R. v. Kirk (J.B.) et al., (2013) 562 A.R. 289 (PC)

• Judge: Fradsham, P.C.J.
• Court: Provincial Court of Alberta (Canada)
• Case Date: May 13, 2013
• Citations: (2013), 562 A.R. 289 (PC);2013 ABPC 130

R. v. Kirk (J.B.) (2013), 562 A.R. 289 (PC)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. MY.146

Her Majesty the Queen v. John Bruce Kirk, Benjamin Thomas Kirk and Dylan Lesley Boyle (110906971P2; 2013 ABPC 130)

Indexed As: R. v. Kirk (J.B.) et al.

Alberta Provincial Court

Fradsham, P.C.J.

May 13, 2013.

Summary:

The three accused were charged with contravening ss. 92(4.1), 93(a)(ii) and 93(b) of Alberta's Securities Act. Contraventions of those provisions constituted offences under ss. 194(1) and 194(3). The accused applied to have the preceding provisions declared ultra vires on the basis that their pith and substance was criminal law which fell within the exclusive jurisdiction of the Federal Government. A further issue was, if the impugned provisions were not ultra vires, whether they nevertheless conflicted with similar fraud provisions of the Criminal Code, rendering them inoperative.

The Alberta Provincial Court dismissed the application.

Constitutional Law - Topic 1581

Extent of powers conferred - Double aspect doctrine - General - The Alberta Provincial Court found that, based on the double aspect doctrine and the rule of federal paramountcy, the impugned provisions in Alberta's Securities Act (ss. 92(4.1), 93(a)(ii) and 93(b)) were not rendered inoperative by similar fraud provisions in the Criminal Code - "With respect to the double aspect doctrine, both Parliament and the Legislative Assembly have the jurisdiction to enact their respective provisions. The subject matters of the impugned provisions and the sections in the Code are admittedly similar: both address fraud and false misrepresentations in the context of securities. However, ... the impugned provisions and the Code are enacted for different purposes that cause them to fall validly within federal and provincial jurisdiction. ... It is impossible to determine which of these purposes is more important. As a result, both Parliament and the Legislative Assembly of Alberta may have concurrent power over the subject matter of fraud and false statements in the context of securities." - See paragraphs 64 to 66, 72 to 74.

Constitutional Law - Topic 2950

Determination of validity of statutes or acts - Pith and substance or matter - General principles - The Alberta Provincial Court discussed the two factors that determine the dominant matter or "pith and substance" of a law - See paragraphs 10 to 12.

Constitutional Law - Topic 3501

Paramountcy of federal statutes - General principles - The Alberta Provincial Court found that, based on the double aspect doctrine and the rule of federal paramountcy, the impugned provisions in Alberta's Securities Act (ss. 92(4.1), 93(a)(ii) and 93(b)) were not rendered inoperative by similar fraud provisions in the Criminal Code - "With respect to the rule of federal paramountcy, there is no direct conflict that would render the impugned provisions inoperative. ... [T]here is no direct conflict because compliance with the impugned provisions does not require a person to breach the sections under the Code. Instead, complying with the Code and the Securities Act would simultaneously achieve the statutes' respective legislative purposes. Based on this strict test for direct conflict, the fact that penalties may be harsher under the Securities Act than the Code is irrelevant. The impugned provisions may remain in operation." - See paragraphs 67 to 71, 75.

