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ALBERTALAW REPORTS

Fifth SeriesReports of Selected Cases

from the Courts of Alberta and Appeals

VOLUME 57(Cited 57 Alta. L.R. (5th))

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ALBERTALAW REPORTS

Fifth SeriesReports of Selected Cases

from the Courts of Alberta and Appeals

[Indexed as: Condominium Corp. No. 0321365 v. 970365Alberta Ltd.]

Condominium Corporation No. 0321365, and an UnspecifiedUnit Holder, As Representative Plaintiff, Appellant (Plaintiff)

and MCAP Financial Corporation, Respondent (Defendant) and970365 Alberta Ltd., Dome Britannia Properties Inc., D.

Marshall Project Management Ltd., Prairie Communities Corp.,Joanne Wright, Michael Nowlan, Travis Henkel, Earth TechCanada Inc., Hans Kneppers, John Cuthbert, Cuthbert Smith

Consulting Inc., Residential Warranty Company of Canada Inc.,Alberta Permit Pro Inc., Regional Municipality of Wood

Buffalo, Gary Nissen, Archiasmo Architectural Works Limited,Macleod Dixon LLP, Burstall Winger LLP, David Marshall and

Evan Welbourn, Not Parties to the Appeal (Defendants)

970365 Alberta Ltd., Dome Britannia Properties Inc., PrairieCommunities Corp., Joanne Wright, Michael Nowlan, TravisHenkel, Earth Tech Canada Inc., Hans Kneppers, Kneppers

Consultants Inc., Alberta Permit Pro Inc., Gary Nissen,Archiasmo Architectural Works Limited, David Marshall, Evan

Welbourn, Real Estate Strategies Group Inc., David Bamber andAllan Penner, Not Parties to the Appeal (Third Parties)

Alberta Court of Appeal

Docket: Calgary Appeal 1001-0308-AC

2012 ABCA 26

Catherine Fraser C.J.A., Jack Watson, J.D. Bruce McDonaldJJ.A.

Heard: September 13, 2011

Judgment: January 27, 2012

ALBERTA LAW REPORTS 57 Alta. L.R. (5th)2

Torts –––– Negligence — Duty and standard of care — Duty of care ––––Plaintiff condominium corporation owned common property of condominiumcomplex — Defendant M Corp. provided interim financing to defendant devel-oper for condominium project in accordance with commitment letter — R Inc.was involved with and assisted purchasers of some of units in project — Condo-minium corporation, together with representative plaintiff for unit holders,brought action against number of defendants for damages to remedy allegedfaulty design and construction of condominium project — M Corp. brought suc-cessful application for summary judgment to dismiss claims against it — Cham-bers judge found that no sufficiently close relationship existed between M Corp.and plaintiffs to impose duty of care to ground action in negligence for failing tostrictly enforce and uphold terms of commitment letter — Plaintiffs appealed —Appeal allowed in part, on other grounds — There was no genuine issue for trialbased on plaintiffs’ claim against M Corp. in negligence for failing to strictlyenforce terms and conditions of commitment letter — Chambers judge was cor-rect in determining that construction lender does not owe duty of care to pur-chasers of units in condominium project which it is financing or to condomin-ium corporation — In this respect, difficulties arose in application of relevanttest, making recognition of duty of care in these circumstances legally unman-ageable and commercially unreasonable — Commitment letter was private con-tract between M Corp. and developer — No rights accrued under that contract tothird party beneficiaries, including purchasers of units in project and condomin-ium corporation — There were difficulties inherent in finding required foresee-ability of harm and proximity between interim financier, on one hand, and pur-chasers and condominium corporation, on other, sufficient to ground prima facieduty of care.

Torts –––– Fraud and misrepresentation — Negligent misrepresentation(Hedley Byrne principle) — Particular relationships — Sale of land ––––Plaintiff condominium corporation owned common property of condominiumcomplex — Defendant M Corp. provided interim financing to defendant devel-oper for condominium project in accordance with commitment letter — R Inc.was involved with and assisted purchasers of some of units in project — Condo-minium corporation, together with representative plaintiff for unit holders,brought action against number of defendants for damages to remedy allegedfaulty design and construction of condominium project — M Corp. brought suc-cessful application for summary judgment to dismiss claims against it — Forclaim of negligent misrepresentation, chambers judge found there was no basisfor finding required proximity between M Corp. and plaintiffs — Plaintiffs ap-pealed — Appeal allowed in part — There was genuine issue for trial based onclaim of negligent misrepresentation — Chambers judge erred in purporting totry case given patent conflict in evidence on issue of alleged representations —Whether M Corp. made any implied representation and, if so, content of any

Condo. Corp. No. 0321365 v. 970365 Alta. 3

such representation, were issues for trial judge — There was material disputewhether M Corp. represented to R Inc. that firm, CSC, would be acting as costconsultant for purposes of s. 14 of Condominium Property Act — There wasalso dispute about whether M Corp. represented to R Inc. that terms and condi-tions of commitment letter would be strictly enforced and upheld by CSC —There was genuine issue of whether R Inc. was acting as agent for purchasers orin some other capacity such that knowledge by or representations that M Corp.made to R Inc., if any, could be held to be knowledge of plaintiffs — There wasmaterial dispute about whether M Corp. ought to have reasonably foreseen thatany alleged representation to R Inc. would arguably be representation to pro-spective purchasers through R Inc. and would be relied on, and whether R Inc.and/or purchasers did rely on those alleged representations.

Construction law –––– Construction and builders’ liens — Trust fund —Breach of statutory trust –––– Defendant M Corp. provided interim financingto defendant developer for condominium project in accordance with commit-ment letter — R Inc. was involved with and assisted purchasers of some of unitsin project — Condominium corporation, together with representative plaintifffor unit holders, brought action against number of defendants for damages toremedy alleged faulty design and construction of condominium project — MCorp. brought successful application for summary judgment to dismiss claimsagainst it — With respect to claim of unjust enrichment, chambers judge foundthat since M Corp. had received funds from developer under terms of interimfinancing agreement, this constituted juristic reason for that receipt — He alsodetermined that receipt was not at expense of purchasers but pursuant to termsof their purchase agreements with developer and required in order to obtain dis-charge of M Corp.’s mortgage on their title — Plaintiffs appealed — Appeal al-lowed in part — Genuine issues for trial existed on claims related to breach ofstatutory trust and unjust enrichment — There were genuine issues for trial withrespect to both knowing assistance and knowing receipt causes of action — Evi-dentiary record suggested that developer’s lawyers understood that firm, CSC,was acting as s. 14 cost consultant under Condominium Property Act — Inter-twined in other matters was: alleged threat by developer to cancel contracts andclaim forfeiture of deposits; whether such threats were used to force closingsnotwithstanding alleged failure to substantially complete specific units and re-lated common property; and what, if anything, turned on this — There weregenuine issues for trial as to whether M Corp. knowingly assisted in breach oftrust or knowingly received monies impressed with statutory trust — Similarconsiderations applied to plaintiffs’ claim against M Corp. for unjust enrich-ment — Whether subject proceeds had lost all identity as purchasers’ funds onceM Corp. received them was very much in dispute.


Restitution and unjust enrichment –––– General principles — Requirementsfor unjust enrichment — Miscellaneous –––– Defendant M Corp. provided in-terim financing to defendant developer for condominium project in accordancewith commitment letter — R Inc. was involved with and assisted purchasers ofsome of units in project — Condominium corporation, together with representa-tive plaintiff for unit holders, brought action against number of defendants fordamages to remedy alleged faulty design and construction of condominium pro-ject — M Corp. brought successful application for summary judgment to dis-miss claims against it — With respect to claim of unjust enrichment, chambersjudge found that since M Corp. had received funds from developer under termsof interim financing agreement, this constituted juristic reason for that receipt —He also determined that receipt was not at expense of purchasers but pursuant toterms of their purchase agreements with developer and required in order to ob-tain discharge of M Corp.’s mortgage on their title — Plaintiffs appealed — Ap-peal allowed in part — Genuine issues for trial existed on claims related tobreach of statutory trust and unjust enrichment — There were genuine issues fortrial with respect to both knowing assistance and knowing receipt causes of ac-tion — Evidentiary record suggested that developer’s lawyers understood thatfirm, CSC, was acting as s. 14 cost consultant under Condominium PropertyAct — Intertwined in other matters was: alleged threat by developer to cancelcontracts and claim forfeiture of deposits; whether such threats were used toforce closings notwithstanding alleged failure to substantially complete specificunits and related common property; and what, if anything, turned on this —There were genuine issues for trial as to whether M Corp. knowingly assisted inbreach of trust or knowingly received monies impressed with statutory trust —Similar considerations applied to plaintiffs’ claim against M Corp. for unjustenrichment — Whether subject proceeds had lost all identity as purchasers’funds once M Corp. received them was very much in dispute.

Real property –––– Condominiums — Definitions — Miscellaneous ––––“Developer” — Defendant M Corp. provided interim financing to defendant de-veloper for condominium project in accordance with commitment letter — RInc. was involved with and assisted purchasers of some of units in project —Condominium corporation, together with representative plaintiff for unit hold-ers, brought action against number of defendants for damages to remedy allegedfaulty design and construction of condominium project — M Corp. brought suc-cessful application for summary judgment to dismiss claims against it — As towhether M Corp. was “developer” under Condominium Property Act, chambersjudge found that when M Corp. received funds from developer’s lawyers, fundswere property of and paid by developer even though those funds came frompurchase proceeds of sale of units — Consequently, M Corp. did not receivefunds “on behalf” of developer and did not fall within definition of “developer”under Act — Plaintiffs appealed — Appeal allowed in part — There was genu-


ine issue as to whether M Corp. was “developer” under s. 14 of Act — Ac-cepting, without deciding, that ordinarily interim financier would not be foundto have received funds “on behalf of developer” when it receives proceeds ofsale of condominium units in repayment of debt developer owes to it, it did notfollow that this will invariably be so — There may well be instances in whichinterim financier is properly included within definition of “developer” under s.14 of Act — Trial judge considering this issue in this case would need to ad-dress and resolve number of matters — There was issue of intended scope oflegislation and s. 14 in particular — Also, basis on which and circumstancesunder which lender received funds could be relevant to this issue — Issue wasfurther complicated by plaintiffs’ outstanding claims against M Corp. for know-ing assistance and knowing receipt — Public policy issues would no doubt fac-tor into trial judge’s analysis of issue.

Civil practice and procedure –––– Summary judgment — Requirement toshow no triable issue –––– Plaintiff condominium corporation owned commonproperty of condominium complex — Defendant M Corp. provided interim fi-nancing to defendant developer for condominium project in accordance withcommitment letter — R Inc. was involved with and assisted purchasers of someof units in project — Condominium corporation, together with representativeplaintiff for unit holders, brought action against number of defendants for dam-ages to remedy alleged faulty design and construction of condominium pro-ject — M Corp. brought successful application for summary judgment to dis-miss claims against it — Plaintiffs appealed — Appeal allowed in part — Therewas no genuine issue for trial based on plaintiffs’ claim against M Corp. in neg-ligence for failing to strictly enforce terms and conditions of commitment let-ter — There was genuine issue for trial based on claim of negligent misrepresen-tation — Genuine issues for trial existed on claims related to breach of statutorytrust and unjust enrichment — There were genuine issues for trial with respectto both knowing assistance and knowing receipt causes of action — There wasgenuine issue as to whether M Corp. was “developer” under s. 14 of Condomin-ium Property Act.

The plaintiff condominium corporation owned the common property of a condo-minium complex. The defendant M Corp. provided interim financing to the de-fendant developer for the condominium project in accordance with a commit-ment letter. R Inc. was involved with and assisted purchasers of some of theunits in the project. The condominium corporation, together with a representa-tive plaintiff for the unit holders, brought an action against a number of defend-ants for damages to remedy the alleged faulty design and construction of thecondominium project.

M Corp. brought a successful application for summary judgment to dismiss theclaims against it. The chambers judge found that no sufficiently close relation-


ship existed between M Corp. and the plaintiffs to impose a duty of care so as toground an action in negligence for failing to strictly enforce and uphold theterms and conditions of the commitment letter. For the claim of negligent mis-representation, the chambers judge found that there was no basis for finding therequired proximity between M Corp. and the plaintiffs. As to whether M Corp.was a “developer” under the Condominium Property Act, the chambers judgefound that when M Corp. received funds from the developer’s lawyers, the fundswere the property of and paid by the developer even though those funds camefrom purchase proceeds of the sale of units. Consequently, M Corp. did not re-ceive funds “on behalf” of a developer and did not fall within the definition of a“developer” under the Act. With respect to the claim of unjust enrichment, thechambers judge found that since M Corp. had received funds from the developerunder the terms of an interim financing agreement, this constituted a juristic rea-son for that receipt. He also determined that the receipt was not at the expense ofthe purchasers but pursuant to the terms of their purchase agreements with thedeveloper and required in order to obtain a discharge of M Corp.’s mortgage ontheir title. The plaintiffs appealed.

Held: The appeal was allowed in part.

Per Fraser C.J.A. (Watson J.A. concurring): There was no genuine issue for trialbased on the plaintiffs’ claim against M Corp. in negligence for failing to strictlyenforce the terms and conditions of the commitment letter. The chambers judgewas correct in determining that a construction lender does not owe a duty of careto the purchasers of units in a condominium project which it is financing or tothe condominium corporation. Difficulties arose in the application of the rele-vant test, making the recognition of a duty of care in these circumstances legallyunmanageable and commercially unreasonable. In the context of the lender-pur-chaser relationship, problems arose in defining the composition of the class towhom a lender would owe a duty of care. The commitment letter was a privatecontract between M Corp. and the developer. No rights accrued under that con-tract to third party beneficiaries, including the purchasers of units in the projectand the condominium corporation. Collectively, the concerns noted revealed thepractical and policy difficulties inherent in finding the required foreseeability ofharm and proximity between an interim financier, on the one hand, and purchas-ers and a condominium corporation, on the other, sufficient to ground a primafacie duty of care. These reasons alone justified rejection of a duty of care. Aconsideration of the second stage of the applicable test, concerned with policyconsiderations, also justified rejection of the plaintiffs’ claimed duty of care.

