



COURT OF APPEAL FOR ONTARIO

CITATION:
Out-Of-Home
    Marketing Association of Canada v. Toronto (City), 2012 ONCA 212

DATE: 20120402

DOCKET: C53527 and C53521

Feldman, Sharpe and Epstein JJ.A.

BETWEEN

Out-Of-Home Marketing Association of
    Canada

Applicant

(Respondent / Appellant by way of
    cross-appeal)

and

City of Toronto

Respondent

(Appellant / Respondent by way of
    cross-appeal)



AND BETWEEN



Pattison
          Outdoor Advertising LP and Pattison Sign Group,

A Division of Jim
          Pattison Industries Ltd.



Applicants

(Appellants / Respondent by way of
          cross-appeal)



and



City
          of Toronto



Respondent

(Respondent / Appellant by way of
          cross-appeal)



Earl A.
          Cherniak Q.C. and Jason Squire, for Pattison Outdoor Advertising LP

Christopher
          J. Williams and Patrick Harrington, for Out-of-Home Marketing Association of
          Canada



Ansuya
          Pachai and Ian A.G. Duke, for the City of Toronto



Heard: November
          23, 2011



On
          appeal from the judgment of Justice M. Penny of the Superior Court of Justice
          dated March 3, 2011, with reasons reported at 2011 ONSC 537, 81 M.P.L.R. (4
th
)
          1.



Sharpe J.A.:



[1]

In 2010, the City of Toronto enacted a bylaw imposing a tax on
    third party signs  fixed exterior signs that advertise goods or services not
    available at the premises where the sign is located: City of Toronto, by-law
    No. 197-2010 (the Sign Tax by-law). Pattison Outdoor Advertising (Pattison)
    and Out-of-Home Marketing Association of Canada (OMAC) challenged the Sign
    Tax by-law on various grounds, principally, that it imposes an indirect tax and
    therefore is
ultra vires
the City as contravening the
City of
    Toronto Act
, 2006, S.O. 2006, c. 11 and the
Constitution Act
,
    1867 (U.K.), 30 & 31 Vict., c. 3. Pattison also argues that the Sign Tax
    by-law should be quashed on the ground that it is discriminatory. OMAC submits
    that the even if the Sign Tax by-law is valid, it does not apply to signs that
    existed at the time of its enactment on account of a provision in the
City
    of Toronto Act
exempting existing lawfully erected signs from the reach of
    by-laws respecting signs.

[2]

The application judge gave comprehensive reasons refusing to
    quash the Sign Tax by-law. However, he accepted OMACs argument that existing
    signs were grandfathered under the saving provision. The application judge
    also imposed a sealing order protecting from disclosure certain financial
    information filed by Pattison in support of its argument that the tax was
ultra
    vires
.

[3]

Pattison and OMAC appeal the dismissal of their
ultra vires
challenge, arguing that the Sign Tax by-law imposes an indirect tax. Pattison
    also appeals the dismissal of the challenge on the ground that the Sign Tax
    by-law is discriminatory. Toronto appeals the grandfathering and sealing
    orders, arguing that the saving provision has no application to a by-law
    imposing a tax and that there was no basis in law for the sealing order.

[4]

My reasons will address the first three issues, all of which
    address the Sign Tax by-law. In respect of the fourth issue, that of the
    sealing order, I am in agreement with the reasons of my colleague, Epstein J.A.

The Sign Tax By-Law

[5]

The Sign Tax by-law imposes an annual tax on signs that advertise goods
    or services not available at the place where the sign is located.

[6]

The key definitions are as follows:

·

THIRD PARTY SIGN - A Signwhich advertises, promotes, or directs
    attention to businesses, goods, services, matters or activities that are not
    available at or related to the premises where the Sign is located and has an
    area of greater than 1 square metre.

·

SIGN - Any device, fixture or medium that displays Sign Copy to
    attract attention to or convey information of any kind and shall include its
    supporting structure, Sign Face, lighting fixtures and all other component
    parts.

