P.V.I. International Inc. v. Canada (Commissioner of Competition)

P.V.I. International Inc. v. Canada (Commissioner of Competition) Court (s) Database Federal Court of Appeal Decisions Date 2004-05-19 Neutral citation 2004 FCA 197 File numbers A-408-02 Notes Digest Decision Content Date: 20040519 Docket: A-408-02 Citation: 2004 FCA 197 CORAM: ROTHSTEIN J.A. NOËL J.A. EVANS J.A. BETWEEN: P.V.I. INTERNATIONAL INC., MICHAEL GOLKA and DARREN GOLKA Appellants and THE COMMISSIONER OF COMPETITION Respondent Heard at Edmonton, Alberta, on May 17, 2004. Judgment delivered at Calgary, Alberta, May 19, 2004. REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: ROTHSTEIN J.A. NOËL J.A. Date: 20040519 Docket: A-408-02 Citation: 2004 FCA 197 CORAM: ROTHSTEIN J.A. NOËL J.A. EVANS J.A. BETWEEN: P.V.I. INTERNATIONAL INC., MICHAEL GOLKA and DARREN GOLKA Appellants and THE COMMISSIONER OF COMPETITION Respondent REASONS FOR JUDGMENT EVANS J.A. A. INTRODUCTION [1] In a decision dated May 30, 2002, the Competition Tribunal held that PVI International Inc., and Michael and Darren Golka ("the appellants") had engaged in reviewable conduct contrary to paragraphs 74.01(1)(a) and (b) of the Competition Act, R.S.C. 1985, c. C-34. Michael and Darren Golka were the corporate appellant's only officers and its sole shareholders. [2] The Tribunal found that the appellants had made representations to the public for the purpose of promoting the use of a platinum vapor injector ("PVI"), that were "false or misleading in a material respect". They were also found to have made a representation to the public in the form of a statement of the performance of the PVI that was "not based on an adequate and proper test thereof." [3] The appellants had misrepresented that, when installed in a gasoline-fuelled internal combustion engine, the PVI ("gasoline PVI") increased combustion efficiency in the engine from 68% to 90%, thereby both increasing fuel efficiency by an average of 22% and reducing emissions. The appellants also misrepresented that the United States Government had endorsed the accuracy of the appellants' representations regarding the fuel-saving capacity of the PVI. [4] On the basis of these findings, the Tribunal made orders under paragraphs 74.1(1)(a) and (b) of the Act prohibiting the appellants from repeating these misrepresentations with respect to the gasoline PVI, and imposing administrative monetary penalties of $75,000 in the case of the corporate appellant and $25,000 in the case of each of the individual appellants. [5] The appellants had represented that their statements also applied to a PVI for use in diesel engines ("diesel PVI"). The Tribunal found that these representations were similarly in breach of the Act and prohibited their repetition. [6] The appellants have appealed under section 74.1 of the Act against the Tribunal's order with respect to the gasoline PVI. They were not represented by counsel at the hearing of the appeal, and had not been legally represented before the Tribunal either. Michael Golka was given leave to read a written statement to the Court and to answer questions from the Bench. [7] The Commissioner of Competition has cross-appealed. He says that the Tribunal erred in law by declining to order the appellants to issue a notice under paragraph 74.1(1)(c) correcting the misrepresentations with respect to both the gasoline and the diesel PVI, and by declining to impose an administrative monetary penalty under paragraph 74.1(1)(b) with respect to the diesel PVI. B. THE APPEAL [8] The appellants raised a number of issues in their memorandum of fact and law and at the hearing. For the most part, they amounted to complaints that the evidence did not support the Tribunal's findings, and that the Tribunal's procedure had been unfair. [9] Having examined the appellants' submissions, the relevant extracts from the transcript and the Tribunal's reasons for decision, I am not satisfied that the Tribunal made any reviewable error. Moreover, contrary to principal allegations made by the appellants in their memorandum of fact and law, it is clear from the Tribunal's reasons that the Tribunal had not confused fuel efficiency and combustion efficiency, and had complied with subsection 74.01(6) by having regard, not only to the literal meaning of the representations, but also to "the general impression" that they conveyed. [10] I should emphasise at the outset that it is not the function of this Court to reweigh the evidence, or to substitute its view for that of the Tribunal on the application of the statute to the facts as found by the Tribunal. These are matters for the Tribunal, and the Court will only intervene if the Tribunal's conclusions were unreasonable or otherwise erroneous in law. [11] Moreover, like other administrative tribunals, the Tribunal has considerable discretion over its procedure. Subsection 9(2) of the Competition Tribunal Act, R.S.C. 1985 (2nd Supp.), c. 19, requires the Tribunal to conduct its proceedings as informally and expeditiously as the