There was a genuine issue for trial based on the claim of negligent misrepresen-tation. The chambers judge erred in purporting to try the case given the patentconflict in the evidence on the issue of the alleged representations. It was not forthe chambers judge to determine that it would be highly unlikely that the plain-tiffs’ claim would succeed at trial. Whether M Corp. made any implied represen-


tation and, if so, the content of any such representation, were both issues for atrial judge. The chambers judge’s failure to recognize that an implied representa-tion may suffice to ground a successful claim in negligent misrepresentation,and that there was a dispute on a material fact in this respect, constituted review-able error. Serious factual disputes existed about many issues. There was a mate-rial dispute whether M Corp. represented to R Inc. that a firm, CSC, would beacting as cost consultant for the purposes of s. 14 of the Act. There was also adispute about whether M Corp. represented to R Inc. that the terms and condi-tions of the commitment letter would be strictly enforced and upheld by CSC.The proposition that it was not reasonably foreseeable by M Corp. that any pro-spective purchaser could reasonably rely on the alleged representation and thatthere was no evidence that any purchasers did so ignored the fact that thesematters were tied up with a dispute on other material facts, namely the relation-ship between R Inc. and the plaintiffs, on the one hand, and R Inc. and M Corp.,on the other. There was a genuine issue of whether R Inc. was acting as an agentfor the purchasers or in some other capacity such that knowledge by or represen-tations that M Corp. made to R Inc., if any, could be held to be knowledge of theplaintiffs. There was a material dispute about whether M Corp. ought to havereasonably foreseen that any alleged representation to R Inc. would arguably bea representation to prospective purchasers through R Inc. and would be relied onand whether, in turn, R Inc. or the ultimate purchasers or both did rely on thosealleged representations. The reason the chambers judge gave for finding that anysuch reliance could not be reasonable was without merit. A court cannot use theabsence of a duty of care based on a lender-purchaser relationship to determinewhether the specific facts and circumstances of a particular case created or gaverise to a special relationship between the lender and purchasers and a corre-sponding duty of care sufficient to ground an action in negligentmisrepresentation.

Genuine issues for trial existed on the claims related to breach of statutory trustand unjust enrichment. There were genuine issues for trial with respect to bothknowing assistance and knowing receipt causes of action. The evidentiary re-cord suggested that the developer’s lawyers understood that CSC was acting asthe s. 14 cost consultant under the Act. Intertwined in other matters was: analleged threat by the developer to cancel the contracts of purchase and sale andclaim forfeiture of deposits paid; who knew what and when about these threats;whether they were used to force closings notwithstanding the developer’s al-leged failure to substantially complete specific units and related common pro-perty; and what, if anything, turned on all of this. There were genuine issues fortrial as to whether M Corp. knowingly assisted in a breach of trust or knowinglyreceived monies impressed with a statutory trust. Similar considerations appliedto the plaintiffs’ claim against M Corp. for unjust enrichment. Whether the sub-


ject proceeds had lost all identity as purchasers’ funds once M Corp. receivedthem was very much in dispute.

There was a genuine issue as to whether M Corp. was a “developer” under s. 14of the Act. Accepting, without deciding, that ordinarily an interim financierwould not be found to have received funds “on behalf of a developer” when itreceives proceeds of sale of condominium units in repayment of the debt a de-veloper owes to it, it did not follow that this will invariably be the case. Theremay well be instances in which an interim financier is properly included withinthe definition of “developer” under s. 14 of the Act. A trial judge consideringthis issue in this case would need to address and resolve a number of matters.There was the issue of the intended scope of the legislation and s. 14 in particu-lar. Also, the basis on which and circumstances under which a lender receivedfunds could be relevant to this issue. The issue was further complicated by theplaintiffs’ outstanding claims against M Corp. for knowing assistance and know-ing receipt. Public policy issues would no doubt factor into a trial judge’s analy-sis of the issue.

Per McDonald J.A. (dissenting in part): There was agreement with the major-ity’s conclusions that there was no genuine issue for trial based on a claim fornegligence, and that there were genuine issues for trial with respect to breach ofstatutory trust and unjust enrichment. However, there was disagreement with thebalance of the conclusions of the majority.

There was no genuine issue for trial based on a claim in negligent misrepresen-tation, and the appeal should be dismissed on this point. Although there mayhave been a genuine issue with respect to some of the required elements, therewas none with respect to the element of reasonable reliance. There was no evi-dence that the plaintiffs were aware of any alleged representation or that theyreasonably relied on it if it was made. There was no evidence of an agency rela-tionship between R Inc. and the plaintiffs, and therefore no basis upon which toimpart any reliance by R Inc. to the plaintiffs themselves. Nowhere in the affida-vit evidence before the chambers judge was there any indication that R Inc.communicated its understanding of the alleged representations by M Corp. to thepurchasers, or that the purchasers themselves relied on M Corp.’s representa-tions. R Inc.’s reliance was not the same as the plaintiffs’ reliance. If the plain-tiffs desired to establish the essential element of reliance through an agency rela-tionship with R Inc., they had to lead evidence of such a relationship. Therebeing no evidence given by any plaintiff that M Corp.’s alleged representationswere a factor in his/her purchase of a unit in the condominium project, therecould be no basis for a successful claim in negligent misrepresentation.

There was no genuine issue with respect to whether M Corp. qualified as a “de-veloper” within the meaning of section 14 of the Act, and the appeal should bedismissed on this point. There could be genuine issues for trial as to whether the


funds M Corp. received through the purchase transactions of units in the projectwas money “paid on behalf of a purchaser”, “pursuant to a purchase agreement”.However, those funds were not received “on behalf of a developer”. Whateverthe scope of that phrase, it could not be so broad as to include money receivedby M Corp. pursuant to a loan agreement to pay off the debt owed by the devel-oper. Money received in this way was fundamentally received by M Corp. on itsown behalf. There was disagreement with the majority’s position that the legis-lature’s failure to state “on behalf of a developer alone” opened the door toclaims based on money paid by a developer that benefits both the developer andthe recipient. Such an interpretation of s. 14 was too broad and unsupportable onthe words of the legislation. There was no evidence for the suggestion that thereremained an unanswered question as to whether there was privity of contractbetween M Corp. and the plaintiffs based on the security granted by the devel-oper to M Corp..

There was disagreement with the reasoning that the issue of whether M Corp.received money “on behalf of” the developer was further complicated by thepossibility that M Corp. knowingly received trust funds. A condition precedentto a finding that a party knowingly received trust property is a finding that theparty was a stranger to the trust. With respect to a s. 14 statutory trust, thismeans the party is not a “developer” for the purposes of the section. If M Corp.was liable for knowingly receiving trust property, it could not have been a devel-oper under s. 14. There was no need to take the further step of categorizing themoney as received “on behalf of” the developer and thereby bring the receivingparty within s. 14 if that party did not otherwise satisfy the criteria set out in thedefinition of “developer”. With this argument the majority was conflating, un-necessarily, the cause of action of knowingly receiving trust property with themeaning of “on behalf of a developer” in s. 14. Even opening the door at trial toan interpretation of s. 14 that may include interim construction lenders in thedefinition of “developer” would clearly be inconsistent with the object of theAct and the intention of the legislature.

Cases considered by Catherine Fraser C.J.A.:

Air Canada v. M & L Travel Ltd. (1993), 1993 CarswellOnt 994, 1993 Carswell-Ont 568, 15 O.R. (3d) 804 (note), 50 E.T.R. 225, 108 D.L.R. (4th) 592,[1993] 3 S.C.R. 787, 67 O.A.C. 1, 159 N.R. 1, EYB 1993-67535, [1993]S.C.J. No. 118 (S.C.C.) — followed

Anns v. Merton London Borough Council (1977), (sub nom. Anns v. LondonBorough of Merton) [1977] 2 All E.R. 492, [1978] A.C. 728, [1977] 2W.L.R. 1024, 121 S.J. 377, [1977] UKHL 4 (U.K. H.L.) — considered

Ault v. Canada (Attorney General) (2011), 87 C.C.P.B. 210, 274 O.A.C. 200,2011 ONCA 147, 2011 CarswellOnt 1126, 88 C.C.E.L. (3d) 161 (Ont.C.A.) — followed


Ault v. Canada (Attorney General) (2011), 2011 CarswellOnt 10861, 2011 Cars-wellOnt 10862, [2011] S.C.C.A. No. 206 (S.C.C.) — referred to

Bare Land Condominium Plan 8820814 v. Birchwood Village Greens Ltd.(1998), 1998 CarswellAlta 1108, 1998 ABQB 1023, (sub nom. Owners:Bare Land Condominium Plan 8820814 v. Birchwood Village Greens Ltd.)235 A.R. 217, 22 R.P.R. (3d) 263, [1999] 6 W.W.R. 753, [1998] A.J. No.1300 (Alta. Q.B.) — considered

Broome v. Prince Edward Island (2010), 918 A.P.R. 24, 297 Nfld. & P.E.I.R.24, [2010] 1 S.C.R. 360, 400 N.R. 148, 317 D.L.R. (4th) 218, 73 C.C.L.T.(3d) 1, 2010 CarswellPEI 20, 2010 CarswellPEI 21, 2010 SCC 11(S.C.C.) — considered

Citadel General Assurance Co. v. Lloyds Bank Canada (1997), 152 D.L.R. (4th)411, 1997 CarswellAlta 823, 1997 CarswellAlta 824, [1997] 3 S.C.R. 805,66 Alta. L.R. (3d) 241, [1999] 4 W.W.R. 135, 19 E.T.R. (2d) 93, (sub nom.Citadel General Life Assurance Co. v. Lloyds Bank Canada) 206 A.R. 321,(sub nom. Citadel General Life Assurance Co. v. Lloyds Bank Canada) 156W.A.C. 321, 219 N.R. 323, 47 C.C.L.I. (2d) 153, 35 B.L.R. (2d) 153, [1997]S.C.J. No. 92 (S.C.C.) — followed

Cooper v. Hobart (2001), [2002] 1 W.W.R. 221, 2001 CarswellBC 2502, 2001CarswellBC 2503, 2001 SCC 79, 8 C.C.L.T. (3d) 26, 206 D.L.R. (4th) 193,96 B.C.L.R. (3d) 36, (sub nom. Cooper v. Registrar of Mortgage Brokers(B.C.)) 277 N.R. 113, [2001] 3 S.C.R. 537, (sub nom. Cooper v. Registrar ofMortgage Brokers (B.C.)) 160 B.C.A.C. 268, (sub nom. Cooper v. Registrarof Mortgage Brokers (B.C.)) 261 W.A.C. 268, [2001] S.C.J. No. 76, REJB2001-26862 (S.C.C.) — followed

Elbow River Marketing Ltd. Partnership v. Canada Clean Fuels Inc. (2011),2011 ABCA 258, 2011 CarswellAlta 1628 (Alta. C.A.) — referred to

Elder Advocates of Alberta Society v. Alberta (2011), [2011] 6 W.W.R. 191, 81C.C.L.T. (3d) 1, 416 N.R. 198, 331 D.L.R. (4th) 257, 499 A.R. 345, 514W.A.C. 345, (sub nom. Alberta v. Elder Advocates of Alberta Society)[2011] 2 S.C.R. 261, 2011 CarswellAlta 763, 2011 CarswellAlta 764, 2011SCC 24, 2 C.P.C. (7th) 1, 41 Alta. L.R. (5th) 1, [2011] S.C.J. No. 24(S.C.C.) — followed

Fullowka v. Royal Oak Ventures Inc. (2010), (sub nom. Fullowka v. Pinkerton’sof Canada Ltd.) [2010] 1 S.C.R. 132, [2010] 4 W.W.R. 35, (sub nom.Fullowka v. Pinkerton’s of Canada Ltd.) 398 N.R. 20, (sub nom. Fullowka v.Pinkerton’s of Canada Ltd.) 479 W.A.C. 1, (sub nom. Fullowka v.Pinkerton’s of Canada Ltd.) 474 A.R. 1, 80 C.C.E.L. (3d) 1, 315 D.L.R.(4th) 577, 2010 SCC 5, 2010 CarswellNWT 9, 2010 CarswellNWT 10, 71C.C.L.T. (3d) 1, [2010] S.C.J. No. 5, [2010] A.C.S. No. 5 (S.C.C.) —followed


Garland v. Consumers’ Gas Co. (2004), 2004 CarswellOnt 1558, 2004 Cars-wellOnt 1559, 2004 SCC 25, 72 O.R. (3d) 80 (note), 237 D.L.R. (4th) 385,319 N.R. 38, 43 B.L.R. (3d) 163, 9 E.T.R. (3d) 163, 42 Alta. L. Rev. 399,186 O.A.C. 128, [2004] 1 S.C.R. 629, [2004] S.C.J. No. 21, REJB 2004-60672 (S.C.C.) — followed

Hercules Management Ltd. v. Ernst & Young (1997), 31 B.L.R. (2d) 147, [1997]2 S.C.R. 165, 1997 CarswellMan 198, 211 N.R. 352, 1997 CarswellMan199, 115 Man. R. (2d) 241, 139 W.A.C. 241, (sub nom. HerculesManagements Ltd. v. Ernst & Young) 146 D.L.R. (4th) 577, 35 C.C.L.T. (2d)115, [1997] 8 W.W.R. 80, [1997] S.C.J. No. 51 (S.C.C.) — followed

Hill v. Hamilton-Wentworth (Regional Municipality) Police Services Board(2007), 2007 SCC 41, 2007 CarswellOnt 6265, 2007 CarswellOnt 6266, 87O.R. (3d) 397 (note), 40 M.P.L.R. (4th) 1, 64 Admin. L.R. (4th) 163, 50C.C.L.T. (3d) 1, 368 N.R. 1, 285 D.L.R. (4th) 620, [2007] 3 S.C.R. 129,[2007] R.R.A. 817, 50 C.R. (6th) 279, 230 O.A.C. 253, [2007] S.C.J. No. 41(S.C.C.) — considered

Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask179, 2002 SCC 33, 30 M.P.L.R. (3d) 1, 219 Sask. R. 1, 272 W.A.C. 1,[2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, REJB 2002-29758 (S.C.C.) —followed

Keith Plumbing & Heating Co. v. Newport City Club Ltd. (2000), 2000 BCCA141, 135 B.C.A.C. 59, 221 W.A.C. 59, 184 D.L.R. (4th) 75, 2000 Car-swellBC 389, 49 C.C.L.T. (2d) 101, 2 C.L.R. (3d) 12, 75 B.C.L.R. (3d) 186,[2000] 6 W.W.R. 65, 3 B.L.R. (3d) 53, [2000] B.C.J. No. 390 (B.C. C.A.) —considered

