R. v. Kirk (J.B.) et al., 2014 ABQB 517

• Judge: Yamauchi, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: August 20, 2014
• Citations: 2014 ABQB 517;(2014), 596 A.R. 9 (QB)

R. v. Kirk (J.B.) (2014), 596 A.R. 9 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. AU.128

John Bruce Kirk, Benjamin Thompson Kirk and Dylan Leslie Boyle (appellants) v. Her Majesty the Queen (respondent) and The Attorney General for Alberta (intervenor)

(110906971S1; 2014 ABQB 517)

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

Alberta Court of Queen's Bench

Judicial District of Calgary

Yamauchi, J.

August 20, 2014.

Summary:

The Crown charged each of the appellants with 10 counts of contravening Alberta's Securities Act, ss. 92(4.1) and 93. Contraventions of those provisions constituted offences under s. 194. The appellants applied to have the preceding provisions declared ultra vires the Alberta Legislature on the grounds that they were "colourable" criminal law and legislation in relation to criminal law falling within the exclusive jurisdiction of Parliament under the Constitution Act, 1867, s. 91(27).

The Alberta Provincial Court, in a decision reported at (2013), 562 A.R. 289, dismissed the application. The appellants raised the following grounds of appeal: that the Provincial Court Judge (PCJ) erred: (1) in determining that the impugned provisions were not ultra vires; (2) in determining that the dominant purpose or pith and substance of the impugned provisions was not in relation to criminal law; and (3) in determining that the impugned provisions were not "colourable" criminal law.

The Alberta Court of Queen's Bench dismissed the appeal. "Although this Court does not entirely agree with the conclusions that the PCJ reached concerning the objectives of the Securities Act and the Criminal Code, it finds that the conclusions that he reached concerning the Alberta Legislature's power to enact the Impugned Provisions are correct."

Constitutional Law - Topic 1581

Extent of powers conferred - Double aspect doctrine - General - [See second and fifth Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 2826

Determination of validity of statutes or acts - Offences - Provincial offences - [See second Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 2950

Determination of validity of statutes or acts - Pith and substance or matter - General principles - [See third Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 3501

Paramountcy of federal statutes - General principles - [See second Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 6444

Federal jurisdiction (s. 91) - Criminal law - General - Matters not criminal - [See fifth Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 7204

Provincial jurisdiction (s. 92) - Property and civil rights - General - Extent of power or subject matter - [See fifth Constitutional Law - Topic 7285 ].

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - A Provincial Court judge held that ss. 92(4.1), 93 and 194 of the Securities Act were intra vires the Alberta Legislature - The Crown had charged the appellants with offences under those provisions - They appealed the judge's decision - The Alberta Court of Queen's Bench, in dismissing the appeal, considered extrinsic evidence, including the legislative history and legislative debates - "The legislative history of the Securities Act and its precursors make it clear that the Alberta Legislature was acting within the scope of its authority when it enacted the 1929 Act, and the various amendments that resulted in the Securities Act. The purpose, as gleaned from the legislative history and the excerpts from the debates that took place in the Alberta Legislature referred to above, make it clear that the Alberta Legislature was acting within the Constitution Act, 1867, ss. 92(13) and 92(15), when it enacted these provisions." - See paragraphs 44 to 56.

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - The Alberta Court of Queen's Bench found that, based on the double aspect doctrine and the rule of federal paramountcy, ss. 92(4.1), 93 and 194 of the Securities Act 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 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - A Provincial Court judge held that ss. 92(4.1), 93 and 194 of the Securities Act were intra vires the Alberta Legislature - The Crown had charged the appellants with offences under those sections - 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 - Section 93(b) prohibited conduct that a person knew or ought to have known would perpetrate a fraud - The contraventions constituted offences under s. 194 - A ground of appeal was that the judge erred in determining that the dominant purpose or pith and substance of the provisions was not in relation to criminal law - The Alberta Court of Queen's Bench, in dismissing the appeal, concluded that the provisions, "when read in isolation, and, in particular, without considering the overarching purposes of the Securities Act, have many characteristics of criminal law. The essential character of the Impugned Provisions, however, is to protect the investing public, to effect and maintain the integrity and public confidence in the public markets that are subject to Alberta securities laws and the suppression of conditions that are likely to erode those objectives. That is their dominant purpose. Their purpose is not to punish, but to deter and prevent. They are part of a larger, comprehensive regulatory scheme that deals with Alberta securities laws." - See paragraph 95.

