Ontario College of Pharmacists v. 1724665 Ontario Inc., 2012 ONSC 4295

COURT FILE NO.: CV-11-00423231-0000

DATE: 20130315

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER of the Drug and Pharmacies Regulation Act,

RSO, 1990, c.H.4, s. 162 and the Health Professions Procedural

Code, s. 87, being Schedule 2 to the Regulated Health Professions

Act, 1991, S.O. 1991, c.18, and deemed to be part of the Pharmacy

Act, 1991, S.O. 1991, c.36

BETWEEN:

ONTARIO COLLEGE OF PHARMACISTS

Applicant

– and –

1724665 ONTARIO INC., c.o.b. GLOBAL PHARMACY CANADA, RX PROCESSING SERVICES INC., RICHARD PETKO, FRANK STACHO, GLOBAL PHARMACY CANADA, INC., DAVID BILLINGS and WADE ONUFFER

Respondents

N. Coleman, L. Harmer and

J.C. Killey for the Applicant

A.J. Lenczner, Q.C., D.N. Varah, for the Respondents RX Processing Services Inc., Richard Petko, Frank Stracho and 1724665 Ontario Inc., c.o.b. as Global Pharmacy Canada

J. Chapman., A. Stephens, for the Respondents Global Pharmacy Canada Inc., David Billings and Wade Onuffer

HEARD: October 9, 2012, November 20, 2012, and February 15, 2013

J. WILSON J.:

REASONS FOR JUDGMENT

Background

[1] Does the Ontario College of Pharmacists (the College) have jurisdiction over the activities of the respondents? Are the respondents, and in particular RX Processing Services Inc. (RXP), selling prescription drugs in Ontario in breach of the legislation governing the conduct of pharmacists and pharmacies in Ontario?

[2] In 2009 to 2010, the respondents restructured the operation of 17245665 Ontario Inc. c.o.b. as Global Pharmacy Canada Inc. (GPC-Ontario) by selling the tangible assets to RXP, and selling the intangible assets to a Belize corporation, carrying on business as Global Pharmacy Canada Inc. (GPC-Belize).

[3] The respondent RXP, owned by Richard Petko and Frank Stacho, carries on business from a call and processing centre in Mississauga, Ontario. RXP conducts various activities on behalf of GPC-Belize. Consumers can purchase generic prescription drugs sent from India by accessing the website at www.globalpharmacycanada.com.

[4] As a result of corporate and organizational restructuring, the RXP staff now receive and process orders for prescription drugs sourced in India and sold to consumers located in United States and elsewhere, but not in Canada.

[5] The respondents’ position is that the College does not presently have jurisdiction to regulate their conduct because: (1) the statutes relied upon by the College are constitutionally limited in scope to protect residents in Ontario and after the restructuring, the conduct and activities of the respondents no longer fall within the jurisdiction of the governing Ontario Statutes; and, (2) the Ontario corporation RXP running the call centre in Mississauga is not selling drugs in Ontario to Ontario residents.

[6] The College seeks declaratory and injunctive relief pursuant to the various legislative provisions which would have the effect of terminating the activities presently being conducted by RXP in the call and processing centre in Mississauga, Ontario, unless the respondents comply with the various legislative requirements. It is the position of the College that the sale of the drugs occurs in Mississauga, and the fact that the targeted consumers are outside the jurisdiction, or that RXP is acting on behalf of GPC-Belize does not preclude the declaratory and injunctive relief sought by the College. It is the position of the College that any restructuring by the respondents is misleading to the public and an attempt to rely upon the credibility and stature of Ontario pharmacies and pharmacists while avoiding regulation.

Concerns Raised and the Need for a Continued Hearing

[7] This application raises issues of public policy and safety with broad implications beyond the interests of these parties. It raises issues of the nature of transactions in the new age of internet sales, where the traditional definitions of sale must be considered in a more global context.

[8] During the initial argument of the motion on October 9, 2012, I expressed two concerns that the facts before me were not complete to allow me to make an informed decision.

[9] First, the respondents asserted in their factum that Health Canada had no ongoing concerns with their operations, “Health Canada, whose authorizing statutes provided it with jurisdiction to protect the health and welfare of Canadians, has no further concern.” However, Health Canada had not been served with the motion material and had not taken a formal position. As Health Canada had previously investigated the conduct of the respondents, in my view it was appropriate for Health Canada to be served with the motion material, and that its position with respect to this motion, if any, be provided to the court.

[10] Second, during the argument of the motion, no one was able to answer any specific questions about the nature of the corporate restructuring and sale which occurred in 2009 to 2010, nor was anyone able to answer where the funds collected and processed by RXP were sent, or specifically how RXP is paid.

[11] Counsel agreed to produce this additional documentation and agreed to a timetable to facilitate the scheduled return date of November 20, 2012.

The November 20, 2012 Return Date

The Position of Health Canada

[12] By November 20, 2012, Health Canada had provided a letter dated November 1, 2012 that contradicted the respondents’ statement contained in their factum. Health Canada was aware of the position of the College, and chose to take no further steps pending the determination of this application. Health Canada’s representative explicitly stated, at page 11, that “it is evident that Health Canada has significant concerns with respect to the general practice of internet pharmacy and it would be incorrect to suggest otherwise”, and again at page 9:

[C]ontrary to the impression that may possibly be created by the statement in paragraph 11 of the Factum of the Respondents … Health Canada has not sent any e-mail or letter stating that the operations of www.globalpharmacycanada.com comply with the FDA or FDR or satisfy the requirement that they are not inconsistent with Health Canada’s mandate

[13] The letter described the complementary roles of Health Canada and provincial regulatory regimes at page 2:

On their own, federal laws governing the sale of drugs will not effectively protect consumers from the risks of prescription drugs if provincial laws regulating the practice of pharmacy are not vigorously enforced. This is so because of the mutually dependent and complementary interaction of federal and provincial laws in this area.

[14] With regard to the College’s investigation in particular, the letter stated, at page 10:

Health Canada’s approach since 2010 has been informed by knowledge that the Ontario College of Pharmacists was conducting an investigation into the operations of www.globalpharmacycanada.com and the desire not to do anything to hinder that investigation.

[15] Health Canada reiterated its position at the close of the letter, stating at page 13 that, “if the Court finds that there have been breaches of the applicable provincial legislation, Health Canada strongly supports the Court granting the restraining orders sought by the Ontario College of Pharmacists.”

Request to Cross-Examine Health Canada

[16] The defendants challenged the position of Health Canada, and Mr. Lenczner, counsel for RXP, Richard Petko, and Frank Stacho, brought a motion to cross-examine the author of the letter. Health Canada had been served with the motion materials, but did not appear. Mr. Coleman, counsel for the College, vigorously opposed this request. I granted permission for a brief cross-examination that was not to exceed one hour and was to be only focussed on the specific aspects of the Health Canada letter that were in dispute.

Absence of Material from the Respondents

[17] In addition, by the November 20, 2012 return date, the respondents had failed to provide the requested information about the nature of the corporate restructuring as well as the additional questions in accordance with the schedule initially agreed to by counsel. Mr. Lenczner stated that his clients had been out of the jurisdiction since October 2012, but that they would file materials by mid-January 2013. Mr. Chapman, counsel for the respondents GPC-Belize, David Billings, and Wade Onuffer, was unclear whether any materials would be filed on behalf of his clients.

[18] The matter was scheduled for February 15, 2013 to complete the argument after the requested cross-examination and to allow the respondents to file any additional materials.

The February 15, 2013 Return Date

[19] The author of the letter from Health Canada was cross-examined prior to the February 15, 2013 return date. Few submissions were made by the respondents about the position of Health Canada, except that in light of Health Canada’s silence it was reasonable for the respondents to assume that it did not have any ongoing problem with RXP’s operations. As well, the respondents argued that the role of Health Canada is limited to protecting the interests of Canadians.

[20] Richard Petko, one of the two previous owners of GPC-Ontario, swore an affidavit disclosing some, but not all, of the documentation and facts about the sale by GPC-Ontario to RXP and GPC-Belize, the restructuring, the role of RXP, as well as the ongoing role of GPC-Ontario with respect to banking functions on behalf of GPC-Belize. He was cross-examined on this affidavit.

[21] David Billings, Wade Onuffer, and GPC-Belize did not file any material, and relied upon the submissions made by counsel on behalf of RXP, Richard Petko and Frank Stacho.

The Issues

[22] The applicant and respondents characterize the issues in this case somewhat differently. The College alleges a variety of breaches by the respondents and argues that the issues as to where a sale takes place must be determined in a purposive fashion in the context of a regulatory regime for the protection of the public.

[23] Counsel for the respondents concede that, collectively, the respondents are engaged in the sale of prescription drugs by retail.

[24] The respondents argue, however, that the application of commercial principles confirms that RXP is not selling drugs by retail in Ontario. Any sale takes place in India or Belize. The respondents rely upon the separation of corporate entities in their interpretation of where the sale takes place. They argue therefore that the College does not have jurisdiction, and that the applicable regulatory legislation does not apply.

[25] In my view, the issues that must be determined are:

1. Do the respondents’ activities have a sufficient connection with Ontario to engage the regulatory legislation and jurisdiction of the College?

2. Is RXP selling prescription drugs by retail in Ontario on behalf of GPC-Belize?

3. If the College has jurisdiction, and the governing Ontario legislation applies, are the respondents in breach of the regulatory legislation?

4. What are the appropriate remedies if there is a breach?

The Statutory Framework

[26] The College has a number of functions, as set out in s. 3(1) the Health Professions Procedural Code (RHPA Code), being Schedule 2 of the Regulated Health Professions Act, 1991, S.O. 1991, c. 18 (RHPA Act). These include regulating the practice of the profession and governing its members in accordance with the RHPA Act, the RHPA Code, and other applicable regulations and by-laws. The College also has as its purpose the development, establishment, and maintenance of standards of practice in regards to: (1) the quality of the practice of the profession; (2) professional ethics; and, (3) the qualification of its members and pharmacies. Notably, in carrying out its objects, “the College has a duty to serve and protect the public interest”, pursuant to s. 3(2) of the RHPA Code.

[27] The College alleges that the respondents are in breach of various overlapping and complex statutory provisions. I attach to this decision, as Schedule A, a detailed table of the applicable statutory provisions that are alleged to have been breached.

[28] The College seeks declaratory relief that the Respondents are in breach of various sections of the Drug and Pharmacies Regulation Act, R.S.O. 1990, c. H.4 (the DPRA), its regulations, Ont. Reg. 58/11, and the Pharmacy Act, 1991, S.O. 1991, c. 36 (the Pharmacy Act). The core allegations are:

• that the respondents are operating a pharmacy without accreditation, contrary to section 139 of the DRPA and section 27 of the RHPA Act;

• that the respondents are inappropriately using the designation of pharmacy when there are no pharmacists at their call centre, contrary to sections 142(1) and 147(1) of the DRPA and section 10 of the Pharmacy Act; and,

• that the respondents are selling drugs in a pharmacy, without pharmacists, and without complying with the rigors of selling prescription medication, contrary to sections 149(1) and 155(1) of the DRPA and section 40 of the regulations.