Mitten v. College of Psychologists (Alberta) (2010), 487 A.R. 198, 495 W.A.C.198, 26 Alta. L.R. (5th) 102, 5 Admin. L.R. (5th) 133, 2010 ABCA 159,2010 CarswellAlta 917 (Alta. C.A.) — followed

Motkoski Holdings Ltd. v. Yellowhead (County) (2010), 89 R.P.R. (4th) 159, 66B.L.R. (4th) 161, 474 A.R. 367, 479 W.A.C. 367, 20 Alta. L.R. (5th) 1, 49C.E.L.R. (3d) 1, 2010 ABCA 72, 2010 CarswellAlta 403, [2010] 5 W.W.R.603, 74 C.C.L.T. (3d) 71, [2010] A.J. No. 243 (Alta. C.A.) — considered

Murphy Oil Co. v. Predator Corp. (2006), [2006] 5 W.W.R. 385, 384 A.R. 251,367 W.A.C. 251, 2006 ABCA 69, 2006 CarswellAlta 233, 55 Alta. L.R.(4th) 1, [2006] A.J. No. 207 (Alta. C.A.) — followed

Nielsen v. Kamloops (City) (1984), [1984] 5 W.W.R. 1, 1984 CarswellBC 476,66 B.C.L.R. 273, [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641, 54 N.R. 1, 11Admin. L.R. 1, 29 C.C.L.T. 97, 8 C.L.R. 1, 26 M.P.L.R. 81, 1984 Car-swellBC 821, [1984] S.C.J. No. 29 (S.C.C.) — followed

Papaschase Indian Band No. 136 v. Canada (Attorney General) (2008), (subnom. Lameman v. Canada (Attorney General)) 372 N.R. 239, [2008] 5


W.W.R. 195, 2008 CarswellAlta 398, 2008 CarswellAlta 399, 2008 SCC 14,[2008] 2 C.N.L.R. 295, 68 R.P.R. (4th) 59, 292 D.L.R. (4th) 49, (sub nom.Canada (Attorney General) v. Lameman) [2008] 1 S.C.R. 372, (sub nom.Lameman v. Canada (Attorney General)) 429 A.R. 26, (sub nom. Lamemanv. Canada (Attorney General)) 421 W.A.C. 26, 86 Alta. L.R. (4th) 1, [2008]S.C.J. No. 14 (S.C.C.) — followed

Queen v. Cognos Inc. (1993), 1993 CarswellOnt 801, 1993 CarswellOnt 972,D.T.E. 93T-198, 45 C.C.E.L. 153, 93 C.L.L.C. 14,019, 99 D.L.R. (4th) 626,60 O.A.C. 1, 14 C.C.L.T. (2d) 113, [1993] 1 S.C.R. 87, 147 N.R. 169, EYB1993-67486, [1993] S.C.J. No. 3 (S.C.C.) — followed

Stewart v. Pettie (1995), 8 M.V.R. (3d) 1, 121 D.L.R. (4th) 222, 162 A.R. 241,83 W.A.C. 241, 1995 CarswellAlta 406, 1995 CarswellAlta 1, 23 C.C.L.T.(2d) 89, 25 Alta. L.R. (3d) 297, [1995] 3 W.W.R. 1, [1995] 1 S.C.R. 131,177 N.R. 297, [1995] S.C.J. No. 3, EYB 1995-66860 (S.C.C.) — considered

Tottrup v. Clearwater (Municipal District) No. 99 (2006), 68 Alta. L.R. (4th)237, 391 W.A.C. 88, 401 A.R. 88, 2006 ABCA 380, 2006 CarswellAlta1627, [2006] A.J. No. 1532 (Alta. C.A.) — followed

Cases considered by J.D. Bruce McDonald J.A. (dissenting in part):

Canadawide Investment Ltd. v. Muirhead (1958), 26 W.W.R. 460, 1958CarswellAlta 54, 15 D.L.R. (2d) 526 (Alta. C.A.) — considered

Hercules Management Ltd. v. Ernst & Young (1997), 31 B.L.R. (2d) 147, [1997]2 S.C.R. 165, 1997 CarswellMan 198, 211 N.R. 352, 1997 CarswellMan199, 115 Man. R. (2d) 241, 139 W.A.C. 241, (sub nom. HerculesManagements Ltd. v. Ernst & Young) 146 D.L.R. (4th) 577, 35 C.C.L.T. (2d)115, [1997] 8 W.W.R. 80, [1997] S.C.J. No. 51 (S.C.C.) — considered

Johnson v. Forbes (1931), 1931 CarswellAlta 62, 26 Alta. L.R. 268, [1932] 1D.L.R. 219, [1931] 3 W.W.R. 757 (Alta. C.A.) — considered

Papaschase Indian Band No. 136 v. Canada (Attorney General) (2008), (subnom. Lameman v. Canada (Attorney General)) 372 N.R. 239, [2008] 5W.W.R. 195, 2008 CarswellAlta 398, 2008 CarswellAlta 399, 2008 SCC 14,[2008] 2 C.N.L.R. 295, 68 R.P.R. (4th) 59, 292 D.L.R. (4th) 49, (sub nom.Canada (Attorney General) v. Lameman) [2008] 1 S.C.R. 372, (sub nom.Lameman v. Canada (Attorney General)) 429 A.R. 26, (sub nom. Lamemanv. Canada (Attorney General)) 421 W.A.C. 26, 86 Alta. L.R. (4th) 1, [2008]S.C.J. No. 14 (S.C.C.) — considered

Queen v. Cognos Inc. (1993), 1993 CarswellOnt 801, 1993 CarswellOnt 972,D.T.E. 93T-198, 45 C.C.E.L. 153, 93 C.L.L.C. 14,019, 99 D.L.R. (4th) 626,60 O.A.C. 1, 14 C.C.L.T. (2d) 113, [1993] 1 S.C.R. 87, 147 N.R. 169, EYB1993-67486, [1993] S.C.J. No. 3 (S.C.C.) — considered

Royal Securities Corp. v. Montreal Trust Co. (1966), 59 D.L.R. (2d) 666, [1967]1 O.R. 137, 1966 CarswellOnt 150 (Ont. H.C.) — considered


Stevens v. Merchants Bank (1919), [1920] 1 W.W.R. 52, 49 D.L.R. 528, 30Man. R. 46, 1919 CarswellMan 88 (Man. C.A.) — referred to

Tanouye v. KJM Developments Ltd. (1980), 25 A.R. 200, 1980 CarswellAlta384, [1980] A.J. No. 755 (Alta. Q.B.) — considered

Statutes considered by Catherine Fraser C.J.A.:

Condominium Property Act, R.S.A. 2000, c. C-22Generally — referred tos. 11 — considereds. 14 — considereds. 14(1)(a) “common property” — considereds. 14(1)(b) “cost consultant” — considereds. 14(1)(c) “developer” — considereds. 14(1)(e) “substantially completed” — considereds. 14(2) — considereds. 14(3) — considereds. 14(4) — considereds. 14(5) — considereds. 14(10) — considereds. 14(13) — considereds. 14(15) — considereds. 15 — considereds. 80(1) — considered

Personal Property Security Act, R.S.A. 2000, c. P-7Generally — referred to

Statutes considered by J.D. Bruce McDonald J.A. (dissenting in part):

Condominium Property Act, R.S.A. 2000, c. C-22Generally — referred tos. 1(1)(j) “developer” — considereds. 14 — considereds. 14(1)(c) “developer” — considered

Rules considered by Catherine Fraser C.J.A.:

Alberta Rules of Court, Alta. Reg. 390/68Generally — referred toR. 159(2) — consideredR. 159(3) — considered

Alberta Rules of Court, Alta. Reg. 124/2010Generally — referred toR. 7.3(1)(b) — consideredR. 15.2(1) — considered


Regulations considered by Catherine Fraser C.J.A.:

Condominium Property Act, R.S.A. 2000, c. C-22Condominium Property Regulation, Alta. Reg. 168/2000

s. 1(2)(c) — considered

Words and phrases considered

dishonest and fraudulent intent of the trustee

[Per Fraser C.J.A. (Watson J.A. concurring):] The appellants submit that MCAP[the defendant provider of interim financing for a condominium project] partici-pated in a breach of trust by knowingly assisting in a fraudulent and dishonestdesign on the part of a trustee or by receiving monies it knew were subject totrust conditions.

In Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805(S.C.C.), the Supreme Court of Canada discussed the fundamental distinctionbetween a stranger to a trust knowingly assisting in a fraudulent and dishonestdesign on the part of a trustee (“knowing assistance”) and knowingly receivingtrust property (“knowing receipt”) and set forth the different thresholds that hadto be met in each situation. Assuming for the sake of argument that MCAP is nota “developer” for purposes of s. 14, MCAP would be a stranger to the statutorytrust created under s. 14 of the Act [Condominium Property Act, R.S.A. 2000, c.C-22].

Under the first category, knowing assistance, a finding of liability requires thatthe stranger to the trust have either actual knowledge of the trustee’s fraudulentand dishonest design or be reckless or wilfully blind to that intention. And wherethe trust is, as here, imposed by statute, the stranger will be deemed to haveknown of it: Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787 (S.C.C.) atpara 39. The dishonest and fraudulent intent of the trustee does not refer to fraudin the criminal sense; conduct that is morally reprehensible will do. Nor is itnecessary that the stranger have acted in bad faith or dishonestly. The test iswhether the stranger can be said to be “taking a risk to the prejudice of another’srights, which risk is known to be one which there is no right to take”: Air Can-ada, supra at para 60.

developer

[Per Fraser C.J.A. (Watson J.A. concurring):] I have concluded that there is agenuine issue for trial as to whether MCAP should, in the particular circum-stances of this case, be properly characterized as a “developer” for purposes of s.14 of the Act [Condominium Property Act, R.S.A. 2000, c. C-22]. Accepting,without deciding, that ordinarily, an interim financier would not be found tohave received funds “on behalf of a developer” when it receives proceeds of saleof condominium units in repayment of the debt a developer owes to it, it doesnot follow that this will invariably be the case. Depending on the facts, there


may well be instances in which an interim financier is properly included withinthe definition of “developer” under s. 14 of the Act. A trial judge consideringthis issue in this case will need to address and resolve a number of matters.

on behalf of a developer

[Per McDonald J.A. (dissenting in part):] I repeat here, again for convenience,the test for determining who is a “developer” for the purposes of section 14 ofthe Act [Condominium Property Act, R.S.A. 2000, c. C-22], as stated in para-graph 118 of the Reasons for Judgment Reserved of the majority. A “developer”includes a person who:

(i) received money paid by or on behalf of a purchaser;

(ii) pursuant to a purchase agreement; and

(iii) on behalf of a developer.

I concede that there may be genuine issues for trial as to whether the fundsMCAP [the defendant provider of interim financing] received through thepurchase transactions of units in the Condo Project was money “paid on behalfof a purchaser” “pursuant to a purchase agreement”. However, I cannot acceptthe suggestion that those funds were received “on behalf of a developer”.

The majority concludes that it is an open question what precisely the words “onbehalf of a developer” in section 14 means: paragraph 124. However, in myopinion, whatever the scope of that phrase might be, it cannot be so broad as toinclude money received by MCAP, pursuant to a loan agreement, to pay off thedebt owed by 970365 [the defendant developer]. Money received in this way isfundamentally received by MCAP on its own behalf. The chambers judgeclearly held that, based on the arrangement between the parties, the money re-ceived by MCAP was 970365’s money, and it was paid by 970365, not on be-half of 970365. [footnote omitted]

developer

[Per McDonald J.A. (dissenting in part):] The majority recognizes that publicpolicy issues will be a factor to consider when analyzing the scope of the defini-tion of “developer” in section 14 of the Act [Condominium Property Act, R.S.A.2000, c. C-22]. However, the majority believes this is a question that is best leftto be decided at trial. With respect, I again diverge on this point. In my opinion,even opening the door at trial to an interpretation of section 14 that may includeinterim construction lenders in the definition of “developer” would clearly beinconsistent with the object of the Act and the intention of the Legislature.

. . . . .

Section 14 is an example of the balance that the Act attempts to create. On theone hand, the definition of “developer” is directed at holding a larger group ofpersons accountable for the proper construction and completion of new condo-


minium projects. In fact, the definition of “developer” presently set out in sec-tion 14 was only introduced in 2000 as part of a package of amendments to theAct . . .

Prior to that time, the applicable definition was the much narrower definition of“developer” applicable to the entire Act; the current general definition of “devel-oper” in section 1(j), which was also amended in 2000 but for the purposes ofthis appeal is substantially the same as it was prior to the amendments, reads:

“developer” means a person who, alone or in conjunction with otherpersons, sells or offers for sale to the public units or proposed unitsthat have not previously been sold to the public by means of an arm’slength transaction.

Clearly the section 14 definition encompasses a wider range of persons than thedefinition in section 1(j) of the Act, indicating a focus on consumer protection.On the other hand, the calculation of trust holdbacks under section 14 now seeksto allow developers easier access to sufficient funds to complete a condominiumproject, while at the same time maintaining sufficient holdbacks to ensure thecompletion of the units and related common property for which purchase monieshave already been paid.

. . . . .

[T]he Legislature did not intend to cast the net so wide as to include interimfinance lenders, since doing so will undermine the other objective of section 14,namely, ensuring that construction financing is available and funds are accessi-ble to allow developers to complete, with reasonable diligence, the constructionof new condominium projects. Expanding section 14 to apply to interim con-struction lenders carrying on business in the ordinary course and through well-accepted and time-proven practices will doubtless have a detrimental effect onthe availability of financing for new condominium developments. This cannothave been the intention of the Legislature when amending section 14.

APPEAL by plaintiffs from judgment reported at Condominium Corp. No.0321365 v. 970365 Alberta Ltd. (2010), 96 R.P.R. (4th) 238, 94 C.L.R. (3d) 23,31 Alta. L.R. (5th) 230, 501 A.R. 323, 100 C.P.C. (6th) 24, [2011] 1 W.W.R.495, 2010 CarswellAlta 1771, 2010 ABQB 573 (Alta. Q.B.) granting applicationby one of defendants for summary judgment to dismiss claims against it.