·

SIGN COPY - Any colour graphic, logo, symbol, word, numeral,
    text, image, picture or combination thereof displayed on a Sign Face

[7]

The tax is payable annually on the earlier of a specified date or
    a date prior to the issuance of a permit for the sign. The tax is imposed on
    the owner, defined as the person who owns and controls the display of Sign
    Copy rather than the owner of the sign itself, making the tax payable by the
    party who owns or controls the display. There are five tax rates that depend on
    the size, type and physical properties of the sign. Although the tax is payable
    only where a sign displays Sign Copy, the amount of the fixed annual tax is not
    related to, or determined by, the advertising sold by the owner or the revenue
    derived by the owner from the sale of advertising.

[8]

In his very comprehensive and thoughtful reasons, the application
    judge carefully considered and analyzed Torontos Sign Tax by-law. He fully
    explored the evidence of the process that led to the enactment of the by-law.
    He also carefully reviewed the evidence relating to the businesses of Pattison
    and OMAC and of the impact the tax would have on their businesses. As I agree
    with his analysis of the evidence and his rejection of the arguments that the
    by-law should be quashed on the grounds that the tax is indirect and is
    discriminatory, this portion of my reasons will be relatively brief.  I do,
    however, respectfully disagree with the application judges holding that signs
    existing at the time the Sign Tax by-law was enacted are protected by a
    grandfathering clause which exempts them from being subject to the tax.

ANALYSIS

(1)

Does the Sign Tax by-law impose an indirect tax?

[9]

It is not disputed that Toronto has no authority to impose an
    indirect tax. The
City of Toronto Act,
s. 267 only allows Toronto to
    impose a tax if the tax is a direct tax. Section 92.2 of the
Constitution
    Act
, 1867 limits the authority of the province, and therefore
    municipalities in the exercise of their delegated powers, to the imposition of
    direct taxation.

[10]

Pattison
    and OMAC submit that they cannot survive in the outdoor sign advertising
    business unless they can pass on the economic burden of the tax by increasing
    advertising rates or reducing the rents paid to landowners. They argue this
    practical reality makes the tax indirect.

[11]

In my view, the application judge correctly rejected this
    submission. The courts have consistently adopted John Stuart Mills classic
    distinction between a direct and an indirect tax in his 1848 treatise,
Principles
    of Political Economy
, Book V, c. III at p. 371:

A direct tax is one which is demanded from the very persons who
    it is intended or desired should pay it. Indirect taxes are those which are
    demanded from one person in the expectation and intention that he shall
    indemnify himself at the expense of another: such as the excise or customs.

[12]

See, for example, Canadian
Industrial Gas & Oil Ltd. v.
    Government of Saskatchewan et al.
, [1978] 2 S.C.R. 545 at p. 581.

[13]

It is well-established in the case law, however, that the legal
    definition of an indirect tax is not to be determined on the basis of pure
    economics or on the basis of the particular financial circumstances of the
    parties affected by the tax. The reason is obvious: if the argument of Pattison
    and OMAC were accepted, virtually every tax would be an indirect tax. Every
    business that bears a tax will treat the tax as a cost that must be factored
    into the price charged for its products. This natural tendency of every
    taxpayer cannot, and does not, automatically make the tax an indirect tax.

[14]

One of the most frequently cited and helpful definitions of an
    indirect tax is that articulated by Rand J. in
Canadian Pacific Railway Co.
    v. Saskatchewan (Attorney General)
, [1952] 2 S.C.R. 231 at pp. 251-52:

If the tax is related or relatable, directly or indirectly, to
    a unit of the commodity or its price, imposed when the commodity is in course
    of being manufactured or marketed, then the tax tends to cling as a burden to
    the unit or the transaction presented to the market.

[15]

I agree with Torontos argument that the third party sign tax
    simply does not fit this definition. The tax is not tied to the price of, or
    the revenue from, the advertising. It is a flat annual tax imposed on the sign
    owner. It is not a tax on the commodity sold by the sign owner, and it is not
    imposed on, rated, or rateable to, a unit of the commodity or its price. It is
    not imposed on a commodity in the course of production or marketing and
    therefore it cannot cling as a burden to the unit or transaction as it is
    presented to the market. The fact that the tax is triggered by the presence of
    Sign Copy and that the amount of tax is determined by a classification system
    based on size, type and physical properties does not make it a tax on a unit of
    sale or production. In the application judge's words, at para. 108:

[T]he tax is levied on any device which displays a message
    advertising goods or services at a location other than where the device is
    located. To be sure, the device, to be taxable, must display a message. But
    that does not change the nature of the tax itself, which is a tax on the
    device. The tax does not vary with the volume or nature of the advertising
    copy displayed.

