fulfilling that purpose and securing for the individual the full benefit of the guarantee. [Emphasis added.]

The approach articulated by Wilson J. has been cited with approval by this Court in several recent cases: see, for example, Rocket v. Royal College of Dental Surgeons of Ontario, 1990 121 (SCC), [1990] 2 S.C.R. 232; R. v. Keegstra, supra; Committee for the Commonwealth of Canada v. Canada, 1991 119 (SCC), [1991] 1 S.C.R. 139.

It is now clear that the Charter is to be interpreted in light of the context in which the claim arises. Context is relevant both with respect to the delineation of the meaning and scope of Charter rights, as well as to the determination of the balance to be struck between individual rights and the interests of society.

A contextual approach is particularly appropriate in the present case to take account of the regulatory nature of the offence and its place within a larger scheme of public welfare legislation. This approach requires that the rights asserted by the appellant be considered in light of the regulatory context in which the claim is situated, acknowledging that a Charter right may have different scope and implications in a regulatory context than in a truly criminal one.

Under the contextual approach, constitutional standards developed in the criminal context cannot be applied automatically to regulatory offences. Rather, the content of the Charter right must be determined only after an examination of all relevant factors and in light of the essential differences between the two classes of prohibited activity. This was the approach taken in Thomson Newspapers Ltd., supra, where La Forest J. stressed the importance of the regulatory nature of the statute in determining the scope of s. 8 of the Charter as applied to the Combines Investigation Act, R.S.C. 1970, c. C‑23.

The contextual approach further requires that the appellant's claim be considered and weighed in light of the realities of a modern industrial society, where the regulation of innumerable activities is essential for the benefit of all. It is vital that the fundamentally important role of regulatory legislation in the protection of individuals and groups in Canadian society today be recognized and accepted. Canadians rely on and expect their governments to regulate and control activities which may be dangerous to others. In McKinney v. University of Guelph, 1990 60 (SCC), [1990] 3 S.C.R. 229, Wilson J. noted the special role of the state in life in Canada. At page 356 of her reasons she wrote:

Canadians recognize that government has traditionally had and continues to have an important role to play in the creation and preservation of a just Canadian society.... It is, in my view, untenable to suggest that freedom is co-extensive with the absence of government. Experience shows the contrary, that freedom has often required the intervention and protection of government against private action.

The scale and importance of public welfare legislation in Canada is such that a contextual approach must be taken to the issues raised in this appeal.

B. The Basis for the Differential Treatment of Regulatory Offences

In the present case, the contextual approach requires that regulatory and criminal offences be treated differently for the purposes of Charter review. Before proceeding to the substantive analysis, however, it is necessary to consider the justifications for differential treatment. They are two-fold: the first relates to the distinctive nature of regulatory activity, while the second acknowledges the fundamental need to protect the vulnerable through regulatory legislation.

1. The Licensing Justification

Those who argue against differential treatment for regulatory offences assert that there is no valid reason to distinguish between the criminal and regulatory accused. Each, it is said, is entitled in law to the same procedural and substantive protections. This view assumes equality of position between criminal and regulatory defendants; that is to say, it assumes that each starts out from a position of equal knowledge, volition and "innocence". The argument against differential treatment further suggests that differentiating between the regulatory and criminal defendants implies the subordination and sacrifice of the regulatory accused to the interests of the community at large. Such a position, it is argued, contravenes our basic concern for individual dignity and our fundamental belief in the importance of the individual. It is these assumptions which the licensing justification challenges.

Criminal law is rooted in the concepts of individual autonomy and free will and the corollary that each individual is responsible for his or her conduct. It assumes that all persons are free actors, at liberty to choose how to regulate their own actions in relation to others. The criminal law fixes the outer limits of acceptable conduct, constraining individual freedom to a limited degree in order to preserve the freedom of others. Thus, the basis of criminal responsibility is that the accused person has made a deliberate and conscious choice to engage in activity prohibited by the Criminal Code. The accused person who is convicted of an offence will be held responsible for his or her actions, with the result that the opprobrium of society will attach to those acts and any punishment imposed will be considered to be deserved.

The licensing argument is directed to this question of choice. Thus, while in the criminal context, the essential question to be determined is whether the accused has made the choice to act in the manner alleged in the indictment, the regulated defendant is, by virtue of the licensing argument, assumed to have made the choice to engage in the regulated activity. The question then becomes not whether the defendant chose to enter the regulated sphere but whether, having done so, the defendant has fulfilled the responsibilities attending that decision. Professor Richardson puts the position this way in "Strict Liability for Regulatory Crime: the Empirical Research," [1987] Crim. L.R. 295, at pp. 295-96:

...it can be argued that the strict liability regulatory offender is not a "blameless innocent". By indulging in the regulated activity she has voluntarily adopted the risks of regulatory infraction and her supposed "innocence" flows from the law's traditional tendency to view the criminal act "only in the context of its immediate past".

The licensing concept rests on the view that those who choose to participate in regulated activities have, in doing so, placed themselves in a responsible relationship to the public generally and must accept the consequences of that responsibility. Therefore, it is said, those who engage in regulated activity should, as part of the burden of responsible conduct attending participation in the regulated field, be deemed to have accepted certain terms and conditions applicable to those who act within the regulated sphere. Foremost among these implied terms is an undertaking that the conduct of the regulated actor will comply with and maintain a certain minimum standard of care.

The licensing justification is based not only on the idea of a conscious choice being made to enter a regulated field but also on the concept of control. The concept is that those persons who enter a regulated field are in the best position to control the harm which may result, and that they should therefore be held responsible for it. A compelling statement of this view is found in the decision of the United States Supreme Court in Morissette v. United States, 342 U.S. 246 (1952), where the court stated, at p. 256:

The accused, if he does not will the violation, usually is in a position to prevent it with no more care than society might reasonably expect and no more exertion than it might reasonably exact from one who assumed his responsibilities.

The licensing justification may not apply in all circumstances to all offenders. That is, there are some cases in which the licensing argument may not apply so as to permit the imputation to an accused of choice, knowledge and implied acceptance of regulatory terms and conditions. This may occur, for instance, where the nature of the regulated conduct is so innocuous that it would not trigger in the mind of a reasonable person the possibility that the conduct was regulated.

The nature of the regulated conduct will itself go far to determining whether the licensing argument applies. It is useful to distinguish between conduct which, by virtue of its inherent danger or the risk it engenders for others, would generally alert a reasonable person to the probability that the conduct would be regulated, from that conduct which is so mundane and apparently harmless that no thought would ordinarily be given to its potentially regulated nature. In the latter circumstances, the licensing argument would not apply.

