Supreme Court Judgments

Hunt v. T&N plc, [1993] 4 S.C.R. 289

 

George Ernest Hunt  Appellant

 

v.

 

Lac d'Amiante du Québec Ltée, formerly known

as Lake Asbestos Company Limited, Asbestos

Corporation Limited, Atlas Turner Inc.,

Bell Asbestos Mines Limited, JM Asbestos Inc.,

the Quebec Asbestos Mining Association and

National Gypsum Co.                                                                    Respondents

 

and

 

T&N, plc, Carey Canada Inc., formerly

known as Carey‑Canadian Mines Ltd.,

Flintkote Mines Limited and The Flintkote Co.                       Defendants

 

and

 

Workers' Compensation Board and

Henfrey Sampson Belair Ltd., Receiver‑Manager

for Victoria Machinery Depot Company Limited                    Third Parties

 

and

 

The Attorney General for Ontario and

the Attorney General of Quebec                                                  Interveners

 

Indexed as:  Hunt v. T&N plc

 

File No.:  22637.

 

1992:  October 7; 1993:  November 18.

 

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

 

on appeal from the court of appeal for british columbia

 

                   Conflict of laws ‑‑ Civil procedure ‑‑ Discovery of documents ‑‑ Plaintiff in civil action in British Columbia seeking discovery of documents from Quebec defendants ‑‑ Quebec statute prohibiting removal from province of documents of business concerns ‑‑ Whether blocking statute provides "lawful excuse" for not complying with demand for discovery ‑‑ Business Concerns Records Act, R.S.Q., c. D‑12 ‑‑ British Columbia Rules of Court, rr. 2(5), 26.

 

                   Constitutional law ‑‑ Statutes ‑‑ Validity ‑‑ Quebec statute prohibiting removal from province of documents of business concerns ‑‑ Whether blocking statute ultra vires province as being in relation to matter outside province ‑‑ Whether blocking statute constitutionally inapplicable to judicial proceedings in another province ‑‑ Business Concerns Records Act, R.S.Q., c. D‑12.

 

                   Courts ‑‑ Jurisdiction ‑‑ Superior courts ‑‑ British Columbia courts declining to rule on constitutionality of Quebec statute ‑‑ Whether British Columbia courts had jurisdiction to deal with constitutional issue.

 

                   Courts ‑‑ Jurisdiction ‑‑ Supreme Court of Canada ‑‑ British Columbia courts declining to rule on constitutionality of Quebec statute ‑‑ Whether British Columbia courts had jurisdiction to deal with constitutional issue ‑‑ Whether Supreme Court of Canada restricted to powers and procedures of courts appealed from ‑‑ Supreme Court Act, R.S.C., 1985, c. S‑26, s. 45 .

 

                   The appellant suffers from cancer which he alleges was caused by the inhalation of asbestos fibres to which he was exposed while working as an electrician in British Columbia.  These fibres were allegedly contained in products manufactured and sold by the respondents, which are Quebec companies involved in the production and distribution of asbestos.  The appellant sued the respondents for damages in British Columbia.  He requested production of documents relating to the action.  The Quebec Business Concerns Records Act prohibits the removal from the province of documents relating to any business concern in Quebec pursuant to any requirement of a judicial authority outside the province.  When the respondents did not respond, the appellant served demands for discovery of documents on them under Rule 26(1) of the British Columbia Rules of Court.  In response to these demands, certain of the respondents asserted that the Act prevented compliance; the others made no reply.  The Quebec Provincial Court granted orders preventing the respondent companies from sending documents out of the province.  The appellant then applied to the British Columbia Supreme Court for an order compelling production of the documents.  Rule 2(5) empowers the trial court to strike out a statement of defence for failure "without lawful excuse" to comply with the Rules.  The application was dismissed, and the Court of Appeal upheld that judgment.  Both courts acted on the basis that the Quebec Act was valid, ruling that the British Columbia courts did not have jurisdiction over the constitutional validity of a Quebec statute.  This appeal is to determine whether the provisions of the Quebec Act provide a "lawful excuse" under Rule 2(5).  The fundamental issue is whether this statute is ultra vires the province as being in relation to a matter outside the province, or constitutionally inapplicable to judicial proceedings in other provinces.

 

                   Held:  The appeal should be allowed.

 

                   At common law the issue of what is foreign law is a question of fact to be determined by the trial judge, and the Quebec statute was clearly a material fact, and its constitutionality is therefore equally material.  Courts may consider constitutional arguments in determining foreign law that incidentally arises in the course of litigation.  A foreign court in making a finding of fact should not be bound to assume that the mere enactment of a statute necessarily means that it is constitutional.  The fact that there is no mandatory provision for advising the appropriate Attorney General does not make the procedure invalid.  The courts below were thus in error in believing that the rules of conflicts law prevented consideration of the constitutionality of the laws of another jurisdiction.  That both jurisdictions in question are part of the same Canadian federation and governed by the same Constitution reinforces and possibly augments the powers of the superior courts to consider the constitutional issues.

 

                   The guiding element in the determination of an appropriate forum must be principles of order and fairness.  In view of the essentially unitary nature of the Canadian court system, the process is basically fair, all the more so since it is subject to the supervisory jurisdiction of this Court.  This is especially true where, as here, the issue relates to the constitutionality of the legislation of a province that has extraprovincial effects, and that constitutionality has never been and is unlikely to be challenged in the other province's courts.  Because of the far‑reaching impact of such rulings, however, the courts should restrict themselves to hearing constitutional challenges to the legislation of other provinces only where there is a real interest affected in their province.

 

                   Since the courts of British Columbia had jurisdiction to deal with the constitutional issue, so has this Court.  Moreover, this Court is not restricted to the identical powers and procedures of the lower courts from which an appeal is taken.  It may take judicial notice of all laws prevailing in every province, even in cases where such laws have not been proved in evidence in the courts below, so long as they were pleaded at first instance.

 

                   The courts must consider appropriate policy in relation to recognition and enforcement of judgments issued in other provinces in light of the legal interdependence under the scheme of confederation established in 1867.  The old common law rules relating to recognition and enforcement were rooted in an outmoded conception of the world that emphasized sovereignty and independence, often at the cost of unfairness.  Greater comity is required in our modern era when international transactions involve a constant flow of products, wealth and people across the globe.  Moreover, it is inherent in the structure of the Canadian federation that the courts in each province should give "full faith and credit" to the judgments of the courts of other provinces.

 

                   While a province is not debarred from enacting any legislation that may have some effect on litigation in other provinces, it must respect minimum standards of order and fairness.  The statute at issue here does not meet those standards.  The whole purpose of a blocking statute is not to keep documents in the province, but to impede successful litigation in other jurisdictions by refusing recognition and compliance with orders issued there.  While this is no doubt part of sovereign right, it certainly runs counter to comity.  This Court's decision in Morguard requires that the rules of private international law be adapted to the structure of the Canadian federation.  Since courts are required, by constitutional restraints, to assume jurisdiction only where there are real and substantial connections to that place, the presence of such blocking statutes is an anachronism that is definitely inimical to interprovincial litigation if applied on the interprovincial level.  Discovery is a very important tool of civil litigation, especially in cases of this type where there are allegations of some sort of product liability.  The Quebec Business Concerns Records Act is therefore constitutionally inapplicable to other provinces and thus to this case.  Given this finding, it is unnecessary to consider whether the Act is wholly unconstitutional because in pith and substance it relates to a matter outside the province.  Nor is it necessary to consider whether the statute could properly be "read down" to permit its application to jurisdictions outside the country or to consider the public policy issue raised.

 

Cases Cited

 

                   Considered:  Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; disapproved:  2632‑7602 Québec Inc. v. Pizza Pizza Canada Inc., [1991] R.J.Q. 2951; referred to:  Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959; Hunt v. T&N, plc, B.C.S.C., Vancouver Reg. No. C885383, June 30, 1989; Québec (Procureur général) v. Lac d'Amiante du Québec Ltée (1989), 24 Q.A.C. 235, leave to appeal refused, [1989] 2 S.C.R. viii; Asbestos Corp. v. Eagle‑Picher Industries Inc., [1984] C.A. 151; Reference re Upper Churchill Water Rights Reversion Act, [1984] 1 S.C.R. 297; Renault v. Bell Asbestos Mines Ltd., [1980] C.A. 370, rev'g [1976] C.P. 284; Benesh, Friedlandler, Coplan & Aronoff v. Nesmith, [1983] C.S. 790; Attorney General of Canada v. Canard, [1976] 1 S.C.R. 170; Buck v. Attorney‑General, [1965] 1 All E.R. 882; Manuel v. Attorney General, [1982] 3 All E.R. 786; Douglas/Kwantlen Faculty Assn. v. Douglas College, [1990] 3 S.C.R. 570; Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5; Northern Telecom Canada Ltd. v. Communication Workers of Canada, [1983] 1 S.C.R. 733; Ontario (Attorney General) v. Pembina Exploration Canada Ltd., [1989] 1 S.C.R. 206; Attorney General of Canada v. Law Society of British Columbia, [1982] 2 S.C.R. 307; Valin v. Langlois (1879), 3 S.C.R. 1; R. v. Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695; Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138; Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393; Bank of Montreal v. Metropolitan Investigation & Security (Canada) Ltd., [1975] 2 S.C.R. 546; John Morrow Screw and Nut Co. v. Hankin (1918), 58 S.C.R. 74; Logan v. Lee (1907), 39 S.C.R. 311; Pettkus v. Becker, [1980] 2 S.C.R. 834; Cooper v. Cooper (1888), 13 App. Cas. 88; R. v. Gardiner, [1982] 2 S.C.R. 368; Argentina v. Mellino, [1987] 1 S.C.R. 536; Attorney General for Ontario v. Scott, [1956] S.C.R. 137; Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2; Black v. Law Society of Alberta, [1989] 1 S.C.R. 591; Indyka v. Indyka, [1969] 1 A.C. 33; Boxer v. Reesor (1983), 43 B.C.L.R. 352; Cie Financière et Commerciale du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55.