G. Vogeli, T. McDonald, for AppellantR.H. Haggett, for Respondent

Condo. Corp. No. 0321365 v. 970365 Alta. Catherine Fraser C.J.A. 17

Catherine Fraser C.J.A.:

I. Introduction1 The appellant, Condominium Corporation No. 0321365 (Condo Cor-

poration), owns the common property of a seven building condominiumcomplex in Fort McMurray known as Alfred Penhorwood Place (CondoProject). The Condo Project consists of 168 units. Real Estate StrategiesGroup Inc. (RESG) was involved with and in some fashion assisted pur-chasers of 72 of the units in the Condo Project. Together with a represen-tative plaintiff for the condominium unit holders, the Condo Corporationis suing a number of defendants for damages to remedy the alleged faultydesign and construction of the Condo Project. The defendants include thedeveloper of the Condo Project, 970365 Alberta Ltd. (970365) and therespondent, MCAP Financial Corporation (MCAP), which provided in-terim financing to 970365 for the Condo Project.

2 The appellants allege that the Condo Project, which they characterizeas a “disaster”, suffers from several serious problems. In particular, theyassert that the Condo Project is sinking into the ground because the foot-ings have failed and geotechnical standards for compaction and fill werenot followed. They further allege that all roofs require replacement, thatthe wall system has failed resulting in extensive moisture penetration,and that the air quality and circulation are very poor and hazardous tohealth. They also allege that the units in the Condo Project and relatedcommon property were not substantially completed at the time of transferof title to the units, and that this triggered certain statutory protections infavour of the purchasers under the Condominium Property Act, RSA2000, c C-22 (Act).

3 MCAP applied under Rule 159(2) of the former Alberta Rules ofCourt (Old Rules) seeking a summary judgment dismissing all the appel-lants’ claims against MCAP. Prior to hearing the summary judgment ap-plication, the chambers judge dealt with and granted, with the consent ofcounsel for MCAP, an outstanding application to amend the Statement ofClaim. Once that was concluded and the amendment allowed, he dealtwith the summary judgment application on the basis of the AmendedAmended Statement of Claim. This is the proper procedure and one thatought to be followed as a matter of good practice. That is to say, out-standing applications to amend pleadings should be resolved prior to achambers judge’s considering a summary judgment application on its


merits: Elbow River Marketing Ltd. Partnership v. Canada Clean FuelsInc., 2011 ABCA 258 (Alta. C.A.) at para 3.

4 After hearing MCAP’s summary judgment application on its merits,the chambers judge granted summary judgment dismissing all claimsagainst MCAP. It is from this decision that the appellants now appeal.

5 I have concluded that the appeal must be allowed in part. An inspec-tion of undoubted law plus arguable or provable law shows that there areseveral material factual disputes interlocked with significant legal issues,all of which need to be tried. This is particularly so where, as here, thelegal issues in dispute are unsettled or complex or intertwined with thefacts: Tottrup v. Clearwater (Municipal District) No. 99, 2006 ABCA380, 401 A.R. 88 (Alta. C.A.) at para 11.

6 I stress that my purpose in reviewing the limited evidence and law Ido is to demonstrate why there are genuine issues for trial and thereforewhy certain claims ought not to have been summarily dismissed. Accord-ingly, my analysis is not intended to provide a complete or balancedview of the contested facts nor foreshadow what may happen at trial. It isfor a trial judge to consider the outstanding claims following a full hear-ing on the merits of the case. Further, for convenience of legal analysis, Idiscuss various areas of law separately along with certain key allegationsof fact only relating to each. But the factual matrix is linked to all claims.Finally, I do not address the question of possible defences, causation,remedies, quantum of damages or mitigation with respect to any of thelegal claims. These are separate issues and they too, depending on theoutcome of the trial, are for the trial judge.

II. Relevant Legislation7 To place in context background information and factual and legal is-

sues in dispute, I must first set out the essential portions of the section ofthe Act primarily engaged on this appeal, namely s. 14, as well as s. 15:

14(1) For the purposes of this section,

(a) “common property” includes facilities and property that areintended for common use by the owners notwithstanding thatthe facilities or property may be located in or comprise a unitor any part of a unit;

(b) “cost consultant” means a person who meets the requirementsof the regulations to be a cost consultant or is otherwise des-ignated as a cost consultant pursuant to the regulations;


(c) “developer” includes any person who, on behalf of a devel-oper, ... receives money paid by or on behalf of a purchaser ofa unit or a proposed unit pursuant to a purchase agreement; ...

(e) “substantially completed” means, subject to the regulations,

(i) in the case of a unit, when the unit is ready for itsintended use, and

(ii) in the case of related common property, when the re-lated common property is ready for its intended use.

(2) A reference in this section to “related common property” is, inrelation to a unit, a reference to the following:

(a) the common property or a portion of the common propertythat is necessarily incidental to the completion of the unit;

(b) the common property or a portion of the common propertythat is necessarily incidental to the intended use of the unit;

(c) in the case of a unit other than a bare land unit, the commonproperty or a portion of the common property consisting of

(i) utilities required to service the unit and the commonproperty,

(ii) a facility providing for reasonable access to or en-trance into the unit,

(iii) a facility providing for reasonable access to highways,municipal roads or streets,

(iv) waste removal facilities or other facilities for handlingwaste, and

(v) any other improvements or areas

(A) designated by the regulations, or

(B) required under any other Act or regulations,

that are necessarily incidental to the intended use ofthe unit;

(d) in the case of a unit other than a bare land unit, in addition tothe common property referred to in clauses (a) to (c), anycommon property or any portion of the common property thathas been represented in the purchase agreement by the devel-oper as being or as going to be available for the use of theowner of the unit and, without limiting the generality of theforegoing, may include one or more of the following:

(i) roadways, parking areas and walkways;

(ii) fences or similar structures;


(iii) landscaped areas and site lighting; ....

(3) A developer shall hold in trust all money, other than rents or se-curity deposits, paid by the purchaser of a unit up to the time that thecertificate of title to the unit is issued in the name of the purchaser inaccordance with the purchase agreement.

(4) Notwithstanding subsection (3), if a unit is not substantially com-pleted, the developer shall hold in trust money, other than rents orsecurity deposits, paid by the purchaser of the unit so that the amountof money held in trust will be sufficient, when combined with theunpaid portion of the purchase price of the unit, if any, to pay for thecost of substantially completing the construction of the unit as deter-mined by a cost consultant.

(5) Notwithstanding subsection (3), if the related common property isnot substantially completed, the developer shall hold in trust money,other than rents or security deposits, paid by the purchaser of the unitso that the amount of money held in trust will be sufficient, whencombined with the unpaid portion of the purchase price of the unit, ifany, to pay for the proportionate cost of substantially completing theconstruction of the related common property as determined by a costconsultant ....

(10) Subject to subsection (11), this section does not apply in respectof money paid to a developer under a purchase agreement if thatmoney is held, secured or otherwise dealt with under the provisionsof a plan, agreement, scheme or arrangement approved by the Min-ister that provides for the receipt, handling and disbursing of all or aportion of that money or indemnifies against loss of all or a portionof that money or both....

(13) Where, with respect to a unit or related common property, orboth,

(a) money is held in trust under this section ..., and

(b) the developer has not met the requirements under which thatmoney is to be paid out of the trust or otherwise disbursed,

the corporation or an interested party may apply to the Court for anorder for that money to be paid out for the purposes of substantiallycompleting the unit or related common property, as the case may be,or to be used as directed by the Court....

(15) Once the unit or the related common property, or both, as thecase may be, in respect of which money is being held in trust underthis section are, as determined by a cost consultant, substantially


completed, any money remaining in trust may be paid to thedeveloper.

15 Section 14 does not apply if the purchaser does not perform thepurchaser’s obligations under the purchase agreement.

8 The purpose of s. 14 is clear. This is part of a package of remedialconsumer protection legislation designed to protect purchasers buyingcondominium units off plan, that is before a condominium project hasbeen built. The Legislature opted not to bar closing of purchase agree-ments where a unit or related common property is not substantially com-pleted. Instead, the Legislature has sought to achieve its objective bystatutorily mandating that developers hold back in trust from purchaseproceeds sufficient funds to substantially complete sold units and theirrelated common property. It has also imposed a duty of fair dealing ondevelopers and purchasers “with respect to the entering into, perform-ance and enforcement” of agreements: s. 11.

9 In enacting this package of legislation, the Legislature was alive toseveral economic and social realities. On the one hand, it did not want toprevent developers from securing, on reasonable terms, the financing re-quired to build and complete condominium projects. On the other, it rec-ognized that consumers needed to be protected from hit and run develop-ers, who promise much but deliver little, whether because of ineptitude,negligence, greed or worse yet, fraud. Through this statutory regime, theLegislature has provided some reasonable assurance that what developersagree to provide, and purchasers agree to buy, will be completed aspromised: see Bare Land Condominium Plan 8820814 v. BirchwoodVillage Greens Ltd., 1998 ABQB 1023, 235 A.R. 217 (Alta. Q.B.) atparas 9-10.

10 The statutory trust and holdback provisions in s. 14 may be summa-rized as follows. If a unit in a condominium project or the related com-mon property is not substantially completed at the time of transfer of titleto the unit, then the developer is required to hold in trust sufficient mon-ies to pay for the cost of substantially completing the construction of theunit as determined by a cost consultant plus monies sufficient to pay forthe proportionate cost of substantially completing the construction of therelated common property as determined by a cost consultant. Under s.1(2)(c) of the Condominium Property Regulation, AR 168/2000, a costconsultant must act “at arm’s length from the developer of the unit orcommon property”. The Legislature also prohibited contracting out of


these provisions: see s. 80(1) of the Act which provides that “... anywaiver or release given of the rights, benefits or protections provided byor under sections 12 to 17 is void”.

11 The Legislature understood that it would not be sufficient to mandatethat only the actual developer of the project be bound to comply withthese provisions. To minimize the risk of purchase monies flowing out tothird parties despite the statutory prohibitions, the Legislature expresslyexpanded the definition of “developer” under s. 14 of the Act to captureand include third parties receiving monies paid by purchasers of units incertain circumstances. Prior to 2000, “developer” was defined simply asa “developer or a person acting on his behalf”. This definition was thenamended to the present wording under s. 14(1)(c) of the Act which pro-vides that “developer” includes “any person who, on behalf of a devel-oper, ... receives money paid by or on behalf of a purchaser of a unit or aproposed unit pursuant to a purchase agreement”.

12 The interpretation of this definition will be a live issue at the trial ofthe matters in dispute between the appellants and MCAP. So too will bethe question of whether the units and related common property in theCondo Project were substantially completed at the time of transfer of titleof the various units — and who determines this question and under whatcircumstances. In particular, did the Legislature leave this up to the de-veloper of a project or a s. 14 cost consultant? To be clear, for purposesof complying with the statutory trust and holdback provisions under theAct, “developer” in the context of this case includes 970365 and otherparties, if any, found to fall within the definition of “developer” under s.14(1)(c).

13 The only exception from the statutory trust and holdback provisionsimposed on a “developer” is set out in s. 14(10). If a project is within thescope of this exemption, then the statutory trust and holdback provisionsdo not apply. To come within the exemption, the purchase monies paidmust be held, secured or dealt with under the “provisions of a plan,agreement, scheme or arrangement approved by the Minister”. The Courtwas advised that the vast majority of new condominium projects in Al-berta fall within this exemption. That includes projects covered under agovernment-approved plan such as the Alberta New Home WarrantyProgram which provides a form of insurance coverage for purchase mon-ies. But the Condo Project is not covered by the Alberta New HomeWarranty Program or any other approved plan. Therefore, on this record,


the exemption under s. 14(10) does not — and did not — apply to theCondo Project.

III. Background Information14 I now turn to certain background information for which there is evi-

dence on this record. That evidence remains to be evaluated at trial bythe trial judge in the context of all relevant evidence. I also recognize thatMCAP has offered contrary evidence on some points and that there isadditional evidence as well that I do not canvass in these reasons. Never-theless, for purposes of this appeal, the present record includes evidencein support of the following.

15 MCAP was the construction lender for 970365 and provided interimfinancing for the Condo Project in accordance with a commitment letterdated July 8, 2002 (the Commitment Letter). The Commitment Letter,which governed the relationship between MCAP and 970365, set out theterms and conditions under which funds would be made available to970365. There were two other parties to the Commitment Letter, theprincipal officer of 970365, Gary Nissen, and the parent corporation of970365, Dome Britannia Properties Inc. Nissen and Dome Britannia ac-cepted and executed the Commitment Letter as guarantors of MCAP’sloan to 970365. The Commitment Letter initially dealt with financing forthe first three buildings in the Condo Project. By a further agreementdated March 5, 2003 made amongst the parties to the Commitment Let-ter, it was amended to provide financing for all seven buildings in theCondo Project.

16 The Commitment Letter contained a number of terms under whichfinancing would be provided. In particular, Funding Condition 11 stated(at Appellants’ Extract of Evidence (AEE) A18):

A soils test report (load bearing capacity) by an acceptable profes-sional engineer or such other similar report as is acceptable to theLender, must be provided, demonstrating to the satisfaction of theLender and its Cost Consultant that the proposed construction andsite improvements of the Project are feasible under existing soil con-ditions, together with evidence that the construction specificationsfor the Project provide for construction in compliance with such con-ditions and with the recommendations, if any, which may be con-tained in such soils test report.

17 The Commitment Letter identified the need for “the Lender’s CostConsultant” to verify the costs of the Condo Project: see eg. Funding


Condition 7 at AEE A17. The cost consultant was described in variousways throughout the Commitment Letter. For example, references weremade to “the Cost Consultant” (see eg. Funding Condition 7 at AEEA17) or “its cost consultant” (see eg. Funding Condition 22 at AEE A20)or the “Lender’s cost consultant (see eg. Availability Condition 2 at AEEA21). Other Conditions 28 provided that:

The Lender’s [monitor(s)/cost consultants] shall be: Cuthbert SmithConsulting ... The terms of reference for the monitor/cost consultantwill be as detailed in Schedule “B”.

18 Schedule “B” then set out the Terms of Reference for the subject costconsultant. Those terms included the requirement that prior to the initialadvance, a required Project and Budget Review Report include “Docu-ments confirming that project has been designed in accordance with Ge-otechnical Engineer’s Report”: see AEE A32. The Commitment Letterprescribed that all requests by 970365 for advances or draws include aninspection certificate from the “Lender’s Cost Consultant” confirmingthat “the work to date is in accordance with the plans and specifications”and calculating “the amount of holdbacks and cost to complete”: seeAvailability, Condition 2 at AEE A21. It was also a term of the Commit-ment Letter that if actual costs exceeded the budgeted and approvedcosts, such that the completion costs exceeded the balance of the loan notyet advanced, that 970365 would contribute the excess toward the CondoProject before receiving any further advances: see Funding Condition 22at AEE A20.

