Canada (Minister of Health) v. Falls Management Company

Canada (Minister of Health) v. Falls Management Company Court (s) Database Federal Court of Appeal Decisions Date 2006-02-14 Neutral citation 2006 FCA 69 File numbers A-401-05 Notes Digest Decision Content Date: 20060214 Docket: A-401-05 Citation: 2006 FCA 69 CORAM: ROTHSTEIN J.A. SHARLOW J.A. MALONE J.A. BETWEEN: CANADA(MINISTER OF HEALTH) Appellant and FALLS MANAGEMENT COMPANY Respondent Heard at Toronto, Ontario, on February 6, 2006. Judgment delivered at Ottawa, Ontario, on February 14, 2006. REASONS FOR JUDGMENT BY: MALONE J.A. CONCURRED IN BY: ROTHSTEIN J.A. SHARLOW J.A. Date: 20060214 Docket: A-401-05 Citation: 2006 FCA 69 CORAM: ROTHSTEIN J.A. SHARLOW J.A. MALONE J.A. BETWEEN: CANADA(MINISTER OF HEALTH) Appellant and FALLS MANAGEMENT COMPANY Respondent REASONS FOR JUDGMENT MALONE J.A. ISSUE [1] This appeal raises the novel issue as to whether a casino rewards program that permits its members to acquire tobacco products by redeeming reward points offends paragraph 29(b) of the Tobacco Act, S.C. 1997, c.13 (the Act). [2] That paragraph is found in Part IV of the Act dealing with the promotion of tobacco products and reads as follows: 29. No manufacturer or retailer shall (b) furnish a tobacco product without monetary consideration or in consideration of the purchase of a product or service or the performance of a service; 29. Il est interdit au fabricant et au détaillant : b) de fournir un produit du tabac à titre gratuit ou en contrepartie de l'achat d'un produit ou d'un service ou de la prestation d'un service; The Act has as its primary purpose the protection of the health of Canadians by restricting access to tobacco products (see section 4). FACTS [3] Falls Management Company operates two casinos at Niagara Falls, Ontario (the casinos) and provides tobacco products as one of a number of rewards available for redemption by members of its loyalty program. [4] This program, known as Players Advantage Club, invites all casino patrons to become club members using the slogan 'Loyalty has its Rewards'. The number of reward points earned depends on the game being played. Slot machines and video poker players earn points based both on the type of machine and number of coins inserted. Table games earn points based on average bets and the length of play. Based on the number of points accumulated in their club account, members can select from a variety of goods and services, including free meals, free hotels, casino store merchandise and tobacco products. Reward points cannot be purchased for cash. [5] Club accounts, where reward points are deposited, can be cancelled at the discretion of the casinos with unredeemed points being subject to forfeiture without any recourse by club members. [6] Following an exchange of correspondence with the respondent, the Manager of the Tobacco Control Program, acting on behalf of the Minister of Health (Health Canada), directed that the casinos disallow any further redemption of tobacco products with the points accumulated from players gaming citing a contravention of paragraph 29(b) of the Act. Enforcement action was threatened if the casinos did not comply with that direction. [7] That decision, dated July 26, 2004 (the Decision), was the subject of a successful judicial review application before a judge of the Federal Court (the Applications Judge) and is reported as 2005 FC 924. By order dated June 30, 2005, the Applications Judge determined that the disputed exchange of accumulated reward points for tobacco products did not contravene paragraph 29(b) of the Act because such transactions were not without monetary consideration. [8] In his reasons, the Applications Judge determined that the reward points removed from a member's account was the same as cash having a real monetary value with a direct relationship to the value of the tobacco product selected. That the points redeemed from the account were a proxy for money was said to be borne out by the fact that the same points could have been used to redeem other casino goods and services, all with a real monetary value. GROUNDS OF APPEAL [9] Health Canada now appeals the order of the Applications Judge on two grounds. First it argues that his interpretation of the words 'monetary consideration' was overly broad and inconsistent with their plain meaning. Second, it asserts that the Applications Judge erred in failing to consider the second part of paragraph 29(b) of the Act which prohibits the barter of goods or services for tobacco products. According to Health Canada, the redemption transaction constitutes a form of barter. Since the rewards points are attained through some other product or service (i.e. gaming services), Health Canada asserts that it is ostensibly an exchange of tobacco products for using the casinos gaming services. STANDARD OF REVIEW [10] At the outset, it is necessary to consider the standard of review to be applied in this appeal. In recent cases, our courts have adopted the view that when a tribunal's decision is judicially reviewed, the appellate court steps into the shoes of the subordinate court in reviewing that decision. In effect, an appellate court decides the appropriate standard of review and then decides whether that standard was applied correctly (see for example Zenner v. Prince Edward Island College of Optometrists, 2005 SCC 77 at paragraphs 29-45 per Major J.; Alberta (Minister of Municipal Affairs) v. Telus Communications