 

Statutes and Regulations Cited

 

Business Concerns Records Act, R.S.Q., c. D‑12, ss. 1, 2, 3, 4 [am. 1988, c. 21, s. 66], 5 [idem].

 

Constitution Act, 1867 , ss. 92(13) , (14) , (16) , 101 .

 

Constitution Act, 1982 , s. 52(1) .

 

Evidence Act, R.S.B.C. 1979, c. 116.

 

Rules of Court [British Columbia], rr. 2(5), 26.

 

Special Procedure Act, R.S.Q., c. P‑27.

 

Supreme Court Act, R.S.C. 1970, c. S‑19, s. 41(1).

 

Supreme Court Act , R.S.C., 1985, c. S‑26 , ss. 40(1) , 45 .

 

Authors Cited

 

Black, Vaughan.  "The Other Side of Morguard:  New Limits on Judicial Jurisdiction" (1993), 22 Can. Bus. L.J. 4.

 

Black, Vaughan, and John Swan.  "New Rules for the Enforcement of Foreign Judgments:  Morguard Investments Ltd. v. De Savoye" (1991), 12 Advocates' Q. 489.

 

Finkle, Peter, and Claude Labrecque.  "Low‑Cost Legal Remedies and Market Efficiency:  Looking Beyond Morguard" (1993), 22 Can. Bus. L.J. 58.

 

Groffier, Ethel.  Précis de droit international privé québécois, 4^e éd.  Cowansville:  Yvon Blais, 1990.

 

Hogg, Peter W.  Constitutional Law of Canada, 3rd ed.  Scarborough, Ont.:  Carswell, 1992.

 

Strayer, Barry L.  The Canadian Constitution and the Courts, 3rd ed.  Toronto:  Butterworths, 1988.

 

                   APPEAL from a judgment of the British Columbia Court of Appeal (1991), 56 B.C.L.R. (2d) 365, 81 D.L.R. (4th) 763, [1991] 5 W.W.R. 475, 48 C.P.C. (2d) 247, 3 B.C.A.C. 138, 7 W.A.C. 138, affirming a judgment of Esson C.J.S.C. (1990), 43 B.C.L.R. (2d) 390, 67 D.L.R. (4th) 687, [1990] 3 W.W.R. 558, dismissing an application for an order compelling the production of documents.  Appeal allowed.

 

                   J. J. Camp, Q.C., David Church and Steven Antle, for the appellant.

 

                   W. S. Berardino, Q.C., Avon Mersey and Michael Sobkin, for the respondent Lac d'Amiante du Québec Ltée.

 

                   Jack Giles, Q.C., and Robert J. McDonell, for the respondents Asbestos Corporation Limited, Atlas Turner Inc. and Bell Asbestos Mines Limited.

 

                   Henry S. Brown, Q.C., and Richard B. Lindsay, for the respondent JM Asbestos Inc.

 

                   Louis J. Zivot, for the respondent the Quebec Asbestos Mining

Association.

 

                   John L. Finlay, for the respondent National Gypsum Co.

 

                   Michel Hélie, for the intervener the Attorney General for Ontario.

 

                   Alain Gingras, for the intervener the Attorney General of Quebec.

 

//La Forest J.//

 

                   The judgment of the Court was delivered by

 

                   La Forest J. -- Legal systems and rules are a reflection and expression of the fundamental values of a society, so to respect diversity of societies it is important to respect differences in legal systems.  But if this is to work in our era where numerous transactions and interactions spill over the borders defining legal communities in our decentralized world legal order, there must also be a workable method of coordinating this diversity.  Otherwise, the anarchic system's worst attributes emerge, and individual litigants will pay the inevitable price of unfairness.  Developing such coordination in the face of diversity is a common function of both public and private international law.  It is also one of the major objectives of the division of powers among federal and provincial governments in a federation.  This appeal raises issues that lie at the confluence of private international law and constitutional law.  In seeking to find a workable balance between diversity and uniformity, one must be aware of the similarities but also the differences that exist in the balances represented in the rules in these two areas of law.

 

                   The immediate issue in this appeal is whether the provisions of the Quebec Business Concerns Records Act, R.S.Q., c. D-12, a "blocking statute", provide a "lawful excuse" under Rule 2(5) of the British Columbia Rules of Court, such that Quebec defendants to a civil action in British Columbia can refuse to comply, as required by Rule 26 of the British Columbia Rules of Court, with a demand for discovery of documents.  The Quebec statute prohibits inter alia the removal from the province of documents of business concerns in Quebec that are required pursuant to judicial processes outside the province.  The fundamental issue is whether this statute is ultra vires or whether it is constitutionally inapplicable to a judicial proceeding in another province.

 

                   During various stages of the proceedings, the appellant has claimed that the Act does not provide an excuse from production of the documents sought in British Columbia for the following reasons:  (1) the Act is ultra vires the National Assembly of Quebec, or, alternatively, it is constitutionally inapplicable to a judicial proceeding in another province; (2) the Act is contrary to the public policy of British Columbia; or (3) the Act is not mandatory and failure to comply with discovery constituted bad faith on the part of the respondents.  In connection with the first issue, the Chief Justice on June 2, 1992 stated the following constitutional question:

 

Is s. 2 of the Quebec Business Concerns Records Act, R.S.Q., c. D-12, ultra vires the National Assembly of Quebec or constitutionally inapplicable because its pith and substance is a derogation from extraprovincial rights?

 

                   The respondents contest all these issues, and also contest the jurisdiction of this Court to hear the constitutional question.  They claim that this Court can only exercise the powers the British Columbia courts could, and that the latter lacked jurisdiction to rule on the constitutionality of a Quebec statute.

 

 

Background

 

                   The appellant, George Hunt, suffers from cancer which he alleges was caused by the inhalation of asbestos fibres to which he was exposed while working as an electrician at the Victoria Machinery Depot in Victoria, British Columbia.  These fibres, it is further alleged, were contained in products designed, manufactured, packaged, advertised, distributed, promoted and sold by a number of companies, including the respondents, which are Quebec companies involved in the production and distribution of asbestos.

 

                   The appellant and a number of other plaintiffs, supported by the Workers' Compensation Board of British Columbia, brought action against the respondents for damages, alleging negligent manufacture, negligent failure to warn against dangerous effects of the fibres, and conspiracy to hide the dangers of asbestos from the public.  An earlier application to strike the appellant's statement of claim was dismissed by this Court in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.  The respondents then challenged the jurisdiction of the British Columbia Supreme Court and sought a stay of proceedings; see Hunt v. T&N, plc, Vancouver Reg. No. C885383, June 30, 1989.  The British Columbia Supreme Court dismissed the application, and leave to appeal that decision to the British Columbia Court of Appeal was denied (July 26, 1989).

 

                   The appellant then requested production of documents related to the action.  The respondents did not respond to this request.  On September 11, 1989, the appellant served a demand for discovery of documents under Rule 26(1) of the British Columbia Rules of Court on the respondents Atlas Turner Inc. ("Atlas"), Bell Asbestos Mines Limited ("Bell"), Asbestos Corporation Limited ("ACL") and the Quebec Asbestos Mining Association and National Gypsum Co. ("QAMA").  A demand for discovery had been served on Johns-Manville Amiante Canada Inc. on June 23, 1989.  JM Asbestos Inc. ("JM") was later substituted for the latter defendant.  In response to these demands, both JM and QAMA asserted that the Act prevented compliance with the demands; the other respondents made no reply.  On October 2, 1989, the principal shareholders of the respondents Atlas, Bell and ACL petitioned the Quebec Provincial Court for an order, pursuant to s. 4 of the Act, preventing the companies from sending documents out of the province.  Bell also petitioned for a similar order against QAMA.  On November 17, 1989, the principal shareholder of JM made a similar petition.  All these orders were granted.  In 1980, the Attorney General of Quebec had applied for an order pursuant to the Act against the respondent Lac d'Amiante du Québec Ltée. ("Lac d'Amiante") with respect to another action.  On April 26, 1989, Lac d'Amiante appealed that order to the Quebec Court of Appeal.  The appeal was dismissed; see Québec (Procureur général) v. Lac d'Amiante du Québec Ltée (1989), 24 Q.A.C. 235.  An application for leave to appeal to this Court was dismissed on November 23, 1989:  [1989] 2 S.C.R. viii.