19 MCAP retained the “firm” of Cuthbert Smith Consulting (CSC) to?act on our behalf as Cost Consultant” under a letter agreement betweenthe two dated July 16, 2002 (CSC Contract). CSC’s role as cost consult-ant was detailed in the CSC Contract. Certain parts of the CommitmentLetter were attached to the CSC Contract. Among them was the sectionon the Funding Conditions, including Funding Condition 11 regardingthe soils conditions report noted above. The Terms of Reference for thecost consultant attached to the Commitment Letter were also attached tothe CSC Contract. This included the requirement that prior to any pro-gress advance for work in place, CSC “[p]rovide revised cost scheduleshowing original Budget, Budget changes, revised Budget, total work inplace, net holdback, work in place previous, payment due, and cost tocomplete [sic]”: AEE A226. Thus, the CSC Contract mirrored the Com-mitment Letter in certain key respects.


20 On July 15, 2002, a conversation took place between Doug Frey ofRESG and Robert Balfour of MCAP. What was discussed during thatconversation has not yet been fully explored. It was followed by what theappellants claim was a critical phone conversation the next day, that is onJuly 16, 2002 (2002 Phone Call). There is evidence on this record thatthe 2002 Phone Call took place between two representatives of RESG,namely Frey and Allan Penner, and the Vice-President of MCAP,Michael Roulston. According to the appellants, it was during the 2002Phone Call that Roulston, on behalf of MCAP, represented that the termsand conditions of the Commitment Letter would be enforced for the ben-efit of those represented by RESG, namely purchasers of units in theCondo Project and the Condo Corporation. The appellants also contendthat Roulston represented that CSC was the cost consultant for the pur-poses of s. 14 of the Act.

21 The 2002 Phone Call, and what transpired during that Call, wouldfigure prominently in the events that unfolded in 2003 when RESG’songoing concerns about the Condo Project were finally brought to a headin September of that year.

22 CSC had a scheduled inspection of the Condo Project arranged forSeptember 10, 2003. RESG was apparently advised by PeterAbramovich of CSC in a phone message left September 10, 2003 that itsrequest to attend this inspection would not be honoured. Penner did at-tend the site on September 10 and 11, 2003, accompanied by Ellen Mar-tin, the resident manager of the Condo Project. Penner’s evidence is thathe was “shocked at the state of the site....”: AEE A112. On September11, 2003, Dan Kuhn of Permit Pro accompanied Penner to the site. Pen-ner deposed that Kuhn identified four Alberta Building Code violationswhich Kuhn advised he would immediately address with 970365: AEEA112-113.

23 On September 12, 2003, Penner, on behalf of RESG, wrote a detailed10 page letter to CSC (Deficiency Letter), copying MCAP, setting outvarious alleged serious deficiencies in the design and construction of theCondo Project, including suspected Alberta Building Code, developmentpermit and contractual deficiencies. It is the appellants’ position that thisDeficiency Letter signalled grave concerns that the units and relatedcommon property in the Condo Project were not in fact substantiallycompleted as contemplated by the Act. In particular, in their view, thesuspected construction and design deficiencies identified for which statu-


tory holdbacks might therefore be mandated included the effectivenessand safety of the mechanical system, the use and operation of the HeatRecovery Ventilator units, corridor pressurization and airflow, and thecompaction and composition of fill materials in the asphalt areas.

24 Accordingly, in the Deficiency Letter, RESG repeatedly requestedthat CSC provide it with estimates of costs to correct the identified defi-ciencies. It also confirmed that it had been “advised” that CSC had beenselected as the required cost consultant for purposes of s. 14 of the Act. Itpointed out to CSC that it “appears you were made aware of the fact thatyour reports are being used for statutory purposes, in addition to yourmonitoring role for MCAP.... Your role is to determine the appropriatelevel of funds to be held in trust for the benefit of purchasers, after as-sessing all pertinent information at your disposal. Your role is not to takeyour instructions from the developer”: AEE A150 and A183. RESGclosed the Deficency Letter by reminding CSC that 970365 had an obli-gation under the Act to act fairly and that it had breached that duty inseveral ways. It specifically asked CSC for an “immediate reply” to theDeficiency Letter.

25 At the time that the Deficiency Letter was sent, construction was stillprogressing on the Condo Project. Although some transactions topurchase units in the Condo Project had closed, many others had not.

26 Four days later, that is on September 16, 2003, Penner received a tele-phone call from James Cuthbert, the principal shareholder and director ofCSC. There is evidence that Cuthbert advised Penner that he had re-viewed the Deficiency Letter, that CSC was in the process of preparingits report to MCAP with respect to the September 10, 2003 site visit andthat Cuthbert would require some time to evaluate the items Penner hadraised in the context of CSC’s dual role as the lender’s monitor and the s.14 cost consultant.

27 On September 22, 2003, Penner wrote CSC another letter (Geotechni-cal Testing Letter) on behalf of RESG, copying MCAP, and urgently re-questing that further development activity on the site of the Condo Pro-ject cease until a geotechnical soils test could be conducted to evaluatesite conditions. This Letter asserted that there was “alarming evidence”that the recommendations by the geotechnical consultants had not beenfollowed: AEE A160. It then proceeded to outline some of that evidence.RESG also put CSC on express notice that Roulston of MCAP had as-sured RESG during the 2002 Phone Call “that the terms of the commit-


ment letter would be carefully monitored and upheld” by CSC: see AEEA160-1. RESG also wrote CSC another letter that same day, that is Sep-tember 22, 2003, notifying CSC that it was considering advising certaintenants that “there exists a serious life safety issue, which will compoundas the weather gets colder”: AEE A162.

28 On this record, the geotechnical testing RESG had requested in theGeological Testing Letter did not happen. Instead, on September 23,2003, 970365 wrote a letter to CSC instructing CSC that CSC had notbeen retained as a s. 14 cost consultant and that it did not consent toCSC’s taking on such role. The next day, September 24, 2003, MCAPwrote a letter to CSC instructing CSC to the same effect in essentiallyidentical terms, that is that CSC had not been retained as a s. 14 costconsultant and MCAP did not consent to its taking on this role. RESGwas not copied on either letter.

29 There is evidence on this record that 970365 threatened to cancelagreements of purchase and sale and retain the deposits paid if the trans-actions of purchase and sale were not closed as 970365 demanded. Unders. 15 of the Act, purchasers lose the protection of s. 14 if the purchaserdoes not perform his or her obligations under the purchase agreement.

30 On September 26, 2003, a number of purchases of units in the CondoProject were closed and MCAP received $1,463,940 from 970365’s law-yers. Later, between October 8 and 16, 2003, MCAP received another$2,891,439 from 970365’s lawyers. MCAP applied the funds received toreduce the debt 970365 owed to MCAP. Letters from 970365’s lawyersto lawyers for purchasers of units in the Condo Project referenced therequirements of s. 14 of the Act at least, it appears, as regards the com-pletion of the “related common property”. For example, at AEE A268, ina letter dated August 15, 2003, 970365’s lawyers gave the following un-dertaking to counsel for a purchaser (see also another letter to the sameeffect at AEE A524-525):

To maintain a holdback pending completion of related common pro-perty in accordance with section 14 of the Condominium PropertyAct, provided that we shall be entitled to rely on the advice of ourclient’s cost consultant, Cuthbert Smith, Chartered Quantity Survey-ors, to determine the appropriate amount of such holdback from timeto time.


IV. Reasons of the Chambers Judge31 Before the chambers judge, the appellants alleged that MCAP was

responsible to them for the losses arising from the deficiencies in theCondo Project on a number of grounds. The chambers judge consideredfive issues:

(1) Did MCAP owe any duty of care to the appellants so as to groundan action in negligence for failing to strictly enforce and upholdthe terms and conditions of the Commitment Letter?

(2) Did MCAP breach a duty of care to the appellants through its al-leged representation that the terms of the Commitment Letterwould be strictly enforced so as to ground an action in negligentmisrepresentation?

(3) Was MCAP a “developer” within the meaning of s. 14 of the Act?

(4) Did MCAP conspire with others in the breach of any statutory orfiduciary duty?

(5) Was MCAP unjustly enriched by receipt from any purchaser ofthe net purchase price for any condominium unit?

32 On the first issue, the chambers judge held that no sufficiently closerelationship existed between MCAP and the appellants to justify impos-ing what would be a novel duty of care: Appeal Book Digest F96 at para25. And even if it did, the chambers judge concluded that imposing sucha duty on a lender would fundamentally change the nature of project fi-nancing and disrupt the market place. Thus, he determined that this toojustified the court’s refusing to impose such a duty. Accordingly, the ap-pellants had no claim against MCAP in negligence.

33 On the second issue, the chambers judge concluded that there was nobasis for finding the required proximity between MCAP and the appel-lants. He determined it was not reasonably foreseeable by MCAP thatany prospective purchaser could reasonably rely on the alleged represen-tation; there was no evidence that any did; and in any event, any suchreliance by a purchaser could not be found to be reasonable. Therefore, aclaim in negligent misrepresentation did not lie.

34 On the third issue, whether MCAP was a developer, the chambersjudge held that when MCAP received funds from 970365’s lawyers, thefunds were the property of and paid by 970365 even though those fundscame from purchase proceeds of the sale of units in the condominiumproject. Consequently, MCAP did not receive funds “on behalf” of a de-


veloper and did not fall within the definition of a “developer” under theAct.

35 On the fourth issue, the chambers judge concluded that it would beimpossible for MCAP to conspire with others in the breach of any dutysince he had already found that MCAP owed no statutory or fiduciaryduty to the appellants.

36 Finally with respect to the fifth issue, unjust enrichment, the cham-bers judge noted that the law requires that a plaintiff be deprived of abenefit and that a defendant be correspondingly enriched without juristicreason. He found that since MCAP had received funds from 970365under the terms of an interim financing agreement, this constituted a ju-ristic reason for that receipt. Also, he determined that the receipt was notat the expense of the purchasers “but pursuant to the terms of theirpurchase agreements with the developer and required in order to obtain adischarge of MCAP’s mortgage on their title”: ABD F104.

37 As a result, the chambers judge summarily dismissed all claimsagainst MCAP.

V. Issues38 The issues on this appeal may be summed up as follows. Did the

chambers judge err in concluding that:

(1) MCAP could not have owed a duty of care to the appellants in thecircumstances of this case and thus, no action could lie in eithernegligence or negligent misrepresentation;

(2) no claim could be brought against MCAP for breach of a statutorytrust or unjust enrichment; and

(3) MCAP did not fall within the s. 14(1)(c) definition of a “devel-oper” in the circumstances of this case.

VI. Standard of Review39 Absent an error of law, the standard of review on an appeal of a sum-

mary judgment is reasonableness given the discretionary nature of theremedy. In Murphy Oil Co. v. Predator Corp., 2006 ABCA 69, 384 A.R.251 (Alta. C.A.) at para 23, this Court explained the standard of reviewthis way:

... the applicable standard of review is correctness with respect to er-rors of law. For both errors of mixed fact and law, and fact alone, the


standard is palpable and overriding error, unless the error of mixedfact and law involves an error relating to an extricable principle oflaw, in which case the standard of correctness applies to that extrica-ble legal question.... Deference is owed given the discretionary na-ture of a decision to grant summary judgment. Accordingly, a cham-bers decision will not be upset unless it is unreasonable....

40 Where a legal standard is applied to a set of facts, if an extricablequestion of law is engaged, the applicable standard of review remainscorrectness with respect to that question of law: Housen v. Nikolaisen,2002 SCC 33 (S.C.C.) at para 36, [2002] 2 S.C.R. 235 (S.C.C.). Findingsof fact are accorded great deference, absent palpable and overridingerror: Housen, supra at paras 10 and 25. Whether a cause of action existsis a question of law reviewable on a correctness standard: Mitten v.College of Psychologists (Alberta), 2010 ABCA 159 (Alta. C.A.) at para9, (2010), 487 A.R. 198 (Alta. C.A.).

VII. Test for Summary Judgment41 What then is the test for summary judgment? Under the Old Rules,

Rule 159 (2) and (3) provided:

159(2) A defendant may, after delivering a statement of defence, onthe ground that there is no merit to a claim or part of a claim or thatthe only genuine issue is as to amount, apply to the court for a judg-ment on an affidavit sworn by him or some other person who canswear positively to the facts, stating that there is no merit to thewhole or part of the claim or that the only genuine issue is as toamount and that the deponent knows of no facts that would substanti-ate the claim or any part of it.

(3) On hearing the motion, if the court is satisfied that there is nogenuine issue for trial with respect to any claim, the court may givesummary judgment against the plaintiff or a defendant.

42 The Old Rules have now been replaced by new Rules of Court [NewRules] effective November 1, 2010. Under transitional New Rule 15.2(1),the New Rules apply to this appeal. New Rule 7.3.1(b) provides that sum-mary judgment is available when “there is no merit to a claim or part ofit”. It is unnecessary on this appeal to consider whether there exists asubtle difference in the summary judgment rule under the New Rules asopposed to the Old Rules. That is not in issue on this appeal and I leave itfor another day. It is clear under both the New Rules and the Old Rules


that summary judgment may be granted where there is “no merit” to aclaim or part of it.

43 In the first instance, a summary judgment application involves twosteps. First, the moving party must adduce evidence to show there is nogenuine issue for trial. This is a high threshold. If there is no genuineissue for trial, then there will be no merit to a claim. Accordingly, if theevidentiary record establishes either that there are missing links in theessential elements of a cause of action or that there is no cause of actionin law, then there will be no genuine issue for trial. The fact there is nogenuine issue for trial must be proven; relying on mere allegations or thepleadings will not suffice: Papaschase Indian Band No. 136 v. Canada(Attorney General), 2008 SCC 14 (S.C.C.) at para 11, [2008] 1 S.C.R.372 (S.C.C.). Second, once the burden on the moving party has been met,the party resisting summary judgment may adduce evidence to persuadethe court that a genuine issue remains to be tried: Murphy, supra at para25. That effectively means showing that the claim has what is often re-ferred to as “a real chance of success”. This may be accomplished byestablishing the existence of disputes on material questions of fact, in-cluding inferences to be drawn therefrom, or on points of law that cannotbe readily resolved given the factual disputes.

44 The question here is whether the chambers judge was correct in con-cluding that there was no merit to any of the appellants’ claims.