This approach is reflected in the American authorities. In Lambert v. California, 355 U.S. 225 (1957), the accused had been convicted under a municipal ordinance requiring felons who remained in the city of Los Angeles for more than five days to register with the Chief of Police. The U.S. Supreme Court reversed the conviction on the basis that the accused would have no reason to know of the duty to register. Due to the nature of the ordinance in question, the court held the licensing argument could not be applied so as to impute to the accused choice and knowledge of the regulated nature of the proscribed conduct. Since there was nothing in the nature of the regulated activity to put the accused on notice that the conduct in question was regulated, the court held, it would be fundamentally unfair to permit conviction in the absence of proof of actual knowledge of the duty to register.

On the other hand, in United States v. Freed, 401 U.S. 601 (1971), and United States v. International Minerals and Chemical Corp., 402 U.S. 558 (1971), the court held that the inherently dangerous nature of the regulated activity (possession of firearms and shipping of corrosive acids respectively) was sufficient to put the accused person on notice that the conduct in question was regulated. In those circumstances, the court held, the probability of regulation is so great that awareness of the regulation can be presumed.

These considerations do not, however, apply in the present case. The appellant, having chosen to enter a regulated sphere of business activity, the regulation of which had received wide publicity, should have known that there would be regulations governing its conduct.

The licensing justification has been advanced by academic writers as a basis for the differential treatment of crimes and regulatory offences. Professor Webb has put the position this way ("Regulatory Offences, the Mental Element and the Charter: Rough Road Ahead" (1989), 21 Ottawa L. Rev. 419, at p. 452):

Criminal Code offences are typically but not always outright prohibitions of certain conduct, not part of a larger administrative regime which permits specified behaviour to take place under controlled circumstances. This is in direct contrast to regulatory offences, which are typically an adjunct to legal schemes permitting activities within pre-established limits and subject to certain conditions. Before a regulator will authorize a regulatee to engage in controlled activities, the regulatee must agree to abide by a set of rules, and must be found fit to carry out the regulated activity. A driver's licence is a good example of such an arrangement. In effect, this arrangement establishes and certifies that the regulatee knows the standards which he or she must meet, is capable of meeting them, and accepts that should his or her conduct fall below these standards, he or she may be subject to administrative actions and penalties prescribed in legislation, according to procedures which take into account the special knowledge of the regulatee. The fact that an accused is participating in a regulated activity and has met the initial "entrance requirements" leads to a legally imposed or assumed awareness on his or her part of the risks associated with that activity. [Emphasis in original.]

He later added, at p. 476:

The fact that a strict liability offence is a component in a larger regulatory system justifies the assumption that as a pre-condition to engaging in regulated activity, regulatees have been made aware of the standards which they must meet, and accept that should their conduct fall below these standards, they may be subject to penalties pursuant to procedures which reflect their special position as regulatees.

The licensing justification finds support as well in the recent decision of this Court in Thomson Newspapers Ltd., supra. There, in holding that it was necessary to interpret the asserted right in light of the regulatory context in which the claim arose, La Forest J. relied on licensing-type considerations to find that there was a diminished expectation of privacy in the minds of those whose conduct was regulated. At pages 506-7 he wrote:

... the degree of privacy the citizen can reasonably expect may vary significantly depending upon the activity that brings him or her into contact with the state. In a modern industrial society, it is generally accepted that many activities in which individuals can engage must nevertheless to a greater or lesser extent be regulated by the state to ensure that the individual's pursuit of his or her self-interest is compatible with the community's interest in the realization of collective goals and aspirations.

By virtue of the decision to enter the regulated field, the regulated person (here the appellant) can be taken to have accepted certain terms and conditions of entry. To paraphrase La Forest J., the procedural and substantive protections a person can reasonably expect may vary depending upon the activity that brings that person into contact with the state. Thus the extent of Charter protection may differ depending upon whether the activity in question is regulatory or criminal in nature.

In this way, the licensing argument provides a link between the distinction between criminal and regulatory offences and the differential treatment of those two categories for the purposes of Charter review. There is, as well, a second justification for differential treatment.

2. The Vulnerability Justification

The realities and complexities of a modern industrial society coupled with the very real need to protect all of society and particularly its vulnerable members, emphasize the critical importance of regulatory offences in Canada today. Our country simply could not function without extensive regulatory legislation. The protection provided by such measures constitutes a second justification for the differential treatment, for Charter purposes, of regulatory and criminal offences.

This Court has on several occasions observed that the Charter is not an instrument to be used by the well positioned to roll back legislative protections enacted on behalf of the vulnerable. This principle was first enunciated by Dickson C.J. for the majority in R. v. Edwards Books and Art Ltd., 1986 12 (SCC), [1986] 2 S.C.R. 713. He wrote, at p. 779:

In interpreting and applying the Charter I believe that the courts must be cautious to ensure that it does not simply become an instrument of better situated individuals to roll back legislation which has as its object the improvement of the condition of less advantaged persons.

The same principle has been repeated and emphasized in Irwin Toy Ltd. v. Quebec (Attorney General), 1989 87 (SCC), [1989] 1 S.C.R. 927, at p. 993, and in Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038, at p. 1051. This principle recognizes that much government regulation is designed to protect the vulnerable. It would be unfortunate indeed if the Charter were used as a weapon to attack measures intended to protect the disadvantaged and comparatively powerless members of society. It is interesting to observe that in the United States, courts struck down important components of the program of regulatory legislation known as "the New Deal". This so-called "Lochner era" is now almost universally regarded by academic writers as a dark age in the history of the American Constitution.

Regulatory legislation is essential to the operation of our complex industrial society; it plays a legitimate and vital role in protecting those who are most vulnerable and least able to protect themselves. The extent and importance of that role has increased continuously since the onset of the Industrial Revolution. Before effective workplace legislation was enacted, labourers -- including children -- worked unconscionably long hours in dangerous and unhealthy surroundings that evoke visions of Dante's Inferno. It was regulatory legislation with its enforcement provisions which brought to an end the shameful situation that existed in mines, factories and workshops in the nineteenth century. The differential treatment of regulatory offences is justified by their common goal of protecting the vulnerable.

The importance of the vulnerability concept as a component of the contextual approach to Charter interpretation has been recognized in the employer/employee field in Edwards Books, supra and Slaight Communications Inc., supra, and in the sphere of commercial advertising in Irwin Toy Ltd., supra. The same considerations should apply whenever regulatory legislation is subject to Charter challenge.

It follows that a contextual approach is required in the present case in order that the distinctive nature of regulatory offences and their fundamental importance in Canadian society may be considered. Both licensing and vulnerability considerations justify differential treatment for the purposes of Charter interpretation, of crimes and regulatory offences. This, then, is the basis upon which the present case must be approached.