[29] The College seeks a permanent injunction directing the Respondents to:

• cease selling by retail any drug to any customer in Canada, the United Sates, and elsewhere, from any location in Ontario;

• cease using the designated term “pharmacy”, “drug”, or “drugs” in relation to any retail business in Ontario, other than an accredited pharmacy, and the protected title “pharmacist” in relation to any person associated with such business, other than a pharmacist registered with the Ontario College of Pharmacists; and,

• pay to the Applicant the costs of the application.

[30] The College also seeks a declaration that the respondents are in breach of the RHPA Act and seek injunctive relief pursuant to the RHPA Code.

No Issue Raised as to the Jurisdiction of this Court

[31] The jurisdiction of this court to hear the matter was not questioned by either party. Applying the test in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, I conclude that this court properly has jurisdiction over the issues raised and should exercise that jurisdiction.

The Facts

Before Restructuring

[32] From 2007 to 2009, generic drugs were sold via the website www.globalpharmacycanada.com by a predecessor, Ontario-incorporated company, 17245665 Ontario Inc. c.o.b. as Global Pharmacy Canada Inc. (GPC-Ontario). Sales were to consumers worldwide, including to American, Ontarian, and Canadian residents. GPC-Ontario operated as a call centre out of the same location in Mississauga from which RXP now operates.

[33] In the summer of 2009, the College received three complaints or inquiries about Global Pharmacy Canada: one from a U.S. citizen who complained that Global Pharmacy Canada “should not be allowed to prey on U.S. citizens”; one from the California Board of Pharmacy inquiring whether Global Pharmacy Canada was licensed with the College; and, one from a Texas doctor suggesting that the Global Pharmacy Canada’s promotional material was “very deceptive”. Between August 2009 and November 2012, the College received further complaints from two other U.S. citizens and from the Director of the Montana Board of Pharmacy. These complaints precipitated an investigation by the College beginning in July 2009.

[34] From 2007 until the restructuring in 2009 and 2010, the respondents acknowledge that:

• the College had jurisdiction to regulate GPC-Ontario’s activities;

• generic drugs originating from India were being sold by an Ontario corporation to Ontario residents; and,

• the respondents were in breach of the applicable legislation, as none of the employees at the call centre were pharmacists or permitted assistants to pharmacists and prescription drugs were being sold in Ontario, contrary to the requirements of the various legislative provisions relied upon by the College in this motion.

[35] In July 2010, Health Canada became involved. It expressed concerns to the respondents that the Canadian public could access the Global Pharmacy Canada Inc. website and acquire drugs from India that were not approved for use in Canada. Health Canada confirmed its ongoing concerns in its November 1, 2012 letter filed as an exhibit.

The Restructuring

[36] The respondents argue that their operations and corporate structure takes them out of the ambit of regulation.

Operational Changes

[37] A block has been put on the website of Global Pharmacy Canada Inc., www.globalpharmacycanada.com, so that Canadian residents cannot access the website using a regular Canadian IP address, that is, from a computer located in Canada.

[38] The College points out, however, that if a Canadian uses a readily available web proxy service, which hides the residency of the computer, a Canadian can easily access the website.

[39] The respondents have also taken steps to ensure that any drugs purchased from the website will not be shipped to a Canadian address. These measures were put in place over 24 months ago.

[40] Therefore, the only way for a Canadian to access the drugs being sold by the respondents is to use a web proxy service to hide the residency of the purchaser, and to use a postal address for delivery in another country, such as the United States.

[41] The respondents argue that “[f]or over a year there has been no access to any resident of Canada” to the website and that no drugs have been sold to any Canadian address.

[42] There is no evidence before me that since that time these measures have been put into place, that there have been any breaches of these protocols intended to prevent sales to Canadians.

Corporate Restructuring

[43] The respondents have also reorganized their corporate structure. The functions of the prior Ontario numbered company carrying on business as GPC-Ontario are now divided in two:

• In April 2009, GPC-Ontario sold all of its tangible assets to RXP, an Ontario company. RXP now runs the call and processing centre in Mississauga.

• In January 2010, after a six month transition period, GPC-Ontario sold all of its intangible assets for $120,000 to a Belize corporation carrying on business as Global Pharmacy Canada Inc. (GPC-Belize).

• GPC-Ontario continued to perform limited banking functions by depositing cheques made out to Global Pharmacy Canada Inc. to their CIBC bank account in the name of Global Pharmacy Canada Inc. on behalf of GPC-Belize until February 4, 2013. The banking contract was cancelled by GPC-Belize in January 2013 during this proceeding.

• The shareholders and directors of RXP, Richard Petko and Frank Stacho, were the owners and directors of GPC-Ontario before the sale.

• There has been no disclosure of the shareholders and directors of GPC-Belize. David Billings signed the agreements on behalf of GPC-Belize with respect to the sale of the intangible assets and is shown as the Chief Financial Officer of GPC-Belize.

After Restructuring

[44] The respondents argue that as a result of the reorganization of both their operations and their corporate structure, any activity currently taking place in Ontario does not engage the jurisdiction of the College nor the applicable Ontario legislation.

[45] The College argues that notwithstanding these changes, RXP is selling drugs on behalf of GPC-Belize in Ontario, and is in violation of the governing legislation, as it is not a pharmacy.

[46] In particular, the College has concerns about that the respondents’ procedures do not conform to the Ontario requirements for the sale of prescription drugs. For example, a photocopy of a prescription, or even a photo of a prescription bottle, is sufficient proof of a prescription for a sale. RXP also grants refills automatically every three months, upon further request and payment, regardless of whether the medication continues to be prescribed by a doctor. Each of these practices is contrary to the statutory requirements in Ontario. The College argues that such non-compliance raises public safety issues for the non-resident purchasers. There is danger to the public receiving these prescription drugs that are being provided without proper verification that a doctor is prescribing the medication at the time that orders or refills of orders are made.

[47] The College is also concerned that the members of the public who purchase drugs from the website are being misled that there is some legitimacy to the respondents’ operation, as the public may believe that they are receiving drugs from a pharmacy and pharmacists sanctioned by Ontario, not from individuals at an Ontario call and processing centre with drugs being shipped from suppliers in India. The College argues that any mention that Global Pharmacy Canada is owned by a Belize corporation is not readily apparent to purchasers in the website or in the invoices.

[48] The College asserts that the reputation and integrity of Ontario pharmacists and pharmacies will be negatively affected world-wide if this misleading and confusing status quo is permitted to continue.

Evolution of the Global Pharmacy Canada website

[49] The website, www.globalpharmacycanada.com, has gone through a number of changes since the start of the College’s investigation. On July 13, 2009, the website had the following notable features:

• the splash page of the website stated: “We are a Canadian company headquartered in Toronto, Canada.”;

• the Contact Us banner at the bottom listed the address as “Global Pharmacy Canada, 1090 Dundas Street East, Suite 106, Mississauga, Ontario L4Y 2B8 Canada”;

• the About Us page showed a photo of eight workers with a caption reading “Global Pharmacy Canada customer service department located in Mississauga, Canada”, with the text below stating “Since 2004, our office in Toronto, Canada has been helping residents…”;

• the Customer Service page listed the address as “Global Pharmacy Canada c/o RX Processing Services” with the same Dundas Street address in Mississauga; and,

• the Patient Order Form featured two maple leafs and had as its address “Global Pharmacy Canada, 1090 Dundas Street East, Suite 106, Mississauga, ON. Canada L4Y 2B8”.

[50] On July 15, 2010, accessing the website from a Canadian website was met with the warning that “Canadian IP addresses have been blocked”.

[51] On August 14 and 20, 2010, the website had the following notable features:

• the splash page stated, “We are a Canadian pharmacy company headquartered in Toronto, Canada”;

• the Contact Us banner at the bottom listed the address as “Global Pharmacy Canada, c/o RX Processing Services, 1090 Dundas Street East, Suite 106, Mississauga, …”;

• the About Us page showed a photo of 13 people with a caption reading “Global Pharmacy Canada customer service department located in Mississauga, Canada”. Below the photo, the text read “Since 2004, our office in Toronto, Canada has been helping residents …”;

• the Customer Service page noted that the “European Administrative Offices” were located at “GPC Web Services Ltd., 17 Hanover Square, London, W1S 1HU, UK”; and stated “Please do not send customer mail to this address. Please send all customer mail to our Canadian office.”;

• the Guarantee page noted that, “If your order is not delivered within 21 days, please call our office in Toronto, Canada toll-free” and, “In the event that they make a mistake and send the wrong product, please call our office in Toronto, Canada toll-free”;

• the Safety Tips page listed a number of “Important Tips to Keep You Safe”: (1) Only deal with a company that requires prescriptions; (2) Only deal with companies located in countries with strong democratic governments; (3) Know where the company is really located, not where they say they are; and (4) Make sure the company has a good shipment guarantee policy, and be careful to check the fine print.” On this page, it is stated “Global Pharmacy Canada is incorporated and physically located in Toronto, Canada” and “If you [check where the domain name is registered] you’ll see that we are in fact located in Canada.”; and,

• the Patient Order Form featured two maple leafs with the address as “Global Pharmacy Canada, c/o RX Processing Services Inc., 1090 Dundas Street East, Suite 106, Mississauga, …”.

[52] On February 16, 2011, the website had the following notable features:

• the splash page stated, “Here at Global Pharmacy Canada we provide generic medications at a fraction of what they cost in the United States. We have a dedicated staff of friendly customer service agents located in Toronto, Canada.”;

• the Contact Us banner at the bottom listed the address as “Global Pharmacy Canada, c/o RX Processing Services” at the same Mississauga address as before;

• the About Us page showed a photo of 18 people (10 of whom appear to be the same people from the previous picture) with the caption reading “Global Pharmacy Canada customer service department located in Mississauga, Canada.” The text below reads, “Since 2004, our office in Toronto, Canada has been helping residents…”;

• the Guarantee page continued to state that “If your order is not delivered within 21 days, please call our office in Toronto, Canada toll-free” and, “In the event that they make a mistake and send the wrong product, please call our office in Toronto, Canada toll-free”; and,

• the Patient Order Form features two maple leafs and lists as its address “Global Pharmacy Canada c/o RX Processing Inc.” with the Mississauga address.

[53] No evidence was presented with respect to the current contents of the website.