circumstances and considerations of fairness permit. The Court will only interfere with the procedural balances struck by the Tribunal in the exercise of its discretion if, in the view of the Court, the Tribunal erred in principle or breached the duty of fairness. [12] Mr. Golka has not persuaded me that the Tribunal erred in any of the above respects. While it is not necessary to deal in detail with the appellants' arguments, I shall focus on the following the points on which Mr. Golka relied in his oral submissions. [13] First, the appellants said that the Tribunal had not allowed Joel Robinson, the holder of the U.S. patent for the PVI, to provide oral testimony on the background to documents being entered as evidence on behalf of the appellants. Mr. Robinson had been permitted to appear before the Tribunal as the representative of the appellants, even though he is not a lawyer. He told the Tribunal that his role would be to challenge the Commissioner of Competition's expert witnesses, not to explain the background of documents. Nonetheless, the Tribunal gave Mr. Robinson considerable latitude by allowing him to give oral evidence, despite his role as the appellants' representative and the absence of a substantive "will say" statement. I do not agree that the limitation placed by the Tribunal on the evidence that it permitted Mr. Robinson to give deprived the appellants of their right to a fair hearing. [14] Second, the appellants sought to impugn the reliability of the testimony of Dr. Gulder, an expert witness called by the Commissioner, and submitted that the Tribunal had attached insufficient weight to documents that they had put into evidence. Assessing the credibility and reliability of witnesses and the probative value of documents is at the heart of the role of the trier of fact, and I see no reviewable error in the Tribunal's determination of these evidential issues. [15] Third, the appellants complained that the Tribunal had refused to admit new evidence, namely, a General Motors service manual tendered by the appellants two weeks after the close of the hearing, and had declined to reopen the hearing to permit the manual to be entered. It was within the discretion of the Tribunal to decide whether to admit evidence at that late date. [16] The appellants had been given ample opportunities to adduce all the documents on which they intended to rely and had stated that they had submitted everything. Nonetheless, the Tribunal had permitted the appellants to file 33 previously undisclosed documents just before the start of the hearing. Moreover, the service manual was relatively peripheral to what the parties had identified as one of the main issues in the case before the Tribunal, namely, whether the level of combustion efficiency in an average engine was 68% or 98%. In these circumstances, the Tribunal did not err in deciding that the interest in the expeditiousness of the proceedings outweighed that in ensuring that the Tribunal had before it all the material that the appellants wished it to consider. [17] Fourth, the appellants said that the schedules set by the Tribunal allowed them too little time to prepare to respond to the evidence that the Competition Commissioner's witnesses proposed to give, and to list all the documents on which they proposed to rely. Again, these are matters within the discretion of the Tribunal in balancing informality and expeditiousness on the one hand, against fairness on the other. In my opinion, the scheduling arrangements made by the Tribunal did not deprive the appellants of an effective opportunity of either answering the Commissioner's case or making their own. I would note that the appellants never produced any substantive "will say" statements and had been late in producing documents. [18] Finally, I should mention that the appellants asked the Court at the hearing of the appeal to admit a textbook, published in 2002, which, they said, undermined the reliability of Dr. Gunder as an expert witness. The Court declined to admit it: the appellants had not explained why they had neither sought to adduce this evidence earlier, nor given prior notice to counsel for the Commissioner. Nor did they demonstrate that the book was of high probative value on an issue critical to the Tribunal's decision. [19] For these reasons, I would dismiss the appeal with costs. C. THE CROSS-APPEAL [20] Counsel for the Commissioner acknowledged that the principal reason for the cross-appeal was a concern that the Tribunal's reasons for denying some of the forms of relief requested by the Commissioner might be regarded as a precedent in future cases, especially as this was the first case brought under Part VII.I of the Act dealing with deceptive marketing practices. I shall deal briefly with the arguments advanced by counsel for the Commissioner. (i) corrective notices [21] Counsel said that the Tribunal had erred in law in two respects when it refused to order the appellants to issue a corrective notice under paragraph 74.1(1)(b). [22] First, the