VIII. Analysis45 I now turn to the three issues raised by this appeal.

A. The Duty of Care Issue46 The appellants’ position is that MCAP owed a duty to the appellants

to take reasonable steps to ensure that 970365 complied with and satis-fied the terms and conditions of the Commitment Letter. They contendthat MCAP’s alleged failure to do so was either negligence or negligentmisrepresentation. They assert that the chambers judge erred in conclud-ing that MCAP could not have owed a duty of care to the appellants oneither ground in the circumstances of this case.


1. Why There is No Genuine Issue for Trial Based on the Claim inNegligence

47 To determine whether the appellants’ claim in negligence againstMCAP for failing to enforce the terms and conditions of the Commit-ment Letter should be summarily dismissed, the chambers judge was re-quired to begin with this starting point. Is there a genuine issue aboutwhether MCAP owed a duty of care in tort to the appellants?

48 The appellants contend that an interim financier owes a duty of careto the purchasers of a condominium unit in a project financed by it toenforce the lending agreements between the financier and the developerof the project. To date, Canadian courts have not recognized the exis-tence of such a duty of care. In deciding whether the law of negligenceshould be extended to recognize this claimed duty, the chambers judgecorrectly turned to the two-part test set out by the House of Lords inAnns v. Merton London Borough Council (1977), [1978] A.C. 728 (U.K.H.L.) as adopted and recast by the Supreme Court of Canada in Nielsenv. Kamloops (City), [1984] 2 S.C.R. 2 (S.C.C.) at pp 10-11 (the recasttest being referred to as the Anns test). See also Cooper v. Hobart, 2001SCC 79, [2001] 3 S.C.R. 537 (S.C.C.) at paras 25 and 29-39; Hill v.Hamilton-Wentworth (Regional Municipality) Police Services Board,2007 SCC 41, [2007] 3 S.C.R. 129 (S.C.C.) at para 20; and Broome v.Prince Edward Island, 2010 SCC 11, [2010] 1 S.C.R. 360 (S.C.C.) atpara 14.

49 The first stage of the Anns test focusses on the relationship betweenthe plaintiff and defendant. It contains two requirements: reasonableforeseeability of harm plus a close and direct relationship of proximitysufficient to justify the imposition of a prima facie duty of care. In otherwords, a court must determine whether a sufficiently close relation-ship — otherwise called proximity — exists between the defendant andthe plaintiff that has suffered the damage such that the defendant couldreasonably foresee that carelessness on its part might cause damage tothe plaintiff. If foreseeability and proximity are established, a prima facieduty of care arises. The second stage asks whether there are any policyconsiderations which ought to negative or limit the scope of the duty, theclass of persons to whom it is owed, or the damages to which a breachmay give rise.

50 I have concluded that the chambers judge was correct in determiningthat a construction lender does not owe a duty of care to the purchasers


of units in a condominium project which it is financing or to the condo-minium corporation. Difficulties arise at both stages of the Anns analysis,making the recognition of a duty of care in these circumstances legallyunmanageable and commercially unreasonable.

51 To begin, liability in negligence is premised on the assumption that aparty can reasonably foresee who would be damaged by its actions.While a plaintiff need not be foreseeable as an identified individual, theplaintiff must belong to a class of persons within the foreseeable range ofrisk: Stewart v. Pettie, [1995] 1 S.C.R. 131 (S.C.C.) at para 28. This pre-supposes an ability on the part of the allegedly negligent party to deter-mine who would fall within that range, that is within the affected class,as well as the degree to which that class might be adversely affected.

52 However, in the context of the lender-purchaser relationship,problems arise in defining the composition of the class to whom a lenderwould owe a duty of care. Knowing this would be very important to aninterim financier. What if the financier were willing to waive a default orgrant extensions of time to the developer or consent to other changes,major or minor, to existing loan agreements? This it would typically beentitled to do under its contractual arrangements with the developer. Butin order to mitigate its risk of being sued in negligence for breach of aduty of care, the lender would no doubt seek to consult those to whom itowed a duty of care or, at a minimum, put them on notice of proposedchanges before implementing them.

53 The difficulty is that an interim financier would not ordinarily be ableto determine with any reasonable degree of certainty who should be con-sulted. Downstream purchasers change on a rolling basis. This problemis compounded by the very real possibility of units being “flipped” toother purchasers without notice to the developer or interim financierbefore construction is completed and before transfer of title. And wherewould the additions to the class stop? Would it include only the initialpurchasers? Or ones to whom units had been “flipped” before closing?Or future purchasers even after title had been transferred following clos-ing? And for how long into the future would this go on? This demon-strates that attempts to define the “class” to whom an interim financierwould owe a claimed duty of care would be bound to lead to undue un-certainty for all.

54 Turning to the proximity requirement, what a court is looking for iswhether the circumstances of the relationship between the parties are


such “that the defendant may be said to be under an obligation to bemindful of the plaintiff’s legitimate interests in conducting his or heraffairs”: Hercules Management Ltd. v. Ernst & Young, [1997] 2 S.C.R.165 (S.C.C.) at para 24. Put another way, in deciding whether the re-quired proximity exists to give rise to a prima facie duty of care, is it justand fair to impose a duty of care in law on the defendant?

55 On the broad issue of fairness, an interim financier’s legitimate busi-ness interests might well conflict with those of the purchasers and condo-minium corporation. For example, a financier may elect to declare a loanin default, not advance any further funds and realize on its security ratherthan extend time to cure a default, advance the balance of the loan andallow the project to be completed. What if purchasers preferred the latteroption? On what basis would these competing business interests andchoices as between the lender’s contractual rights and a supposed duty ofcare in tort to enforce those contractual agreements for the benefit ofthird parties then be resolved? By whom? And whose interests wouldprevail? And in what circumstances? And in any event, how, when andon what basis would a lender consult with the purchaser beneficiaries ofa duty of care and secure their consent to changes in the financing agree-ments? And what would the lender do when and if there were disagree-ments amongst the purchasers?

56 These problems expose a fundamental flaw in the appellants’ asser-tion that a lender owes a duty of care to purchasers of units in a project itis financing. The Commitment Letter is a private contract betweenMCAP and 970365. No rights accrue under that contract to third partybeneficiaries, including the purchasers of units in the Condo Project andthe Condo Corporation. The alleged “duty to enforce” the CommitmentLetter essentially amounts to an attempt to step round this limitation andcreate a cause of action. This attempt to obtain benefits for third partybeneficiaries via the law of negligence is, in these circumstances, funda-mentally unsound. It would place the lender in the position where legiti-mate business rights it has in contract could be undercut, indeed renderednugatory, if a third party beneficiary did not agree with the way in whichthe lender was exercising its contractual rights.

57 Collectively, the concerns noted reveal the practical and policy diffi-culties inherent in finding the required foreseeability of harm and prox-imity between an interim financier, on the one hand, and purchasers anda condominium corporation, on the other, sufficient to ground a prima


facie duty of care. Many of the features of the subject relationship wouldnecessarily be undefined, not only in scope and time but also content. Bythemselves, these reasons justify rejection of a duty of care.

58 A consideration of the second stage of the Anns test also justifies re-jection of the appellants’ claimed duty of care. At this stage, a court mustconsider the purposes served by permitting recovery as well as any pol-icy considerations which would call for a limitation on tort liability. Therelationship between the parties is not the focus; it is the effect that rec-ognizing a duty of care might have on other legal obligations, the legalsystem and society: see Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R.537 (S.C.C.) at para 37. Generally, the question of concern to the courtsis this. Would imposition of the duty of care expose the defendant to“liability in an indeterminate amount for an indeterminate time to an in-determinate class”: Hercules, supra at para 31?

59 Policy considerations have particular import where the claims are notfor serious physical harm or threats to a person’s health and safety butrather for economic loss in a commercial context: see eg. John G. Flem-ing, The Law of Torts, 10th ed. (Sydney: Law Book, 2011) at 202-203. Incommercial cases, potential plaintiffs acting with due diligence may wellhave alternative means of protecting their positions. Their autonomy asindividuals means that they have the freedom to make the choices theysee fit. For this reason, policy considerations in commercial cases maymore readily weigh in favour of limiting tort liability.

60 Compelling policy reasons exist for not recognizing a duty of care byan interim lender to the purchasers of condominium units or the relatedcondominium corporation to enforce the terms of a lending agreement.Intractable practical problems exist with defining the scope of any suchduty. Just how far would a lender be required to go in enforcing theterms of the lending agreements? The fact that there is no reasonableanswer to this question reveals the difficulty inherent in defining an issuerelated to the scope of the duty — and that is the standard of care. Thatstandard of care must be capable of being identified with some degree ofprecision: see Fullowka v. Royal Oak Ventures Inc., 2010 SCC 5, [2010]1 S.C.R. 132 (S.C.C.) at para 80.

61 Further, were this duty of care found to exist, this would fundamen-tally alter the economic and commercial realities of construction financ-ing and significantly undermine the continued viability of the commer-cial lending industry. The risks to interim financiers in financing


developers would increase substantially. It would no longer be sufficientfor a lender to protect its interests and ensure repayment of its loan. In-stead, a lender would effectively become a guarantor of the due perform-ance by the developer of its obligations to the lender. This makes nosense. A developer owes obligations to a lender; the lender does not actas surety for the developer’s non-performance of obligations owed to it.If the developer’s obligations to the lender were to become the lender’sobligations to third parties, the allocation of commercial risk would thenfall disproportionately on the lender. The lender would typically face thisdilemma: pursue the developer to “fully enforce” all contractual agree-ments with the lender or run the very real risk of liability to third parties.

62 The deleterious effects that recognizing this novel duty of care wouldhave on commerce and the financial industry and in turn economic de-velopment are obvious. Additional costs would be incurred by individuallenders in their quest to minimize the risk of being sued for not properlyenforcing the terms and conditions of lending agreements between it anda borrower. Lenders would no doubt seek to pass these costs along toborrowers and borrowers to consumers. Imposing obligations on interimfinanciers that allocate risk in a commercially unreasonable manner isnot in the public interest since this would in turn seriously jeopardize theavailability of capital for the development of housing. In the end, all con-sumers — homeowners and renters alike — would lose.

63 Thus, these reasons too justify rejecting the recognition of a duty ofcare by an interim financier in favour of purchasers of units in a projectand its condominium corporation. Accordingly, there is no genuine issuefor trial based on the appellants’ claim against MCAP in negligence forfailing to strictly enforce the terms and conditions of the CommitmentLetter.

64 However, this conclusion does not foreclose the possibility of liabilitybeing imposed on an interim financier for negligent misrepresentationdepending on the specific facts of an individual case. It is to the issue ofthe appellants’ claim against MCAP for negligent misrepresentationwhich I now turn.


2. Why There is a Genuine Issue for Trial Based on the Claim forNegligent Misrepresentation

(a) Elements for a Successful Negligent Misrepresentation Claim65 The Supreme Court of Canada outlined the required elements for a

successful negligent misrepresentation claim in Queen v. Cognos Inc.,[1993] 1 S.C.R. 87 (S.C.C.) at para 33. First, there must be a duty of carebased on a “special relationship” between the representor and therepresentee. Second, the representation in question must be untrue, inac-curate or misleading. Third, the representor must have acted negligentlyin making the representation. Fourth, the representee must have relied, ina reasonable manner, on the negligent misrepresentation. And fifth, thereliance must have been detrimental to the representee in the sense thatdamages resulted.

66 Regarding the first element, the duty of care, the same general frame-work that is used to assess whether a duty of care exists in negligence —the two-part Anns test — applies to negligent misrepresentation: Hercu-les, supra at para 21.

67 At the first stage of the Anns test, in deciding whether a prima facieduty of care exists to ground a claim in negligent misrepresentation, acourt must determine whether the defendant-representor and plaintiff-representee can be said to be in a relationship of proximity orneighbourhood, that is a “special relationship”. As to what is required tocreate the necessary special relationship and corresponding prima facieduty of care, two criteria must be met. The defendant ought reasonably toforesee that the plaintiff will rely on its representations; and reliance bythe plaintiff would be reasonable in the circumstances: see Hercules,supra at para 24. If these criteria are satisfied, then the special relation-ship exists to give rise to a prima facie duty of care. Thus, for negligentmisrepresentation claims, more than foreseeable harm to a foreseeableplaintiff is required; the reasonableness of the plaintiff’s reliance mustalso be considered.

68 If the proximity requirement is met, a court must then go on and con-sider the second part of the Anns test. Are there policy considerationsthat warrant not recognizing, or otherwise limiting, the duty of care? It isat this stage that a court is concerned about the possibility of indetermi-nate liability. Of course, to properly take policy considerations into ac-count, a court must have a clear understanding of the scope of the allegedmisrepresentation. The precise wording of that misrepresentation is key


to assessing whether a duty of care has been breached. The SupremeCourt confirmed the nature and extent of that in Cognos, supra at para55:

The standard of care required by a person making representations isan objective one. It is a duty to exercise such reasonable care as thecircumstances require to ensure that representations made are accu-rate and not misleading.

(b) Analysis of Reasons of Chambers Judge69 Against this backdrop, I now turn to why I have concluded that the

chambers judge erred in summarily dismissing the negligent misrepre-sentation claim.

70 To situate this in context, the appellants’ claim against MCAP fornegligent misrepresentation rests on the following theory. MCAP owed aduty of care to the appellants based on the special relationship betweenthe appellants and MCAP as reflected in the dealings between RESG, theappellants’ representative/agent, and MCAP. MCAP impliedly repre-sented to RESG that (1) the terms and conditions of the CommitmentLetter would be strictly enforced and upheld by CSC; and (2) it had re-tained a cost consultant for the purposes of s. 14 of the Act. Neither oc-curred and MCAP was negligent in making these implied representa-tions. MCAP ought reasonably to have foreseen that RESG, and those itwas representing, would rely on these representations. The appellants,through RESG, relied on these representations and that reliance was rea-sonable. MCAP’s failure to enforce the terms of the Commitment Letterand to retain a cost consultant for purposes of s. 14 has resulted in signif-icant damages to the appellants.

(i) Trying the Case is Not for the Chambers Judge

71 The chambers judge began by concluding that it was “highly un-likely” that the appellants would be successful at trial in establishing thata representation had been made. He reasoned that while MCAP had as-serted that its representative never undertook to enforce the CommitmentLetter, the appellants offered “only an impression that that was what wasmeant” in the 2002 Phone Call between Penner and Frey of RESG andRoulston of MCAP. The chambers judge erred in purporting to try thecase given the patent conflict in the evidence on the issue of the allegedrepresentations. It was not for the chambers judge to determine that itwould be “highly unlikely” that the appellants’ claim would succeed at


trial. Whether MCAP made any implied representation and, if so, thecontent of any such representation, are both issues for a trial judge fol-lowing a trial on the merits.