Constitutional Law - Topic 6444

Federal jurisdiction (s. 91) - Criminal law - General - Matters not criminal - The accused applied to have ss. 92(4.1) and 93(a)(ii) of Alberta's Securities Act declared ultra vires, because their purpose (pith and substance) was criminal law which fell within the exclusive jurisdiction of the Federal Government - Both those sections addressed false representations - Section 92(4.1) prohibited the making of statements that the person knew or ought to have known were misleading or untrue - Section 93(a)(ii) prohibited the dissemination of false or misleading information which the person knew or ought to have known would result in an artificial price for the securities - The Alberta Provincial Court held that both sections were intra vires, given that the regulation of the securities market was a matter within the property and civil rights head of power - "Initially, both of these provisions appear to be criminal law in pith and substance. ... Nevertheless, sections 92(4.1) and 93(a)(ii) lack valid criminal law purposes. ... [T]he dominant purpose of these provisions is not to protect public morality or safety. Instead, ... the purpose of sections 92(4.1) and 93(a)(ii) is to regulate the representations of persons who propose to trade in securities. These sections ensure that the investing public receives a particular level of information. In this way, the impugned provisions serve the Securities Act's greater objective of fostering a fair playing field for all investors." - See paragraphs 55 to 57.

Constitutional Law - Topic 6444

Federal jurisdiction (s. 91) - Criminal law - General - Matters not criminal - The accused applied to have s. 93(b) of Alberta's Securities Act declared ultra vires, because its purpose (pith and substance) was criminal law which fell within the exclusive jurisdiction of the Federal Government - Section 93(b) prohibited conduct that a person knew or ought to have known would perpetrate a fraud - The Alberta Provincial Court held that s. 93(b) was intra vires Alberta's Legislative Assembly - Section 93(b) appeared to be criminal law, because it addressed fraud, which was covered in the Criminal Code - Such overlap, however, was to be expected, and was not determinative of the constitutionality of s. 93(b) - "[S]ection 93(b) is aimed at upholding a provincial regulatory scheme: that is, the Securities Act. The Securities Act is designed to cultivate a fair and efficient capital market in Alberta. To achieve this goal, however, it is necessary to have a provision that forcefully reminds investors of their obligations to act in good faith. Section 93(b) reminds investors by making it an offence to perpetrate a fraud. Given that the section 93(b) regulates the conduct of actors in the securities market, the impugned provision neatly falls within the property and civil rights head of power." - See paragraphs 58 and 59.

Constitutional Law - Topic 6444

Federal jurisdiction (s. 91) - Criminal law - General - Matters not criminal - The accused applied to have the penalty provisions of Alberta's Securities Act, specifically ss. 194(1) and (3), declared ultra vires the Province of Alberta, because their pith and substance was criminal law which fell within the exclusive jurisdiction of the Federal Government - The Alberta Provincial Court held that s. 194 remained intra vires the province, "[g]iven that section 92(15) of the Constitution allows provinces to enact penal legislation as a means of enforcing compliance with a valid provincial scheme" - The constitutionality of s. 194 was not determined by the severity of the fine or imprisonment - "As a result, the harshness of the penalties under the Securities Act offers little assistance in the division of powers analysis. ... [S]ection 194 lacks a criminal law purpose, despite being penal in nature. The dominant purpose of section 194 is to act as a deterrent to investors who are tempted to breach the Securities Act. Deterring would-be offenders serves the Securities Act's main purpose of ensuring that the securities market is not tainted by actors who are unwilling to trade or sell securities honestly. Section 194 is therefore collateral to the main purpose of the Securities Act." - See paragraphs 60 and 61.

Constitutional Law - Topic 7204

Provincial jurisdiction (s. 92) - Property and civil rights - General - Extent of power or subject matter - [See first and second Constitutional Law - Topic 6444 ].

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - [See all Constitutional Law - Topic 6444 ].

Securities Regulation - Topic 6

General principles - Securities legislation - Nature of - The Alberta Provincial Court described Alberta's Securities Act and its purpose (pith and substance), to determine whether the impugned provisions in the case at bar were criminal law or law relating to property and civil rights - See paragraphs 31 and 32.