 

                   On October 3, 1989, the appellant served Atlas, Bell, ACL and QAMA with a notice of motion for an order compelling discovery of lists of documents.  Notice was served on JM on October 10, 1989.  Both applications were adjourned at the request of the respondents.  On October 12, 1989, Atlas, Bell and ACL gave "lists of documents" listing no documents, claiming that the orders under the Quebec statute prevent disclosure.  JM had done the same earlier.  The appellant then applied to the Supreme Court of British Columbia for an order compelling the production of the documents.  The chambers judge, Esson C.J.S.C., dismissed the application:  (1990), 43 B.C.L.R. (2d) 390, 67 D.L.R. (4th) 687, [1990] 3 W.W.R. 558.  The appellant unsuccessfully appealed to the Court of Appeal of British Columbia:  (1991), 56 B.C.L.R. (2d) 365, 81 D.L.R. (4th) 763, [1991] 5 W.W.R. 475, 48 C.P.C. (2d) 247, 3 B.C.A.C. 138, 7 W.A.C. 138.  Leave to appeal to this Court was granted on January 16, 1992:  [1992] 1 S.C.R. viii.

 

Judicial History

 

Supreme Court of British Columbia (1990), 43 B.C.L.R. (2d) 390

 

                   After reviewing the history of the Act, Esson C.J.S.C. defined the basic issue as "whether considerations of comity require this court to respect the law of another province by accepting, as an excuse for not complying with the ordinary requirements of our rules, the prohibition in that law" (p. 394).  He declined to rule on the constitutional validity of the Quebec statute, stating that he was not aware of any precedent where provincial legislation had been struck down by a court in another province.  In any event, he would not entertain such a submission without hearing from the Attorney General or other appropriate representative of Quebec.  He therefore proceeded on the assumption that the legislation was valid.

 

                   The Chief Justice observed that the orders under s. 4 of the Act had been obtained at the petition of shareholders in the companies, and not by the Attorney General.  He observed that he could not "resist the inference that this was a case of deliberately courting legal impediments to production" (p. 396), but he felt that deliberate courting of legal impediment was of no significance if an effective legal impediment existed in any event.  He referred to the reasons of Kaufman J.A. in Lac d'Amiante, supra, which found that s. 4 of the Act merely gives the prohibition in s. 2 "greater teeth".  He stated that other Quebec authorities had also interpreted the Act broadly, referring to the Quebec Court of Appeal decision in Asbestos Corp. v. Eagle-Picher Industries Inc., [1984] C.A. 151, which indicated that the prohibition in the Act extended to any form of indirect disclosure as well, for example, even delivery of a list of documents.  While the affidavit evidence of a Quebec attorney filed as evidence in the earlier application for a stay of proceedings expressed the opinion that the Act was of more limited application, Esson C.J.S.C. did not consider that he should interpret the Act differently from the cases he had examined.  He, therefore, found that the prohibition in the Act is wide and extends to the making of lists of documents, and was not prepared to order that the companies break the Quebec law.

 

                   Based on his reading of the cases, the Chief Justice held that the doctrine of comity required the court not to compel the circumvention of the law of another jurisdiction.  He noted that while significant, discovery was considerably less vital to civil actions than the ability to compel evidence at trial.  Furthermore, he noted that the appellant's ultimate course would be an order striking out the defence for non-compliance with discovery under Rule 2(5).  He indicated that this discretionary remedy would not be given where, as in this case, the non-compliance to provide discovery of documents was based on a legal prohibition.

 

British Columbia Court of Appeal (1991), 56 B.C.L.R. (2d) 365

 

                   Gibbs J.A., for a unanimous Court of Appeal, accepted the ruling of Esson C.J.S.C. that the British Columbia courts do not have jurisdiction over the constitutional validity of a Quebec statute, and that he could not be faulted for not entertaining the matter without hearing from the Attorney General of Quebec.  Gibbs J.A. noted that in order to be heard on the appeal, the Attorney General would have to apply for intervener status and would have to accept the record below unless leave to introduce fresh evidence was granted, and held that it was not open to the appellant to impose such obligations on the Attorney General.  The court did not, therefore, call on the Quebec respondents to reply to the constitutional submissions.  Consequently, like Esson C.J.S.C., the court acted on the basis that the Quebec Act was valid.

 

                   This, Gibbs J.A. stated, led to conflict between the public policies of British Columbia as reflected in the Rules of Court and the Quebec statute.  He noted that Esson C.J.S.C. had resolved that conflict by applying the doctrine of comity as between the provinces.  That view, Gibbs J.A. thought, was supported by this Court's decision in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077.  Gibbs J.A. ruled that the principles of comity developed in that case applied as much to the "recognition of, and deference to, validly enacted legislation of a province by the courts of another province" (p. 369).

 

                   Nevertheless Gibbs J.A. stated that the courts of one province might refuse to "give cognizance to an enactment of another province designed to intrude into the exclusive legislative field of the first province" (p. 369).  Citing the decision of this Court in Reference re Upper Churchill Water Rights Reversion Act, [1984] 1 S.C.R. 297, he stated that a court must determine the pith and substance of the impugned statute.  He reasoned that the Quebec statute had been enacted over 30 years ago, and that the incidental or consequential effect on the appellant now, in British Columbia, did not render the Act ultra vires.

 

                   On the other issues raised, the Court of Appeal agreed with the reasons and conclusions of Esson C.J.S.C.  It agreed that the Act constituted an absolute prohibition, and that there was no bad faith by the Quebec companies in seeking orders preventing discovery.

 

The Act

 

                   For a full understanding of the issues, it is useful to examine the provisions of the Act in more detail.  I, therefore, set forth its provisions at length:

 

1. In this act, the following words mean:

 

                   (a) "document":  any account, balance sheet, statement of receipts and expenditure, profit and loss statement, statement of assets and liabilities, inventory, report and any other writing or material forming part of the records or archives of a business concern;

 

                   (b) "concern":  any business concern in Québec;

 

                   (c) "requirement":  any demand, direction, order, subpoena or summons.

 

2. Subject to section 3, no person shall, pursuant to or under any requirement issued by any legislative, judicial or administrative authority outside Québec, remove or cause to be removed, or send or cause to be sent, from any place in Québec to a place outside Québec, any document or résumé or digest of any document relating to any concern.

 

3. The prohibition enacted in section 2 shall not apply in the case of the removal or sending of a document out of Québec

 

                   (a) by an agency, branch, company or firm carrying on business in Québec, to a principal, head office, affiliated company or firm, agency or branch situated outside Québec, in the ordinary course of their business;

 

                   (b) by or on behalf of a company or person, as defined by the Securities Act, (chapter V-1) carrying on business in Québec, to a territory subject to another political jurisdiction in which the sale of the securities of such company or person has been authorized;

 

                   (c) by or on behalf of any such company or person carrying on business in Québec as a broker, security issuer or salesman within the meaning of the Securities Act, to a territory subject to another political jurisdiction in which any such company or person has been registered or is otherwise authorized to carry on business as broker, security issuer or salesman, as the case may be;

 

                   (d) whenever such removal or sending is authorized by any law of Québec or of the Parliament of Canada, in accordance with their respective jurisdictions.

 

4. Whenever there is reason to believe that a requirement has been or is likely to be made for the removal or sending out of Québec of a document relating to a concern, the Attorney General may apply to a judge of the Court of Québec, in the judicial district where the concern in question is located, for an order requiring any person, whether or not designated in the requirement, to furnish an undertaking or security to ensure that such person will not remove or send out of Québec the document mentioned in the said requirement.

 

                   The application to the judge of the Court of Québec shall be made by summary petition.  In case of urgency, it may be filed and presented to the judge without prior service.  The judge may however order the service thereof within such delay, in such manner and on such conditions as he may consider expedient.

 

                   Every person having an interest in a concern may exercise the rights contemplated in this section.

 

5. Every person who, having received notice of a petition to a judge of the Court of Québec under section 4, infringes the provisions of section 2, shall be guilty of contempt of court and liable to one year's imprisonment.

 

                   Every person who has furnished, or has received from the judge an order to furnish, an undertaking or security and who infringes the provisions of section 2 shall be guilty of contempt of court and liable to one year's imprisonment, without prejudice to any penalty or obligation provided by the undertaking or security furnished or ordered by the judge.