Inc. (2002), 218 D.L.R. (4th) 61 at paragraphs 25-26 per Berger J.). [11] In a normal application for judicial review, the tribunal's decision is reviewed on the basis of the record of the tribunal proceedings. In this rare case, further evidence was added in the Federal Court judicial review through affidavits and cross-examination of both parties. This inclusion of new evidence converted the hearing before the Applications Judge, at least in part, into a procedure similar to a hearing de novo before a trial judge. [12] With respect to the evidence submitted at the Federal Court, the normal rules of appellate review articulated in Housen v. Nikolaisen, [2002] 2 S.C.R. 235 apply. Housen says that questions of law are to be reviewed on a correctness standard, while all questions of fact or mixed fact and law are to be reviewed on a standard of palpable and overriding error. The issue now under appeal is whether the redemption of casino reward points represents monetary compensation as set out in paragraph 29(b) of the Act. This is a question of mixed fact and law to be reviewed on a standard of palpable and overriding error. ANALYSIS [13] The key to the disposition of this appeal rests on a clear understanding of the relationship between the casinos and their patrons. Fundamentally, gaming patrons risk a sum of money on the basis of the outcome of an unpredictable event. Whether one is a club member matters not; the risks and costs to a member or non-member are the same. [14] No annual fee or initiation charge is required to become a club member eligible to accrue and redeem reward points. Membership is free. Members can join on-line by providing the casinos with personal information such as their name, mailing address, e-mail address, phone number, gender, date of birth and special interests. Photo identification is also required. [15] According to a deponent for the casinos, the objective of the loyalty program is the collection and maintenance of important information relating to casino patrons. In argument, counsel for the casinos suggested that this information was consideration for the bargain between the casinos and their club members and is shared with other commercial establishments such as car rentals, restaurants, hotels and the like. However, unlike other reward programmes referred to in evidence (Petro-Points, HBC Rewards and Shoppers Optimum Points) which contain detailed privacy statements respecting and protecting the privacy of their members, the casinos documentation does not mention the collection and maintenance of club member information or its eventual distribution to other commercial concerns. In these circumstances, in my view, it is untenable to suggest that the information provided is consideration for the award of and redemption of club points. [16] In sum, there is nothing in the casinos documents that suggest that the reward program is anything but a free offering to casino patrons. This view is reinforced by the fact that the program can be cancelled by the casinos at any time and the reward points forfeited without recourse. [17] There is no monetary consideration involved in the redemption of club points for tobacco products and the Applications Judge made a palpable and overriding error when he determined that reward points were akin to cash. Club accounts do not represent sums of money like a bank account. They are merely a repository for a member's accumulated points. The value of accumulated points varies among redeemable products or services based solely on the casinos own determination of the appropriate value for each service or product to be redeemed. Nothing in the documents suggest that accumulated points have a fixed base value and common point of monetary reference (i.e. 100 points has a value of $10.00 that may be redeemed for selected goods or services) nor can they be redeemed for cash. [18] The Applications Judge correctly noted that the use of the adjective 'monetary' narrows the meaning of the word 'consideration'. The OxfordEnglish Dictionary (2d ed., Oxford: Oxford University Press, 1998.) defines 'monetary' as "of or relating to coinage or currency, especially that of a particular country; relating to money in the form of coins, notes or other units of account." Clearly, cash, cheques, credit card and debit transactions and pre-paid gift certificates easily come within that definition but the value of points redeemed for tobacco products in these narrow circumstances is not the equivalent of 'monetary consideration' as required to satisfy paragraph 29(b) of the Act. [19] For these reasons, the appeal should be allowed with costs both here and below set at $17,500 as submitted by counsel at the appeal. The order of the Applications Judge dated June 30, 2005, should be set aside and the Decision of Health Canada dated July 26, 2004, should be confirmed and restored. "B. Malone" "I agree Marshall Rothstein J.A." "I agree K. Sharlow J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-401-05 STYLE OF CAUSE: Canada (Minister of Health) v. Falls Management Company PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: February 6, 2006 REASONS FOR JUDGMENT BY: Malone J.A. CONCURRED IN BY: Rothstein J.A. Sharlow J.A. DATED: February 14, 2006 APPEARANCES: ERIC PETERSON FOR THE APPELLANT JOEL RICHLER FOR THE RESPONDENT SOLICITORS OF RECORD: DEPUTY ATTORNEY GENERAL OF CANADA OTTAWA, ONTARIO FOR THE APPELLANT BLAKE, CASSELS 7 GRAYDON LLP TORONTO, ONTARIO FOR THE RESPONDENT