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - A Provincial Court judge held that certain provisions of the Securities Act were intra vires the Alberta Legislature - The Crown had charged the appellants with offences under the impugned provisions - They appealed the judge's decision - The appellants argued that the essential character of the provisions was criminal law - The Alberta Court of Queen's Bench, in dismissing the appeal, found that the dominant purpose of the Securities Act was the protection of the investing public, and that the pith and substance of the impugned provisions was to further that general purpose - However, because the Court found that the provisions had aspects of criminal law, the question became whether the Alberta Legislature could properly legislate to prevent or reduce the likelihood of crime - The fact that the impugned provisions had criminal law aspects and that Parliament had enacted similar provisions were not determinative - "The key to applying the 'ancillary powers doctrine' is that the legislation must be grounded on a valid legislative scheme that falls within its jurisdiction" - See paragraphs 101 to 120.

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - In the case at bar, the question was whether certain provisions of the Securities Act (ss. 92(4.1), 93 and 194) represented a minor incursion on Parliament's power over criminal law, or a substantial one - The Alberta Court of Queen's Bench stated that "[t]he scope of criminal law is very broad, as is the scope of property and civil rights. Thus, the Alberta Legislature's intrusion is less serious, and the Securities Act is validated under the broad scope of Constitution Act, 1867, s. 92(13), as are the Impugned Provisions. The Impugned Provisions do not themselves create substantive rights. Rather, they are enforcement provisions that assist in enforcing the Securities Act. ...[T]he Impugned Provisions 'are tailored to a small corner of the vast topography of the provincial power' over property and civil rights, viz, the protection of the investing public, and the establishment and support of vibrant yet stable public markets for capital. The Impugned Provisions fit within that small corner and are ancillary to the overall purpose of the Securities Act." - In the end result, the Court concluded that there was overlap between the provincial and federal aspects of the Impugned Provisions - "Because these aspects are of roughly equal importance, this Court applies the double aspect doctrine for judicial restraint to uphold the validity of those sections. They are not ultra vires the Alberta Legislature." - See paragraphs 121 and 122, 131.

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - The Crown had charged the appellants with offences under ss. 92(4.1) and 93 of the Securities Act - Each of the contraventions constituted offences under s. 194 - The appellants unsuccessfully applied for a declaration that the preceding provisions were ultra vires the Alberta Legislature - On the appeal, they argued that there was little in the way of the Alberta Legislature's history of legislating in the field occupied by the impugned provisions - The Alberta Court of Queen's Bench disagreed - "The Alberta Legislature has had a rich history of attempting to deal with issues of fraud and misrepresentation in its regulation of those involved in the capital markets. The breadth of that regulation has expanded and the penalties that wrongdoers face have increased, but the Alberta Legislature has been alive historically to the issues with which the Impugned Provisions deal. The Impugned Provisions are not a recent add-on to an already functioning regulatory system. The legislative history supports the legitimacy of the Impugned Provisions. ... In sum, the Criminal Code provisions are aimed at a general public purpose, that of morality, whereas the Impugned Provisions have as their purpose the proper enforcement of provisions that regulate the participation in the capital markets." - See paragraphs 123 to 125.

Courts - Topic 8351

Provincial courts - Alberta - Court of Queen's Bench - Jurisdiction - Appeals - [See Securities Regulation - Topic 1386 ].

Securities Regulation - Topic 6

General principles - Securities legislation - Nature of - [See third Constitutional Law - Topic 7285 ].

Securities Regulation - Topic 1386

Regulatory commissions (incl. self-regulatory organizations) - Statutory appeal or judicial review - Scope of appeal or standard of review - This appeal, pursuant to s. 18(1) of the Provincial Offence Procedure Act, related to the Provincial Court decision that certain provisions of the Securities Act were intra vires the Alberta Legislature - The Crown had charged the appellants with offences under the impugned provisions - The Alberta Court of Queen's Bench heard the appeal on the following basis - "This is an unusual procedure inasmuch as there is no general right of appeal in relation to interlocutory matters. Because the parties seek general guidance as it relates to the division of powers questions they have posed, all agree that the bifurcation of the issues involving these Appellants would be useful to them, and that this procedure is appropriate. The division of powers issue is not dependent on any evidence that may be proffered in relation to the substantive charges. This is a pure legal issue that must be decided before any court receives evidence on the substantive charges. More simply, this Court heard the parties' legal arguments, but heard no evidence." - See paragraphs 7 to 12.

Securities Regulation - Topic 5310

Trading in securities - Offences - Giving false or misleading information - [See third Constitutional Law - Topic 7285 ].

Securities Regulation - Topic 5313

Trading in securities - Offences - Fraud - [See third Constitutional Law - Topic 7285 ].

Securities Regulation - Topic 5321.1

Trading in securities - Offences - Penalties and punishments - Considerations - The Alberta Court of Queen's Bench stated that "it would be wrong for this Court to say that the remedies available under the Securities Act must be 'frozen in time'. Economic and other realities have changed." - See paragraph 38.