 

                   As can be seen, s. 2 (as construed pursuant to the definition in s. 1) provides a general prohibition, subject to exceptions in s. 3 not applicable here, against the removal from the province to any place outside the province of any business document relating to any business concern in Quebec, in pursuance of any requirement, i.e., demand, direction, order, subpoena or summons, of, inter alia, a judicial authority outside the province.  Section 4 then provides that the Attorney General, or any person interested in the concern, may apply to a Quebec court in the judicial district where the concern is located for an order requiring a person to furnish an undertaking or security to ensure that a document mentioned in s. 2 shall not be removed out of Quebec pursuant to a judicial or other requirement.  Finally, s. 5 provides that anyone who, having received a notice of an application under s. 4, or having furnished or been ordered to furnish an undertaking or security under s. 4, infringes s. 2, is guilty of contempt of court and is liable to one year's imprisonment.

 

                   The Act, like its counterpart in Ontario upon which it is patterned, was enacted, we were told, as a defence to the extraterritorial reach of United States anti-trust legislation and perhaps other forms of foreign judicial interference.  In a colourful passage cited by Esson C.J.S.C. in the court below, the Quebec newspaper L'Événement of February 21, 1958, purports to report a speech by the then Premier of Quebec in introducing the Bill which makes it clear that its object was to prevent foreign, and specifically American, intrusions of that kind.  The Quebec courts have on a number of occasions asserted that this was indeed the purpose of the legislation.  Thus in Renault v. Bell Asbestos Mines Ltd., [1976] C.P. 284, the Quebec Provincial Court expressed the view that the main purpose of the Act is [translation] "to protect Canadian businesses or subsidiaries against the implementation of American or foreign anti-trust laws" (p. 287).  That cannot be considered the last word on the issue, however.  The Quebec Court of Appeal, [1980] C.A. 370, though it dealt with the case on the assumption that the Provincial Court's conclusion on the point was correct, indicated that this was not expressly stated in the Act and that there was no preamble (p. 372).  However, in Benesh, Friedlandler, Coplan & Aronoff v. Nesmith, [1983] C.S. 790, at p. 793, it was again held that the objective of the Act "is generally conceded to be the protection of Québec businesses from foreign judicial interference such as anti-trust prosecutions . . .".

 

                   Despite this supposed narrow objective, the Quebec courts, as Esson C.J.S.C. noted, have nonetheless given the Act a generous interpretation consistent with its very broad terms.  Thus in Lac d'Amiante, supra, Kaufman J.A. for the Court of Appeal held that it was not necessary in an order under s. 4 of the Act to set forth the relevant specific documents.  Such a course, he stated, would be cumbersome and is unnecessary because s. 2 "in any case prohibits the removal of `any document . . .'" (p. 236).  That case, of course, did not relate to antitrust matters.  Again in Asbestos Corp. v. Eagle-Picher Industries Inc., supra, also a private civil action, the court interpreted the Act as including evidence taken before a rogatory commission in Quebec.

 

                   These cases also reject the notion that the Act is confined to documents demanded by foreign authorities and assert that it applies to demands made by judicial authorities in other provinces as well.  This view was most recently applied in 2632-7602 Québec Inc. v. Pizza Pizza Canada Inc., [1991] R.J.Q. 2951.

 

                   There is one case, Benesh, supra, in which the Superior Court, per Gomery J., was willing to interpret the Act more narrowly.  However, his restriction of the Act to cases involving "considerations of public policy" is far from clear, and the Act does not make it a matter of discretion.  Again his notion that the term "documents" does not include letters to third parties would seem doubtful even if the Act were confined to antitrust cases, for that is a common means of proof in such cases.  What is more, this approach conflicts with that taken by the Quebec Court of Appeal; see, for example, Renault, supra, at p. 371.

 

                   One commentator also argues that the Court of Appeal should have given a narrower interpretation to the Act on the basis of another Quebec statute, the Special Procedure Act, R.S.Q., c. P-27, and that there is no penalty specifically attached to violating the general prohibition in s. 2 of the Act; see E. Groffier, Précis de droit international privé québécois (4th ed. 1990), at p. 234.  In the present case, however, there was a court order and in that event a sanction exists under s. 5 of the Act.

 

                   While an argument might be mounted against the position taken by the Quebec Court of Appeal, Esson C.J.S.C. and the British Columbia Court of Appeal can scarcely be faulted for accepting the Quebec Court of Appeal's position under the common law rule which holds that the law of another jurisdiction is a question of fact.  Whether the British Columbia court could under the provision in the British Columbia Evidence Act, R.S.B.C., 1979, c. 116, permitting courts to take judicial notice of the laws of other jurisdictions permit a different approach to issues of foreign law was not argued and I, therefore, refrain from commenting on it.  It would in any event be unusual for a British Columbia court to ignore the guidance of the Court of Appeal of Quebec respecting the interpretation of a Quebec statute.

 

                   This Court, as I will indicate, is not in the same position as the British Columbia court in dealing with the laws of another province.  But in his argument in this Court, the appellant did not really attack the broad interpretation given to the Act.  In fact, during oral argument, counsel for the appellant, the respondents and the intervener the Attorney General of Quebec all supported a broad interpretation.  What the appellant really contested in this Court was that the Act was either ultra vires the Province of Quebec, as being in relation to a matter outside the province, or inapplicable as it applied to other provinces under the principles set forth by this Court in Morguard.  Indeed the latter was the principal battleground during oral argument.  Because of this, I propose to deal with the case on that basis.  While, as I indicated, it may be possible to mount an argument for a narrower application of the Act, that argument was not fully made before this Court.  Moreover, the Act is written in very broad terms and a full argument for reading it down might well require a consideration of constitutional requirements in any event.

 

 

 

 

May the British Columbia Court Consider the Constitutionality of the Quebec Statute?

 

                   Before considering the issue of constitutionality, it is necessary to examine a preliminary question raised by the respondents and the Attorney General of Quebec.  They submit that this Court has no jurisdiction to consider the constitutionality of this Act.  This, they say, flows from the operation of s. 45  of the Supreme Court Act , R.S.C., 1985, c. S-26 , which, they maintain, restricts this Court's jurisdiction to what the courts below could have done, citing a remark from Beetz J.'s reasons in Attorney General of Canada v. Canard, [1976] 1 S.C.R. 170, at p. 216.  The courts below, they continue, properly accepted that they had no jurisdiction to rule on the constitutionality of the Quebec statute.  Consequently, in their submission, this Court lacks jurisdiction to reply to the constitutional question framed by the Chief Justice.

 

                   I do not agree with this submission.  In my view, the jurisdiction to at least consider the constitutionality of another province's legislation can be found in the right of any superior court to consider and make findings of fact respecting the law of another jurisdiction for the purposes of litigation before it.  This jurisdiction to consider the laws of another province seems to me to be even more clearly justified when both jurisdictions are Canadian and governed by our Constitution.  I will look at each of these questions in turn, and then address the specific jurisdiction of this Court in the interpretation of the laws of every province and their constitutionality.

 

Ordinary Power of Courts to Consider the Constitutionality of Foreign Law

 

                   I begin by noting that at common law the issue of what is foreign law, which most frequently but not exclusively arises in conflicts law, is a question of fact to be determined by the trial judge.  In the present case, the law of Quebec is clearly a material fact for the consideration of whether there was a "lawful excuse" under Rule 2(5) of the British Columbia Rules of Court for failing to obey that province's rules for discovery.  It is also a material fact in relation to the public policy of British Columbia.  Since the Quebec statute is material to these issues, it follows that the validity of that statute, its constitutionality, is equally material.

 

                   In determining what constitutes foreign law, there seems little reason why a court cannot hear submissions and receive evidence as to the constitutional status of foreign legislation.  There is nothing in the authorities cited by the respondents that goes against this proposition.  Quite the contrary, Buck v. Attorney-General, [1965] 1 All E.R. 882 (C.A.), holds only that a court has no jurisdiction to make a declaration as to the validity of the constitution of a foreign state.  That would violate the principles of public international law.  But here nobody is trying to challenge the constitution itself.  The issue of constitutionality arises incidentally in the course of litigation.  The distinction is clearly made by Lord Diplock in Buck, at pp. 886-87:

 

The only subject-matter of this appeal is an issue as to the validity of a law of a foreign independent sovereign state, in fact, the basic law prescribing its constitution.  The validity of this law does not come in question incidentally in proceedings in which the High Court has undoubted jurisdiction as, for instance, the validity of a foreign law might come in question incidentally in an action on a contract to be performed abroad.  The validity of the foreign law is what this appeal is about; it is nothing else.  This is a subject-matter over which the English courts, in my view, have no jurisdiction.

 

Similarly in Manuel v. Attorney General, [1982] 3 All E.R. 786 (Ch. D.), while it was asserted that the courts of one country should not pronounce on the validity of a statute of another, the case where the question arises merely incidentally is expressly excepted.

