Environmental Protection Review Canada
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Reasons - December 4, 2002 regarding stay

In the matter of the application for review filed by IET-Aquarecherche Ltée and Mme Marie-Claude Cantin and M. Karl F. Ehrlich with respect to the Environmental Protection Compliance Order No. 2008-2002-08-22-001

Reasons for Decision

General Background

[1] After an inspection at the offices of IET-Aquarecherche Ltée by an Environment Canada enforcement officer, an environmental protection compliance order, No. 2008-2002-08-22-001 ("the Order"), was issued to the corporation and to Mme Marie-Claude Cantin and M. Karl F. Ehrlich, President and Vice-President respectively of the corporation ("the applicants"). The Order was given in writing on October 7, 2002.

[2] The Order identifies a number of micro-organisms and the enforcement officer made a finding that IET-Aquarecherche Ltée and Mme Cantin and Mr. Ehrlich had failed to provide information to the Minister as required by the Canadian Environmental Protection Act, 1999 (CEPA, 1999), ss. 106(1) and (2) in the form required by the New Substances Notification Regulations, SOR/94-206. The Order requires that the applicants file the information required by subsection 106(1) by November 15, 2002. The information required by subsection 106(2) must be filed by December 16, 2002.

[3] Pursuant to s. 256 (1) of CEPA 1999, the applicants filed an application with the Chief Review Officer for a review of the Order. The application arrived in the office of Environmental Protection Review Canada (EPRC) late in the day on November 6, 2002 and was entered into the register the following morning, November 7, 2002. The letter from counsel for the applicants, Me Richard Laflamme, requested a stay pursuant to s. 258(2) of CEPA, 1999. More precisely, Me Laflamme stated:

De plus, nous lui demandons, compte tenu de tous les imbroglios générés par l'application de cette Loi auprès de notre client depuis 1998, de suspendre, à toutes fins que le droit, l'application de l'ordre d'exécution….

[4] In the affidavit accompanying the application, Me Laflamme argued in favour of a stay of the Order.

Les demandeurs requièrent la suspension de l'Ordre…compte tenu du préjudice irréparable qui pourrait leur être causé, lequel préjudice peut découler tant de la divulgation générale de la liste identifiant les micro-organismes cultivés par les demandeurs et/ou la possibilité que les demandeurs puissent être reconnus coupables d'une infraction de quelque nature que ce soit en regard de la présente Loi.

[5] The Chief Review Officer issued an interim order dated November 15, 2002 suspending the operation of the compliance Order until November 21, 2002. In doing so, the Chief Review Officer took into account the very short period of time between receipt of the application and the date when compliance with the Order was required (with an intervening holiday weekend). Me Denis Lemieux, counsel to EPRC, had informed the Chief Review Officer that Me Laflamme and Me Simon Kamel, counsel for the Minister, were discussing settlement. In addition to allowing for more discussion of settlement, the interim order was intended to allow Me Kamel sufficient time to file the Minister's reply to the request for suspension of the compliance Order. Me Kamel was given a deadline of noon, November 20, 2002. His reply was filed on that date.

[6] Having considered the arguments presented in the application for suspension of the Order by Me Laflamme and the reply by Me Kamel, the Chief Review Officer denied the request for a stay, with reasons to follow. A full hearing on the application for review of the Order is scheduled for December 5, 2002.

The Issue of the Stay

[7] An application for review of an environmental protection compliance order does not in itself suspend the operation of the order (subsection 258(1), CEPA, 1999). Similarly, an appeal to the Federal Court from a decision of a Review Officer does not suspend the operation of an order (section 271, CEPA, 1999). The legislative intention is that, as a general rule, an order will continue in force for its duration, unless otherwise ordered.

[8] Subsection 258(2) of CEPA, 1999 provides that:

A review officer may, on application made by a person subject to an order before the beginning of the hearing, suspend the operation of the order if the review officer considers it appropriate in the circumstances….

[9] The suspension of an order is considered to be an exceptional event; there is no presumption in favour of granting a stay. Thus, it is not available simply by request, but only where the Review Officer considers it appropriate. In making such a determination, Review Officers are guided by established analytical approaches and case law. In particular, reference will be made to the criteria set out by the Supreme Court of Canada in Manitoba (Attorney General) v. Metropolitan Stores Ltd, [1987] S.C.R. 100, and RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. These, in turn, adopted an approach taken by the House of Lords in American Cyanamid Co. v. Ethicon Ltd., [1975] All E.R. 504. Considerable case law from both courts and tribunals have expanded on the application of these criteria. The Practice Directive (draft) issued by EPRC embodies this analytical approach.