Tribunal had based its decision on the ground that the U.S. Federal Trade Commission only made such orders in a minority of cases. However, there was no evidence on the record to this effect and, if the Tribunal proposed to take official notice of U.S. regulatory practice as a basis for its own decision, it should have so indicated, and given the partes an opportunity to respond. [23] I agree with this submission. However, I would also note that the Tribunal gave another reason for refusing to issue a corrective notice: a previous decision of a U.S. District Court that had held, on different evidence, that the Consumer Protection Division of the U.S. Postal Services had not substantiated a finding that misrepresentations had been made about the PVI. [24] Second, the Tribunal stated that a corrective notice was inappropriate, because the complexity of the appellants' claims and the evidence showing that they were false or misleading would make it difficult for consumers to grasp why the representations were false or misleading. Counsel argued that, in so far as the Tribunal was of the view that a notice must contain an explanation of the claims and the evidence showing that they are false or misleading, it had added to those aspects of the Tribunal's determination that subparagraphs 74(1)(b)(i)-(iii) specify are to be included in the notice. [25] I agree that neither paragraph 74.1(1)(b), nor subsection 74.1(3) which sets out the general purpose of an order under paragraph 74.1(1)(b), requires the kind of detail apparently contemplated by the Tribunal and that, by taking into account an irrelevant consideration, the Tribunal erred in law in the exercise of its discretion. [26] Nonetheless, in view of the time that has elapsed since the appellants last made false or misleading representations with respect to gasoline PVI, and of the Commissioner's acknowledgement that his primary concern relates to the precedential nature of the Tribunal's ruling, remitting the matter to the Tribunal for a reconsideration of the exercise of its discretion would be of little practical value. (ii) diesel PVI: administrative monetary penalty [27] Although it found that the appellants had engaged in reviewable conduct with respect to diesel PVI, the Tribunal declined to impose an administrative monetary penalty. Counsel said that, in so deciding, the Tribunal had erred in law because it had taken into account an irrelevant consideration, namely, the fact that the appellants had undertaken at the hearing not to repeat the representations concerning the diesel PVI. [28] Even assuming that this was an irrelevant consideration, which I do not have to decide, I am not prepared to infer from the Tribunal's reasons that it did not exercise its discretion on a more holistic view of the facts of the case than the Commissioner suggests. For example, another reason given by the Tribunal for not imposing an administrative monetary penalty was that the advertisements of the diesel PVI were "not as calculated to mislead as the representations with respect to the gasoline PVI." The Tribunal may also have had regard to the fact that it had already imposed penalties on the appellants totalling $125,000 with respect to the gasoline PVI and that, in these circumstances, it would be unduly harsh to impose additional monetary penalties on the appellants. [29] For these reasons, I am not persuaded that the Tribunal erred in law when, in the exercise of its broad remedial discretion, it declined to impose an administrative penalty with respect to the diesel PVI. D. CONCLUSIONS [30] For the reasons that I have given, I would dismiss the appellants' appeal with costs. [31] I would allow the Commissioner's cross-appeal, but only to the extent of determining that the Tribunal erred in law in basing its decision not to issue corrective notices on the grounds that the FTC rarely did, and that notices must contain material in addition to that specified in subparagraphs 74.1(1)(b)(i)-(iii). In the circumstances of this case, I would neither exercise the Tribunal's remedial discretion under section 74.1, nor refer the matter back. In view of the parties' divided success, I would award no costs with respect to the cross-appeal. "John M. Evans" J.A. "I agree Marshall Rothstein J.A." "I agree Marc Noël J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-408-02 STYLE OF CAUSE: P.V.I. International Inc., Michael Golka and Darren Golka v. The Commissioner of Competition PLACE OF HEARING: Edmonton, Alberta DATE OF HEARING: May 17, 2004 REASONS FOR JUDGMENT BY: EVANS J.A. CONCURRED IN BY: ROTHSTEIN J.A. NOËL J.A. DATED: May 19, 2004 APPEARANCES: Mr. Michael Golka (Self-Represented) For the Appellants (Respondents in Cross-Appeal) Mr. John L. Syme For the Respondent Mr. Arsalaan Hyder (Appellant in Cross-Appeal) SOLICITORS OF RECORD: Mr. Michael Golka (Self-Represented) For the Appellants Ardrossan, Alberta (Respondents in Cross-Appeal) Morris Rosenberg For the Respondent Deputy Attorney General of Canada (Appellant in Cross-Appeal)