[16]

The appellants place considerable emphasis on the point that the
    nature of a tax is to be assessed according to its general tendency. They say
    that because, as a matter of business economics, they must pass on the burden
    of the tax, its general tendency is to be an indirect tax. However, as the
    application judge correctly held, that argument has been consistently rejected
    in the case law: see
Canadian Pacific Railway Co. v. Saskatchewan (Attorney
    General)
[1952] 2 S.C.R. 231;
New Brunswick (Minister of Finance) v.
    Simpson-Sears Ltd.
[1982] 1 S.C.R. 144, at p. 161-3; G. V. La Forest,
The
    Allocation of Taxing Power Under the Canadian Constitution
, 2nd ed. (Toronto:
    Canadian Tax Foundation, 1981), at p. 83; Peter Hogg, Constitutional Law of
    Canada, 5th ed., looseleaf, (Toronto: Carswell, 2010), at ch. 31.2.

[17]

I agree with and adopt the following passage from the application
    judges reasons rejecting this argument, at para. 95:

The fact that sign owners may recoup the tax in their overall
    pricing structure, competitive and other factors permitting, is no ground for
    classifying the tax as an indirect tax. The fact that the tax is a cost of
    carrying on business which may compel the sign owners to try to recover it from
    customers does not mean that it is, for constitutional purposes, not exacted
    from the very person who it is intended and expected would pay it.

[18]

In
Reference re Quebec Sales Tax
, [1994] 2 S.C.R. 715 at
    pp. 725-27, the Supreme Court held that the fact that the taxed party may seek
    to pass on the economic consequences of the tax, more or less successfully, is
    not the defining feature of the legal passing on requirement. The legal
    nature of the tax is to be assessed by asking the question posed by Rand J. as
    stated above: does the tax cling as a burden to the unit of production in
    the sense that its amount attaches to the good and moves together with the good
    through the chain of supply? To repeat, the annual tax at issue here may
    increase Pattisons and OMACs cost of doing business and those parties may
    therefore charge more for the product they sell. However, the annual tax is not
    imposed on a unit of advertising space sold by the appellants and it lacks the
    clinging quality that is the hallmark of an indirect tax.

[19]

The
    Sign Tax by-law is distinguishable from the tax at issue in
Ontario Home
    Builders Association v. York Region Board of Education
, [1996] 2 S.C.R.
    929 which dealt with a levy on new residential dwelling units to cover
    education capital costs. The levy, imposed on the developer, was determined by
    the number of units being sold. For that reason, it was found to fit the
    definition of an indirect tax in that it was rated to a unit of the commodity,
    imposed when the commodity is in course of being marketed, and would therefore
    naturally cling as a burden to the unit or the transaction presented to the
    market.

[20]

I
    agree with Toronto that the tax at issue here is very similar to the annual fee
    imposed on signs that was at issue in
Urban Outdoor Trans Ad. v.
    Scarborough (City)
52 OR (3d) 607, at para. 39:

The annual fees involved in this case, if not fees, are similar
    to a land tax and, in my view, would more properly be considered to be direct
    taxation.  The annual fee is paid in relation to permanent fixtures within
    the City.  It is not tied to the number of times that the billboard space
    is sold to an advertiser.  The annual fee is not targeted at any
    commodity.  These billboards are used as part of national advertising
    campaigns.  The fees do not cling as a burden to these advertising
    campaigns.  There was no evidence that the annual fee was demanded from
    the sign companies in the expectation and intention that they could indemnify
    themselves at the expense of these national advertisers.  The fact that
    the companies might attempt to recoup the fee in their overall pricing
    structure did not make it an indirect tax.  [citations omitted]

[21]

I
    conclude, accordingly, that the application judge did not err in finding that
    the Sign Tax by-law did not impose an indirect tax.