Statutes - Topic 1450

Interpretation - Construction where meaning is not plain - Aids or methods to determine meaning - Legislative history - Reference to prior versions or amendments - [See first and sixth Constitutional Law - Topic 7285 ].

Cases Noticed:

R. v. Laba - see R. v. Johnson et al.

R. v. Johnson et al., [1994] 3 S.C.R. 965; 174 N.R. 321; 76 O.A.C. 241; 94 C.C.C.(3d) 385, refd to. [para. 10].

R. v. Curtis (G.) and Hudson (D.) (1998), 107 O.A.C. 136; 123 C.C.C.(3d) 178; 37 W.C.B.(2d) 306 (C.A.), refd to. [para. 11].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 13].

Smith et al. v. St. Albert (City) (2014), 569 A.R. 363; 606 W.A.C. 363; 2014 ABCA 76, appld. [para. 13].

R. v. Keshane (R.L.) (2012), 539 A.R. 74; 561 W.A.C. 74; 2012 ABCA 330, leave to appeal refused (2013), 458 N.R. 391 (S.C.C.), refd to. [para. 13].

Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters et al. (2009), 395 N.R. 276; 469 A.R. 50; 470 W.A.C. 50; 14 Alta. L.R.(5th) 203; 2009 SCC 53, refd to. [para. 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, appld. [para. 14].

Reference Re Assisted Human Reproduction Act, [2010] 3 S.C.R. 457; 410 N.R. 199; 2010 SCC 61, refd to. [para. 14].

Reference Re Farm Products Marketing Act (Ont.), [1957] S.C.R. 198, refd to. [para. 16].

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. 17].

Reference Re Securities Act (Can.), [2011] 3 S.C.R. 837; 510 A.R. 200; 527 W.A.C. 200, refd to. [para. 19].

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. 20].

Ontario (Attorney General) v. Chatterjee, [2009] 1 S.C.R. 624; 387 N.R. 206; 249 O.A.C. 355; 242 C.C.C.(3d) 129; 2009 SCC 19, refd to. [para. 20].

R. v. Morgentaler, [1993] 3 S.C.R. 463; 157 N.R. 97; 125 N.S.R.(2d) 81; 349 A.P.R. 81; 85 C.C.C.(3d) 118, refd to. [para. 21].

Upper Churchill Water Rights Reversion Act, 1980, Re; Churchill Falls (Labrador) Corp. et al. v. Newfoundland (Attorney General) et al., [1984] 1 S.C.R. 297; 53 N.R. 268; 47 Nfld. & P.E.I.R. 125; 139 A.P.R. 125, refd to. [para. 28].

Biscotti, Re, 1992 CarswellOnt 1469; 16 OSCB 31, refd to. [para. 31, footnote 1].

Reference Re Securities Act (Can.) (2011), 510 A.R. 200; 527 W.A.C. 200; 41 Alta. L.R.(5th) 145; 2011 ABCA 77, refd to. [para. 35].

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; 43 B.L.R. 225, refd to. [para. 37].

Starr et al. v. Houlden, [1990] 1 S.C.R. 1366; 110 N.R. 81; 41 O.A.C. 161, refd to. [para. 61].

Scowby et al. v. Glendinning et al., [1986] 2 S.C.R. 226; 70 N.R. 241; 51 Sask.R. 208; 29 C.C.C.(3d) 1, refd to. [para. 62].

R. v. Westendorp, [1983] 1 S.C.R. 43; 46 N.R. 30; 41 A.R. 306; 2 C.C.C.(3d) 330, refd to. [para. 65].

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; 44 D.L.R.(4th) 663, refd to. [para. 67].

Rio Hotel Ltd. v. Liquor Licensing Board (1983), 47 N.B.R.(2d) 436; 124 A.P.R. 436; 1 D.L.R.(4th) 418 (C.A.), refd to. [para. 69].

R. v. Racette (1988), 61 Sask.R. 248; 39 C.C.C.(3d) 289; 48 D.L.R.(4th) 412 (C.A.), refd to. [para. 70].

R. v. Wason (1890), 17 O.A.R. 221 (C.A.), refd to. [para. 72].

R. v. Corry, 1932 CarswellAlta 18; 26 Alta. L.R. 390 (C.A.), refd to. [para. 72].

Lymburn v. Mayland, [1932] 1 W.W.R. 578; 1932 CarswellAlta 35 (P.C.), refd to. [para. 74].

O'Hara and Kirkbride v. British Columbia, [1987] 2 S.C.R. 591; 80 N.R. 127, refd to. [para. 78].

R. v. Théroux (R.), [1993] 2 S.C.R. 5; 151 N.R. 104; 79 C.C.C.(3d) 449, refd to. [para. 80].

Alberta Securities Commission v. Brost et al. (2008), 440 A.R. 7; 438 W.A.C. 7; 2 Alta. L.R.(5th) 102; 2008 ABCA 326, refd to. [para. 80].