Securities Regulation - Topic 5310

Trading in securities - Offences - Giving false or misleading information - The Alberta Provincial Court found that the impugned provisions in Alberta's Securities Act (ss. 92(4.1), 93(a)(ii) and 93(b)) were not rendered inoperative by similar fraud provisions in the Criminal Code - The sections were aimed at prohibiting the dissemination of untruthful statements, or engaging in conduct which would contribute to the creation of an artificial price or would perpetrate a fraud - "[O]ne must remember that 'fraud' has long been a concept in both the civil law and the criminal law. ... Whether one speaks in terms of 'fraudulent conduct' in the context of contract law, or of the independent tort of 'deceit' ... it is clear that both encompass the conduct which is the target of the Securities Act provisions which are attacked in the case at bar. ... The type of fraud referred to can fall squarely within the tort of deceit or within fraudulent behaviour affecting contractual relationships, or both. Under section 92(13) of the Constitution Act, 1867, Provinces have full authority over the laws of tort and contracts. That conclusion, coupled with the presumption of constitutionality ... makes it clear that the impugned provisions of the Securities Act are not a colourable attempt by the Province to legislate in the realm of criminal law." - See paragraphs 49 to 51.

Securities Regulation - Topic 5313

Trading in securities - Offences - Fraud - [See Securities Regulation - Topic 5310 ].

Securities Regulation - Topic 5325.1

Trading in securities - Offences - Penalties and punishments - Fraud - [See third Constitutional Law - Topic 6444 ].

Securities Regulation - Topic 5336

Trading in securities - Offences - Penalties and punishments - Fines (incl. imprisonment in default of payment) - [See third Constitutional Law - Topic 6444 ].

Cases Noticed:

Canadian National Transportation Ltd. and Canadian National Railway Co. v. Canada (Attorney General) et al., [1983] 2 S.C.R. 206; 49 N.R. 241; 49 A.R. 39, refd to. [para. 7, footnote 9].

Kitkatla Indian Band et al. v. British Columbia (Minister of Small Business, Tourism and Culture) et al., [2002] 2 S.C.R. 146; 286 N.R. 131; 165 B.C.A.C. 1; 270 W.A.C. 1; 2002 SCC 31, refd to. [para. 7, footnote 9].

Reference Re Assisted Human Reproduction Act, [2010] 3 S.C.R. 457; 410 N.R. 199; 2010 SCC 61, refd to. [para. 7, footnote 10].

McNeil v. Nova Scotia Board of Censors, [1978] 2 S.C.R. 662; 19 N.R. 570; 25 N.S.R.(2d) 128; 36 A.P.R. 128, refd to. [para. 8, footnote 12].

Siemens et al. v. Manitoba (Attorney General) et al., [2003] 1 S.C.R. 6; 299 N.R. 267; 173 Man.R.(2d) 1; 293 W.A.C. 1; 2003 SCC 3, refd to. [para. 8, footnote 13].

Reference Re Firearms Act (Can.), [2000] 1 S.C.R. 783; 254 N.R. 201; 261 A.R. 201; 225 W.A.C. 201; 2000 SCC 31, refd to. [para. 8, footnote 14].

R. v. Keshane (R.L.) (2012), 539 A.R. 74; 561 W.A.C. 74; 2012 ABCA 330, refd to. [para. 9, footnote 15].

R. v. Morgentaler, [1993] 3 S.C.R. 463; 157 N.R. 97; 125 N.S.R.(2d) 81; 349 A.P.R. 81, refd to. [para. 10, footnote 17].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, refd to. [para. 15, footnote 30].

Canadian Western Bank et al. v. Alberta, [2007] 2 S.C.R. 3; 362 N.R. 111; 409 A.R. 207; 402 W.A.C. 207; 2007 SCC 22, refd to. [para. 15, footnote 31].

Scowby et al. v. Glendinning et al., [1986] 2 S.C.R. 226; 70 N.R. 241; 51 Sask.R. 208, refd to. [para. 18, footnote 34].

Reference Re Validity of Section 5(a) of Dairy Industry Act (Margarine Case), [1949] S.C.R. 1, refd to. [para. 18, footnote 36].