(2)

Is the by-law discriminatory?

[22]

The
    Sign Tax by-law contains a long list of exemptions for various signs including
    signs owned by the Crown, Crown corporations, boards and commissions, education
    boards, universities and other post-secondary institutions, hospitals, nursing
    homes and the City of Toronto: see s. 771-78.

[23]

Pattisons
    attack on the by-law as discriminatory focuses on the exemption for an Owner
    who has entered into a revenue sharing agreement with the City of Toronto.
    Toronto has a revenue sharing agreement with Astral Media Outdoor (Astral),
    Pattisons competitor, whereby Astral supplies for public use street
    furniture  transit shelters, benches, garbage containers, public washrooms
    and information kiosks - and is permitted to sell space on these structures for
    advertising. Toronto receives not only the benefit to its residents of the
    facilities provided by Astral but also a share of the advertising revenue. This
    represents a significant source of revenue for Toronto.

[24]

Pattison
    complains that Astral has an unfair competitive advantage because it does not
    have to pay the third party sign tax. This, Pattison submits, constitutes a
    form of discrimination that renders the by-law vulnerable to attack.

[25]

The
    application judge properly focussed on the applicable legal test for municipal
    discrimination laid down by the Supreme Court of Canada in
Shell Canada
    Products Ltd. v. Vancouver (City)
, [1994] 1 S.C.R. 231, at p. 259:

The rule pertaining to municipal discrimination is essentially
    concerned with the municipalitys power. Municipalities must operate within the
    powers conferred on them under the statutes which create and empower them.
    Discrimination itself is not forbidden. What is forbidden is discrimination
    which is beyond the municipalitys powers as defined by its empowering statute.
    Discrimination in this municipal sense is conceptually different from
    discrimination in the human rights sense; discrimination in the sense of the
    municipal rule is concerned only with the ambit of delegated power.

[26]

In
    my view, the application judge correctly concluded that Pattison failed to
    demonstrate that the exemption for revenue sharing arrangements amounts to
    discrimination under that test.

[27]

The
City of Toronto Act
, s. 267 specifically authorizes Toronto to provide
    for exemptions from taxes. Section 10(1) provides that a by-law under this Act
    may be general or specific in its application and may differentiate in any way
    or on any basis the City considers appropriate. The application judge
    carefully considered the evidence as to the rationale for the revenue sharing
    exemption. He found that the exemption was not arbitrary or improperly
    motivated and that it was rationally connected to a legitimate municipal
    purpose.

[28]

The
    application judge described the Sign Tax by-law, at para. 142, as one of
    several policy initiatives relating to signs and billboards and that, while
    seeking to raise revenues, the City also had to balance a number of competing
    interests, claims and other policy objectives. These policy objectives include
    not only raising revenue for municipal purposes, but also controlling and
    regulating the display of signs and enhancing the quality and character of
    shared public spaces. The revenue sharing exemption allows Toronto to enter an
    arrangement that significantly benefits the city and its residents. Toronto is
    able to gain both substantial revenue and the provision of physical structures
    and facilities for the use and enjoyment of its residents that also enhance the
    citys visual and physical qualities.

[29]

The
    fact that this arrangement may give Astral a competitive advantage over
    Pattison renders neither the by-law nor the exemption vulnerable to attack. The
    revenue sharing agreement with Astral is simply a different arrangement, fully
    authorized by the Act and the by-law, that permits Toronto to advance and
    achieve legitimate municipal objectives.

(3)

Are signs that existed on the date the by-law was enacted exempt from
    the tax?

[30]

OMAC
    submits that existing signs were grandfathered and not subject to the tax
    because of the
City of Toronto Act
, s. 110.

Advertising
    devices

110.
(1)  A
    City by-law respecting advertising devices, including signs, does not apply to
    an advertising device that was lawfully erected or displayed on the day the
    by-law comes into force if the advertising device is not substantially altered,
    and the maintenance and repair of the advertising device or a change in the
    message or contents displayed is deemed not in itself to constitute a
    substantial alteration.

Lien for
    costs and charges

(2)  All costs and charges incurred by the City for
    the removal, care and storage of an advertising device that is erected or
    displayed in contravention of a City by-law are a lien on the advertising
    device that may be enforced by the City under the
Repair and Storage Liens
    Act
.