 

                   The policy reasons for allowing consideration of constitutional arguments in determining foreign law that incidentally arises in the course of litigation are well founded.  The constitution of another jurisdiction is clearly part of its law, presumably the most fundamental part.  A foreign court in making a finding of fact should not be bound to assume that the mere enactment of a statute necessarily means that it is constitutional.  Formal determination of constitutionality is often purely fortuitous.  It is often dependent on there happening to be parties interested in challenging the statute.  This is unlikely to happen where, as in this case, most of the parties affected are outside the enacting jurisdiction.  In this case, the Quebec statute has never been challenged by Quebec litigants because it does not arise in normal litigation in the province, and in extraprovincial litigation, Quebec defendants benefit while Quebec plaintiffs are normally unaffected.  Why should a litigant not be able to argue constitutionality in the course of litigation that directly raises the issue?  As a practical matter, it is not much more difficult to determine constitutionality than any other aspect of foreign law.

 

                   The fact that there is no mandatory provision for advising the appropriate Attorney General does not make the procedure invalid.  Nor do I see it as resulting in great inconvenience.  Situations like this are rare and the findings, essentially of a factual nature, are not binding on the courts of other provinces.  And if the constitutional issue is raised in this Court, there are provisions for advising the appropriate Attorney General.

 

                   The British Columbia courts in this case were commendably, but in my view excessively, cautious in refusing to consider constitutionality even in this limited sense, at the potential price of injustice to the plaintiff.  With respect, I therefore find that the lower courts were in error in believing that the rules of conflicts law prevented consideration of the constitutionality of the laws of another jurisdiction.

 

                   The British Columbia courts in this case, therefore, did possess at least the normal court power to consider and make findings of fact as to the constitutionality of the laws of another jurisdiction.  Such findings would have affected their conclusions on lawful excuse, comity and public policy.  To simply ignore the constitutional issues was an error of law that vitiated their findings.  Moreover, there is an additional factor that reinforces and possibly augments the powers of the superior courts to consider the constitutional issues, namely, that both jurisdictions in question are part of the same Canadian federation and governed by the same Constitution.  I shall now turn to that issue.

 

Impact of the Canadian Constitution

 

                   It is well established that a range of Canadian courts and tribunals in Canada are empowered to consider the constitutionality of the laws they apply.  In doing so, they are applying the principle of the supremacy of the Constitution confirmed by s. 52(1)  of the Constitution Act, 1982 .  This Court has had to deal with the implications of this provision on a number of occasions in different contexts.  Thus in Douglas/Kwantlen Faculty Assn. v. Douglas College, [1990] 3 S.C.R. 570, and Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5, this Court found that administrative tribunals expressly empowered by their enabling statutes to interpret or apply any law necessary to reach their findings had the power to apply the Canadian Charter of Rights and Freedoms .  Similarly, the Court has ruled that some administrative tribunals are competent to consider issues of the division of powers; see, for example, Northern Telecom Canada Ltd. v. Communication Workers of Canada, [1983] 1 S.C.R. 733.  The latter decision also held that the Federal Court in the exercise of its statutory jurisdiction had the power and duty to review legislation for constitutionality in determining issues arising before them; see Northern Telecom, supra, at p. 740.

 

                   The same principle applies with, if anything, more force to the provincial superior courts.  These are the ordinary courts of the land having inherent jurisdiction over all matters, both federal and provincial, unless a different forum is specified; see Ontario (Attorney General) v. Pembina Exploration Canada Ltd., [1989] 1 S.C.R. 206, at pp. 217-18.  Estey J. felicitously put the matter in Attorney General of Canada v. Law Society of British Columbia (the Jabour case), [1982] 2 S.C.R. 307.  He stated, at pp. 326-27:

 

                   There is, however, another and more fundamental aspect to this issue.  The provincial superior courts have always occupied a position of prime importance in the constitutional pattern of this country. They are the descendants of the Royal Courts of Justice as courts of general jurisdiction.  They cross the dividing line, as it were, in the federal-provincial scheme of division of jurisdiction, being organized by the provinces under s. 92(14) of the Constitution Act and are presided over by judges appointed and paid by the federal government (sections 96 and 100 of the Constitution Act).

 

This approach, as he noted, is supported by previous cases from as early as Valin v. Langlois (1879), 3 S.C.R. 1, where Ritchie C.J. emphasized that these courts "are not mere local courts for the administration of the local laws" (p. 19) but "are the Queen's Courts, bound to take cognizance of and execute all laws, whether enacted by the Dominion Parliament or the Local Legislatures" (p. 20) (emphasis added).  See also Pigeon J. in R. v. Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695, at p. 713.

 

                   This jurisdiction must include a determination of whether the laws sought to be applied are constitutionally valid.  In Laskin J.'s words in Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138, at p. 151:  "The question of the constitutionality of legislation has in this country always been a justiciable question."  This was also referred to in Northern Telecom, supra, where Estey J. stated, at pp. 741-42:

 

                   It is inherent in a federal system such as that established under the Constitution Act, that the courts will be the authority in the community to control the limits of the respective sovereignties of the two plenary governments, as well as to police agencies within each of these spheres to ensure their operations remain within their statutory boundaries.  Both duties of course fall upon the courts when acting within their own proper jurisdiction.  The Jabour case, supra, was concerned with the superior courts of general jurisdiction in the provinces, but the same principles apply to courts of subordinate jurisdiction when they are acting within their limited jurisdiction as described by their constituting statute.  Such courts must, in the application of the laws of the land whether they be federal or provincial statutes, determine, whether the issue arises, the constitutional integrity of the measure in question.  Such a court of limited jurisdiction must, of course, be responding to a cause properly before it under its statute.

 

That is scarcely cause for surprise.

 

                   As noted in Cuddy Chicks, supra, at p. 14, the source of this jurisdiction is not technically s. 52(1) itself, which is silent on the jurisdictional point per se.  Rather, the source of the jurisdiction to consider such questions for administrative tribunals is their enabling statutes.  The superior courts in the provinces, however, have inherent jurisdiction to enforce the provisions of the Constitution Acts as binding the governments in Canada.  Many constitutional challenges arise in the course of "normal" private litigation, and the work of the courts would be stymied if they could not deal with the issue.  As B. Strayer has noted (The Canadian Constitution and the Courts (3rd ed. 1988), at p. 145), there is little standing issue because

 

[i]n such cases the individual is seeking to assert some right for himself.  In the process of establishing this right he contends that legislation or an administrative act which would interfere with it is invalid.  This is an incidental and collateral attack on the legislation or act in the process of claiming a right peculiar to the claimant.

 

                   In principle, I see no reason why there should be a categorical rule to prevent a judge from dealing with a constitutional issue that incidentally arises in the ordinary course of litigation.  As this Court observed in Morguard, supra, the guiding element in the determination of an appropriate forum must be principles of order and fairness.  In considering these principles, some of the considerations set forth in Morguard bear repeating.  At page 1103, the following statement appears:

 

Why should a plaintiff be compelled to begin an action in the province where the defendant now resides, whatever the inconvenience and costs this may bring, and whatever degree of connection the relevant transaction may have with another province?  And why should the availability of local enforcement be the decisive element in the plaintiff's choice of forum?

 

I recognize, of course, and this was mentioned in Morguard, that these considerations must be weighed against the need for fairness to the defendant as well.  This, as is there noted at p. 1103, "requires that the judgment be issued by a court acting through fair process and with properly restrained jurisdiction".

 

                   So far as the first of these conditions is concerned, it is difficult to question the basic fairness of the process given the essentially unitary nature of the Canadian court system; see Pembina, supra, at p. 215.  I would reiterate here what was said in Morguard, supra, at pp. 1099-1100:

 

The Canadian judicial structure is so arranged that any concerns about differential quality of justice among the provinces can have no real foundation.  All superior court judges ‑‑ who also have superintending control over other provincial courts and tribunals ‑‑ are appointed and paid by the federal authorities.  And all are subject to final review by the Supreme Court of Canada, which can determine when the courts of one province have appropriately exercised jurisdiction in an action and the circumstances under which the courts of another province should recognize such judgments.

 

It may, no doubt, be advanced that courts in the province that enacts legislation have more familiarity with statutes of that province.  It must not be forgotten, however, that courts are routinely called to apply foreign law in appropriate cases.  It is thus only the fact that a constitutional issue is raised that differentiates this case.  But all judges within the Canadian judicial structure must be taken to be competent to interpret their own Constitution.  In a judicial system consisting of neutral arbiters trained in principles of a federal state and required to exercise comity, the general notion that the process is unfair simply is not legally sustainable, all the more so when the process is subject to the supervisory jurisdiction of this Court.

 

                   This approach is even more persuasive where, as here, the issue relates to the constitutionality of the legislation of a province that has extraprovincial effects in another province.  This is especially true where the constitutionality of the other province's legislation has never been challenged in the other province's courts, and where moreover, as here, such a challenge is unlikely.  Where the violation is as much a violation against the Constitution of Canada, then the superior courts which must legitimately face the issue should be able to deal with the question.  Against this position, it was observed that most of the parties interested in the question as interveners would be in the province whose statute is impugned.  That may be, but where the alleged violation relates to extraterritorial effect, many of the interested parties are also outside Quebec.  Above all, it is simply not just to place the onus on the party affected to undertake costly constitutional litigation in another jurisdiction.