Anderson et al. v. British Columbia Securities Commission (2004), 192 B.C.A.C. 119; 315 W.A.C. 119; [2004] 4 W.W.R. 81; 2004 BCCA 7, refd to. [para. 80].

TransCap Corp (Re), 2013 ABASC 201, refd to. [para. 80].

Nest Acquisitions and Mergers (Re) (2013), 36 OSCB 4628, refd to. [para. 80].

Al-Tar Energy Corp (Re) (2013), 33 OSCB 5535, refd to. [para. 80].

Sextant Capital Management Inc (Re) (2011), 34 OSCB 5863, refd to. [para. 80].

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; 2003 BCCA 281, consd. [para. 81].

O'Grady v. Sparling, [1960] S.C.R. 804, refd to. [para. 84].

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. 84].

Irwin Toy Ltd. v. Québec (Procureur général), [1989] 1 S.C.R. 927; 94 N.R. 167; 58 D.L.R(4th) 577, refd to. [para. 84].

Cartaway Resources Corp. et al., Re, [2004] 1 S.C.R. 672; 319 N.R. 1; 195 B.C.A.C. 161; 319 W.A.C. 161; 2004 SCC 26, refd to. [para. 85].

Lavallee v. Alberta Securities Commission (2009), 467 A.R. 152; 3 Alta. L.R.(5th) 232; 2009 ABQB 17, affd. (2010), 474 A.R. 295; 479 W.A.C. 295; 2010 ABCA 48, refd to. [paras. 88, 89].

Chief v. Sutton and Dubienski (1963), 42 C.R. 293; 42 D.L.R.(2d) 712 (Man. Q.B.), refd to. [para. 91].

R. v. Wholesale Travel Group Inc. and Chedore, [1991] 3 S.C.R. 154; 130 N.R. 1; 49 O.A.C. 161; 67 C.C.C.(3d) 193, refd to. [para. 92].

Proprietary Articles Trade Assoc. v. Canada (Attorney General) - see Reference Re Validity of the Combines Investigation Act and of s. 498 of the Criminal Code.

Reference Re Validity of the Combines Investigation Act and of s. 498 of the Criminal Code, [1929] S.C.R. 409; 1929 CarswellNat 36; 52 C.C.C. 223, refd to. [para. 94].

Québec (Procureur général) v. Canada (Procureur général), 2011 QCCA 591, refd to. [para. 97].

Gregory & Co. v. Quebec Securities Commission, [1961] S.C.R. 584, refd to. [para. 98].

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. 99].

Multiple Access Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 101].

Reference Re Validity of Section 5(a) of Dairy Industry Act (Margarine Case), [1949] S.C.R. 1, refd to. [para. 103].

R. v. Olan, Hudson and Hartnett, [1978] 2 S.C.R. 1175; 21 N.R. 504, refd to. [para. 104].

R. v. Ellis (T.L.) (2007), 426 A.R. 1; 2007 ABQB 722, refd to. [para. 109].

Smith v. R., [1960] S.C.R. 776, refd to. [para. 117].

Thomson v. Transportation and Safety Board (Alta.) - see Gonzalez v. Driver Control Board (Alta.).

Gonzalez v. Driver Control Board (Alta.) et al. (2003), 330 A.R. 262; 299 W.A.C. 262; 2003 ABCA 256, refd to. [para. 117].

Statutes Noticed:

Constitution Act, 1867, sect. 91(27), sect. 92(13), sect. 92(15), sect. 92(16) [Appendix].

Criminal Code, R.S.C. 1985, c. C-46, sect. 24(1), sect. 24(2), sect. 361, sect. 363, sect. 380 [Appendix].

Provincial Offence Procedure Act, R.S.A. 2000, c. P-34, sect. 18(1) [para. 7].

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

Authors and Works Noticed:

Alberta, Hansard, Legislative Assembly Debates, 1st Sess., 26th Legislature (March 23, 2005), p. 451 [para. 31]; (April 5, 2005), p. 532 [para. 32]; (April 12, 2005), p. 726 [para. 33].

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

Counsel:

Alias Sanders, for John Bruce Kirk;

Donald W. MacLeod, Q.C. (O'Brien Devlin MacLeod), for Benjamin Thompson Kirk;

Tyler Hodgson and Loni da Costa (Borden Ladner Gervais), for Dylan Leslie Boyle;

Liam Oddie (Alberta Securities Commission), for Her Majesty the Queen;

Robert Normey (Alberta Justice), for the Attorney General of Alberta.

This appeal was heard at Calgary, Alberta, on June 19 and 20, 2014, before Yamauchi, J., of the Alberta Court of Queen's Bench, who delivered the following judgment and reasons, dated August 20, 2014.