[31]

The
    application judge accepted OMACs argument. He held, at para. 152, that the
    narrow question of interpretation was whether the Sign Tax by-law was a
    by-law respecting advertising devices, including signs and that the answer
    is unequivocally yes. The application judge noted that the phrase in respect
    of had consistently been given very wide scope. He rejected Torontos argument
    that properly read, s. 110 only applied to by-laws regulating or restricting
    signs, stating, at paras. 159-60, that if the legislature had intended to limit
    the reach of s. 110, more specific language to that effect was required.

[32]

Toronto
    appeals the application judges determination and argues that s. 110 is
    nothing more than a non-conforming use provision intended to apply to by-laws
    enacted pursuant to the Citys authority to regulate signs. The reach of s. 110,
    according to Toronto, does not extend to exempt owners of existing signs from
    paying the tax imposed by the Sign Tax by-law. The Sign Tax by-law is a measure
    enacted pursuant to the Citys authority to raise revenue. It does not render
    unlawful any sign that was, before its enactment, lawfully erected or displayed
    and therefore s. 110 has no application.

[33]

While
    I agree with the application judge that the word respecting is ordinarily
    given broad meaning, it is not the only or, in my view, the governing word in
    s. 110. Section 110 must be read as a whole and in the context of the rest of
    the Act. There are several aspects of the wording of s. 110 that, when read in
    the light of the sections apparent purpose and other relevant provisions of
    the Act, satisfy me that it does not apply to the Sign Tax by-law.

[34]

I
    take as my starting point the source of Torontos authority to enact the Sign
    Tax by-law. That authority is to be found in s. 267(1) of the
City of
    Toronto Act
which gives the City the power to impose a tax in the City
    provided the by-law is a direct tax and satisfies certain criteria specified in
    s. 267(3). As stated in its preamble, the Sign Tax by-law was enacted for the
    purpose of supplementing the revenue of the City.

[35]

I
    agree with Toronto that, given its revenue raising purpose, the Sign Tax by-law
    was not and could not have been validly enacted under the Citys authority,
    conferred by s. 8(2) 10, to pass by-laws respectingStructures, including
    fences and signs. That is made clear by s. 13 which expressly states that s. 8
    does not authorize the City to impose any type of tax. Section 8(2) 10 is,
    however, the source of legislative authority for the enactment of the Sign
    Regulation By-law, a by-law which, as its name suggests, prescribes detailed
    standards for signs and renders signs that do not comply with those standards unlawful.
    The Sign Regulation by-law explicitly incorporates s. 110(1) of the Act,
    protecting from its reach non-conforming signs that were in existence at the
    time it was enacted.

[36]

The
    language relied on by OMAC in s. 110 specifically tracks the wording of the
    power to regulate signs conferred by s. 8(2). That section, as I have noted,
    authorizes the City to pass by-laws
respecting
signs. In my view, by
    using those very words in s. 110, the legislature indicated an intention to
    relate the grandfathering effect of s. 110 to regulatory by-laws enacted
    pursuant to s. 8(2). The Sign Tax by-law is not a by-law respecting signs
    pursuant to s. 8(2). It is a by-law to impose a tax in the City pursuant to
    s. 267(1). The fact that it applies to or affects signs does not make it a
    by-law
respecting
signs within the meaning of the relevant
    power-conferring statutory provisions.

[37]

More
    generally, the language of s. 110 clearly indicates that it was enacted to deal
    with the unfairness of subjecting existing signs to newly enacted regulatory
    standards. It is a classic example of a legal non-conforming use provision that
    is designed to protect a property owner who has erected a structure in reliance
    on existing municipal standards from being subjected to standards that did not
    exist at the time the structure was erected. See, for example, Ian MacF. Rogers
    and Alison Scott Butler.
Canadian Law of Planning and Zoning
,
    loose-leaf, 2nd ed. (Toronto: Carswell, 2009), at para. 6.2.1:

[38]