[54] As is readily apparent, the website has undergone a number of evolutionary changes, from claiming that Global Pharmacy Canada is a pharmacy with an office in Toronto, to claiming that they have a staff of friendly customer service agents located in Toronto, Canada. Customers are explicitly told to direct all issues and complaints to the Mississauga address and the Mississauga toll free number. It appears that each consecutive iteration of the website downplays overt references to being a pharmacy located in Toronto, yet based upon the evidence before me, all contact between customers of the respondents located in the United States or elsewhere, to place an order or to rectify a problem with an order remains exclusively with the staff in Mississauga.

Positions of the Parties

[55] The respondents’ claim that as a result of their corporate and organizational restructuring, they have done enough to preclude regulation by the College and the applicability of the governing Ontario legislation.

[56] The respondents rely upon paragraph 50 of Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63, as confirming that the reach of provincial regulatory bodies is constitutionally limited:

It is well established that a province has no legislative competence to legislate extraterritorially. ... This territorial restriction is fundamental to our system of federalism in which each province is obliged to respect the sovereignty of the other provinces within their respective legislative spheres, and expects the same respect in return.

[57] The College argues that the respondents have created a sophisticated multi-jurisdictional scheme to avoid regulation yet rely on the reputation of Ontario pharmacists to promote their business, similar to what was described at paragraph 19 of Crowe v. Ontario Securities Commission, 2011 ONSC 6918, 108 O.R. (3d) 410 (Div. Ct.):

The Commission also described the respondents before them as engaging in “a sophisticated multi-jurisdictional scheme in order to avoid regulatory oversight”. It concluded that it had jurisdiction to intervene because the conduct of the corporations and the appellants had negatively affected the reputation and integrity of Ontario’s capital markets (Reasons, para. 216).

[58] The College asserts that it has jurisdiction to regulate the respondents’ activities.

Issue 1: Do the respondents’ activities have a sufficient connection with Ontario to engage the regulatory legislation and jurisdiction of the College?

[59] In approaching the issue of sufficient connection, I will address the following:

• The law on what constitutes a sufficient connection;

• A factual analysis of the structure of RXP and GPC-Belize, looking at both form and substance;

• A review of whether RXP is agent for GPC-Belize, and how this affects the finding of sufficient connection; and,

• Whether the College has Jurisdiction if the Targeted Public for the Sale of Drugs is Outside Canada.

The Law

[60] The respondents argue that there is not a sufficient connection to Ontario for the College’s jurisdiction to engage.

[61] The nature of the sufficient connection test was discussed in detail in Unifund Assurance Co. At paragraph 56, the court stated that, “what constitutes a “sufficient” connection depends on the relationship among the enacting jurisdiction, the subject matter of the legislation and the individual or entity sought to be regulated by it.”

[62] The court in Crowe v. Ontario Securities Commission, also referred to this test as it grappled with whether there was a sufficient connection to engage jurisdiction of the Ontario Securities Commission over extra-provincial trading activities. At paragraph 33 it stated:

In Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63, the Supreme Court set out a four part test for determining the constitutional applicability of provincial legislation. Two parts of that test are significant here. First, the territorial constraint on provincial legislation prevents the application of provincial law to matters not sufficiently connected to it. The Court then stated that “[w]hat constitutes a ‘sufficient connection’ depends on the relationship among the enacting jurisdiction, the subject matter of the legislation and the individual or entity sought to be regulated by it” (at para. 56). [Emphasis added.]

[63] As these cases illustrate, there is no single standard defining what constitutes a sufficient connection and whether there is a sufficient connection will depend largely on the context. This is discussed further in Unifund at paragraph 65:

It appears from the case law that different degrees of connection to the enacting province may be required according to the subject matter of the dispute. Broken Hill was a tax case. In divorce matters, mere residence of the parties in the jurisdiction was regarded, at common law, as an insufficient “relationship”. Actual domicile was required, e.g., Kalenczuk v. Kalenczuk (1920), 1920 CanLII 167 (SK CA), 52 D.L.R. 406 (Sask. C.A.). In another context, “[m]erely going through the air space over Manitoba” was an insufficient “relation” or connection with the province to support imposition of a provincial tax “within the Province”: The Queen in Right of Manitoba v. Air Canada, 1980 CanLII 16 (SCC), [1980] 2 S.C.R. 303, at p. 316, per Laskin C.J. Yet in a products liability case, the presence of the defendant manufacturer in the jurisdiction is considered unnecessary. The relationship created by the knowing dispatch of goods into the enacting jurisdiction in the reasonable expectation that they will be used there is regarded as sufficient: Moran v. Pyle National (Canada) Ltd., 1973 CanLII 192 (SCC), [1975] 1 S.C.R. 393, at p. 409. In yet another context, in R. v. Thomas Equipment Ltd., 1979 CanLII 226 (SCC), [1979] 2 S.C.R. 529, the “relation” requirement was satisfied for regulatory purposes where the accused, a non-resident, not only sold its products (which were not defective) in the enacting jurisdiction, but had hired a local agent to promote their sale. In each case, the court assessed the relationship between the enacting jurisdiction and the out-of-province individual or entity sought to be regulated by it in light of the subject matter of the legislation to determine if the relation was “sufficient” to support the validity or applicability of the legislation in question. [Emphasis added.]

[64] As the sufficient connection test depends primarily on the context of given case, it is instructive to look at the types of connecting factors that have met the sufficient connection test to enable a regulatory body to have jurisdiction:

• post office and telephone number in the jurisdiction; customers instructed to contact the company via the telephone number in the jurisdiction; cheques sent to the head office in the jurisdiction: Gregory & Co. v. Quebec (Securities Commission), 1961 CanLII 75 (SCC), [1961] S.C.R. 584;

• registered offices in the jurisdiction; operating minds residents of the jurisdiction; certificates issued in the jurisdiction; funds deposited in bank accounts in the jurisdiction; majority of shares held by residents of the jurisdiction: Crowe; and,

• charge on Visa bill stated was from the jurisdiction; envelope, invoice, and return address stated to be in the jurisdiction; head office in the jurisdiction: Presciriptions4us inc. c. Ordre des pharmaciens du Québec, [2004] Q.J. No. 9014, aff’d in Prescriptions4us inc. v. Ordre des pharmaciens du Québec, [2004] J.Q. no. 13143.

What is the Structure and Operation of RXP and GPC-Belize, looking at both form and substance?

[65] Whether the activities of the respondents have a sufficient connection with Ontario for the College to have jurisdiction requires a close analysis into the structures of RXP and GPC-Belize, and an understanding of the relationship between the principals of these entities.

[66] The respondents argue that neither RXP nor GPC-Belize can be subject to the regulation of the College because the companies are separate and independent corporate entities and the integrity of separate corporate entities must be protected and respected. RXP is simply a call and processing centre and is not selling drugs by retail. The respondents rely upon the terms in the various documents governing the relationship.

[67] The College, on the other hand, relies upon the continued active involvement of the same individuals in the restructured and reorganized RXP and GPC-Belize in support of their argument that any reorganization is an attempt to avoid regulation. The governing documents are a relevant starting point, but substance, not form, should govern.

a) The Form

[68] A number of legal contracts have governed the relationship between GPC-ON, RXP, and GPC-BZ:

• May 15, 2009 Asset Purchase Agreement between GPC-Ontario and RXP;

• May 2009 Exclusive Licensing Agreement between GPC-Ontario and GPC-Belize;

• January 1, 2010 Asset Purchase Agreement between GPC-Ontario and GPC-Belize;

• January 1, 2010 Payment Processing Services Agreement between GPC-Ontario and GPC-Belize; and,

• August 1, 2010 Master Services Agreement between GPC-Belize and RXP.

[69] In the May 15, 2009 Asset Purchase Agreement, GPC-Ontario sold to the recently incorporated RXP, for $41,034.74, all of its tangible assets, that is, all property located at 1090 Dundas Street East, Suite 106, in Mississauga, including network infrastructure and software licenses.

[70] In his January 2013 affidavit, Richard Petko stated that at the same time as the May 2009 Asset Purchase Agreement, GPC-Ontario entered into an Exclusive Licensing Agreement with GPC-Belize. The details of this agreement are unknown as Petko was unable to locate the Agreement. The other respondents, including David Billings, Wade Onuffer and GPC-Belize, have declined to produce any documents.

[71] In the January 1, 2010 Asset Purchase Agreement, GPC-Ontario sold to GPC-Belize, for $120,000 USD, all of its intangible assets: its website, domain name, “Global Pharmacy Canada” name, logos, trademarks, existing customer database, and all advertising and marketing collateral. Petko stated that at the time of the sale, he did not have an interest in or control of GPC-Belize. His only contact at the company was David Billings.

[72] In the January 1, 2010 Payment Processing Services Agreement, GPC-Ontario agreed to provide cheque payment processing services to GPC-Belize, described as a company that “sells and markets pharmaceutical supplies worldwide.” GPC-Ontario deposited cheques payable to Global Pharmacy Canada Inc. into its Canadian bank account, and periodically sent the funds accumulated by wire transfer to GPC-Belize, less the agreed upon 3% fee. There was a clear co-mingling of funds.

[73] The Payment Processing Services Agreement was terminated by GPC-Belize in a letter dated January 5, 2013 during these proceedings. No reasons were provided.

[74] In the Master Services Agreement (MSA), effective as of August 1, 2010, GPC-Belize and RXP outlined the nature of their working relationship. The following provisions are notable:

• Section 1.2(a) states that RXP is to provide “General customer service, administrative, and staff or similar services in connection with the business, operations, affairs and activities of [GPC-Belize]”;

• Section 1.3 goes on to limit the scope of services, and in particular, excludes RXP’s ability and power to enter into any binding agreements or commitments on behalf of GPC-Belize (items (b) and (d));

• Section 1.3(e) notes that RXP must disclose that it is acting as a supplier of services to GPC-Belize when dealing with third parties;

• Section 1.3(g) states that RXP shall not provide any pharmacy-related services to customers of or on behalf of GPC-Belize including: reading, assessing, managing, and storing prescriptions; depositing customer payments into RXP’s bank accounts; and, directly or indirectly selling or marketing any GPC-Belize services to its customers;

• Section 1.3(a) states that “[t]he services of [RXP] hereunder shall at all times be subject to control of and policy direction of the Board of Directors and officers of [GPC-Belize]” (emphasis added);

• Section 1.4 entitled “Relationship of Parties” states that “[RXP] is acting as an independent contractor to [GPC-Belize] and all [RXP] employees, personnel, or agents performing Services shall remain employees, personnel, or agents of [RXP]”;

• Section 3.1 states that GPC-Belize will reimburse RXP for all Reimbursable Expenses “in addition to a markup of 15% of such Reimbursable Expenses”, including a Chargeable Percentage of the “total compensation, benefits and related overhead of [RXP] personnel or agents for time spent in performing Services for [GPC-Belize] … to be determined by such method of allocation as the parties agree is appropriate … and shall include but shall not be limited to (1) the Chargeable Percentage of the internal budget of [RXP] and (2) the Chargeable Percentage of total incentive compensation, stock options, stock appreciation rights and other deferred or non-salary compensation of personnel performing Services, if applicable.”; and,

• Section 3.3 states that RXP shall periodically submit to GPC-Belize written invoices of all Services Charges for the proceeding period, with payments due within a “reasonable period after such submission”.

b) The Substance

[75] The College argues that it is irrelevant that RXP is functioning under various contracts with GPC-Belize. Although RXP and GPC-Belize are technically distinct corporate entities, there is no real distinction or separation between the two companies. Alternatively, RXP is an agent acting on behalf of GPC-Belize.