IV

The Constitutionality of Strict Liability

The appellant argues that strict liability violates the Charter on two bases. First, it is said that, at least where imprisonment is available as a sanction, s. 7 of the Charter requires a minimum fault element of guilty intent or wilful blindness to be proven; it is argued that, under s. 7, negligence is an insufficient degree of fault to justify a conviction. Second, the appellant alleges that the traditional requirement in strict liability offences that the defendant establish due diligence on a balance of probabilities violates the presumption of innocence guaranteed by s. 11(d) of the Charter. Let us consider these submissions.

A. Section 7: The Mens Rea Issue

The Constitutionality of Strict Liability

Wholesale Travel contends that wherever imprisonment is available as a penalty for breach of a regulatory statute, the failure to require the Crown to prove guilty intent as an essential element of the offence violates s. 7 of the Charter. It is constitutionally impermissible, it is argued, to impose liability solely on the basis of lack of reasonable care. Thus, it is the appellant's position that strict liability as defined in Sault Ste. Marie has been superseded and rendered invalid by the Charter. The appellant's argument, if accepted, would eliminate any distinction between criminal and regulatory offences.

The question to be determined at this stage is what level of mens rea is required by s. 7 of the Charter. In Re B.C. Motor Vehicle Act, the Court considered a challenge to a provincial absolute liability offence which provided for a minimum period of imprisonment. Lamer J. (as he then was), giving the reasons of the majority of the Court, stated at p. 492:

A law that has the potential to convict a person who has not really done anything wrong offends the principles of fundamental justice and, if imprisonment is available as a penalty, such a law then violates a person's right to liberty under s. 7...

In other words, absolute liability and imprisonment cannot be combined.

At the same time, Lamer J. was careful to note, at p. 515, that absolute liability per se does not violate s. 7, but does so "only if and to the extent that it has the potential of depriving of life, liberty or security of the person".

In the Vaillancourt case, supra, Lamer J. expanded upon his reasons in Re B.C. Motor Vehicle Act. He stated at p. 652:

... Re B.C. Motor Vehicle Act acknowledges that, whenever the state resorts to the restriction of liberty, such as imprisonment, to assist in the enforcement of a law, even, as in Re B.C. Motor Vehicle Act, a mere provincial regulatory offence, there is, as a principle of fundamental justice, a minimum mental state which is an essential element of the offence. It thus elevated mens rea from a presumed element in Sault Ste. Marie, supra, to a constitutionally required element. Re B.C. Motor Vehicle Act did not decide what level of mens rea was constitutionally required for each type of offence, but inferentially decided that even for a mere provincial regulatory offence at least negligence was required, in that at least a defence of due diligence must always be open to an accused who risks imprisonment upon conviction. [Emphasis in original.]

It can be seen that Vaillancourt specifically left open the question of whether, in circumstances where imprisonment is available as a penalty, strict liability with its attenuated fault requirement of negligence constitutes an acceptable basis of liability under s. 7 of the Charter.

What emerges from Re B.C. Motor Vehicle Act and Vaillancourt is that the principles of fundamental justice referred to in s. 7 of the Charter prohibit the imposition of penal liability and punishment without proof of fault. Fault was thus elevated from a presumed element of an offence in Sault Ste. Marie to a constitutionally required element under the Charter. These cases did not, however, decide what level of fault is constitutionally required for every type of offence; rather, they make it clear that the degree of fault required will vary with the nature of the offence and the penalties available upon conviction. Re B.C. Motor Vehicle Act does establish, however, that where imprisonment is available as a penalty, absolute liability cannot be imposed since it removes the fault element entirely and, in so doing, permits the punishment of the morally innocent.

The question which must now be determined is as follows: in situations where imprisonment is available as a penalty, does s. 7 require proof of a degree of fault greater than negligence? That is to say, must a positive mental state be established in order to justify a conviction?

The Crown submits that the reasons of this Court in R. v. Logan, 1990 84 (SCC), [1990] 2 S.C.R. 731, dispose of the appellant's s. 7 argument. In Logan, the accused argued that s. 21(2) of the Criminal Code, R.S.C. 1970, c. C‑34, violated ss. 7 and 11(d) of the Charter since it would permit a party to an offence to be convicted on the basis of objective intention. The question to be determined was whether s. 7 requires a minimum level of mens rea and, if so, what that level might be. In answering this question, Lamer C.J. for the majority wrote, at p. 743:

As I have stated in Vaillancourt, the principles of fundamental justice require a minimum degree of mens rea for only a very few offences. The criteria by which these offences can be identified are, primarily, the stigma associated with a conviction and, as a secondary consideration, the penalties available.

The Crown submits that the words of the Chief Justice indicate that, even for some criminal offences, it is constitutionally permissible to remove the mens rea requirement entirely; as a result, it is said, there is no basis upon which to impose a minimum mental element for regulatory offences. I cannot accept this contention. In the passage quoted from Logan, the Chief Justice was considering whether s. 7 requires subjective (as opposed to objective) intent as a minimum level of mens rea for all criminal offences. He was not dealing with the issue of whether s. 7 requires proof of any mens rea at all. It is that question which is raised by the appellant's argument.

Does section 7 require in all cases that the Crown prove mens rea as an essential element of the offence? The resolution of this question requires that a contextual approach be taken to the meaning and scope of the s. 7 right. Certainly, there can be no doubt that s. 7 requires proof of some degree of fault. That fault may be demonstrated by proof of intent, whether subjective or objective, or by proof of negligent conduct, depending on the nature of the offence. While it is not necessary in this case to determine the requisite degree of fault necessary to prove the commission of particular crimes, I am of the view that with respect to regulatory offences, proof of negligence satisfies the requirement of fault demanded by s. 7. Although the element of fault may not be removed completely, the demands of s. 7 will be met in the regulatory context where liability is imposed for conduct which breaches the standard of reasonable care required of those operating in the regulated field.

It should not be forgotten that mens rea and negligence are both fault elements which provide a basis for the imposition of liability. Mens rea focuses on the mental state of the accused and requires proof of a positive state of mind such as intent, recklessness or wilful blindness. Negligence, on the other hand, measures the conduct of the accused on the basis of an objective standard, irrespective of the accused's subjective mental state. Where negligence is the basis of liability, the question is not what the accused intended but rather whether the accused exercised reasonable care. The application of the contextual approach suggests that negligence is an acceptable basis of liability in the regulatory context which fully meets the fault requirement in s. 7 of the Charter.

It is argued, however, that to place regulatory offences in a separate category from criminal offences, with a lower fault standard, puts the accused charged with the breach of a regulatory provision in a fundamentally unfair position. It is a violation of the principles of fundamental justice under s. 7, it is said, to allow the defendant to go to jail without having had the protection available in criminal prosecutions -- that is, proof of mens rea by the Crown.

I cannot accept this contention. Regulatory offences provide for the protection of the public. The societal interests which they safeguard are of fundamental importance. It is absolutely essential that governments have the ability to enforce a standard of reasonable care in activities affecting public welfare. The laudable objectives served by regulatory legislation should not be thwarted by the application of principles developed in another context.