[10] EPRC Practice Directive states that:

Applications must be supported by affidavit evidence that, in addition to addressing any other matter that the applicant considers relevant, must address the following:

  1. The merits of the request for review
  2. The irreparable harm that will be suffered by the applicant if an interim suspension is not granted; and
  3. The balance of convenience; namely, whether the harm to the applicant if a suspension is denied outweighs the risk to the environment if a suspension is granted.

[11] Because the Minister and potential applicants for review do not have extensive experience with EPRC, it may be helpful to set out in more detail what a Review Officer's expectations might be regarding an application for a suspension of an order. The first element, the merits of the request for review, relates to the review of the order itself, not to the merits of the request for suspension. In order to meet this criterion, there must be some evidence available in the application for the suspension that the request for review is, at the very least, not frivolous or vexatious. In other words, there should be some indication that there is a serious issue to be tried. In this context, the issue at hand should relate to the powers the Review Officer may exercise to cancel, confirm, amend or extend the order.

[12] It may be further noted that, although the Chief Review Officer cannot reject an application for a review on the grounds that it is frivolous, vexatious or unfounded, these factors may enter into considerations regarding the suspension of an order. They would be, of course, important elements to be considered by a Review Officer in a hearing on the merits of the application.

[13] A Review Officer is not required to make an extensive examination of the merits of the applicant's case; that is a matter that will be left to a hearing. In addition, as the Supreme Court noted in RJR-MacDonald, the nature of the evidence available in an interlocutory hearing on a motion is not suitable for deciding what might be complex legal and factual issues. There are some exceptions to this statement, but as the Court also noted that the threshold is a low one. "Whether the test has been satisfied should be determined by the motions judge on the basis of common sense and an extremely limited review of the case on the merits." (para 125) However, to at least a reasonable degree, some form of prima facie case should be made that indicates there are issues to be dealt with at the full hearing stage. This does not mean that the Review Officer considering a suspension needs to believe that the applicant would succeed in a hearing.

[14] The second criterion relates to irreparable harm that might be suffered if the order were not suspended. "'Irreparable' refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other." (RJR-MacDonald, para. 99) Being noncompliant with a compliance order does not, in and of itself, constitute irreparable harm. The issue of the public interest in compliance with laws is a matter that the courts generally prefer to deal with under the third criterion, balance of convenience, but the very nature of that examination indicates that a party's state of noncompliance with a legal requirement does not necessarily constitute irreparable harm. Among the examples of irreparable harm drawn from cases cited in RJR-MacDonald were situations where one party will suffer permanent market loss or irrevocable damage to its business reputation or where a permanent loss of natural resources would result if an activity were not restrained. Inability to collect damages is a consideration, but is not determinative of the matter.

[15] The last criterion relates to the balance of convenience. This addresses which of the parties will suffer the greater harm from the granting or refusal of an application to stay an order. The courts have pointed out that numerous factors may be considered, as Lord Diplock in American Cyanamid, quoted in RJR-MacDonald (at para. 103), said:

It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.

[16] The courts prefer to consider the public interest under the heading of balance of convenience. CEPA, 1999 is a statute in which the public interest lies at the forefront. The Preamble to the Act and the duties imposed on the Government of Canada in section 2 of the Act make this clear. The protection of the health and well being of Canadians and the contribution to sustainable development through pollution prevention are the primary objectives of the Act. There is a very specific public interest consideration that applies to the Minister's position in terms of the balancing of convenience. The Federal Court of Appeal expressed this in A.G. Canada v. Fishing Vessel Owners' Association of B.C., [1985] 1. F.C. 791 at 795: "When a public authority is prevented from exercising its statutory powers, it can be said…that the public interest, of which that authority is the guardian, suffers irreparable harm."

[17] Public interest, however, is a consideration that can be relied on by non-governmental parties (in the context of EPRC, by the applicant) in arguing where the balance of convenience lies. "'Public interest" includes both the concerns of society generally and the particular interests of identifiable groups." (RJR-MacDonald, para.109). The Court also noted in RJR-MacDonald (para. 118) that:

In the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant. This is partly a function of the nature of the public authority and partly a function of the action sought to be enjoined. The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting or protecting the public interest and that the impugned legislation, regulation or activity was undertaken pursuant to that responsibility.