 

                   I agree that, because of the far-reaching impact of such rulings, the courts should restrict themselves to hearing constitutional challenges to the legislation of other provinces only where there is a real interest affected in their province.  Unfortunately, there are intractable "chicken and egg" problems:  if the extraterritorial effects of the law are themselves a prerequisite to the British Columbia court taking jurisdiction, then who is to determine that such extraterritorial effects exist in a particular case?  The process must begin somewhere, and we must rely on the good sense of our superior courts in the respective provinces to not gratuitously assume jurisdiction.

 

                   The problem in the end, then, involves issues of jurisdiction and whether that jurisdiction should be exercised.  The British Columbia courts in related litigation (Hunt v. T&N, supra), we saw, dismissed a challenge to jurisdiction, and leave to this Court was refused.  That is scarcely surprising.  The case would appear to be similar to Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393, where a corporation that had in one province manufactured goods that were defective was sued in a province where the plaintiff suffered damage as a result.  As here, the manufacturer must be taken to have known that the goods would be used outside the province of manufacture in the manner they were.  Given the significant connection with the province where the injury took place, it is difficult to see how it could be said to offend the principles of order and fairness for the British Columbia courts to take jurisdiction.  A court might, I suppose, also be asked to consider whether it should decline jurisdiction on the basis of the doctrine of forum non conveniens.  Indeed the court in Hunt v. T&N, supra, was asked to decline jurisdiction.  But in my view the court was right to refuse to do so.  The additional factor that the case involved the British Columbia court in considering the interpretation and constitutional validity of the Quebec statute is not, given the considerations that weigh in favour of the British Columbia court's exercising jurisdiction, sufficient to make a court of that province a forum non conveniens.

 

                   I do not deny that there are practical inconveniences, but actions dealing with activities having extraprovincial effects must necessarily impose difficulties on one party or the other.  Counsel, however, argued that certain systemic inconveniences were involved.  There was, he stated, no mandatory provision to advise the Attorneys General, including that of the province whose statute was attacked.  Undoubtedly, the representations of the Attorneys General are useful, but I see no reason why this should be fatal.  The requirement of such notice is a matter for statutory enactment in each jurisdiction; see B. Strayer, supra, at pp. 73-86.  It may be a factor to consider but it is just that.  The courts and counsel for the parties, who are after all principally affected, must be taken to have competence to deal with the issues.  At all events, the courts of other provinces are not bound by the determination, and it is subject to review by this Court when the Attorneys General are required to be advised as, of course, they were in the present case.

 

                   The respondents also argued that this may lead to differing holdings on the constitutionality of the statute in different provinces.  It must be remembered, however, that this is not uncommon in respect of federal statutes or identical statutes in different provinces.  And in the rare cases where this could cause a party difficulty, this could be dealt with by this Court.  As Black and Swan, "New Rules for the Enforcement of Foreign Judgments:  Morguard Investments Ltd. v. De Savoye" (1991), 12 Advocates' Q. 489, note, commenting on our decision in Bank of Montreal v. Metropolitan Investigation & Security (Canada) Ltd., [1975] 2 S.C.R. 546, it would likely do so in view of the fact that the division of powers status of provincial legislation would be at stake.

 

                   I, therefore, conclude that the courts of British Columbia had jurisdiction to deal with the constitutional issue and, consequently, so has this Court.  It is thus not strictly necessary to consider the specific powers of this Court to consider constitutional questions, but since this issue was seriously debated, it would seem wise to say a few words about it.

 

The Jurisdiction of the Supreme Court of Canada

 

                   There are several factors that suggest that the Supreme Court of Canada is not restricted to the identical powers and procedures of the lower courts from which an appeal is made.  An important qualification is that the laws of a province other than that from the courts of which an appeal is taken are not required to be proved as a fact.  An early case in support is John Morrow Screw and Nut Co. v. Hankin (1918), 58 S.C.R. 74, in which this Court held that it could take judicial notice of the statutory or other laws prevailing in provinces of Canada other than that in which the action originated.  Anglin J. quotes from the older case of Logan v. Lee (1907), 39 S.C.R. 311, at p. 313, where then Chief Justice Fitzpatrick "announces":

 

. . . after having consulted with my brother judges, that this court, constituted as an appellate tribunal for the whole Dominion of Canada, requires no evidence as to what laws may be in force in any of the provinces or territories of Canada.  This court is bound to follow the rule laid down by the House of Lords in the case of Cooper v. Cooper, [(1888), 13 App. Cas. 88], and to take judicial notice of the statutory or other laws prevailing in every province and territory in Canada, suo motû, even in cases where such statutes or laws may not have been proved in evidence in the courts below, and although it might happen that the views as to what the law might be, as entertained by the members of this court, might be in absolute contradiction of any evidence upon those points adduced in the courts below.

 

This direct power of the Court to consider the laws of the provinces has continued to be acknowledged.  For example, in Pettkus v. Becker, [1980] 2 S.C.R. 834, at pp. 853-54, Dickson J. approved of Cooper v. Cooper (1888), 13 App. Cas. 88, and stated that this Court would take judicial notice of all laws prevailing in every province, even in cases where such laws may not have been proved in evidence in the courts below, so long as such laws had been pleaded in the first instance.

 

                   The Court can thus play a "unifying jurisdiction" over the provincial courts; see Bank of Montreal v. Metropolitan Investigation & Security (Canada) Ltd., supra, at p. 556, per Laskin C.J.  This is consistent with the mandate given it under the Supreme Court Act  which establishes it as "a General Court of Appeal for Canada" as authorized by s. 101  of the Constitution Act, 1867 .  The remarks of Beetz J. in Canard, supra, were made in a context involving the respective jurisdictions of the federal and provincial courts, and they can hardly be taken to have been intended to restrict the operation of these cases.  This would run against the trend of recent cases which have mandated an expansive reading of other provisions of the Supreme Court Act  (s. 40(1) ) (formerly s. 41(1) ) "the better to enable this Court to discharge its role at the apex of the Canadian judicial system, as the court of last resort for all Canadians"; see R. v. Gardiner, [1982] 2 S.C.R. 368, per Dickson J. (later C.J.), at p. 404; see also Argentina v. Mellino, [1987] 1 S.C.R. 536, at pp. 545-47.

 

The Constitutional Issue

 

                   I shall begin by considering the constitutional basis advanced to support the Quebec statute.  The respondents and the intervener the Attorney General of Quebec submit that the Act falls within provincial legislative competence by virtue of ss. 92(13), (14) and (16), which empower a province to legislate in relation to the following matters in the province:  property and civil rights, the administration of justice, including the creation and organization of provincial courts and the procedure in civil matters, and matters of a merely local or private nature.  These provisions, they say, empower a province to legislate respecting the enforcement of judicial and other orders emanating from another province.  For this, they cite Attorney General for Ontario v. Scott, [1956] S.C.R. 137, upholding the power of a province to enforce judgments of other countries pursuant to reciprocal enforcement arrangements.  A necessary inference, they say, is that the province has legislative jurisdiction to prevent the enforcement in its jurisdiction of any order in relation to property located in the province, even if that affects rights recognized outside the province.

 

                   This position, of course, raises issues about the extent to which a province may give extraterritorial effect to legislation, issues that have traditionally been considered in the context of the limitation in every head of provincial power to legislation "in the province".  As well, so far as the extraterritorial application of judicial pronouncements in another province is concerned, it raises issues concerning whether the doctrine propounded in Morguard is of a constitutional character and whether that doctrine applies in the circumstances.  Before turning to these extraterritorial concerns, however, I should observe that I have considerable reservations about some of the suggested constitutional justifications for the Act.  First, it is difficult to view the Act as concerned with the administration of justice in Quebec pursuant to s. 92(14).  That section relates to the creation of courts in the province and their procedures.  The impugned Act does not, however, relate to the administration of justice or procedure in the courts in Quebec; rather it purports to control property in the province that might be affected by proceedings outside the province.  It has nothing to do with the court procedure in Quebec.  It is instead concerned with impeding legal processes of courts outside the province by preventing their enforcement in the province.

 

                   Similarly, s. 92(16) seems an implausible head of power under which the Act could be authorized because the refusal to allow discovery of documents related to court orders or legislative acts emanating from outside the province is hardly a matter of a "merely local or private Nature in the Province".  Rather the Act is specifically concerned with orders and acts from outside the province, and the response of parties in Quebec to them.

 

                   The most promising constitutional basis for the Act is s. 92(13), as it relates to the substantive property and civil rights in the province.  The documents and information in question may certainly form the subject of legislation as property in the province of Quebec.  This indeed was the basis principally relied on by those seeking to uphold the Act.  The purpose of the Act, it was said, was to prohibit execution of decisions made outside the province that affected the communication of records of business concerns located in the province.