It must be remembered that regulatory offences were historically developed and recognized as a distinct category precisely for the purpose of relieving the Crown of the burden of proving mens rea. This is their hallmark. The tremendous importance of regulatory legislation in modern Canadian industrial society requires that courts be wary of interfering unduly with the regulatory role of government through the application of inflexible standards. Under the contextual approach, negligence is properly acceptable as the minimum fault standard required of regulatory legislation by s. 7.

What some writers have referred to as "licensing" considerations lead to the same conclusion. The regulated actor is allowed to engage in activity which potentially may cause harm to the public. That permission is granted on the understanding that the actor accept, as a condition of entering the regulated field, the responsibility to exercise reasonable care to ensure that the proscribed harm does not come about. As a result of choosing to enter a field of activity known to be regulated, the regulated actor is taken to be aware of and to have accepted the imposition of a certain objective standard of conduct as a pre-condition to being allowed to engage in the regulated activity. In these circumstances, it misses the mark to speak in terms of the "unfairness" of an attenuated fault requirement because the standard of reasonable care has been accepted by the regulated actor upon entering the regulated sphere.

Further, from a practical point of view, it is simply impossible for the government to monitor adequately every industry so as to be able to prove actual intent or mens rea in each case. In order to do so, governments would have to employ armies of experts in every conceivable field. For example, it would be necessary to continuously monitor a myriad of complex activities that are potentially dangerous to members of society. Such activities include manufacturing and mining procedures, food and drug manufacturing, processing and packaging.

In our complex society, the government can, as a practical matter, do no more than demonstrate that it has set reasonable standards to be met by persons in the regulated sphere and to prove beyond a reasonable doubt that there has been a breach of those standards by the regulated defendant. The impossibility of requiring the government to prove mental culpability was recognized by Dickson J. in Sault Ste. Marie. He stated at p. 1311:

Having regard to both the difficulty of proving mental culpability and the number of petty cases which daily come before the Courts, proof of fault is just too great a burden in time and money to place upon the prosecution. To require proof of each person's individual intent would allow almost every violator to escape. This, together with the glut of work entailed in proving mens rea in every case would clutter the docket and impede adequate enforcement as virtually to nullify the regulatory statutes.

The whole governmental regulatory scheme would be rendered meaningless if the appellant's mens rea argument were to succeed.

For these reasons, I conclude that the appellant's claim that strict liability offences violate s. 7 of the Charter cannot succeed. The requirements of s. 7 are met in the regulatory context by the imposition of liability based on a negligence standard. Therefore, no violation of s. 7 results from the imposition of strict liability.

B. Section 11(d): Onus and the Due Diligence Defence

Wholesale Travel argues that the placing of a persuasive burden on the accused to establish due diligence on a balance of probabilities violates the presumption of innocence as guaranteed by s. 11(d) of the Charter. As the due diligence defence is the essential characteristic of strict liability offences as defined in Sault Ste. Marie, the appellant's s. 11(d) claim represents a fundamental challenge to the entire regime of regulatory offences in Canada.

There can be no doubt since the decision of this Court in R. v. Wigglesworth, 1987 41 (SCC), [1987] 2 S.C.R. 541, that the rights guaranteed by s. 11 of the Charter are available to all persons who are prosecuted for public offences carrying punitive sanctions. In that case, the term "offence" in s. 11 was defined so as to include criminal, quasi-criminal and regulatory offences, whether federal or provincial. However, there is nothing in the Wigglesworth decision to suggest that the content and scope of the s. 11 rights cannot vary with the nature of the offence.

This Court has recently considered the meaning of the presumption of innocence in the criminal context, particularly as applied to reverse onus provisions. It is now clear that it is the net effect of a reverse onus provision on the determination of the guilt or innocence of an accused rather than the precise nature of the provision that must be examined under s. 11(d). In R. v. Keegstra, supra, the Court adopted as the governing principle the following passage from the reasons of Dickson C.J. in R. v. Whyte, supra, at p. 18:

The real concern is not whether the accused must disprove an element or prove an excuse, but that an accused may be convicted while a reasonable doubt exists. When that possibility exists, there is a breach of the presumption of innocence.

The exact characterization of a factor as an essential element, a collateral factor, an excuse, or a defence should not affect the analysis of the presumption of innocence. It is the final effect of a provision on the verdict that is decisive. If an accused is required to prove some fact on the balance of probabilities to avoid conviction, the provision violates the presumption of innocence because it permits conviction in spite of a reasonable doubt in the mind of the trier of fact as to the guilt of the accused.

What must now be determined is whether the s. 11(d) standard which has been developed and applied in the criminal context should be applied to regulatory offences.

The Content of the Presumption in the Regulatory Context

Much of what has been said in regard to the validity of strict liability under s. 7 of the Charter is applicable as well to the s. 11(d) question of onus. The importance of regulatory legislation and its enforcement strongly support the use of a contextual approach in the interpretation of the s. 11(d) right as applied to regulatory offences.

At the outset, it is enlightening to return to the relatively recent decision of this Court in Sault Ste. Marie. In his reasons, Dickson J. made explicit reference to the presumption of innocence, holding (at p. 1316) that requiring an accused to establish due diligence on a balance of probabilities does not offend the basic presumption of innocence as articulated in Woolmington v. Director of Public Prosecutions, [1935] A.C. 462:

Viscount Sankey L.C. referred to the strength of the presumption of innocence in a criminal case and then made the statement, universally accepted in this country, that there is no burden on the prisoner to prove his innocence; it is sufficient for him to raise a doubt as to his guilt. I do not understand the case as standing for anything more than that. It is to be noted that the case is concerned with criminal offences in the true sense; it is not concerned with public welfare offences. It is somewhat ironic that Woolmington's case, which embodies a principle for the benefit of the accused, should be used to justify the rejection of a defence of reasonable care for public welfare offences and the retention of absolute liability, which affords the accused no defence at all. There is nothing in Woolmington's case, as I comprehend it, which stands in the way of adoption, in respect of regulatory offences, of a defence of due care, with burden of proof resting on the accused to establish the defence on the balance of probabilities. [Emphasis added.]

In Sault Ste. Marie, Dickson J. carefully considered the basic principles of criminal liability, including the presumption of innocence, and balanced them against the public goals sought to be achieved through regulatory measures. He determined that strict liability represented an appropriate compromise between the competing interests involved. This conclusion is no less valid today. The Charter was not enacted in a vacuum. The presumption of innocence which it guarantees had long been established and was well recognized at common law. The due diligence defence recognized in Sault Ste. Marie which is the target of the present challenge was itself a function of the presumption of innocence.