(ii) Whether an Implied Representation was Made Remains a Live Issue

72 Further, the chambers judge framed the issue improperly. The ques-tion is not whether there was evidence that MCAP made an express rep-resentation; the absence of evidence about an express representation isnot dispositive of the real issue. Nor is the question whether the evidenceestablished that the appellants received an impression only of what wasmeant by Roulston of MCAP. The question is whether there was evi-dence on this record to support the appellants’ claim that MCAP made animplied representation. The underlying assumption by the chambersjudge that representations are not actionable at law because they dependon inferences or implications rather than on direct and express statementsis incorrect: see Cognos, supra at paras 73-76.

73 Whether a statement or implied statement is a representation is aquestion of fact that depends on a trial judge’s assessment of the evi-dence and inferences drawn from the evidence: Ault v. Canada (AttorneyGeneral), 2011 ONCA 147, 274 O.A.C. 200 (Ont. C.A.), leave den. (Oc-tober 20, 2011) [2011] S.C.C.A. No. 206 (S.C.C.). The impression con-veyed may in fact be evidence of an implied representation. If the partylistening received that impression from what was said — and not said inresponse to what was said — it may be some evidence that a reasonablebystander would also have had the same impression. A trial judge wouldconsider what MCAP conveyed through Roulston during the 2002 PhoneCall viewed from the perspective of a reasonable person in thosecircumstances.

74 Put simply, representation by implication, that is an implied represen-tation, may well suffice to ground a successful claim in negligent misrep-resentation. The chambers judge’s failure to recognize that this is so andthat there is on this record a dispute on a material fact, namely whetherMCAP made an implied representation, constitutes reviewable error.These are both matters for a trial judge as is whether any representation,if implied, is actionable negligence.


(iii) Scope of Implied Representation is Also in Dispute

75 This takes me to a further error. The chambers judge appears to havecharacterized the alleged representation this way. Is there evidence thatMCAP represented that it would enforce strictly the terms of the Com-mitment Letter? But what this means in the context of this case wasnever explored by the chambers judge. It should have been. In the result,he failed to recognize that the scope of the alleged representations wasbroader than he assumed.

76 The appellants’ claims go beyond maintaining that MCAP repre-sented during the 2002 Phone Call that the terms of the CommitmentLetter would be monitored and upheld by CSC. The import of this claimis that MCAP represented that it would audit or supervise the quality ofconstruction of the Condo Project through CSC. In addition, the appel-lants contend that MCAP represented that CSC had been retained as acost consultant for purposes of s. 14 of the Act. Penner, on behalf ofRESG, alleges that during the 2002 Phone Call, Frey specifically askedRoulston whether a cost consultant had been engaged, who it was andwhether the selected cost consultant, CSC, possessed the necessary quali-fications in terms of timeliness and quality in reporting processes: seeAEE A498-499. RESG contends that MCAP assured it during the 2002Phone Call that the terms of the Commitment Letter would be enforcedincluding the provisions relating to the cost consultant for the CondoProject.

77 MCAP contends that no representation of any kind was ever made toany of the appellants during the 2002 Phone Call or otherwise. It submitsthat the terms and conditions of the Commitment Letter were confiden-tial and intended to be treated as such. Again, while there is evidence tothis effect, there is also evidence from Penner of RESG from which itmay be inferred that the subject of the Commitment Letter and the costconsultant in particular came up, and were discussed, during the 2002Phone Call. Penner contends that it was made clear to Roulston ofMCAP during that conversation that if MCAP did not undertake the duediligence required under the Commitment Letter that “we would haveto”: AEE A499.

78 This, and other evidence, underscores the fact that serious factual dis-putes exist about many issues: what transpired during the 2002 PhoneCall; whether CSC was the cost consultant for purposes of s. 14 of theAct; who retained CSC for this purpose; if CSC was not the cost consult-


ant for this purpose, whether MCAP represented to RESG that CSC wasnevertheless acting in that role and capacity; whether RESG relied onthat representation to the detriment of the purchasers for whom it allegesit was acting as representative/agent; whether MCAP knew that therewas no cost consultant for the Condo Project and, if so, when; whetherMCAP, by itself or in concert with 970365, concealed that informationfrom RESG or failed to inform RESG that its understanding that therewas a s. 14 cost consultant was incorrect; and, if so, what, if anything,turns on any of this.

79 There are other related statutory interpretation issues that might wellbe relevant and linked to the cost consultant issue. Given the requirementthat the cost consultant act at arms length from the developer, who is toretain the cost consultant for purposes of s. 14 of the Act? And when, ifever, is this to occur? Does the legislative scheme envision one cost con-sultant only per project? Further, do the duties of a cost consultant underthe Act mirror the duties of the cost consultant under the CommitmentLetter?

80 In the Geological Testing Letter, Penner confirmed RESG’s positionon the 2002 Phone Call, namely that Roulston of MCAP had assuredRESG that the terms of the Commitment Letter would be monitored andupheld by CSC. The Geological Testing Letter was written within a weekof the Deficiency Letter. By the time of both, it had become obvious, atleast to RESG, that there were a number of grave deficiencies in theCondo Project. Penner, on behalf of RESG, not only sent the GeologicalTesting Letter to CSC, but also copied MCAP. RESG urged that ge-otechnical testing be conducted at the site of the Condo Project since itappeared that recommendations of the geotechnical consultants had notbeen followed. Roulston testified that, to the best of his knowledge,MCAP did not respond to this Geological Testing Letter or advise RESGthat it should not rely on MCAP: AEE A593-595.

81 When Roulston was cross-examined about the reference in the Geo-logical Testing Letter to his having represented to RESG during the 2002Phone Call that the terms of the Commitment Letter would be carefullymonitored and upheld by CSC, and the fact that MCAP had not re-sponded to that Letter, Roulston stated that MCAP had no intention ofresponding to RESG about the Commitment Letter because it was confi-dential and RESG should not have had a copy. He emphasized thatMCAP would never talk about or make commitments to third parties


about the Commitment Letter. That may be so. But whether it is, andwhat, if anything, turns on this, is for the trial judge. So too is the issue ofwhat transpired during the 2002 Phone Call.

82 It is sufficient to note that on this record, a pointed evidentiary dis-pute exists on the cost consultant issue. Given the context here and thecentrality of the cost consultant issue, the evidence led to date revealsthat there is a material dispute whether MCAP represented to RESG thatCSC would be acting as cost consultant for the purposes of s. 14 of theAct. The evidence adduced to date confirms the existence of this factualand legal dispute. That evidence also reveals the existence of a disputeon whether MCAP represented to RESG that the terms and conditions ofthe Commitment Letter would be strictly enforced and upheld by CSC.Therefore, unless summary dismissal is warranted on another ground, allof this is a matter for a trial judge as is the question of whether there islinkage between these two alleged representations.

(iv) Material Disputes Remain on Special Relationship — ReasonableForeseeability and Reliance Issues

83 I recognize that the chambers judge did go on to conclude that sum-mary dismissal was justified irrespective of his assessment that it was“highly unlikely” that the appellants would succeed in proving thatMCAP had made a representation. His reasons for so concluding werethat:

[I]t was not reasonably foreseeable by MCAP that any prospectivepurchaser or plaintiffs could reasonably rely on the allegedrepresentation.

Furthermore, there is no evidence that any such purchaser or plain-tiffs did rely...upon that alleged undertaking.

In my view, any such reliance by a purchaser or plaintiffs or the al-leged purchaser’s representative RESG cannot be found to be reason-able. A purchaser could not reasonably look to the interim financelender to ensure the proper completion of the project”: ABD F101 atparas 54-56.

84 This analysis is flawed. The proposition that it was not reasonablyforeseeable by MCAP that any prospective purchaser could reasonablyrely on the alleged representation and that there is no evidence that anypurchasers did so ignores the fact that these matters are tied up with adispute on other material facts, namely the relationship between RESGand the appellants, on the one hand, and RESG and MCAP, on the other.


In the Amended Amended Statement of Claim, RESG is described as “arepresentative of purchasers in the Project”: AEE A79. In an affidavitbefore the chambers judge, Penner, part owner of RESG, refers to RESGas an “authorized representative of a number of past and present ownersof condominium units” and describes RESG as an “advocate” for theRESG purchasers as regards individual unit matters, and for all potentialpurchasers as regards the condominium common property: AEE A89.There is also evidence that MCAP was on notice that RESG was actingas a “real estate syndicator” in the sale of the units with everything thatthis would arguably entail: AEE A48, A49. In this regard, there is evi-dence that RESG was acting in accordance with certain agreements madebetween it and 970365 to sell units in the Condo Project and that both970365 and MCAP were involved in direct dealings with RESG for thispurpose. In addition, the affidavit evidence indicates that RESG madecertain representations to the prospective purchasers”: AEE A87.

85 Thus, there is a genuine issue whether RESG was acting as an agentfor the purchasers or in some other capacity such that knowledge by orrepresentations that MCAP made to RESG, if any, could be held to beknowledge of the appellants. Further, in any event, regardless of the tech-nical nature of the relationship between the purchasers and RESG, thereis also a material dispute about whether MCAP ought to have reasonablyforeseen that any alleged representation to RESG would arguably be arepresentation to prospective purchasers through RESG and would be re-lied on and whether, in turn, RESG or the ultimate purchasers or both didrely on those alleged representations. And if RESG alone were found tohave relied on the alleged representations, then a further issue is whetherthat would suffice for purposes of the appellants’ claim against MCAPgiven other evidence that indicates that the purchasers were relying onRESG to represent them in relation to their purchases of units. Again,these are all matters for a trial judge.

86 The record reveals that RESG was particularly concerned to ensurethat a cost consultant for purposes of s. 14 of the Act had been retainedfor the Condo Project. When a party asks a question and receives an an-swer, one reasonable inference is that they are relying on the answergiven, and, depending on the circumstances, that the answer is importantto it. Otherwise, unless idle chit chat, why ask the question? In otherwords, when specific information is requested and a response provided,this may be relevant in assessing whether a party will reasonably foreseethat it will be relied on. All of this is for a trial judge including whether


the questions that RESG asserted it posed to MCAP about the cost con-sultant went to the issue of who would play the central role envisionedunder s. 14 of the Act in protecting purchasers and what, if anything,turns on this. In considering these issues, a trial judge should evaluate the2002 Phone Call in accordance with commercial realities. The term “costconsultant” has a special meaning under the Act.

87 More fundamentally, the reason the chambers judge gave for findingthat any such reliance could not be reasonable is without merit. Thatstated reason: a purchaser cannot look to an interim lender to ensure theproper completion of the project. I agree that an interim lender owes noduty of care to purchasers of units in a project it is financing to ensurethat the project is completed in accordance with the lending agreement. Ihave explained why this is so earlier. However, a court cannot use theabsence of a duty of care based on a lender-purchaser relationship to de-termine whether the specific facts and circumstances of a particular casecreated or gave rise to a special relationship between the lender and pur-chasers and a corresponding duty of care sufficient to ground an action innegligent misrepresentation. But that is what happened here. This tooconstitutes reviewable error. There may well be circumstances in which alender owes a duty of care to third parties involved in a project it is fi-nancing sufficient to ground an action in negligent misrepresentation: seeKeith Plumbing & Heating Co. v. Newport City Club Ltd., 2000 BCCA141, 184 D.L.R. (4th) 75 (B.C. C.A.).

88 As to why reliance on the alleged representations would be reasona-ble, a trial judge would need to take into account a number of considera-tions. Professor Bruce Feldthusen has set out in Economic Negligence(3rd ed. 1994) at pp. 62-63 five general indicia of reasonable reliance,namely: (1) the defendant had a direct or indirect financial interest in thetransaction in respect of which the representation was made; (2) the de-fendant was a professional or someone who possessed special skill, judg-ment, or knowledge; (3) the advice or information was provided in thecourse of the defendant’s business; (4) the information or advice wasgiven deliberately, and not on a social occasion; and (5) the informationor advice was given in response to a specific enquiry or request. To whatextent these indicia existed in this case is for a trial judge.

89 Therefore, it was not open to the chambers judge, on this record, todetermine that it was not reasonably foreseeable by MCAP that any pro-spective purchasers could reasonably rely on the alleged representations.


There is ample evidence here demonstrating the existence of a materialdispute on this point too. Again, all of this is for a trial judge with thebenefit of a full hearing.

90 So too is the question of whether any alleged representation involveda future expectation and whether, in law, that claim is actionable. Thereis authority that only a representation of a present fact and not a futureintention can give rise to actionable negligence. This issue was not defin-itively resolved by the Supreme Court in Cognos, supra at para 71-72.Nevertheless, the weight of authority at present supports the view thatstatements about future intentions cannot ground an action in negligentmisrepresentation: see Motkoski Holdings Ltd. v. Yellowhead (County),2010 ABCA 72, 474 A.R. 367 (Alta. C.A.) at paras 39-55. That said, onehas to be careful not to confuse a statement of present fact with the futureconsequences flowing from the negligent misrepresentation of that fact.Many statements of existing facts are inextricably linked to the futureand it is what happens in the future that brings home the full extent of thedamages caused by the negligent misrepresentation.

(c) Conclusion91 Thus, for these reasons, the appellants have shown that the claim for

negligent misrepresentation is a genuine issue for trial.

B. Why a Genuine Issue for Trial Exists on the Claims Related toBreach of a Statutory Trust and Unjust Enrichment

1. Threshold Elements for Knowing Assistance and Knowing Receipt92 The appellants submit that MCAP participated in a breach of trust by

knowingly assisting in a fraudulent and dishonest design on the part of atrustee or by receiving monies it knew were subject to trust conditions. Insubmissions before the chambers judge, this argument was not developedat any length. Understandably, therefore, it was not dealt with expresslyby the chambers judge. However, on appeal it became one of the maingrounds of appeal.

93 In Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3S.C.R. 805 (S.C.C.), the Supreme Court of Canada discussed the funda-mental distinction between a stranger to a trust knowingly assisting in afraudulent and dishonest design on the part of a trustee (“knowing assis-tance”) and knowingly receiving trust property (“knowing receipt”) andset forth the different thresholds that had to be met in each situation.


