Supreme Court of Canada Will Not Hear Constitutional Challenges to CASL 
March 2021 Charity & NFP Law Update
Published on March 25, 2021

By  Ryan M. Prendergast

On March 4, 2021, the Supreme Court of Canada dismissed the application for leave to appeal from the judgments of the Federal Court of Appeal dated June 5, 2020, in 3510395 Canada Inc. v. Canada (Attorney General) (the “CompuFinder decision”), and will, therefore, not hear CompuFinder's constitutional challenge to Canada’s Anti-Spam Legislation (“CASL”).

The appellant, operating as CompuFinder, was a small business that offered professional training courses in areas that used e‑mail marketing as its primary means of business development. Between July and September 2014, the appellant sent 317 commercial electronic messages (“CEMs”) to various recipients primarily in the province of Quebec. On March 5, 2015, following an investigation by the Canadian Radio-Television and Telecommunications Commission (the “CRTC”), the appellant was issued a Notice of Violation (“NOV”) pursuant to section 22 of CASL because the appellant had not obtained the recipients’ consent prior to sending the CEMs, contrary to paragraph 6(1)(a) of CASL, and some of the CEMs did not contain a functioning “unsubscribe” link, contrary to paragraph 6(2)(c) of CASL. The NOV also imposed a $1,100,000.00 administrative monetary penalty.

CompuFinder challenged the NOV and CRTC ruled in two separate decisions. In the first CRTC decision, the appellant’s constitutional challenge to CASL’s “messaging portions”, which the appellant claimed were within provincial jurisdiction and not Parliament’s, was dismissed; and the challenge that CASL infringes on freedom of expression, protected under section 2(b) of the Canadian Charter of Rights and Freedoms (the “Charter”), was found to be justified under section 1 as a reasonable limit permitted under the Charter. In the second CRTC decision, the appellant was found to have committed four violations of CASL, but imposed a reduced administrative monetary penalty of $200,000.00

Of note, the CompuFinder decision which the Supreme Court of Canada refused to revisit, provides guidance with regard to the “business-to-business” exemption, CASL’s implied consent requirements regarding conspicuous publication, and CASL’s requirements regarding unsubscribe mechanisms.

Regarding the “business-to-business” exemption, CompuFinder argued that the CRTC had erred in finding that none of the 317 CEMs qualified for the exemption by refusing to recognize that it had a “relationship” with each recipient organization that had previously purchased the appellant’s courses. The appellant alleged that this type of contractual relationship would be sufficient to establish an “existing business relationship” for the purposes of implying an individual’s consent pursuant to paragraph 10(9)(a) of CASL. The Federal Court found no error in the CRTC ruling and held that an “existing business relationship” in the present case would permit the appellant to send CEMs to an individual who had paid the appellant for a course within the preceding two years, but a relationship for the purposes of the “business-to-business exemption” would allow the appellant to send CEMs to not only the individual who paid for or took the course, but to every other employee of the organization to which that individuals belongs, which is the type of harmful conduct that CASL regulates.

The CompuFinder decision also held that CompuFinder had not met the requirements of paragraph 10(9)(b) of CASL for implied consent for failing to meet the requirement of conspicuous publication. Although some of the recipients had conspicuously published their electronic addresses online, many of the electronic addresses had been obtained from third-party directory websites that did not indicate whether the information was submitted by the users or which contained disclaimers stating that unsolicited CEMs were not to be sent to the listed addresses.

With regard to CASL’s requirements regarding unsubscribe mechanisms, the CRTC had found that by sending 87 CEMs containing two unsubscribe links or mechanisms, only one of which worked properly, with the other one producing an error message, CompuFinder’s CEMs violated subsection 6(2) of CASL. Specifically, the CRTC found that CEMs containing a second non-functioning or faulty unsubscribe mechanism was confusing and that, as per CRTC’s “Guidelines on the interpretation of the Electronic Commerce Protection Regulations” (Compliance and Enforcement Information Bulletin (CRTC 2012-548)) “for an unsubscribe mechanism to be ‘readily performed,’ it must be accessed without difficulty or delay, and should be simple, quick, and easy for the consumer to use.”

Read the March 2021 Charity & NFP Law Update