[76] In the further alternative, even if RXP and GPC-Belize are distinct arm’s length corporations, (which is not the position of the College) the College argues that the sale of drugs by retail is taking place in Ontario by RXP with the proceeds from the sales being forwarded to GPC-Belize, and that the activities of RXP can and should be subject to regulation.

[77] The additional disclosure about the corporate structure and ownership of RXP and GPC-Belize after the corporate restructuring sheds light on a number of matters in issue.

[78] The January 2010 Asset Purchase Agreement for the sale of the intangible assets of GPC-Ontario was signed by Richard Petko on behalf of GPC-Ontario and by David Billings on behalf of GPC-Belize.

[79] Richard Petko and David Billings are friends dating back to the days when they were students studying for their MBA together at Queen’s University from 1994 to 1996. Mr. Billings apparently lives in Pittsburgh, USA. They call each other on their birthdays, and maintain contact by telephone. The respondents argue that this relationship is irrelevant.

[80] David Billings, Wade Onuffer and GPC-Belize have declined to provide any material about the shareholders and directors of GPC-Belize, citing privacy laws in Belize as the reason for the non-disclosure.

[81] The College asserts that I should draw an adverse inference from this lack of information and presume that it was not provided because such disclosure would support the argument that the respondents are not functioning as distinct corporate entities. Counsel for David Billings, Wade Onuffer and GPC-Belize argue that the evidence of Richard Petko should be accepted and that no adverse inference should be drawn.

[82] The College relies upon the evidence of Richard Petko as disclosing what counsel refers to as an “extraordinary” relationship during the initial transition period of six months lasting from May 2009 until January 2010 when the parties were allegedly deciding whether the sale of the intangible assets between GPC-Ontario and GPC-Belize would take place.

[83] During this six month transition period, RXP was not paid for its services rendered to GPC-Belize, but simply kept any funds received payable to Global Pharmacy Canada Inc. by cheque. The written agreement with respect to this period was not produced. The present arrangement of costs incurred plus 15% was finalized in the August 2010 MSA, after the trial period.

[84] According to Section 3.3(a) of the MSA, RXP simply submits its invoices to GPC-Belize that “shall be accompanied or followed by such data in support thereof as [RXP] and [GPC-Belize] may from time to time mutually determine is reasonable.” Section 3.3(b) states that “Payment of the amounts stated in the invoices submitted by [RXP] under (a) above shall be due within a reasonable period after such submission.” Richard Petko confirms that RXP does not present any sort of budget to GPC-Belize, and all amounts requested are paid, no questions asked.

[85] The College argues that this informal arrangement is indicative of the friendship between Richard Petko and David Billings, and confirmation that RXP and GPC-Belize are not functioning in a usual arm’s length businesses arrangement.

[86] Notwithstanding the wording in the MSA, the evidence that I do have before me suggests that from a practical perspective, on the ground, little has changed since May 2009 and January 2010, when GPC-Ontario sold its assets to RXP and GPC-Belize.

[87] The players in Ontario at RXP are the same as the predecessor GPC-Ontario. The respondents Richard Petko and Frank Stacho were the directors and owners of GPC-Ontario and are now directors and shareholders of RXP. Stacho continues to be director GPC-Ontario, which changed its name to 1724665 Ontario Inc. in July 2010. Petko, the officer and director of RXP, continues to be in charge of the operations at the Mississauga site. The May 2009 Asset Purchase Agreement for the tangible assets of GPC-Ontario is signed by Frank Stacho, on behalf of GPC-Ontario, and Richard Petko, on behalf of RXP.

[88] The chief financial officer of GPC-Belize, David Billings, lives in Pittsburgh, Pennsylvania, and his role, if any, in operations is unknown and unspecified in the motion material provided. Both Petko and Stacho remain involved with RXP. Petko gave evidence that he has no interest in GPC-Belize or any of the funds it receives, but there is no documentary proof supporting this evidence.

[89] Wade Onuffer has given no evidence. The only connection Onuffer has to the respondents is that his name appears in two press releases of GPC-Belize as a pharmacist. In a November 19, 2009 press release entitled “Global Pharmacy Canada Has Already Served Over 25,000 Americans”, Onuffer is referred to as “Mr. Wade Onuffer of globalpharmacycanada.com” and is quoted extensively. In a May 12, 2010 press release entitled “Experts to Explain the Top Reasons to buy Generic Qualaquin”, Onuffer is referred to as “a pharmacist”. His counsel acknowledges that he is not a pharmacist.

[90] The manager of RXP (D’Adderio) confirmed that nothing about his task has changed since the reorganization. As well, the staff at RXP continue to answer the telephone as “Global Pharmacy Canada”, as they did prior to reorganization, and continue to receive and process patient order forms for drugs, receive and process payments for the drugs, and respond to customer complaints, as they did prior to reorganization. All customer mail or enquiries continue to be directed to “Our offices in Toronto”.

[91] The day-to-day operations of the respondents are the same. RXP uses the same facility to fulfil the same basic functions that the GPC-Ontario performed at that same facility with largely the same staff. Indeed, the changing photographs on the website clearly depict many of the same workers across the various iterations of the website.

[92] The activities that the website claims are performed by Global Pharmacy Canada are performed by the staff at RXP. In particular, the Terms and Conditions state that the customer appoints Global Pharmacy Canada to send his or her order and prescriptions to a licensed pharmacy and arrange for shipping of the product to the customer’s home address.

[93] Even beyond these connections, the structural organization of RXP and GPC-Belize are blurred. Although a number of the terms of the MSA describe RXP as the independent contractor unable to bind GPC-Belize, Section 2.1(a) confirms that RXP functions under the “control and policy direction” of the Board and Directors and Officers of GPC-Belize. This term appears contrary to the argument that the companies are separate entities, as claimed.

[94] The January 2010 Payment Processing Services Agreement, signed by David Billings on behalf of GPC-Belize and Richard Petko on behalf of GPC-Ontario, provides further evidence that the companies may not in substance be as separate as claimed.

[95] GPC-Ontario, the original Global Pharmacy Canada Inc., pursuant to this agreement continued to deposit cheques and money orders made out to Global Pharmacy Canada Inc. to its CIBC bank account in the name of Global Pharmacy Canada Inc. Richard Petko was the signing officer. Thousands of dollars were deposited each day, and sometimes twice a day. Once a month, GPC-Ontario paid GPC-Belize the funds, less the 3% agreed upon “discount rate”. This agreement was in place from January 2010 until it was terminated during the hearing of this application in January 2013. Notwithstanding the termination of the agreement, funds continued to be deposited until February 4, 2013.

[96] I conclude that based upon the facts of this case, there is a wealth of evidence in support of the finding that there is a sufficient connection between the activities of RXP in Ontario to provide the College with jurisdiction to proceed with this application.

[97] There is merit to the College’s concern that the restructuring appears to be an attempt to avoid regulation. However, this finding does not underpin my finding that the College has jurisdiction in this matter. It is the sufficiency of the connection that has persuaded me.

The Agency Argument

[98] The College raises the alternative argument to establish a sufficient connection to engage its jurisdiction to regulate the activities of the respondents as RXP is in an agency relationship with GPC-Belize. The College alleges that RXP is an agent for GPC-Belize as it has apparent, if not actual, authority to bind GPC-Belize to transactions for the sale of drugs. As such, GPC-Belize is liable for RXP’s conduct in Ontario.

[99] There is no express agency arrangement between RXP and GPC-Belize. Section 1.4 of MSA explicitly states that RXP is an independent contractor providing services to GPC-Belize and is not an agent of GPC-Belize, presumably in an attempt to distance GPC-Belize from the actions of RXP and hence the reach of Ontario regulation.

[100] While agency relationships are often created on a consensual and contractual basis, an agency arrangement can also arise by implication. The creation of an agency relationship depends not on a written agreement but on the facts. Agency can arise against the wishes against one or both of the parties and in the absence of the agent having any actual authority to bind the principal.

[101] As G.H.L. Fridman confirmed in Canadian Agency Law, 2nd ed. (Markham: LexisNexis Canada Inc., 2012), at paragraph 1.3, “It is the effect in law of the way the parties have conducted themselves that must be investigated to determine whether an agency relationship has come into existence” (emphasis added). Similarly, White J. concluded, in Gardner v. Ontario (1984), 1984 CanLII 1941 (ON SC), 45 O.R. (2d) 760 (H.C.), that a principal-agent relationship “does not have to be explicitly stated … [as] whether or not an agency relationship arises out of the factual context is a matter of law”.

[102] Determining agency therefore requires, as Fridman stated, at paragraph 1.3, “an intricate analysis of the facts to determine the correct nature of the relationship between the parties”.

[103] The respondents argue that RXP functions as an independent contractor in accordance with the MSA. The key distinction between an independent contractor and an agent is whether the party can enter into contracts on behalf of the principal and bind the principal. Agency has been repeatedly defined as:

The relationship that exists between two persons when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal’s legal position by the making of contracts or the disposition of property: Fridman, at para. 1.1. See also: Labreche Estate v. Harasymiw, 1992 CanLII 8629 (ON SC), [1992] O.J. No. 321 (Gen. Div.)

[104] Authority is at the core of agency, and results either from actual authority, from an agreement that the agent can bind the principal, or from apparent or ostensible authority, from a principal’s representation to third parties that it intends to be bound by the agent’s acts: Fridman, at paragraph 1.14.

[105] On one hand, the MSA stipulates that RXP has no actual authority to bind GPC-Belize, yet the very function of RXP is to sell drugs by retail on behalf of GPC-Belize, as I will outline in the analysis of whether the sale of drugs is taking place in Ontario.

[106] Apparent authority arises from a principal making a representation to a third party that the alleged agent is authorized to act on the principal’s behalf: Freeman and Lockyer v. Buckhurst Park Properties (Mangal) Ltd., [1964] 1 All E.R. 630 (UK CA). Apparent authority will be established if: the representation was made by principal to the third party; the representation was relied on by the third party, who altered his or her position from such reliance; and, the third party did not have notice that the alleged agent did not have actual authority: see Crown Manufacturers Ltd. v. Texas Refinery Corp. of Canada, [1984] S.J. No. 194 (Q.B.), at paragraph 26. As stated by Fridman, at paragraph 3.26, “it is a question of fact dependent on the evidence whether or not the requisite representation has been made”, and can include, for example, telling a third party that they must deal with a certain person: Hayes v. Douglas, [1976] A.J. No. 398 (S.C.).