The reasons for ascribing a different content to the presumption of innocence in the regulatory context are persuasive and compelling. As with the mens rea issue, if regulatory mechanisms are to operate effectively, the Crown cannot be required to disprove due diligence beyond a reasonable doubt. Such a requirement would make it virtually impossible for the Crown to prove regulatory offences and would effectively prevent governments from seeking to implement public policy through regulatory means.

It has been suggested that requiring the Crown to prove negligence beyond a reasonable doubt, either as part of its case or after the accused adduces some evidence raising a reasonable doubt as to due diligence, would represent an acceptable compromise: it would, it is said lessen the burden on the accused while still allowing for the effective pursuit of the regulatory objective. I cannot accept this contention. While such an approach would undoubtedly be beneficial to the accused, it would effectively eviscerate the regulatory power of government by rendering the enforcement of regulatory offences impossible in practical terms. Under this approach, the Crown would be forced to prove lack of reasonable care where the accused raises a reasonable doubt as to the possibility of due diligence.

It is difficult to conceive of a situation in which a regulated accused would not be able to adduce some evidence giving rise to the possibility that due diligence was exercised. For instance, an environmental polluter would often be able to point to some measures it had adopted in order to prevent the type of harm which ultimately resulted. This might raise a reasonable doubt that it had acted with due diligence no matter how inadequate those measures were for the control of a dangerous situation. Similarly, a wholly inadequate effort to ensure that an advertisement was true might nevertheless succeed in raising a reasonable doubt as to due diligence.

To impose such a limited onus is inappropriate and insufficient in the regulatory context. Criminal offences have always required proof of guilt beyond a reasonable doubt; the accused cannot, therefore, be convicted where there is a reasonable doubt as to guilt. This is not so with regulatory offences, where a conviction will lie if the accused has failed to meet the standard of care required. Thus, the question is not whether the accused has exercised some care, but whether the degree of care exercised was sufficient to meet the standard imposed. If the false advertiser, the corporate polluter and the manufacturer of noxious goods are to be effectively controlled, it is necessary to require them to show on a balance of probabilities that they took reasonable precautions to avoid the harm which actually resulted. In the regulatory context, there is nothing unfair about imposing that onus; indeed, it is essential for the protection of our vulnerable society.

It must not be forgotten that the virtual impossibility of proving regulatory offences beyond a reasonable doubt was central to this Court's decision in Sault Ste. Marie. This consideration led the Court to conclude that the imposition of strict liability with a defence of due diligence available to the accused was both necessary and appropriate. Dickson J. stated at p. 1325:

The correct approach, in my opinion, is to relieve the Crown of the burden of proving mens rea, having regard to Pierce Fisheries and to the virtual impossibility in most regulatory cases of proving wrongful intention. In a normal case, the accused alone will have knowledge of what he has done to avoid the breach and it is not improper to expect him to come forward with the evidence of due diligence. This is particularly so when it is alleged, for example, that pollution was caused by the activities of a large and complex corporation....

In this doctrine it is not up to the prosecution to prove negligence. Instead, it is open to the defendant to prove that all due care has been taken. This burden falls upon the defendant as he is the only one who will generally have the means of proof. This would not seem unfair as the alternative is absolute liability which denies an accused any defence whatsoever. While the prosecution must prove beyond a reasonable doubt that the defendant committed the prohibited act, the defendant must only establish on the balance of probabilities that he has a defence of reasonable care. [Emphasis added.]

This rationale is no less compelling today. Quite simply, the enforcement of regulatory offences would be rendered virtually impossible if the Crown were required to prove negligence beyond a reasonable doubt. The means of proof of reasonable care will be peculiarly within the knowledge and ability of the regulated accused. Only the accused will be in a position to bring forward evidence relevant to the question of due diligence.

Nor can I accept the contention that there is little practical difference between requiring the accused to prove due diligence on a balance of probabilities and requiring only that the accused raise a reasonable doubt as to the exercise of due diligence. Professor Webb, in his article, supra, deals with this argument in the following terms, at p. 467:

Some might argue that in practice there is no workable distinction between an offence which requires the accused to prove due diligence on the balance of probabilities to avoid conviction, and one that permits the accused to raise a reasonable doubt as to the existence of due diligence. Trial judges will find a way to convict those whom they feel are guilty of negligence, the argument would go, and they will acquit those whom they feel have exercised due diligence, regardless of burdens of proof. This type of reasoning certainly contradicts the statement of the trial Judge in Whyte [supra], who contended that in the absence of a balance of probability presumption, he would have found reasonable doubt as to whether the accused had "care and control" of a motor vehicle.

Webb then goes on, at p. 467, to identify the deleterious effects on prosecution of regulatory offences which would result from requiring the Crown to prove negligence:

The "there is no difference in practice anyway" argument also fails to recognize the different quantity and quality of evidence which administrators would be forced to provide to prosecutors in preparation for a case. If an evidential rather than a persuasive burden is adopted, merely raising a reasonable doubt as to the existence of due diligence would then shift the burden of proof to the prosecutors to prove negligence. Prior to any case reaching the prosecution stage, administrators would be under an obligation to collect all the evidence necessary to prove negligence. In effect, prosecutors would be more likely to turn down a request from administrators for a prosecution unless proof of negligence could be established. Given the difficulty in accumulating such information, it is not unlikely that there would be a chilling effect on use of the prosecution mechanism. Once it became noticeable that less cases were reaching the courts, it is possible that regulatees would receive the signal that, in most circumstances, the offence of negligence was not enforceable. [Emphasis in original.]

I agree with these conclusions of Professor Webb. To reduce the onus on the accused would, from a practical point of view, raise insurmountable barriers for the Crown seeking to enforce a regulatory scheme.

In these circumstances, it cannot be contended that requiring the prosecution to prove negligence beyond a reasonable doubt would still allow for the effective achievement of regulatory objectives. To the contrary, its effect would be, in practical terms, to render the regulatory power of governments ineffectual.

Nor can it be argued that other solutions would be satisfactory; there is simply no other practical solution. Both with respect to the consumption of government resources and the intrusiveness of regulatory measures, the consequences of a finding that the due diligence defence violates s. 11(d) of the Charter would be extremely severe. Governments would be forced to devote tremendous expenditure, in terms of monetary and human resources, to regulatory enforcement mechanisms. Armies of investigators and experts would be required in order to garner sufficient evidence to establish negligence or disprove due diligence beyond a reasonable doubt.

Further, a marked expansion in enforcement mechanisms by definition implies an escalation in the intrusiveness of regulatory measures. The greater the burden of proof on the Crown, the greater the likelihood that those charged with the enforcement of regulatory measures would have to resort to legislation authorizing search and surveillance in order to gather sufficient evidence to discharge that onus.