Section
    110 operates to exempt signs that were 
lawfully
erected or displayed
    on the day the by-law comes into force. The word lawfully indicates that its
    purpose is to deal with the regulation of signs and the application of the
    standards that the City has prescribed for lawful signs. Similarly, the
    reference to substantial alteration indicates that the purpose of s. 110 is
    to deal with the problem of changing standards in relation to existing uses, an
    issue commonly encountered with non-conforming uses. Subsection 110(2), allows
    the City to recover the cost of removing non-complaint signs, which confers a
    power that coincides with the regulation of signs and the prescription of
    regulatory standards. In my view, the references to signs that were lawfully
    erected or displayed, to substantial alteration and to recovering the cost
    of removal of non-compliant signs all point to regulation of signs, not
    taxation.

[39]

I
    also agree with the submission that the powers conferred by the
City of
    Toronto Act
should be read in a generous fashion so as to enable the City
    to meet the needs of its residents and to provide them with good government. To
    apply the legal non-conforming use provision to the Sign Tax by-law would
    represent a significant limitation on the powers of the City to raise revenue.
    There is nothing in the provisions of the Act conferring the power to impose
    taxes limiting that power by excluding the imposition of taxes on things that
    already exist at the time a taxing by-law is enacted. In my respectful view, to
    read s. 110 as limiting the Citys revenue generating powers in the manner
    suggested by OMAC is not required by the specific language of s. 110. Moreover,
    when read in the light of ss. 8(2) and 267(1), such a reading would be contrary
    to the overall purpose and scheme of the Act.

[40]

For
    these reasons, I conclude that the application judge erred in holding that
    signs existing at the time the Sign Tax by-law was enacted are grandfathered
    and not subject to tax. Accordingly, I would allow Torontos appeal on this
    issue.

[41]

Given
    my conclusion on that issue it is not necessary for me to consider the related
    issue of the actual date the Sign Tax by-law came into effect.

Disposition

[42]

For
    these reasons, I would dismiss the appeals of Pattison and OMAC, but allow
    Torontos appeal from that portion of the judgment holding that the
City of
    Toronto Act
, s. 110, exempts from tax signs existing at the date the Sign
    Tax by-law was enacted. I agree with the Epstein J.A. that the Torontos appeal
    against the sealing order should also be allowed.

[43]

If
    the parties are unable to agree as to costs, we will receive brief written
    submissions.

Robert J. Sharpe J.A.

I agree K. Feldman
    J.A.


Epstein J.A.:

[44]

I
    am in agreement with the reasons and disposition of my colleague, Sharpe J.A.,
    concerning the first three issues. Consequently, my reasons will address only
    the fourth issue.

[45]

In
    my view, the application judge erred in law by granting the sealing order. I
    would allow the City of Torontos appeal on this issue.

[46]

Pattisons
    evidence included financial information pertaining to its outdoor sign
    inventory that Pattison identified as being proprietary, confidential and
    commercially sensitive.  At the outset of the hearing, the parties entered into
    a confidentiality agreement that allowed Pattison to produce this documentation
    on a confidential basis.  This agreement was without prejudice to Pattisons
    right to seek a sealing order from the court or the Citys right to resist such
    an order.

[47]

In
    the course of the hearing of the application neither counsel made specific
    reference to the documents in issue.  However, they were marked as exhibits,
    and certain witnesses for Pattison relied on the information in the documents
    to support the evidence they provided to the court in affidavits sworn in
    support of Pattisons challenge to the Sign Tax By-Law.

[48]

At
    the conclusion of the hearing, Pattison moved for an order sealing the
    documents from public access. No members of the media were notified of the
    application.

[49]

The
    foundation of Pattisons sealing order request, as described by the application
    judge, is that the public dissemination of this financial information would
    cause significant harm to its competitive position and business. The City took
    issue with this and also submitted that the information was necessary for the
    public to understand the outcome of the application.

[50]

The
    application judge, in his reasons for granting the order, made no reference to
    the test for granting a confidentiality order.  Rather, he responded to the
    competing arguments and concluded that Pattison had an important interest in
    the preservation of its proprietary and confidential information and that
    because the evidence in issue was not determinative of the constitutional
    question, keeping it confidential would not adversely affect the publics
    ability to comprehend the proceedings and their outcome.