[107] The respondents cite Transamerica Life Insurance Co. v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423, aff’d [1997] O.J. No. 3754 (C.A.), as authority that an agency relationship can only be imposed between RXP and GPC-Belize by piercing the corporate veil.

[108] Respectfully, the respondents have mischaracterized the requirements for a finding of an agency relationship. One corporation can be agent for another, without embarking in the murky waters and complex prerequisite criteria needed to justify the piercing the corporate veil. This is clearly confirmed by Bruce Welling in Corporate Law in Canada: The Governing Principles, 3rd ed. (London, Ont.: Scribblers Publishing, 2006), at pp. 135-136, in which he states that “the doctrine that corporations are separate legal personalities, as established in Salomon v. Salomon & Co, [1897] A.C. 22 [H.L.], does not foreclose the possibility that corporations may act as agents for other corporations”: see also Dumbrell v. Regional Group of Companies Inc., 2007 ONCA 59, 85 O.R. (3d) 616, at paragraph 80.

[109] Applying these principles of agency law to the facts and applicable documents of this case, it is clear that RXP is acting as agent on behalf of GPC-Belize for the sale by retail of prescription drugs. The documents considered as a whole bestow RXP with the actual authority to bind GPC-Belize. Further, GPC-Belize makes representations on its website to third parties that RXP has authority to bind GPC-Belize in contract to consumers purchasing drugs.

[110] Therefore, I find that there is an agency relationship between RXP and GPC-Belize, as RXP at least has apparent authority, if not actual authority, to contract on behalf of GPC-Belize. While the terms of the various contracts may suggest otherwise, it is factual substance, not form, which governs. This conclusion does not underpin my finding that the sufficient connection test is met, but simply adds weight to that conclusion.

Does the College have Jurisdiction if the Targeted Public for the Sale of Drugs is Outside Canada?

[111] The respondents further argue that they are operating outside of the jurisdiction and the applicable legislation because the purchasers of the drugs are not Ontarian or Canadian residents. They assert that it is not the College’s role to intervene to protect out-of-province or even out-of-country consumers.

[112] The case law does not support the respondents’ narrow view of the appropriate reach of regulation, particularly in situations involving public protection and public interest.

[113] Beginning in 1961, in Gregory & Company Inc. v. The Quebec Securities Commission, 1961 CanLII 75 (SCC), [1961] S.C.R. 584, the courts have held that protecting the public can go beyond provincial borders. In that case, the Supreme Court confirmed that the appellant was subject to jurisdiction and control of the Quebec Securities Commission. It is important to note that in Gregory, the purpose of the securities legislation was to protect the public in the province and elsewhere against fraud. At paragraph 11 the Court confirmed:

The paramount object of the Act is to ensure that persons who, in the province, carry on the business of trading in securities or acting as investment counsel, shall be honest and of good repute, and in this way, to protect the public, in the province or elsewhere, from being defrauded as a result of certain activities initiated in the province by persons therein carrying on such a business. [Emphasis added.]

[114] Similarly, the decision Thorpe v. College of Pharmacists of British Columbia (1992), 1992 CanLII 895 (BC CA), 97 D.L.R. (4th) 634 (B.C.C.A.), interpreted the scope of the provincial Pharmacists Act, R.S.B.C. 1979, c. 326, as applying to control conduct beyond the borders of British Columbia.

[115] In Thorpe, a licenced British Columbian pharmacist was selling drugs to doctors in the United States, contrary to s. 21 of the Act, which prohibits selling drugs to doctors who are not authorized to practice medicine in Canada. The appellant argued that it was necessary to read the provision narrowly, as it should be interpreted to only protect “the health and welfare of British Columbia residents” (emphasis added).

[116] The Court in Thorpe disagreed. It concluded that it was a proper concern of the Pharmacists Act to ensure that all conduct within the province is subject to the same standards, even if the reach of such conduct is extra-provincial. At paragraph 17, the court confirmed:

I am satisfied that it is a reasonable and proper concern of a provincial legislature to ensure that professional persons under their regulatory authority so practice their profession as to ensure that the standards which apply within the province apply with equal force to conduct within the province which has extra-provincial reach. [Emphasis added.]

[117] The court further concluded, at paragraph 18 in Thorpe, that the risks to public safety were obvious:

The risks attendant upon an unfettered discretion to fill prescriptions from outside of the province without regard to the identity, place of residence, or qualifications of the prescriber are so obvious as not to require further comment.

[118] Further, the Ontario Court of Appeal recently held in R. v. Stucky, 2009 ONCA 151, [2009] O.J. No. 600, leave to appeal to S.C.C. discontinued, [2009] S.C.C.A. No. 186, that the meaning of “to the public” for the purposes of the Competition Act, R.S.C. 1985, c. C-34 was not limited to the Canadian public if there was a link or connection between the offence and Canada. In that case, the accused had operated a direct mail business from Ontario that sold lottery tickets and merchandise to persons outside of Canada.

[119] Finally, the court in Crowe is clear, at paragraph 32, that once the sufficient connection test is met, the province is not limited to regulating domestically, or in that case, protecting domestic investors from unfair or fraudulent practices. In coming to this conclusion, the court refers back to the 1961 Gregory decision:

As Gregory makes clear, and contrary to what the appellants assert, a province is not limited to protecting the interests of domestic investors from unfair or fraudulent activities. Provincial securities legislation can also be applied to regulate corporations or individuals within the province in order to protect investors outside the province from unfair, improper or fraudulent activities. Where the Commission is regulating trades that have an extraprovincial character, the question is not the location of the investors; rather, it is whether there is a sufficient connection between Ontario and the impugned activities and the entities involved to justify regulatory action by the Commission. [Emphasis added.]

[120] As early as October 6, 2006, Health Canada expressed concerns about dangers of the internet sale of drugs whether or not the ultimate purchaser and consumer was Canadian:

It is a violation of the Food and Drugs Act and Food and Drug Regulations to advertise or sell, at retail or via the Internet, drugs that are not approved for sale in Canada. This applies to all Canadian pharmacies selling over the Internet, even in cases where the unapproved drugs do not enter Canada but are dispensed by foreign pharmacies and delivered to patients outside of Canada. Pharmacies licensed in Canada that engage in such activity are considered to be advertising and selling unapproved drugs in Canada. [Emphasis added.]

[121] The case law does not support the respondents’ argument that harm, or risk of harm, must be experienced by an Ontario resident or a Canadian resident for the College to have jurisdiction to regulate the respondents’ conduct. The case law is clear that the sufficient connection test can be met even if the public affected by the activity in question is outside the jurisdiction, particularly when the legislation has public protection as its aim.

[122] There is also no merit to the respondents’ other arguments that the role of the College is to regulate conduct and ensure compliance by professionals resident in the province in breach of the regulatory scheme. If the test of sufficient connection is met, the regulatory controls in the legislation apply to professionals and non-professionals alike, including RXP and GPC-Belize. The role of the College is to ensure compliance.

[123] The facts clearly disclose a sufficient connection between the activities of RXP conducted in Ontario on behalf of GPC-Belize to meet the preliminary question of whether there is a sufficient connection between the respondents’ conduct and Ontario to invoke the jurisdiction of the College.

[124] Assessing the sufficient connection test is dependent upon context. Selling prescription drugs raises public safety issues, and issues of potential misrepresentation to clients outside Ontario. The evidence is clear, and in fact overwhelming, that there is a sufficient connection in the facts and circumstances of this case for the College to assert jurisdiction.

Issue 2: Are the Respondents selling drugs in Ontario?

[125] I arrive at the core question in this proceeding: is the sale of drugs taking place in Ontario?

[126] It is the position of the College that in form and in substance the sale of prescription drugs is taking place at the call and processing centre in Mississauga by unlicensed, untrained RXP staff contrary to a host of interconnected rules and regulations governing the functions of a pharmacy selling prescription drugs by retail in Ontario.

[127] It is the position of the respondents that RXP staff are merely inputting data, and responding to questions, and that any sale takes place in either India, or in Belize.

a) The Law of What Constitutes a Sale

[128] In Ontario, contracts made over the internet are regulated by the Consumer Protection Act, 2002, S.O. 2002, c. 30, in Schedule A (ss. 38-40) and in O. Reg. 17/05 (ss. 31-33), which stipulates disclosure requirements, cancellation requirements, and other mandatory processes, but does not address the question of how or where electronic contracts are formed.

[129] I turn then to first principles.

[130] The common law has traditionally defined “a sale” as the transfer by mutual assent of the ownership of a thing from one person to another for a money price: see Connell v. Hickock, [1888] O.J. No. 41, at paragraph 34 (C.A.). In CCH Canadian Ltd. v. Law Society of Upper Canada, 2002 FCA 187, [2002] 4 F.C. 213, Rothstein J.A., at paragraphs 286-7, further described the traditional, commercial definition of a sale:

The existence of a “sale” is not predicated on the earning of a profit. No authorities to the effect that a sale is predicated on the earning of a profit were cited. In general terms, the key elements of a sale are the transfer of property on the one hand and the payment of some form of consideration on the other. In Blacks Law Dictionary (7th ed.) “sale” is defined as:

n. 1. The transfer of property or title for a price. 2. The agreement by which such a transfer takes place. The four elements are (1) parties competent to contract, (2) mutual assent, (3) a thing capable of being transferred, and (4) a price in money paid or promised.

[131] Internet contracts, such as in the current case, challenge these traditional concepts of sale. Angela Swan and Jakub Adamski in Canadian Contract Law, 3rd ed. (Markham, Ont.: LexisNexis, 2012), discuss the nature of these challenges at paragraph 4.75:

Contracts made over the Internet probably present a slightly different picture to those made by any kind of exchange of negotiating positions. This result arises from the fact that, unlike the exchange of faxes or e-mail messages, there is likely to be no bargaining and the notice of acceptance will be the offeree’s simple assent to the terms offered on the offeror’s website. Legislation dealing with e-commerce does not touch issues of contract formation except to the extent that, for example, the legislation recognizes the validity of documents formed by electronic communication and the validity of electronic signatures. The legislation has nothing to say about the rules which should govern the communication of an acceptance or which courts should have jurisdiction over any contract that may be created. [Emphasis added.]

[132] In regards to internet contracts, Justice Cohen’s decision in In Prescriptions4us c. Ordre des pharmaciens du Quebec, [2004] Q.J. No. 9014 (Q.S.C.), aff’d [2004] J.Q. no. 13142 (QCCA), is helpful. She applied traditional, commercial law definition of sale, including the locus of the offer and acceptance, to determine whether a sale of prescription drugs to Americans over the internet from Manitoba pharmacists could be said to take place in Quebec. Although in Prescriptions4US, the company in question was from Quebec, the principles are useful and apply in assessing the criteria for what constitutes a sale. I note that this decision was upheld by the Quebec Court of Appeal without reasons, and therefore I refer to the reasons of the motions judge.