[18] This is not to say, however, that this consideration of the public interest is determinative either of the assessment of the balance of convenience or of the decision on whether or not to suspend the application of a compliance order. It is certainly an important indicator that the integrity of the regulatory scheme enacted by CEPA, 1999 should be seriously weighed against the inconvenience of noncompliance with a compliance order in assessing the balance of convenience. The test for an applicant regarding public interest is also likely to be less severe in determining the temporary suspension of many forms of compliance orders than that applied in court judgments in constitutional cases involving the suspension of the application of legislation. Thus the Court noted in RJR-MacDonald that "[t]he weight accorded to public interest concerns is partly a function of the nature of legislation generally, and partly the function of the purposes of the specific legislation under attack." (para. 134)

Application of criteria

a) The merits of the review

[19] The first consideration is whether the applicants have made out some form of prima facie case regarding the merits of the application for review. The applicants have indicated a willingness to comply with statutory requirements, but they express concern regarding the continued confidentiality of certain commercial information if they comply with the legislation or, indeed, the Order. In response, the Minister has identified the confidentiality process available under Part 11 of CEPA, 1999 and the Masked Name Regulations, SOR/94-261. These provisions are intended to anticipate concerns regarding confidentiality, such as those expressed by the applicants.

[20] Without determining whether the information held by the applicants and sought by the Minister would meet tests dealing with trade secrets or sensitive commercial information whose disclosure would result in competitive harm (such as those set out in the Access to Information Act and elaborated in case law), it may be noted that no evidence has been provided at this stage as to why the confidentiality provisions established in the Act and Regulations would not serve to satisfy the applicants' concerns. Nor is there any evidence or argument provided at this stage as to why concerns about confidentiality should be considered as a defence to failure to fulfill obligations established by legislation.

[21] The arguments on this criterion by the applicant were not convincing.

b) Irreparable harm

[22] To some degree, this criterion is related to the first. The harm identified by the applicant relates to disclosure of information that the applicant wishes to be kept confidential in order to avoid competitive harm. In addition, noncompliance with the Order and vulnerability to the consequences of noncompliance are identified as potential irreparable harms.

[23] On the first point, as noted above, the applicants have provided no evidence or argument as to why existing legislative provisions regarding confidentiality are not sufficient to meet their concerns. EPRC has agreed, in the Interim Order dated November 15, 2002, to consider certain information as confidential as far as the files regarding this application are concerned until the issue can be examined at the scheduled hearing on the merits of the application. This provision in the Interim Order was not extinguished by the Order of November 21, 2002. It cannot be assumed that refusal to suspend the application of the compliance Order would result in irreparable harm to the financial or competitive position of the applicants on the basis of the evidence provided. Indeed, the reply by the Minister indicated that at least some of the information being put forward as confidential by the applicants may have been made publicly available by the applicants themselves.

[24] On the second point, noncompliance with the Order or the legislation does not, in and of itself, constitute irreparable harm. Additional evidence and argument must be supplied. In particular, there does not appear, on the evidence provided, to be any question about whether the applicants have or have not complied with the legislation, which is a matter that underlies any environmental protection compliance order. The applicants admit they have not filed the information. It is true that noncompliance with an Order may reflect negatively on the applicants' Environment Canada compliance record: see the CEPA, 1999 Compliance Policy. This in itself does not constitute irreparable harm. Nor is there any evidence that noncompliance would cause lasting and irreparable harm to the applicants' reputation.

[25] The evidence and argument regarding irreparable harm were also not convincing.

c) Balance of convenience

[26] As discussed above, the public interest nature of CEPA, 1999 and the integrity of the regulatory system established by CEPA, 1999 to deal with toxics create an initial presumption that favours the Minister with respect to the balance of convenience. A basic element of the toxics regulatory regime is notifications regarding substances. Compliance with these provisions is not a technical matter, but is important to the success of the regulatory system.

[27] This is not to say, however, that the balance of convenience cannot be swung to favour the applicants, in this case or any other similar application. But this requires some supporting evidence and argument, which will be difficult to establish where the first two criteria have not been met. For example, substantial irreparable harm would certainly affect the balance of convenience. In light of the applicants' failure to establish such irreparable harm and in the absence of other evidence or argument regarding the balance of convenience by the applicants, the balance of convenience would favour the public interest in maintaining the integrity of the federal regulatory system regarding toxics.

Conclusions

[28] The applicants have failed to meet any of the criteria established regarding the grant of an application to stay the application of an environmental protection compliance order. They will have an opportunity to present their full case at the scheduled hearing so that the matter can be dealt with on the merits. The findings in these reasons relate only to the evidence presented regarding the application for a stay pursuant to subsection 258(2) of CEPA, 1999. The matter was dealt with through written submissions in light of the short time periods that were available for decision. It should be emphasized that the applicants are free to present additional evidence and argument at the full hearing and the Review Officer may make different findings regarding the merits of the case.

Margot Priest
Chief Review Officer

Dated at Ottawa, 4 December 2002