As with the s. 7 challenge, licensing considerations support the conclusion that strict liability does not violate s. 11(d) of the Charter. The licensing argument attributes to the regulated actor knowledge and acceptance, not only of the standard of reasonable care itself, but also of the responsibility to establish on a balance of probabilities the exercise of reasonable care. Acceptance of this burden is an implied term and a pre-condition of being allowed to engage in activity falling within the regulated sphere. Regulated actors are taken to understand that, should they be unable to discharge this burden, an inference of negligence will be drawn from the fact that the proscribed result has occurred.

I wish to emphasize, however, that the difference in the scope and meaning of s. 11(d) in the regulatory context does not imply that the presumption of innocence is meaningless for a regulated accused. The Crown must still prove the actus reus of regulatory offences beyond a reasonable doubt. Thus, the Crown must prove that the accused polluted the river, sold adulterated food, or published a false advertisement. However, once having established this beyond a reasonable doubt, the Crown is presumptively relieved of having to prove anything further. Fault is presumed from the bringing about of the proscribed result, and the onus shifts to the defendant to establish reasonable care on a balance of probabilities.

For these reasons, I conclude that the presumption of innocence as guaranteed in s. 11(d) of the Charter is not violated by strict liability offences as defined in Sault Ste. Marie. The imposition of a reverse persuasive onus on the accused to establish due diligence on a balance of probabilities does not run counter to the presumption of innocence, notwithstanding the fact that the same reversal of onus would violate s. 11(d) in the criminal context.

C. The Imprisonment Concern

Much has been made in this appeal of the potential use of imprisonment as a sanction for breach of strict liability offences. The Chief Justice considers the use of imprisonment to be determinative of the Charter analysis. With respect, I am unable to agree. The availability of imprisonment in no way alters my conclusion that strict liability does not violate either ss. 7 or 11(d) of the Charter.

The Charter does not guarantee an absolute right to liberty; rather, it guarantees the right not to be deprived of liberty except in accordance with the principles of fundamental justice. Thus, while the availability of imprisonment undoubtedly triggers Charter review, it does not resolve the ultimate question. What must be determined is whether, in a given case, the possibility of a sentence of imprisonment comports with the principles of fundamental justice. It is whether the principles of fundamental justice have been violated, not the availability of imprisonment, which is the determinative consideration.

In this regard, it is essential to recognize that the principles of fundamental justice are not static in meaning or application. As La Forest J. stated for the Court in R. v. Lyons, 1987 25 (SCC), [1987] 2 S.C.R. 309, at p. 361:

It is also clear that the requirements of fundamental justice are not immutable; rather, they vary according to the context in which they are invoked. Thus, certain procedural protections might be constitutionally mandated in one context but not in another.

There is quite properly a difference or variation between what the principles of fundamental justice require in regard to true crimes and what they require in the regulatory context.

The ultimate question is whether the imposition of imprisonment on the basis of strict liability comports with the principles of fundamental justice. For the reasons set out earlier concerning the underlying rationale of regulatory offences, I am of the opinion that it does.

Regulatory schemes can only be effective if they provide for significant penalties in the event of their breach. Indeed, although it may be rare that imprisonment is sought, it must be available as a sanction if there is to be effective enforcement of the regulatory measure. Nor is the imposition of imprisonment unreasonable in light of the danger that can accrue to the public from breaches of regulatory statutes. The spectre of tragedy evoked by such names as Thalidomide, Bhopal, Chernobyl and the Exxon Valdez can leave no doubt as to the potential human and environmental devastation which can result from the violation of regulatory measures. Strong sanctions including imprisonment are vital to the prevention of similar catastrophes. The potential for serious harm flowing from the breach of regulatory measures is too great for it to be said that imprisonment can never be imposed as a sanction.

I would only add that, in those circumstances where the imposition of imprisonment would be grossly disproportionate to the offence committed, the accused person would have a compelling claim under s. 12 of the Charter. However, the fact that it is possible to imagine instances where the use of imprisonment would be inappropriate should not be used to justify the conclusion that imprisonment can never be imposed in respect of strict liability offences. Imprisonment must be available to governments as a sanction if the power to regulate is to be effective.

D. The American Position

The conclusion that strict liability does not violate either s. 7 or s. 11(d) of the Charter is supported by the American approach to regulatory offences. Generally speaking, American courts have not recognized an intermediate category of strict liability. Rather, the U.S. Supreme Court has held that, where the person charged is aware of the regulated nature of the impugned conduct, it is constitutionally permissible to enact absolute liability offences, even where imprisonment is available as a penalty: see, for example, United States v. Balint, 258 U.S. 250 (1922); United States v. Dotterweich, 320 U.S. 277 (1943); Morissette v. United States, supra; Lambert v. California, supra. Furthermore, even in the case of serious criminal offences, it has been held that placing a persuasive burden on the accused to establish a defence does not violate the presumption of innocence: see Patterson v. New York, 432 U.S. 197 (1977); Martin v. Ohio, 480 U.S. 228 (1987). The constitutional validity of regulatory legislation which imposes strict liability would, under the American approach, seem to be beyond question.

It must always be remembered that there are important differences between our Charter and the Constitution of the United States. There are also important historical and other differences between Canadian and American society. Decisions of the highest American courts should not and must not be slavishly followed in Canada. Nonetheless, we can often benefit from the American experience and learning.

In this case, the American experience supports a finding that strict liability is constitutionally permissible. Indeed, it is telling that several American commentators who have decried the imposition of absolute liability have argued in favour of a middle ground position very similar to strict liability as that term is defined in Sault Ste. Marie: see LaFave and Scott, Substantive Criminal Law; Packer, "Mens Rea and the Supreme Court" (1962), Sup. Ct. Rev. 107; Saltzman, "Strict Criminal Liability and the United States Constitution: Substantive Criminal Law Due Process" (1978), 24 Wayne L. Rev. 1571.

E. Section 1

In light of my conclusion regarding the appellant's ss. 7 and 11(d) claims, there is no need to proceed to s. 1. However, had it been necessary to consider the matter, the same reasons I have set forth in finding that neither s. 7 nor s. 11(d) are necessarily infringed by strict liability offences would have led me to conclude that strict liability offences can be justified under s. 1 of the Charter.

V

Application to s. 36(1)(a) and s. 37.3(2)

Application to s. 36(1)(a) and s. 37.3(2)

Section 36(1)(a) of the Act creates the offence of false or misleading advertising. Section 37.3(2) provides a statutory defence to that charge. The defence will only lie where all four conditions set out in paras. (a) through (d) are met. While paras. (a) and (b) in essence describe the common law defence of due diligence, paras. (c) and (d) create additional conditions which must be met before the defence will lie.

The Validity of Paras. (c) and (d) of s. 37.3(2)

Paragraph (c) of s. 37.3(2) requires an accused who has made a misleading representation to take positive steps to bring the error to the attention of those to be likely affected by it. Paragraph (d) requires this to be done promptly. The effect of these provisions is to impose an obligation on the accused to make a prompt retraction as a precondition to relying on the defence of due diligence.