R. v. Westendorp, [1983] 1 S.C.R. 43; 46 N.R. 30; 41 A.R. 306, consd. [para. 20, footnote 41].

O'Grady v. Sparling, [1960] S.C.R. 804; 25 D.L.R.(2d) 145, refd to. [para. 22, footnote 47].

Rio Hotel Ltd. v. Liquor Licensing Board (N.B.), New Brunswick (Attorney General) and Saskatchewan (Attorney General), [1987] 2 S.C.R. 59; 77 N.R. 104; 81 N.B.R.(2d) 328; 205 A.P.R. 328, refd to. [para. 23, footnote 49].

Chief v. Sutton and Dubienski (1963), 42 D.L.R.(2d) 712 (Man. Q.B.), affd. [1964] M.J. No. 54 (C.A.), refd to. [para. 24, footnote 51].

R. v. Wason (1890), 17 O.A.R. 221 (C.A.), refd to. [para. 24, footnote 52].

R. v. Hauser, [1979] 1 S.C.R. 984; 26 N.R. 541; 16 A.R. 91; 8 C.R.(3d) 89, refd to. [para. 27, footnote 57].

R. v. Del Bianco (D.J.) (2008), 456 A.R. 134 (Prov. Ct.), refd to. [para. 28, footnote 59].

R. v. Del Bianco (D.) (2010), 488 A.R. 151 (Q.B.), refd to. [para. 28, footnote 62].

R. v. Videoflicks Ltd. et al., [1986] 2 S.C.R. 713; 71 N.R. 161; 19 O.A.C. 239, refd to. [para. 30, footnote 65].

R. v. Edwards Books and Art Ltd. - see R. v. Videoflicks Ltd. et al.

Multiple Access Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 31, footnote 66].

R. v. Boyle (K.P.) (2002), 331 A.R. 273 (Prov. Ct.), refd to. [para. 31, footnote 68].

Reference Re Securities Act (Can.) (2011), 510 A.R. 200; 527 W.A.C. 200; 2011 ABCA 77, refd to. [para. 33, footnote 70].

Lymburn v. Mayland, [1932] 2 D.L.R. 6 (P.C.), refd to. [para. 34, footnote 72].

Smith v. R. (1960), 25 D.L.R.(2d) 225 (S.C.C.), refd to. [para. 38, footnote 76].

R. v. Eurosport Auto Co. et al. (2003), 182 B.C.A.C. 275; 300 W.A.C. 275; 173 C.C.C.(3d) 449 (C.A.), refd to. [para. 52, footnote 79].

Statutes Noticed:

Securities Act, R.S.A. 2000, c. S-4, sect. 92(4.1), sect. 93(a)(ii), sect. 93(b), sect. 194(1), sect. 194(3) [para. 5].

Authors and Works Noticed:

Alberta, Hansard, Legislative Assembly Debates, 3rd Sess., 22nd Legislature (May 6, 1991), generally [para. 32, footnote 69].

Hansard (Alta.) - see Alberta, Hansard, Legislative Assembly Debates.

Hogg, Peter W., Constitutional Law of Canada (5th Ed.) (Looseleaf Supp.), c. 15, p. 20 [para. 12, footnote 25].

Klar, Lewis N., Tort Law (5th Ed. 2012), pp. 696 to 697 [para. 50].

Magnet, Joseph E., Constitutional Law of Canada (2007), p. 757 [para. 19, footnote 40].

Counsel:

Richard J. Finn and Andrew Wilson, for the Crown;

Margaret Unsworth, Q.C., and Robert Normey, for the Attorney-General of Alberta (intervener);

James M. Lutz and Alias Sanders, for John Bruce Kirk;

Don MacLeod, Q.C., for Benjamin Thomas Kirk;

Tyler Hodgson and Loni da Costa, for Dylan Leslie Boyle.

This application was heard at Calgary, Alberta, before Fradsham, P.C.J., of the Alberta Provincial Court, who delivered the following ruling, with reasons, on May 13, 2013.