 

                   This argument is understandable in terms of traditional approaches to private international law as it operates between foreign states.  It is well established that judgments and orders of a state must be recognized and enforced in order to have effect in a foreign jurisdiction.  But the traditional conflicts rules, which were designed for an anarchic world that emphasized forum independence, must be assessed in light of the principles of our constitutional law mentioned above.  First, the statute must conform to the requirement that it be "in the Province" as required by s. 92, a requirement that involves a balancing under the "pith and substance" approach to determine if it exceeds provincial jurisdiction to enact legislation with extraprovincial effect.  Secondly, the courts must consider appropriate policy in relation to recognition and enforcement of judgments issued in other provinces in light of the legal interdependence under the scheme of confederation established in 1867.  It is the latter issue I now wish to explore.

 

The Morguard Decision

 

                   It was the situation of total autonomy over recognition and enforcement, and the consequent disruption it could cause for any litigation involving interprovincial or international elements, that was the concern of this Court's decision in Morguard, supra.  Morguard was concerned with tempering this source of unfairness and inconvenience to litigants in conformity with the changing nature of the world community and, in particular, in light of the Canadian constitutional structure.

 

                   A central idea in that judgment was comity.  But as I stated, at p. 1098, "I do not think it much matters whether one calls these rules of comity or simply relies directly on the reasons of justice, necessity and convenience" that underlie them.  In my view, the old common law rules relating to recognition and enforcement were rooted in an outmoded conception of the world that emphasized sovereignty and independence, often at the cost of unfairness.  Greater comity is required in our modern era when international transactions involve a constant flow of products, wealth and people across the globe.

 

                   In any event, I indicated, at p. 1099, that the traditional rules emphasizing sovereignty seem to "fly in the face of the obvious intention of the Constitution to create a single country".  Among the factors I identified that would also support a more cooperative spirit in recognition and enforcement were (1) common citizenship, (2) interprovincial mobility of citizens, (3) the common market created by the union as reflected in ss. 91(2), 91(10), 121 and the peace, order and good government clause, and (4) the essentially unitary structure of our judicial system with the Supreme Court of Canada at its apex to which I have earlier referred.  The following passage, at p. 1099 of Morguard, sets out these factors:

 

                   In any event, the English rules seem to me to fly in the face of the obvious intention of the Constitution to create a single country.  This presupposes a basic goal of stability and unity where many aspects of life are not confined to one jurisdiction.  A common citizenship ensured the mobility of Canadians across provincial lines, a position reinforced today by s. 6  of the Charter ; see Black v. Law Society of Alberta, [1989] 1 S.C.R. 591.  In particular, significant steps were taken to foster economic integration.  One of the central features of the constitutional arrangements incorporated in the Constitution Act, 1867  was the creation of a common market.  Barriers to interprovincial trade were removed by s. 121.  Generally trade and commerce between the provinces was seen to be a matter of concern to the country as a whole; see Constitution Act, 1867 , s. 91(2) .  The Peace, Order and Good Government clause gives the federal Parliament powers to deal with interprovincial activities (see Interprovincial Co-Operatives Ltd. v. The Queen, [1976] 1 S.C.R. 477; as well as my reasons in R. v. Crown Zellerbach Canada Ltd., [1988] 1 S.C.R. 401 (dissenting but not on this point); see also Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161).  And the combined effect of s. 91(29) and s. 92(10) does the same for interprovincial works and undertakings.

 

                   These arrangements themselves speak to the strong need for the enforcement throughout the country of judgments given in one province.  But that is not all.  [The judgment then goes on, at pp. 1099-1100, with the passage cited supra regarding the essentially unitary structure of the Canadian court system, which allays any concerns about differential quality of justice among the provinces.]

 

                   The importance of adapting the traditional procedural limits of common law rules in light of the demands of the structural requirements of the Canadian Constitution was not something invented in Morguard.  For example, I noted then, and repeat now, what was said by Estey J. in Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2, at pp. 34-35, in relation to Mareva injunctions designed to prevent the removal of assets from one jurisdiction to another:

 

                   All the foregoing considerations, while important to an understanding of the operation of this type of injunction, leave untouched the underlying and basic question:  do the principles, as developed in the United Kingdom courts, survive intact a transplantation from that unitary state to the federal state of Canada?

 

He concluded that the rules intended to deal with the removal of assets and "fend off the depredations of shady mariners operating out of far-away havens, usually on the fringe of legally organized commerce" were not applicable to situations where a corporate defendant was seeking to move assets for legitimate business purposes to another jurisdiction in Canada.  Similarly, I do not think litigation engendered against a corporate citizen located in one province by its trading and commercial activities in another province should necessarily be subject to the same rules as those applicable to international commerce.  In particular, when a corporate citizen situate in one province chooses to engage in trading and commercial activities in other provinces, the rules governing consequential litigation, specifically rules for the recognition and enforcement of judgments, should be adapted to the specific nature of the Canadian federation.  And it is difficult to believe that ordinary individuals moving across Canada in the exercise of their common right of citizenship should be treated differently; see Black v. Law Society of Alberta, [1989] 1 S.C.R. 591.

 

                   Morguard was not argued in constitutional terms, so it was sufficient there to infuse the constitutional considerations into the rules that might otherwise have governed issues of enforcement and recognition of judgment.  But the issue was very clearly raised in this case and in fact a constitutional question was framed.  Now, as perusal of the last cited passage from Morguard reveals, the constitutional considerations raised are just that.  They are constitutional imperatives, and as such apply to the provincial legislatures as well as to the courts, as the Attorney General for Ontario conceded and as a number of commentators have maintained; see, for example, P. Hogg, Constitutional Law of Canada (3rd ed. 1992), at p. 335; V. Black and J. Swan, "New Rules for the Enforcement of Foreign Judgments:  Morguard Investments Ltd. v. De Savoye", supra.  In short, to use the expressions employed in Morguard, at p. 1100, the "integrating character of our constitutional arrangements as they apply to interprovincial mobility" calls for the courts in each province to give "full faith and credit" to the judgments of the courts of sister provinces.  This, as also noted in Morguard, is inherent in the structure of the Canadian federation, and, as such, is beyond the power of provincial legislatures to override.  This does not mean, however, that a province is debarred from enacting any legislation that may have some effect on litigation in other provinces or indeed from enacting legislation respecting modalities for recognition of judgments of other provinces.  But it does mean that it must respect the minimum standards of order and fairness addressed in Morguard.  I turn briefly then to the relevant principles after which I shall consider whether the statute impugned in this case offends these standards.

 

                   The basic thrust of Morguard was that in our federation a greater degree of recognition and enforcement of judgments given in other provinces was called for.  Morguard was careful to indicate, however, that a court must have reasonable grounds for assuming jurisdiction.  One must emphasize that the ideas of "comity" are not an end in themselves, but are grounded in notions of order and fairness to participants in litigation with connections to multiple jurisdictions.

 

                   In Morguard, a more accommodating approach to recognition and enforcement was premised on there being a "real and substantial connection" to the forum that assumed jurisdiction and gave judgment.  Contrary to the comments of some commentators and lower court judges, this was not meant to be a rigid test, but was simply intended to capture the idea that there must be some limits on the claims to jurisdiction.  Indeed I observed (at p. 1104) that the "real and substantial connection" test was developed in Indyka v. Indyka, [1969] 1 A.C. 33, in a case involving matrimonial status (where sound policy demands generosity in recognition), and that in a personal action a nexus may need to be sought between the subject-matter and the territory where the action is brought.  I then considered the test developed in Moran v. Pyle National (Canada) Ltd., supra, for products liability cases as an example of where jurisdiction would be properly assumed.  The exact limits of what constitutes a reasonable assumption of jurisdiction were not defined, and I add that no test can perhaps ever be rigidly applied; no court has ever been able to anticipate all of these.  However, though some of these may well require reconsideration in light of Morguard, the connections relied on under the traditional rules are a good place to start.  More than this was left to depend on the gradual accumulation of connections defined in accordance with the broad principles of order and fairness; V. Black, "The Other Side of Morguard:  New Limits on Judicial Jurisdiction" (1993), 22 Can. Bus. L.J. 4.  But I think that the general approach was solidly based.

 

                   Since the matter has been the subject of considerable commentary, I should note parenthetically that I need not, for the purposes of this case, consider the relative merits of adopting a broad or narrow basis for assuming jurisdiction and the consequences of this decision for the use of the doctrine of forum non conveniens; see the opposing views of V. Black in the article just cited, and P. Finkle and C. Labrecque, "Low-Cost Legal Remedies and Market Efficiency:  Looking Beyond Morguard" (1993), 22 Can. Bus. L.J. 58.  Whatever approach is used, the assumption of and the discretion not to exercise jurisdiction must ultimately be guided by the requirements of order and fairness, not a mechanical counting of contacts or connections.  Here, the courts below found that there was, on the authorities, jurisdiction, and that there was no reason to apply the doctrine of forum non conveniens.  In light of commentaries on Morguard, I should perhaps also add that I need not consider the implications, if any, of Morguard on choice of law and other aspects of conflicts law.