[133] Prescriptions4us was private company registered in Quebec, and none of its directors or officers was a pharmacist registered with the Ordre des pharmaciens and none were authorized to sell prescription medications in Quebec.

[134] Justice Cohen noted at paragraphs 41 and 42 that neither the use of the internet to conduct the sale nor the fact that drugs were shipped from a pharmacist in Manitoba to another location to the ultimate purchaser out of the jurisdiction changed her conclusions that the offer and acceptance culminating in a sale were in Montreal.

[135] Justice Cohen applied the ordinary rules of contract to the provisions of the Civil Code of Quebec, ss. 1385 and 1387. The purchaser was on a computer out of province, but the offer and acceptance took place in Montreal. This analysis is outlined at paragraph 44:

On the face of the facts as set out here, it appears obvious that the sale took place in Montreal, once again pursuant to the ordinary rules of contract, in particular article 1387 C.C.Q. The offeror, RX4US, was located in Montreal, at the address of its head office. The purchaser, Mr. Lewis, was on a computer. While the location of this computer is not given, it could have been anywhere, as Mr. Lewis completed the forms provided by RX4US on its web site and sent them back to RX4US in Montreal. Thus, the place of offer and the place where the acceptance was received by the vendor, RX4US, are identical - namely Montreal, Quebec. There can be no other possible physical location for the conclusion of this contract, on the facts.

b) Application of the law to the facts of this case

[136] The following are the undisputed facts with respect to how the sale of drugs on behalf of GPC-Belize now occurs:

1. Individuals initiate the purchase of drugs by completing a Patient Order Form, available by mail or online from the www.globalpharmacycanada.com website. GPC-Belize owns the website.

2. Once completed, the Patient Order Form is sent by mail, fax, or electronically, with copies of prescriptions, pill bottles, or pharmacy receipts to “Global Pharmacy Canada Inc. c/o RX Processing Services, Inc.” to the Mississauga address, or to the Mississauga email address.

3. The payment method on the Patient Order Form is by Visa or MasterCard.

4. The Patient Order Form confirms “we will not process your credit card until we have completed your order” (emphasis added). The purchaser must sign authorizing the credit card payment and include the security code, the expiry date, and number of the card to facilitate payment.

5. The staff at RXP complete the necessary documentation to process the payment of the client from their Visa or MasterCard to complete the order.

6. Payment by cheque and money order is also accepted. Richard Petko’s evidence was that payment in this manner was a small percentage of the total drug sales. Between August 1, 2012 and February 4, 2013, over $1,200,000 USD was deposited into this account.

7. Up until February 4, 2013, GPC-Ontario deposited cheques payable to Global Pharmacy Canada Inc. to GPC-Ontario’s CIBC USD bank account, used exclusively for this purpose. Periodically, proceeds from this account were wired by the RXP staff to GPC-Belize, less the 3% agreed upon fee for service.

8. The Payment Processing Services Agreement was terminated by David Billings on January 5, 2013, although no changes occurred in the procedures as reflected in the February 6, 2013 bank statement. The sum of $119,672.71 was deposited into the CIBC account between February 1 and February 5, 2013.

9. The Patient Order Form confirms that Global Pharmacy Canada Inc. is appointed to act as agent for the patient for the purpose of conveying the order to a licenced pharmacy in India (emphasis added). The patient signs this acknowledgment. The acknowledgement confirms that the patient agrees to be bound by the terms and conditions available at the Global Pharmacy Canada website.

10. The patient order form contains a reorder form and a reminder. By ticking off the reorder box, the patient authorizes the credit card on file to be used to automatically reorder the drug and process future payments every three months, without the need for any further proof of a valid ongoing prescription.

11. RXP Staff in Mississauga process the order by completing the documentation necessary to process the Visa or MasterCard payment. The customer is charged the full amount for the prescription drugs requested. Visa or MasterCard in turn processes the credit card payment for the correct amount and forwards these amounts to the account of GPC-Belize

12. Once confirmation of payment is received by Visa or MasterCard, or by the cheque clearing the bank, the staff of RXP then inputs the customer’s order form and prescriptions into the Global Pharmacy Canada website to be filled by a supplier in India.

13. According to D’Adderio, manager at RXP, at the end of each day, all orders processed by the RXP staff are uploaded to a website that is accessed by the participating pharmacists in India.

14. I note that there is no named pharmacist in India. There is no indication in any of the documentation sent to the client who the supplier of the drugs may be, and whether or not these drugs in fact come from an Indian pharmacist as represented, or from a supplier of drugs.

15. Orders are confirmed by an email sent by “orders@globalpharmacycanada.com” or by letter sent by “Your Friends at Global Pharmacy Canada”, enclosing a Global Pharmacy Canada fridge magnet. The header of this confirmation letter reads “Global Pharmacy Canada c/o RX Processing Services, Inc.” with the Mississauga address and phone number, and the www.globalpharmacycanada.com website.

16. An invoice is prepared by the supplier in India or by the Global Pharmacy Canada website accessed by the supplier (this was not clear on the evidence) and is placed in the package which is shipped from India to the client in the United States or elsewhere. The header of the invoice states “Global Pharmacy Canada” and lists the Dundas Street Mississauga Address, without mention of RXP. The footer of the invoice describes how consumers can re-order drugs, stating: “Please fax this form to: (866)850-6021 or send by mail to: 1090 Dundas St. East, Suite 106, Mississauga ON L4Y 2B8, CANADA (the RXP address). For faster service, call us at (866)850-6021 to authorize your refill over the phone.”

17. The packages are sent to the United States without any indication that they contain prescription drugs. The customs declaration form that appears on the outside of each package states “health products for personal use”.

18. There is no evidence before me how the Indian supplier of the drugs is paid. I presume that GPC-Belize pays the supplier of the drugs the agreed upon fee. RXP plays no role in the payment of the Indian supplier of the drugs

19. If for some reason one of the Indian suppliers cannot fill the order, RXP remains involved in the process. If the drug is not available, RXP will advise the customer and will do one of two things. One option is to reverse any credit card charges that have been made when the drugs were ordered if the drug is no longer available. If the drug is on back-order and not presently available, the RXP staff will advise the customer of the delay, and the customer will decide whether to wait to obtain the drug, or whether he or she wished to obtain a refund. The RXP staff will produce the paperwork for the refund at the customers’ direction.

20. RXP staff receive and resolve customer complaints involving all practical matters including non-delivery or delayed delivery of the drugs. If the customer raises any problem with the effects of the medication itself, the RXP representative tells the person to see his or her doctor.

21. Prior to the involvement of Health Canada, any allegedly defective goods were returned by the purchaser to the Mississauga address. As a result of Health Canada’s concerns about the presence of drugs at the call centre premises, now, if there is a problem with an order, the purchasers are advised by the staff at the call center to either destroy the product, or return the drugs to the supplier in India. As noted, there is no information in the package received by a client who is the supplier of the drug.

[137] The respondents did not address in any detail their position that the sale of drugs takes place in either India or Belize. They argue that the sale of the drugs cannot take place until the supplier in India confirms that it will forward the drugs to the purchaser. In my view, once the order form is received by RXP staff, and funds are processed by RXP staff for payment, a contract exists. Alternatively, the respondents argue that the sale takes place in Belize. The only connection to Belize is the receipt of funds by GPC-Belize from MasterCard, Visa or from GPC-Ontario.

[138] Once payment is received, the RXP staff post the sale to the anonymous participating suppliers in India to be filled. Taking steps to fill the order after payment has been processed cannot be characterized as acceptance. Forwarding the payments by Visa and MasterCard to GPC-Belize cannot be characterized as acceptance.

[139] Applying the traditional notion of sale as defined in CCH Canadian Ltd. v. Law Society of Upper Canada, and in Prescriptions4us to the facts of this case leads to the only rational conclusion: the sale of drugs through www.globalpharmacycanada.com is taking place in Ontario.

[140] The Patient Order Form filled out by the client is received by internet or by mail by RXP, and is processed by the staff at RXP in Mississauga. There are two ways to characterize the sale as taking place in Ontario:

• First, as reflected in the comment made by Angela Swan and Jakub Adamski in Canadian Contract Law, paragraph 4.75 as outlined in paragraph 131 of this decision, the offer may be characterized as the terms offered for the sale of drugs on the GPC-Belize website. Acceptance would be the client’s agreement to the terms offered on the website by forwarding the Patient Order Form to the RXP location.

• An alternate view of offer and acceptance is that the Patient Order Form sent by the client to RXP constitutes the offer to purchase. The processing of the payment by the staff of RXP using the client’s Visa or MasterCard, or depositing the cheque or money order into the GPC-Ontario bank account constitutes acceptance.

[141] Using either analysis, the sale takes place in Ontario. All documentation – including the Patient Order Form, confirmation of the order, the invoice, and the packing slip – are in the name of Global Pharmacy Canada bearing the Mississauga address.

c) Impact of Celgene Corp v. Canada (Attorney General)

[142] The respondents rely upon the recent Supreme Court of Canada decision Celgene Corp v. Canada (Attorney General), 2011 SCC 1, [2011] 1 S.C.R. 3, to assist in their argument about jurisdiction and their interpretation of the meaning of a sale. I am of the view that the approach in Celgene, assists the College, not the respondents.

[143] In Celgene, Justice Abella confirmed that the words sold, sell, and selling have different interpretations in different statutory contexts, and that a merely mechanical application of strict, traditional commercial analysis may not always be appropriate.

[144] The court confirmed that the Patented Medicine Prices Review Board (the Board) had authority under the Patent Act, R.S.C. 1985, c. P-4, over the New Jersey-based distributor’s sales of the pharmaceutical Thalomid to Canadians. The New Jersey company had refused to supply pricing information to the Board because the drug was “sold” in New Jersey, applying traditional commercial principles, and therefore the sale was outside the Board’s authority.

[145] In a sense, Celgene is factually the mirror image of this case: that is, the drugs were being sold from a location in New Jersey and sent to customers in Canada.

[146] The Board acknowledged that the New Jersey head office was the locus of sale for commercial law purposes. However, as the mandate of the Board included protecting Canadians from excessive prices charged for patented medicines, the Board took an expansive view of the meaning of sale. It concluded that the legislative phrase “sales in any market in Canada” included sales of medicine delivered to and used in Canada, with the costs borne by Canadians.

[147] The Supreme Court agreed with the opinion of the Board that “sale in any market in Canada” may have a broad, contextual meaning, beyond application of strict commercial principles, and that in the circumstances, a sale occurred by delivery of drugs to Canadians that engaged the jurisdiction of the Board to intervene to protect Canadians from unreasonable prices for drugs.