The Court of Appeal unanimously held that paras. (c) and (d) of s. 37.3(2) may in some circumstances require conviction where there is no fault on the part of the accused. I agree with this conclusion. Even where an accused can establish the absence of negligence in the making of misleading representations, paras. (c) and (d) nonetheless require conviction if the accused has failed to make a prompt correction or retraction. In these circumstances, the accused would be deprived of the defence of due diligence and the offence would be tantamount to absolute liability, since liability could be imposed in the absence of fault on the part of the accused.

Such a result clearly violates s. 7 of the Charter. As Lamer J. stated in Re B.C. Motor Vehicle Act, supra, at p. 492:

A law that has the potential to convict a person who has not really done anything wrong offends the principles of fundamental justice and, if imprisonment is available as a penalty, such a law then violates a person's right to liberty under s. 7 of the Charter of Rights and Freedoms.

Nor do I think that paras. (c) and (d) can be justified under s. 1 of the Charter. The Crown has filed little evidence to support its position that paras. (c) and (d) can be saved by s. 1. Perhaps this is itself a sufficient basis for finding that those paragraphs are not justifiable.

There are, however, additional grounds for reaching this conclusion. Assuming that there is a rational connection between the requirement of corrective advertising and the legislative objective of seeking to prevent the harm resulting from misleading representations, it cannot be said that the impugned provisions constitute a minimal impairment of the rights of the accused. Further, the availability of imprisonment as a sanction far outweighs the importance of the regulatory objective in correcting false advertising after the fact. In short, there is no proportionality between means and ends. Paragraphs (c) and (d) cannot then be justified under s. 1 of the Charter.

The Validity of Paras. (a) and (b)

These paragraphs in essence put forward the common law defence of due diligence. Where imprisonment is available as a penalty for breach of a statute, s. 7 of the Charter requires proof of fault before liability can be imposed. I have concluded, however, that the fault requirement is different for regulatory than for criminal offences. In the regulatory context, it is appropriate that fault should be imposed on the basis of negligence. There is therefore no violation of s. 7 resulting from the removal of the mens rea requirement in strict liability offences. It follows that paras. (a) and (b) of s. 37.3(2) do not violate s. 7 of the Charter.

It has been noted earlier that the s. 11(d) presumption of innocence has a different scope and meaning in relation to regulatory as opposed to criminal offences. In my view, the imposition in strict liability offences of a reverse persuasive onus on the accused to establish due diligence is proper and permissible and does not constitute a violation of the s. 11(d) presumption of innocence. I therefore conclude that paras. (a) and (b) of s. 37.3(2) do not violate s. 11(d) of the Charter.

VI

Conclusion

Conclusion

Strict liability offences, as exemplified in this case by the combination of s. 36(1)(a) and s. 37.3(2)(a) and (b) of the Act, do not violate either s. 7 or s. 11(d) of the Charter. Neither the absence of a mens rea requirement nor the imposition of an onus on the accused to establish due diligence on a balance of probabilities offends the Charter rights of those accused of regulatory offences.

Regulatory legislation is essential to the functioning of our society and to the protection of the public. It responds to the compelling need to protect the health and safety of the members of our society and to preserve our fragile environment. The imposition of strict liability is both reasonable and essential to the operation of regulatory schemes.

VII

Disposition

Disposition

Since paragraphs (c) and (d) of s. 37.3(2) of the Act violate s. 7 of the Charter and cannot be justified under s. 1, they must be struck down and declared to be of no force or effect. What remains in s. 36(1)(a) and s. 37.3(2)(a) and (b) is a strict liability regulatory offence. These provisions are valid and enforceable. In the result I would dismiss the appeal and allow the Crown's Appeal to the extent required to reflect this disposition.

//Iacobucci J.//

The reasons of Gonthier, Stevenson and Iacobucci JJ. were delivered by

Reasons of Iacobucci J.

Iacobucci J. -- I have had the benefit of the reasons of the Chief Justice Lamer and of Justice Cory. I am in agreement with the conclusions of Lamer C.J. as to the standing of the appellant corporation and with both Lamer C.J. and Cory J. that paras. (c) and (d) of s. 37.3(2) of the Competition Act, R.S.C. 1970, c. C-23, infringe s. 7 of the Canadian Charter of Rights and Freedoms and that such infringement is not justified under s. 1 thereof. I also share the views of Lamer C.J. that the reverse onus on the accused to establish due diligence on a balance of probabilities (via the words "he establishes that" in s. 37.3(2) of the Competition Act) infringes s. 11(d) of the Charter. However, for many of the reasons given by Cory J. in the context of his s. 11(d) analysis, I arrive at a different conclusion from Lamer C.J. on the question of whether such a restriction is a reasonable and demonstrably justified limit under s. 1 of the Charter.

There is no question that the presumption of innocence is a fundamental legal right which plays a very important role in the administration of our criminal law system. The importance of this right is illustrated by its entrenchment in s. 11(d) of the Charter. However, as is the case for all rights and freedoms guaranteed by the Charter, it is subject to limitations under s. 1 of the Charter. The procedure to be followed when the state is attempting to justify a limit on a right or freedom under s. 1 of the Charter is well established and described in the Chief Justice's reasons. This procedure, which was first set out by this Court in R. v. Oakes, 1986 46 (SCC), [1986] 1 S.C.R. 103, involves the application of four criteria: (1) the objective of the impugned provision must be of sufficient importance to warrant overriding a constitutionally protected right or freedom; (2) the means chosen to achieve the objective must be "rationally connected" to the objective and not arbitrary, unfair or based on irrational considerations; (3) the means chosen must impair the right or freedom in question as "little as possible" to accomplish the objective; and (4) the means chosen must be such that their effects on the limitation on rights and freedoms are proportional to the objective.

At the outset, I would like to point out that it is now clear that a rigid or formalistic approach must be avoided when applying the various criteria of the Oakes analysis, and that proper consideration must be given to the circumstances and context of a particular case: R. v. Keegstra, 1990 24 (SCC), [1990] 3 S.C.R. 697, at pp. 737-38, per Dickson C.J. speaking for the majority. In the present case, the special nature of the legislation and offence in question must be kept in mind when applying s. 1 of the Charter. In this respect, I agree with Cory J. that what is ultimately involved in this appeal is the ability of federal and provincial governments to pursue social ends through the enactment and enforcement of public welfare legislation. While I abstain from commenting on the dichotomy articulated by Cory J. between "true crimes" and "regulatory offences", I agree with my colleague that the offence of false or misleading advertisement may properly be characterized as a public welfare offence and that the prohibition of such offences is of fundamental importance in Canadian society.