 

                   Finally, I noted in Morguard (at p. 1100) that a number of commentators had suggested that the federal Parliament had power to legislate respecting the recognition and enforcement of judgments, and in my view that suggestion is well founded.  This issue is ultimately related to the rights of the citizen, trade and commerce and other federal legislative powers, including that encompassed in the peace, order and good government clause.  But subject to these overriding powers, I see no reason why the provinces should not be able to legislate in the area, subject, however, to the principles in Morguard and to the demands of territoriality as expounded in the cases, most recently in Reference re Upper Churchill Water Rights Reversion Act, supra.

 

Application of Morguard Principles to the Impugned Statute

 

                   I now turn to the issue whether the impugned statute is consistent with the principles I have just set forth.  I say at the outset that I do not think it is.  A province undoubtedly has an interest in protecting the property of its residents within the province, but it cannot do so by unconstitutional means.  Here the means chosen are intended to unconditionally refuse recognition to orders and thereby impede litigation, not only in foreign countries but in other provinces.  At least when a court order is sought, if not before, a judicial order in another province will be denied effect.  There are no qualifications.  No discretion is given so it can scarcely be said that the Act respects the principles of order and fairness which must, under the Morguard principle, inform the procedures required for litigation having extraprovincial effects.  Apart from the legislative aspect, the situation in Morguard differed in that the appellant there sought refusal of recognition after the judgment was rendered.  But the constitutional mandate cannot be avoided by a preemptive strike.  The whole purpose of a blocking statute is to impede successful litigation or prosecution in other jurisdictions by refusing recognition and compliance with orders issued there.  Everybody realizes that the whole point of blocking statutes is not to keep documents in the province, but rather to prevent compliance, and so the success of litigation outside the province that that province finds objectionable.  This is no doubt part of sovereign right, but it certainly runs counter to comity.  In the political realm it leads to strict retaliatory laws and power struggles.  And it discourages international commerce and efficient allocation and conduct of litigation.  It has similar effects on the interprovincial level, effects that offend against the basic structure of the Canadian federation.

 

                   As a matter of legislative history, we were told, the Ontario and Quebec statutes were precipitated by the aggressively extraterritorial, "long arm" antitrust statutes of the United States.  Unfortunately, these blocking statutes are a blunt response, and themselves have become like long arm statutes that haphazardly end up harming individuals who were not in the jurisdiction and are not pursuing the actions against which the blocking statutes were allegedly originally aimed.

 

                   This could, no doubt, be defended on the basis of sovereignty.  Indeed the federal Parliament is expressly permitted by our Constitution to legislate with internationally extraterritorial effect.  But this appeal is concerned with the provinces within Confederation.  Morguard requires that the rules of private international law must be adapted to the structure of our federation.  In a federation, we assume that there is more commonality as to what is acceptable action; we have many common procedures.  We even have similar conflicts rules, related, for example, to jurisdiction and deference, and to procedures regarding the lex fori.  And courts are required, by constitutional restraints, to assume jurisdiction only where there are real and substantial connections to that place.  In terms of policy, the presence of such blocking statutes is an anachronism, not even, so we were told, aimed at interprovincial litigation at its inception in the 1940s, but definitely inimical to such litigation if applied on the interprovincial level.

 

                   If blocking statutes of the type now in effect in both Ontario and Quebec were possible under the Constitution, they would have the potential of affecting the rights of litigants in all the other provinces, whenever the defendant was a Quebec or Ontario business.  Discovery is a very important tool of civil litigation.  It is especially important in cases of this type, where there are allegations of some sort of product liability.  The ultimate plaintiff must have a tool to access the otherwise internal documents, especially of large corporate monoliths.  And given that there are allegations of civil conspiracy in this case, it is all the more necessary.  That British Columbia, despite what was stated in the courts below, considers discovery central is evident in that refusal to comply with a demand is one of the few procedural violations that will result in a default judgment in the province.  Most other instances of non-compliance with Rules of Court are treated as irregularities that can be remedied; see Rule 2.  Moreover, the trend of the case law on Rule 26 is to emphasize the importance of the right to discovery, even at the cost of considerable loss of confidentiality.  In Boxer v. Reesor (1983), 43 B.C.L.R. 352, McEachern C.J.S.C. (as he then was) confirmed the fundamental importance of discovery as emphasized long ago in the English case of Cie Financière et Commerciale du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55 (C.A.).

 

                   It may be that the only reason that these blocking statutes have not caused more problems in the past is that most defendants assumed that they had no basis to claim that they barred the production of documents in situations like the present, and voluntarily produced the documents.  But future defendants, once aware of this strategy for avoiding discovery, will only be too happy to avail themselves of the operation of the statute.  The impact of this bad practice can already be seen in the case of 2632-7602 Québec Inc. v. Pizza Pizza Canada Inc., supra, where the trial judge in Quebec refused to order discovery with respect to Ontario defendants claiming a prohibition under the equivalent Ontario statute, misguidedly relying on Morguard.  If constitutionally permissible, this approach would effectively immunize the business concerns located in Quebec and Ontario from ever having to produce documents sought for the purposes of litigation in other provinces.  All they, or their shareholders, would need to do to escape discovery would be to simply seek an order as provided in the Act.  When one considers that Ontario and Quebec are the headquarters for many of the largest corporations in this country, many of which will properly be subject to tort and other actions in other provinces, the impact would be serious.  The essential effect then, and indeed the barely shielded intent, is to impede the substantive rights of litigants elsewhere.  It would force parties to conduct litigation in multiple fora and compel more plaintiffs to choose to litigate in the courts of Ontario and Quebec.  Other provinces could, of course, follow suit.  It is inconceivable that in devising a scheme of union comprising a common market stretching from sea to sea, the Fathers of Confederation would have contemplated a situation where citizens would be effectively deprived of access to the ordinary courts in their jurisdiction in respect of transactions flowing from the existence of that common market.  The resultant higher transactional costs for interprovincial transactions constitute an infringement on the unity and efficiency of the Canadian marketplace (see Finkle and Labrecque, supra), as well as unfairness to the citizen.

 

                   The lack of order and fairness in the present situation is evident in a further incongruity. It is that full rights of discovery are available to parties in the civil procedure of Ontario and Quebec.  It is not as if these jurisdictions have a totally different tradition of civil procedure.  If the litigation was proceeding in either of those provinces there would be full discovery.  And if both parties to the action had been from British Columbia there would be discovery.  But somehow, because of the fortuitous combination of litigation in British Columbia involving a defendant from Quebec or Ontario, the discovery process is barred.

 

                   In light of the foregoing, I conclude that the Quebec Business Concerns Records Act is constitutionally inapplicable to other provinces, and consequently in the present case.

 

Other Issues

 

                   In view of the fact that I have found the impugned Act constitutionally inapplicable because it offends against the principles enunciated in Morguard, it becomes unnecessary for me to consider whether it is wholly unconstitutional because, in pith and substance, it relates to a matter outside the province.  Nor is it necessary to consider whether the statute could properly be "read down" to permit its application to jurisdictions outside the country, nor to consider the issue of public policy raised by the appellant.

 

                   One subsidiary issue, however, does require attention.  It was argued on behalf of Lac d'Amiante that since it was prohibited by an order of the Quebec court in a separate proceeding from responding to a demand for discovery in British Columbia, in a practical effect that order was res judicata.  I have difficulty with this proposition.  The order was not one determining rights past and closed.  Rather it purports to direct future action which the court has no jurisdiction to do.  This seems to me to be all the more cogent when the order is sought to be applied in another action.

 

Disposition

 

                   For these reasons, I would allow the appeal with costs throughout and order the respondents to produce for inspection within 30 days, in British Columbia, copies of all documents in their possession and control relating to the matters in question in this action, regardless of whether those documents are located inside or outside the province of Quebec.  I would answer the constitutional question by saying that the Act should be read as not applying to the provinces since such application would be ultra vires under the constitutional principle set forth in the Morguard case.

 

                   Appeal allowed with costs.

 

                   Solicitors for the appellant:  Camp Church & Associates, Vancouver.

 

                   Solicitors for the respondent Lac d'Amiante du Québec Ltée:  Russell & DuMoulin, Vancouver.

 

                   Solicitors for the respondents Asbestos Corporation Limited, Atlas Turner Inc. and Bell Asbestos Mines Limited:  Farris, Vaughan, Wills & Murphy, Vancouver.

 

                   Solicitors for the respondent JM Asbestos Inc.:  Lindsay Kenney, Vancouver.

 

                   Solicitors for the respondent the Quebec Asbestos Mining Association:  Lang Michener, Vancouver.

 

                   Solicitors for the respondent National Gypsum Co.:  Arvay, Finlay, Victoria.

 

                   Solicitor for the intervener the Attorney General for Ontario:  George Thomson, Toronto.

 

                   Solicitors for the intervener the Attorney General of Quebec:  Jean‑Yves Bernard and Alain Gingras, Ste‑Foy.