[148] Celegene confirmed the approach adopted by the Court in Canada Trustco Morgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601, at paragraph 10, that in statutory interpretation, a contextual and purposive analysis is appropriate unless the wording of a provision is precise and unequivocal capable of no other interpretation:

The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole.

[149] In paragraph 21 of Celgene, Abella J.A. summed up this approach as, “[t]he words, if clear, will dominate; if not, they yield to an interpretation that best meets the overriding purpose of the statute”. The court agreed with the Board that the consumer protection purpose of the Act and the legislative context pointed away from a strict commercial law interpretation of “sold”:

But that does not mean that the Board misinterpreted the words “sold” and “selling” in the context of ss. 80(1)(b), 83(1) and 85. In rejecting the technical commercial law definition, the Board was guided by the consumer protection goals of its mandate, concluding that Celgene’s approach would undercut these objectives by preventing the Board from protecting Canadian purchasers of Thalomid and other foreign-sold SAP patented medicines.

[150] The court further confirmed at paragraphs 29-32 that the jurisdiction of the Board applied only to sales of the drug that will be dispensed in Canada for consumption by Canadians. On the facts of the Celgene case, the purposive interpretation of the meaning of sale did not give the Board jurisdiction to regulate prices of drugs sold in other jurisdictions:

The Board therefore concluded that in order to comply with that mandate, sales “in any market in Canada” for the purposes of the relevant provisions, should be interpreted to “include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians -- patients or taxpayers, as the case may be” (para. 34). All of these prerequisites are satisfied in the case of Celgene’s sales of Thalomid to Canadians through the SAP.

The Board also found, and I agree, that a strict commercial law interpretation of “sold” in s. 80(1)(b) would give the Board authority over sales which, while technically made “in Canada”, are destined for other countries, a result incongruous with the legislative purpose of regulating the price at which patented medicines are sold in Canadian, not foreign, markets:

[T]he Board does not have a statutory mandate to protect European purchasers of patented medicines, regardless of the locus of the sale at common law. The locus of the sale at common law, does not give rise to jurisdiction when the locus is Canada, and does not deprive the Board of jurisdiction when the locus is outside of Canada. [para. 36.]

In my view, therefore, the legislative context and the consumer protection purpose of ss. 80(1)(b), 83(1) and 85 of the Patent Act support the Board’s conclusion that, based on the language of those provisions, it has authority over Celgene’s sales of Thalomid to Canadians through the SAP.

[151] The respondents rely on this limitation of the scope of the Board’s jurisdiction as supportive of their view that the Ontario legislation and regulations of pharmacists and pharmacies relates to potential harm to only Ontario, or Canadian residents.

[152] In my view, the respondents misread the intended limitation of the mandate of the Board. In Celgene, there was no dispute that the sale, from a commercial perspective, took place in New Jersey. In this context, the Board could only impose price controls for drugs sold in New Jersey to Canadians. It goes without saying that the Patented Medicine Prices Review Board, a Canadian Federal Board, cannot control the price of drugs sold in New Jersey to residents of other countries.

[153] Celgene reinforces the arguments of the College, confirming that a purposive analysis of the meaning of sale is appropriate, and that substance, not form, should be relevant in assessing whether there is a sale, unless the words are not capable of bearing any other meaning.

[154] I conclude, applying traditional notions of sale, as well as applying the principles of Celgene, that it is clear that the sale of drugs occurs in Ontario. RXP at its Mississauga office is selling on behalf of GPC-Belize prescription drugs sourced from India destined for consumers in the United States and elsewhere.

Issue 3: Does the Respondents’ conduct breach the governing legislation?

[155] The respondents focused their arguments on the absence of jurisdiction of the College and the locale of the sale as being outside Ontario. No submissions were made that if the sale of drugs takes place in Ontario, and if the College has jurisdiction to regulate the respondents’ conduct, that there were no breaches of the governing legislation.

[156] The College alleges that the respondents are in breach of various sections of the DPRA, its regulations Ont. Reg. 58/11, and the Pharmacy Act, outlined in detail in Schedule A.

[157] The College seeks a permanent injunction directing the respondents to cease selling by retail any drugs to any customer in Canada, the United States, and elsewhere from any location in Ontario, and directing the respondents to cease using the designated terms “pharmacy”, “drug”, and “drugs”, in relation to any retail business in Ontario other than an accredited pharmacy, or the protected title “pharmacist” in relation to any person associated with such business other than a pharmacist registered with the College.

[158] This court has broad jurisdiction pursuant to section 162 of the DPRA to grant restraining orders and injunctive relief and may impose any other order “as the judge thinks fit”. It also has jurisdiction pursuant to s. 87 of the Code to order compliance with the RHPA Act, the RHPA Code, and other regulations and by-laws.

a) Are the Respondents selling drugs by retail without authorization?

[159] The sale of drugs in Ontario is highly regulated, as (i) only a registered pharmacist can own, operate, and supervise a pharmacy, (ii) only accredited pharmacies can sell drugs, and (iii) drugs can only be sold under specific conditions. The College alleges that the Respondents activities are in breach of these three components of selling drugs by retail without authorization.

(i) Only a registered pharmacist can own, operate, and supervise a pharmacy

[160] A pharmacy cannot be owned and operated by a corporation unless the majority of its directors and shareholders are registered pharmacists, pursuant to ss. 142(1), 142(2), and 144 of the DPRA.

[161] The respondents acknowledge that none of the directors and shareholders of RXP, including Richard Petko and Frank Stacho, are licensed pharmacists. The directors and shareholders of GPC-Belize are unknown, but counsel concedes that no one involved in GPC-Belize is a pharmacist.

[162] I conclude that the respondents, collectively, own and operate a pharmacy, contrary to the ownership requirements stipulated in ss. 142(1), 142(2), and 144 of the DPRA.

(ii) Only accredited pharmacies can sell drugs

Breach of s. 139(1) of the DPRA

[163] Section 139(1) of the DPRA confirms that, “No person shall establish or operate a pharmacy unless a certificate of accreditation has been issued in respect thereof”.

[164] The respondents argue that the sale of drugs occurs in either India or Belize, and outside the reach of the College’s regulatory oversight.

[165] The respondents acknowledge that, collectively, they are selling prescription drugs by retail. Neither RXP nor GPC-Belize has a certificate of accreditation from the College and therefore, pursuant to s. 139(1) of the DPRA, RXP and GPC-Belize are precluded from selling prescription drugs by retail.

[166] I have concluded that sale of drugs on behalf of GPC-Belize occurs in Ontario, and therefore I find that the respondents are in breach of s. 139(1) of the DPRA.

Breaches of s. 149 of the DPRA and s. 27 of the RHPA

[167] Section 149 of the DPRA confirms that, “no person shall compound, dispense or sell any drug in a pharmacy other than (a) pharmacist; (b) an intern acting under the supervision of a pharmacist who is physically present; (c) a registered pharmacy student acting under the supervision of a pharmacist who is physically present; or (d) a pharmacy technician acting under the supervision of a pharmacist who is physically present.”

[168] Furthermore, s. 27 of the RHPA Act states that “no person shall perform a controlled act … unless (a) the person is a member authorized by a RHPA Act to perform the controlled act or (b) the performance of the controlled act has been delegated” with controlled act defined in s. 27(2) as including, at paragraph 8, “prescribing, dispensing, selling or compounding a drug”.

[169] The respondents acknowledge that none of the individuals working at RXP or GPC-Belize are pharmacists, or are working under the supervision of a pharmacist present in the offices who is authorized to perform the controlled act of selling drugs. Further no one at RXP or GPC-Belize is authorized under the RHPA Act.

[170] As I have concluded that the respondents are selling drugs in Ontario, I also find them in breach of s. 149 of the DPRA and s. 27 of the RHPA Act.

(iii) Drugs can only be sold under specific conditions

[171] All parties agree that customers can order prescription drugs by providing a photocopy of a previous prescription or even a photo of a prescription bottle. Further, once a prescription has been filled, customers can automatically refill the prescription every three months by a pre-authorized credit card payment, whether or not a doctor continues to prescribe the drug. The manner in which drugs are sold in Ontario is subject to strict regulations.

[172] Clearly the respondents’ practices outlined above are in breach of s. 155(1) of the DPRA and s. 41 of O. Reg. 58/11 which stipulates specific methods of filling the initial prescriptions and repeat prescriptions to ensure that the medication is prescribed, and continues to be prescribed, by a medical doctor.

b) Are the Respondents using the designated terms “pharmacy”, “drug” and “pharmacist” contrary to sections 147 of the DPRA and s. 10(1) of the Pharmacy Act?

[173] Finally, the College alleges that through the use of the words “pharmacy”, “drug”, “drugs”, and “pharmacist” on the Global Pharmacy Canada website, brochures, order forms, and invoices, the Respondents are in breach of s. 147 of the DPRA and s. 10 of the Pharmacy Act.

[174] Pursuant to s. 147 of the DPRA, “no person shall in connection with a retail business use any of the following designations, unless the business is an accredited pharmacy: … 3. Pharmacy … 9. Drug or drugs”, and pursuant to s. 10(1) of the Pharmacy Act, “no person other than a member shall use the title … “pharmacist”, a variation or abbreviation or an equivalent in another language.”

[175] As neither RXP nor GPC-Belize are an accredited pharmacy, and no member of the staff at either company is a registered pharmacist, I find the Respondents in breach of s. 147 of the DPRA and s. 10 of the Pharmacy Act.

Conclusions

[176] First, I conclude that the College has jurisdiction to regulate the conduct of the respondents because:

• There is overwhelming evidence that the test of a sufficient connection between the respondents’ activities and Ontario has been met to invoke the jurisdiction of the College. The only activity in furtherance of a sale of prescription drugs by retail occurs in Mississauga Ontario. The corporate and organizational restructuring does not avoid the regulation by the College.

• The facts confirm that RXP is an agent with actual and apparent authority to sell drugs by retail on behalf of GPC-Belize. This finding is not necessary to meet the sufficient connection test, but adds weight to that conclusion.

• The argument that the ultimate consumer of the drugs is not Canadian or from Ontario does not affect my conclusions about either the sufficient connection test, or whether there is a sale of drugs taking place in Ontario.

[177] Second, for the reasons outlined, I conclude that the facts are clear that RXP is selling prescription drugs by retail in Ontario on behalf of GPC-Belize.

[178] Finally, for the reasons outlined, I find that the respondents are in breach of sections 139(1), 142(1), 142(2), 144(1), 147, 149(1), 155(1) of the DPRA, s. 41 of O. Reg. 58/11, s. 10 of the Pharmacy Act, and s. 27 of the RHPA Act.