Having said that, I will now apply the Oakes analysis to the case at bar. I am in agreement with the conclusions of Lamer C.J. regarding the first two requirements of the Oakes analysis. With respect to the first requirement, I concur that the specific objective of placing a persuasive burden on an accused to prove due diligence is to ensure that all those who are guilty of false or misleading advertising are convicted of these public welfare offences and to avoid the loss of convictions because of evidentiary problems which arise because the relevant facts are particularly in the knowledge of the accused. This legislative objective is of sufficient importance to warrant overriding the right guaranteed by s. 11(d) of the Charter. It relates to concerns which are "pressing and substantial" in Canadian society; especially when one considers the overall objective of the Competition Act which is to promote vigorous and fair competition throughout Canada.

With respect to the second requirement of Oakes, I agree that there is a rational connection between the desired objective and the means chosen to attain the objective. Removing the burden on the Crown to prove lack of due diligence beyond a reasonable doubt and instead requiring the accused to establish due diligence on a balance of probabilities is without a doubt a rational and logical way of attaining the legislative objective.

However, it is with respect to the third requirement of the Oakes analysis, that I respectfully disagree with the conclusions of Lamer C.J. This step requires a consideration of whether the means chosen impair the right or freedom in question no more than is necessary to accomplish the desired objective. Lamer C.J. is of the opinion that the use of a persuasive burden in s. 37.3(2) of the Competition Act cannot pass this third step of the Oakes analysis because of the presence of an alternative means open to Parliament that would be less intrusive on s. 11(d) of the Charter and would "go a long way" in achieving the objective. The alternative in question is the use of a "mandatory presumption of negligence" (following from the proof of the actus reus) which could be rebutted by something less than an accused's establishing due diligence on a balance of probabilities, i.e., by raising a reasonable doubt as to due diligence. With respect, I cannot agree that such a means would achieve the stated objective as effectively nor would it go a long way in achieving it. Such a means would shift to the accused the burden of simply raising a reasonable doubt as to due diligence and would not thereby allow the effective pursuit of the regulatory objective. It would leave the Crown the legal burden of proving facts largely within the peculiar knowledge of the accused.

For the reasons given by Cory J. in the context of his s. 11(d) analysis, such an alternative would in practice make it virtually impossible for the Crown to prove public welfare offences such as the one in question and would effectively prevent governments from seeking to implement public policy through prosecution. It would also not provide effective inducement for those engaged in regulated activity to comply strictly with the regulatory scheme including adopting proper procedures and record keeping and might even have a contrary effect. Though such a result would be clearly advantageous to an accused, it would not be effective in avoiding the loss of convictions because the Crown could not prove facts within the particular knowledge of the accused. In sum, taking into account the particular circumstances described by Cory J. in his reasons, Parliament could not "reasonably have chosen an alternative means which would have achieved the identified objective as effectively": R. v. Chaulk, 1990 34 (SCC), [1990] 3 S.C.R. 1303, at p. 1341, per Lamer C.J. for the majority.

As for the final requirement of the Oakes analysis, I would also respectfully disagree with the conclusions of Lamer C.J. As noted by Cory J. in his reasons, regulated activity and public welfare offences are a fundamental part of Canadian society. Those who choose to participate in regulated activities must be taken to have accepted the consequential responsibilities and their penal enforcement. One of these consequences is that they should be held responsible for the harm that may result from their lack of due diligence. Unless they can prove on a balance of probabilities that they exercised due diligence, they shall be convicted and in some cases face a possible prison term. These participants are in the best position to prove due diligence since they possess in most cases the required information. Viewed in this context, and taking into account the fundamental importance of the legislative objective as stated and the fact that the means chosen impair the right guaranteed by s. 11(d) as little as is reasonably possible, the effects of the reverse onus on the presumption of innocence are proportional to the objective.

Having found that the reverse onus on the accused to establish due diligence on a balance of probabilities (via the words "he establishes that" in s. 37.3(2) of the Competition Act) satisfies all four requirements of the Oakes analysis, I conclude that such an onus is saved under s. 1 of the Charter as a reasonable limit in a free and democratic society. Accordingly, I would dispose of the appeals in the manner suggested by Cory J.

//McLachlin J.//

The following are the reasons delivered by

Reasons of McLachlin J.

McLachlin J. -- I agree with the conclusions of Chief Justice Lamer. The modified due diligence defence embodied in s. 37.3(2)(c) and (d) of the Competition Act, R.S.C. 1970, c. C-23, permits conviction in the absence of even the minimum fault of negligence and thus infringes s. 7 of the Canadian Charter of Rights and Freedoms. The requirement in s. 37.3(2) that the accused establish due diligence on a balance of probabilities, through the inclusion of the phrase "he establishes that", permits conviction despite a reasonable doubt as to an essential element of the offence; combined with the sanction of imprisonment, the application of this onus upon an alleged offender violates s. 11(d) of the Charter. Neither of these infringements can be upheld under s. 1 of the Charter.

I agree with the Lamer C.J. that when the offending provisions in s. 37.3(2)(c) and (d) of the Act and the offending phrase in s. 37.3(2) are removed, the remaining provision at issue, s. 36(1)(a), does not infringe the Charter.

Leaving aside the significance of "stigma", upon which I make no comment, it is my view that the penalty of imprisonment cannot, without violating the guarantees in the Charter, be combined with an offence which permits conviction without fault or because the accused has failed to prove that he or she is innocent on a balance of probabilities. Nor can such a combination be "demonstrably justified in a free and democratic society", in my opinion.

I find it unnecessary to consider either the application of the Charter to a provision dealing with corporations only, or the "range of means" approach to over-intrusiveness under s. 1 of the Charter, and would prefer to leave these questions for another case.

I would dispose of the appeals and answer the constitutional questions as proposed by Lamer C.J.

The appeal by The Wholesale Travel Group Inc. is dismissed. The Crown's appeal is allowed, Lamer C.J., La Forest, Sopinka and McLachlin JJ. dissenting in the result.

Solicitors for The Wholesale Travel Group Inc.: McCarthy Tétrault, Toronto.

Solicitor for Her Majesty The Queen: John C. Tait, Ottawa.

Solicitor for the intervener the Attorney General for Ontario: Jack Johnson, Toronto.

Solicitor for the intervener the Attorney General of Quebec: The Attorney General of Quebec, Ste‑Foy.

Solicitor for the intervener the Attorney General for New Brunswick: The Attorney General for New Brunswick, Fredericton.

Solicitor for the intervener the Attorney General of Manitoba: The Attorney General of Manitoba, Winnipeg.

Solicitor for the intervener the Attorney General for Saskatchewan: Brian Barrington‑Foote, Regina.

Solicitor for the intervener the Attorney General for Alberta: The Attorney General for Alberta, Edmonton.

Solicitors for the interveners Ellis‑Don Limited and Rocco Morra: Lerner & Associates, Toronto.