[51]

A
    request to have exhibits sealed implicates the open court principle, and must
    be approached with great care.  The application judge was required to apply the
    two-step approach identified in a series of cases from the Supreme Court of
    Canada involving non-publication orders and/or sealing orders:  see
Toronto
    Star Newspapers Ltd. v. Ontario
, 2005 SCC 41, [2005] 2 S.C.R. 188, at
    para. 26;
Sierra Club of Canada v. Canada (Minister of Finance)
, 2002
    SCC 41, [2002] 2 S.C.R. 522, at paras. 45-46;
R. v. Mentuck
, 2001 SCC
    76, [2001] 3 S.C.R. 442, at para. 32.  This approach is commonly referred
    to as the
Dagenais/ Mentuck
test.

[52]

In
Mentuck
, Iacobucci J. said, at para. 32:

A publication ban should only be ordered when:

(a)  such an order is necessary in order to prevent a
    serious risk to the proper administration of justice because reasonably
    alternative measures will not prevent the risk; and

(b)  the salutary effects of the
    publication ban outweigh the deleterious effects on the rights and interests of
    the parties and the public, including the effects on the right to free
    expression, the right of the accused to a fair and public trial, and the
    efficacy of the administration of justice.

[53]

Under
    the controlling jurisprudence, before the court can address the degree to which
    the publics interests may be harmed by the order, the party seeking the order
    must present evidence that demonstrates that the order is necessary to prevent
    a serious risk to an important interest expressible in terms of a public
    interest in confidentiality: see
Sierra Club
, at para. 55.

[54]

It
    has been held that
Mentucks
requirement that non-publication and
    sealing orders are potentially justifiable only if necessary in order to
    prevent a serious risk to the proper administration of justice, may refer to a
    serious risk to public interests other than those that fall under the broad
    rubric of the proper administration of justice:
Sierra Club of
    Canada
, at paras. 46-51, 55.  However, the interest jeopardized must
    have a public component.  As Doherty observed in
M.E.H. v. Williams
,
    2012 ONCA 35, at para. 26, there are other interests that may be considered
    essential components of the proper administration of justice, such as access
    to the courts.

[55]

However,
    as was observed in
Williams
, the focus must be on how the motion is
    framed.  Where the interest in confidentiality engages no public component, the
    inquiry is at an end.  There is no basis upon which to proceed to the second
    branch of the test where factors such as the nature of the orders impact on
    public access and other societal interests become valid considerations.

[56]

If
    the issue relied upon to seek a confidentiality order does involve a public
    component, the evidence must be carefully examined.   The evidence relied upon
    to satisfy the first branch of the test must be convincing and subject to
    close scrutiny and meet rigorous standards: see
R. v. Canadian
    Broadcasting Corp.
, 2010 ONCA 726, 102 O.R. (3d) 673, at para. 40;
R.
    v. Toronto Star Newspapers Ltd.
(2003), 67 O.R. (3d) 577 (C.A.), at para.
    19, affd 2005 SCC 41, [2005] 2 S.C.R. 188, at para. 41;
Williams
, at
    para. 34; see also
Ottawa Citizen Group Inc. v. R.
(2005), 75 O.R.
    (3d) 590 (C.A.), at para. 54.  This demanding evidentiary standard is in
    keeping with the well-recognized serious implications of the order.

[57]

Pattison
    framed its need for the sealing order on the basis that disclosure would
    imperil its commercial interests.  The only evidence in support of this
    assertion is a statement in the affidavit of Randy Otto that the information
    under seal is highly sensitive and confidential and can be used by Pattison
    Outdoors competitors, advertisers and land owners to Pattison Outdoors
    disadvantage.

[58]

In
    my view, this evidence falls short of allowing Pattison to get past the first
    branch of the
Mentuck
test.  There is no indication of how the
    information could be used against Pattisons business or how great a risk
    disclosure would present.

[59]

Absent
    a supportable finding sufficient to pass the first branch of the test, the
    order could not have been made under the controlling jurisprudence.

[60]

I
    would therefore allow the Citys appeal on this issue and set aside the sealing
    order.

G.J.
    Epstein J.A.

Released: April 02, 2012