[179] It appears clear from the website that the respondents are using the reputation and credibility of Ontario pharmacies and pharmacists to promote and sell drugs to non-residents. The website claims that they have “offices in Toronto”, and individuals with queries or problems are encouraged to call “our offices in Toronto”. The Mississauga address, complete with maple leafs, appears prominently on each Global Pharmacy Canada document, while any identification of the locale of GPC-Belize’s head office or of the suppliers in India is hidden in the fine print.

[180] Internet sale of drugs is a reality. The College has rules and procedures to ensure that the traditional pharmacies, as well as internet pharmacies comply with the governing legislation. By using the word “Canada” in the name of the company, referencing the offices in Toronto, and directing all customer inquiries to the Mississauga address, the website reassures clients as to the reliability and credibility of the respondents based upon the excellent reputation of Ontario and Canadian pharmacies and pharmacists. The respondents appear to be taking advantage of the reputation and standards in place for Ontario pharmacies, without incurring any of the costs of compliance.

[181] If the respondents wish to rely upon the credibility and reputation of Ontario pharmacies and pharmacists, fair play as well as public safety dictates that the respondents need to comply with the rigors of the Ontario legislation.

[182] The unregulated sale of prescription drugs by a non-pharmacist poses obvious dangers to customers outside the jurisdiction. It is appropriate that Ontario regulate the sale of the drugs taking place in Ontario, destined for customers across our borders. As one of the original complainants to the College stated, Global Pharmacy Canada Inc. “should not be allowed to prey on U.S. citizens”.

[183] Therefore the relief requested by the College is granted. Specifically, a permanent injunction is granted directing the respondents, and in particular RXP, to:

• cease selling by retail any drug to any customer in Canada, the United Sates, and elsewhere, from any location in Ontario, unless they can illustrate that they are in compliance with the governing legislation;

• cease using the designated term “pharmacy”, “drug”, or “drugs” in relation to any retail business in Ontario, other than an accredited pharmacy, and the protected title “pharmacist” in relation to any person associated with such business, other than a pharmacist registered with the Ontario College of Pharmacists.

Costs

[184] Counsel made submissions as to costs at the conclusion of argument, and before the result of the application was known. They have since filed their written submissions and their Bills of Cost.

[185] The College seeks partial indemnity costs in the amount of $265,822.25 if successful, and no order as to costs if unsuccessful, as this is public interest litigation.

[186] Counsel for the respondents RXP, 1724665 Ontario Inc., c.o.b. as Global Pharmacy Canada, Richard Petko and Frank Stacho seek partial indemnity costs in the amount $78,061.33 if successful.

[187] Counsel on behalf of Global Pharmacy Canada Inc., David Billings and Wade Onuffer, basically supported the submissions of counsel for RXP and made limited submissions. He seeks to limit the cost exposure of his clients to $5000.00 due to the limited role they played in the hearing. In my view, there is no reason to limit the costs awarded against these defendants just because they chose to adopt the position of the other respondents.

[188] The hearing took place over three days – the first was a full day, and the other two days were half days. The case was complex, requiring significant documentation to be prepared by the College. There was some limited cross-examination. The reason the third day was necessary was because the respondents had not complied with the timetable they had agreed to, and had failed to make the requested disclosure about the corporate restructuring.

[189] I have carefully reviewed the Bill of Costs of the College. I agree with the respondents that there are an inordinate number of hours spent, but I note that the College bore the onus of proof and assumed primary responsibility for the preparation of the various application records. I take into account the principles enunciated in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and in particular the reasonable expectations of the losing party.

[190] In all of the circumstances I fix costs in the amount of $145,000 inclusive of HST and disbursements. All respondents are jointly and severally liable. Any funds held in the name RXP, Global Pharmacy Canada Inc., or Global Pharmacy Canada Belize in any bank account in Ontario are ordered to be held pending the payment of the costs to the College. In light of the recent termination during these proceedings of the 2010 Payment Processing Services Agreement, if a new account has been opened to deposit cheques or money orders in the name of Global Pharmacy Canada Inc., those funds are also ordered to be held pending payment of the cost award.

J. Wilson J.

Released: March 15, 2013

Schedule A

Jurisdiction under the Regulated Health Professions Act, 1991, Schedule 2 (“Health Professions Procedural Code”)

Regulated Health Professions Act, 1991, Schedule 2 (“Health Professions Procedural Code”), S.O. 1991, c. 18

s. 87 The College may apply to the Superior Court of Justice for an order directing a person to comply with a provision of the health profession Act, this Code, the Regulated Health Professions Act, 1991, the regulations under those Acts or the by-laws made under clause 94 (1) (l.2), (l.3) (s), (t), (t.1), (t.2), (v), (w) or (y).

Pharmacy Act, 1991, S.O. 1991, c. 36

s. 1. In this Act,

“College” means the Ontario College of Pharmacists;

s. 2. (1) The Health Professions Procedural Code shall be deemed to be part of this Act.

(2) In the Health Professions Procedural Code as it applies in respect of this Act,

“College” means the Ontario College of Pharmacists;

“health profession Act” means this Act;

“profession” means the profession of pharmacy;

“regulations” means the regulations under this Act.

Breaches of the Regulated Health Professions Act, 1991 and the Pharmacy Act, 1991 relied on by the Applicant

Regulated Health Professions Act, 1991, S.O. 1991, c. 18

s. 27. (1) No person shall perform a controlled act set out in subsection (2) in the course of providing health care services to an individual unless,

(a) the person is a member authorized by a health profession Act to perform the controlled act; or

(b) the performance of the controlled act has been delegated to the person by a member described in clause (a).

(2) A “controlled act” is any one of the following done with respect to an individual:

8. Prescribing, dispensing, selling or compounding a drug as defined in the Drug and Pharmacies Regulation Act, or supervising the part of a pharmacy where such drugs are kept.

Pharmacy Act, 1991, S.O. 1991, c. 36

s. 10. (1) No person other than a member shall use the title “apothecary”, “druggist”, “pharmacist”, “pharmacy technician” or “pharmaceutical chemist”, a variation or abbreviation or an equivalent in another language.

Jurisdiction under the Drug and Pharmacies Regulation Act

Drug and Pharmacies Regulation Act, R.S.O. 1990, c H.4

s. 162. (1) Where it appears to the College that any person does not comply with any provision of this Act or the regulations, despite the imposition of any penalty in respect of such non-compliance and in addition to any other rights it may have, the College may apply to a judge of the Superior Court of Justice for an order directing such person to comply with such provision, and upon the application the judge may make such order or such other order as the judge thinks fit.

Drug and Pharmacies Regulation Act, R.S.O. 1990, c H.4

s. 1. (1) In this Act,

“College” means the Ontario College of Pharmacists

“drug” means any substance or preparation containing any substance,

(a) manufactured, sold or represented for use in,

(i) the diagnosis, treatment, mitigation or prevention of a disease, disorder, abnormal physical or mental state or the symptoms thereof, in humans, animals or fowl, or

(ii) restoring, correcting or modifying functions in humans, animals or fowl,

(b) referred to in Schedule I, II or III,

(c) listed in a publication named by the regulations, or

(d) named in the regulations,

but does not include,

(e) any substance or preparation referred to in clause (a), (b), (c) or (d) manufactured, offered for sale or sold as, or as part of, a food, drink or cosmetic,

(f) any “natural health product” as defined from time to time by the Natural Health Products Regulations under the Food and Drugs Act (Canada), unless the product is a substance that is identified in the regulations as being a drug for the purposes of this Act despite this clause, either specifically or by its membership in a class or its listing or identification in a publication,

(g) a substance or preparation named in Schedule U,

(h) a substance or preparation listed in a publication named by the regulations, or

(i) a substance or preparation that the regulations provide is not a drug; (“médicament”)

“pharmacy” means a premises in or in part of which prescriptions are compounded or dispensed for the public or drugs are sold by retail, and includes a remote dispensing location; (“pharmacie”)

“prescriber” means a person who is authorized under the laws of a province or territory of Canada to give a prescription within the scope of his or her practice of a health discipline; (“personne autorisée à prescrire des médicaments”)

“prescription” means a direction from a prescriber directing the dispensing of any drug or mixture of drugs for a designated person or animal; (“ordonnance”)

s. 6. In addition to the objects of the College set out in subsection 3 (1) of the Health Professions Procedural Code, the College has the following objects:

1. To regulate drugs and pharmacies under the Drug and Pharmacies Regulation Act.

Breaches of the Drug and Pharmacies Regulation Act Relied on by the Applicant

Drug and Pharmacies Regulation Act, R.S.O. 1990, c H.4

s. 139. (1) No person shall establish or operate a pharmacy unless a certificate of accreditation has been issued in respect thereof.

s. 142. (1) No corporation shall own or operate a pharmacy unless the majority of the directors of the corporation are pharmacists.

(2) No corporation shall own or operate a pharmacy unless a majority of each class of shares of the corporation is owned by and registered in the name of pharmacists or in the name of health profession corporations each of which holds a valid certificate of authorization issued by the College.

s. 144. (1) No person other than a pharmacist or a corporation complying with the requirements of section 142 shall own or operate a pharmacy.

s. 147. No person shall in connection with a retail business use any of the following designations, unless the business is an accredited pharmacy:

1. Drug store.

2. Pharmacien détaillant.

3. Pharmacy.

4. Pharmacie.

5. Drug department.

6. Service de pharmacie.

7. Drug sundries.

8. Remèdes divers.

9. Drug or Drugs

s. 149. (1) Subject to subsections (2) and (3), no person shall compound, dispense or sell any drug in a pharmacy other than,

(a) a pharmacist;

(b) an intern acting under the supervision of a pharmacist who is physically present;

(c) a registered pharmacy student acting under the supervision of a pharmacist who is physically present; or

(d) a pharmacy technician acting under the supervision of a pharmacist who is physically present.

s. 155. (1) Subject to the regulations, no person shall sell by retail any drug referred to in Schedule I, except on prescription given in such form, in such manner and under such conditions as the regulations prescribe.

O. Reg. 58/11 made under the Drug and Pharmacies Regulation Act (in force as of March 14, 2011)

s. 41. (1) A prescription may only be refilled,

(a) where a prescriber authorized the refill in the original prescription; or

(b) under section 42.

(2) Section 40 applies to a refilled prescription.

(3) Where a prescriber authorizes the repeat of a prescription previously given, the repeat prescription shall constitute a new prescription and section 40 applies.

COURT FILE NO.: CV-11-00423231-0000

DATE: 20130315

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ONTARIO COLLEGE OF PHARMACISTS

Applicant

– and –

1724665 ONTARIO INC., c.o.b. GLOBAL PHARMACY CANADA, RX PROCESSING SERVICES INC., RICHARD PETKO and FRANK STACHO, GLOBAL PHARMACY CANADA, INC., DAVID BILLINGS and WADE ONUFFER

Respondents

REASONS FOR JUDGMENT

J. Wilson J.

Released: March 15, 2013