Assuming for the sake of argument that MCAP is not a “developer” forpurposes of s. 14, MCAP would be a stranger to the statutory trust cre-ated under s. 14 of the Act.

94 Under the first category, knowing assistance, a finding of liability re-quires that the stranger to the trust have either actual knowledge of thetrustee’s fraudulent and dishonest design or be reckless or willfully blindto that intention. And where the trust is, as here, imposed by statute, thestranger will be deemed to have known of it: Air Canada v. M & LTravel Ltd., [1993] 3 S.C.R. 787 (S.C.C.) at para 39. The dishonest andfraudulent intent of the trustee does not refer to fraud in the criminalsense; conduct that is morally reprehensible will do. Nor is it necessarythat the stranger have acted in bad faith or dishonestly. The test iswhether the stranger can be said to be “taking a risk to the prejudice ofanother’s rights, which risk is known to be one which there is no right totake”: Air Canada, supra at para 60.

95 The second category, knowing receipt, occurs where a stranger re-ceives trust property for its own use or benefit and with knowledge thatthe property was transferred to it in breach of trust. It is irrelevantwhether the breach was fraudulent. For knowing receipt, the level ofknowledge required is lower since the stranger is being enriched at theexpense of the plaintiff. Thus, relief will be granted where a stranger,having received trust property for its own benefit and having knowledgeof facts which would put a reasonable person on inquiry, fails to inquireas to the possible misapplication of trust property. Because the recipientis held to this higher standard, constructive knowledge, that is knowledgeof facts sufficient to put a reasonable person on notice or inquiry, will beadequate as the basis for liability: Citadel, supra at paras 48-49.

2. Threshold Elements for Unjust Enrichment96 The claim for unjust enrichment stands on a different legal footing

than the claims for knowing assistance and knowing receipt. Unjust en-richment is a separate common law cause of action; the latter two areequitable causes of action: Elder Advocates of Alberta Society v. Alberta,2011 SCC 24, [2011] 2 S.C.R. 261 (S.C.C.) at para 94. Three elementsmust be proven to establish unjust enrichment: (1) enrichment of the de-fendant; (2) a corresponding deprivation of the plaintiff; and (3) an ab-sence of juristic reason for the enrichment: Garland v. Consumers’ GasCo., 2004 SCC 25, [2004] 1 S.C.R. 629 (S.C.C.), at para 30.


3. Material Disputes Remain for Knowing Assistance, Knowing Receiptand Unjust Enrichment Claims

97 The appellants’ position may be summed up this way. MCAP knewthat RESG considered CSC to be the cost consultant for purposes of s. 14of the Act. MCAP was aware of the terms of the purchase and sale agree-ments since it had required that those contracts be on terms agreeable toit. Those agreements contemplated a cost consultant as required under s.14. At the time of closing of the transactions of purchase and sale,MCAP was on notice through the Deficiency Letter and later the Geolog-ical Testing Letter that individual units and related common property hadnot been substantially completed. Therefore, the proceeds of sale weresubject to the statutory trust and holdback provisions mandated under theAct. MCAP took no steps to correct RESG’s understanding of CSC’srole. Indeed, MCAP instructed CSC not to act as a s. 14 cost consultantbut never at any time disclosed this critical fact to RESG. Nor did MCAPmake any inquiries after receiving RESG’s warnings in September 2003about substantial deficiencies in the Condo Project to determine whetherthere could be a misuse or misapplication of trust funds by 970365. Fur-ther, given the very short period of time between MCAP’s receiving no-tice of the serious deficiencies and the actual closing of the transactionsof purchase and sale, MCAP would have known that those deficienciescould not have been substantially completed. Thus, MCAP is liable forknowing assistance, knowing receipt and unjust enrichment.

98 I have concluded that based on the record before this Court, there aregenuine issues for trial with respect to all three claims.

99 I begin with this. The Commitment Letter contemplated that theCondo Project would be registered with a new home warranty provideracceptable to MCAP: Funding Condition 16 of the Commitment Letter atAEE A19. Under the terms of the Commitment Letter, all purchasers andcontracts of purchase and sale were required to be “satisfactory” toMCAP: Other Conditions 6 of the Commitment Letter at AEE A23. Itappears from this record that the new home warranty provider was notintended to be one that would bring this Condo Project within the excep-tion to s. 14 of the Act. If so, the statutory trust and holdback provisionsunder s. 14 would apply to the Condo Project. The contracts of purchase


and sale appear to contemplate this as well since they provided in rele-vant part (AEE A131):

3. Money in Trust

All funds paid by the Purchaser ... shall be held in trust by the Ven-dor’s solicitors pursuant to section 14 of the Condominium PropertyAct (the “Act”) and released in accordance with the Act.... For thepurposes of section 14 of the Act, a written statement of the Vendor’sconsulting engineer or architect for the Project confirming (as thecost consultant under the Act) that the improvements to the Propertyor any part of it or to the Common Property are substantially com-plete shall be proof of such facts and conclusively binding upon thePurchaser. The Vendor may act on the statement of the cost consult-ant in disbursing or using the Purchase Price.

100 Other evidence supports the appellants’ position that there are genu-ine issues for trial with respect to both the knowing assistance and know-ing receipt causes of action. The appellants point to the fact that on Sep-tember 12, 2003, RESG sent the Deficiency Letter to CSC, copyingMCAP, confirming that RESG had been “advised by counsel” that970365 had failed to obtain the appropriate exemption from the cost con-sultant requirements under the Act. As noted above, the Deficiency Letterstated that RESG had been “further advised that CSC has been selectedas the required cost consultant” for the purpose of determining theamount of the statutory holdback to be held in trust under s. 14 of theAct: AEE A150. The Deficiency Letter then went on to describe at con-siderable length the numerous and varied serious alleged deficiencies inthe design and construction of the Condo Project.

101 There is also evidence that prior to the Deficiency Letter, CSC hadissued letters to 970365 certifying costs to complete common areas forthe purpose of determining a holdback from purchaser funds for unitsthat had closed. The appellants assert that both 970365 and 970365’slawyers represented that these certification letters were the certificationsrequired under s. 14 of the Act.

102 This evidentiary record suggests that 970365’s lawyers also under-stood that CSC was acting as the s. 14 cost consultant under the Act. Intheir trust letters to purchasers’ counsel, 970365’s lawyers undertook tomaintain a holdback in accordance with s. 14, stating that in doing so,“we shall be entitled to rely upon the advice of our client’s cost consult-ant, currently Cuthbert Smith Chartered Quantity Surveyors, to deter-mine the appropriate amount of such holdback from time to time”: AEE


A525. Further, 970365’s lawyers have given evidence in this case that, inclosing the transactions of purchase and sale, they believed that CSC wasacting as the s. 14 cost consultant: see affidavit of 970365’s lawyer,Gordon Van Vliet, at AEE A4C at line 13.

103 This record reveals that Penner discussed the Deficiency Letter withCuthbert of CSC on September 16, 2003. In addition, as noted above,RESG then sent the Geotechnical Testing Letter to CSC and copiedMCAP. This was the Letter that asked that further development activitycease until geotechnical testing could be done at the site of the CondoProject. In the Geotechnical Testing Letter, RESG advised that it hadbeen provided with the Commitment Letter on July 15, 2002 and pointedout that the Commitment Letter required a soils test and “construction incompliance with such conditions and with the recommendations”. Asalso noted above, RESG then asserted that it had been assured by MCAPthat the Commitment Letter would be enforced, stating (AEE A160):

By telephone conversation on July 16.2002 with Mr. Michael Roul-ston, Assistant Vice-president of MCAP, we were assured that theterms of the commitment letter would be carefully monitored and up-held by Mr. John [sic] Cuthbert of CSC.

104 As also discussed above, on September 23 and 24, 2003, 970365 andMCAP respectively wrote separate letters to CSC instructing CSC that ithad not been retained as a s. 14 cost consultant and that neither consentedto CSC’s taking on such a role.

105 Specifically, 970365’s September 23 letter admonished CSC for what970365 perceived to be “unauthorized communications” between CSCand RESG. The letter stated at AEE A570:

We wish to make it expressly clear that your firm has been retainedas the cost consultant for the purposes of the loan transaction be-tween ourselves as developer and MCAP Financial as lender, and forno other purpose. Your firm has not been retained for any expandedrole as alleged by RSG, nor do we consent to you taking on such arole. RSG is simply wrong in this regard.

106 That letter went on to state that 970365 was taking the allegationsadvanced by RESG “very seriously” and had referred the correspondenceto the architects, engineers and contractor. 970365 copied MCAP on thisletter. It did not copy RESG and the appellants point to the fact that thereis no evidence that 970365 or MCAP ever provided a copy of that letterto RESG.


107 MCAP sent CSC a letter to the same effect on September 24, 2003(AEE A36). In that letter, MCAP referred to the various allegations thatRESG had made concerning the Condo Project and cautioned CSC, inwords essentially identical to those used by 970365 in its September 22letter, that CSC’s role was as follows (AEE A36):

[W]e wish to make it clear that your firm has been retained by ouroffice as the cost consultant for the purposes of the loan transactionbetween 970365 Alberta Ltd as developer and ourselves as lender,and for no other purpose. MCAP Financial has not retained your firmfor any expanded role as suggested in RSG’s correspondence of Sep-tember 12, 2003, nor do we consent to you taking on such a role.

108 MCAP did not copy RESG with this letter and again, the appellantsnote that there is no evidence that MCAP ever provided a copy of thisletter to RESG. They also observe that, on the current record before thisCourt, at no time did MCAP or 970365 ever write to RESG or Penneradvising that CSC was not the s. 14 cost consultant under the Act.

109 In addition, the appellants assert that both MCAP and 970365 knewfull well the jeopardy that existed for each at the time that they sent theirsubject letters to CSC. According to the appellants, at this stage the expo-sure for both MCAP and 970365 was at its greatest since the outstandingloan amount would have been approaching the highest level. In the ap-pellants’ view, by not informing RESG that CSC was not the cost con-sultant for purposes of s. 14 of the Act, MCAP improperly reduced itsown risk exposure to the significant detriment and harm of purchasers ofunits in the Condo Project.

110 As noted earlier, on September 26, 2003, MCAP received $1,463,940from the closing of a large number of sales transactions in the CondoProject. And then between October 6 and 8, 2003, it received another$2,891,439. MCAP applied all funds against the debt 970365 owed toMCAP.

111 Intertwined in all of this is also the alleged threat by 970365 to cancelthe contracts of purchase and sale and claim forfeiture of deposits paid,who knew what and when about these threats, whether they were used toforce closings notwithstanding 970365’s alleged failure to substantiallycomplete specific units and related common property and what, if any-thing, turns on all this.

112 All this being so, given the allegations contained in the AmendedAmended Statement of Claim and the evidentiary record before this


Court, I cannot say that the appellants’ claims for knowing assistance andknowing receipt are without merit. There are genuine issues for trial as towhether MCAP knowingly assisted in a breach of trust or knowingly re-ceived monies impressed with a statutory trust.

113 Similar considerations apply to the appellants’ claim against MCAPfor unjust enrichment. The chambers judge relied on the fact that therewas a juristic reason as between 970365 and MCAP for the paymentsreceived by MCAP to summarily dismiss the unjust enrichment claim.But whether the subject proceeds had lost all identity as purchasers’funds once MCAP received them is very much in dispute on this record.The appellants’ position is that when MCAP received the subject monies,these were payments from the purchasers, rather than being 970365’smonies. Assuming only for the sake of argument that the appellants arecorrect, the analysis would then lead a different inquiry. The questionwould be whether MCAP had a juristic reason to retain monies receivedfrom the purchasers of the units. That is a different issue than what thechambers judge considered. The answer to it is also in dispute.

114 I again caution that I make no findings on any of the matters dis-cussed. Suffice to say that given this record, summary dismissal of theseclaims was not appropriate.

C. Why There is a Genuine Issue on Whether MCAP was a“developer” under s. 14 of the Act

1. Statutory Definition of “developer”115 Section 14(1)(c) defines developer as follows:

“developer” includes any person who, on behalf of a developer, actsin respect of the sale of a unit or a proposed unit or receives moneypaid by or on behalf of a purchaser of a unit or a proposed unit pursu-ant to a purchase agreement

116 The significance of the appellants’ claim that MCAP falls within thisdefinition in connection with the Condo Project is this. If MCAP werefound to be a “developer” under the Act, it would have been subject to,and bound by, the statutory trust conditions under ss. 14(4) and (5) of theAct in its own right irrespective of any potential liability for knowingassistance, knowing receipt or unjust enrichment.


2. Appellants’ Theory of Liability117 As noted, the relationship between MCAP, as lender, and 970365, as

borrower, was governed by the Commitment Letter. Neither the CondoCorporation nor any condominium unit owner was a party to that Com-mitment Letter. Nevertheless, it is the appellants’ position that whenMCAP received monies from 970365’s lawyers, these monies were cap-tured by the wording of s. 14(1)(c) such that MCAP should properly betreated as a “developer” for purposes of s. 14 and the statutory trust andholdback provisions.

118 The test for determining who is a “developer” for purposes of s. 14 ofthe Act has three parts. The person or entity in question must: (1) “re-ceive money paid by or on behalf of a purchaser”; (2) “pursuant to apurchase agreement”; and (3) “on behalf of a developer”.

119 The appellants assert that when MCAP received the proceeds of sale,those funds had not lost all their identity as purchasers’ monies. On theirtheory, these funds were subject to repayment if the required partial dis-charges of MCAP’s mortgage security and caveat 022 293 886 relatingto an assignment by 970365 of rents and leases in favour of MCAP (Ca-veat) were not provided as required. They assert that this is clear fromthe way in which the subject transactions were structured, documentedand closed. In their view, MCAP knew the monies it received from970365’s lawyers were “monies paid by or on behalf of a purchaser” andalso knew it had received the monies “pursuant to a purchase agreement”especially since MCAP had required that 970365 grant in its favour ageneral assignment of all agreements of purchase and sale made between970365 and purchasers of units in the Condo Project.

120 In the appellants’ view, there are several reasons why MCAP shouldbe found to have received the purchase monies “on behalf of a devel-oper”, namely 970365. They point out that the purchase and sale agree-ments themselves mandated that purchase monies be paid to MCAP “onbehalf of the developer”. Why? Because item 4 of Schedule I defines“Permitted Encumbrances” as including: “Registrations relating to theVendor’s financing requirements which are to be discharged out of andconditional upon receipt of the full Purchase Price”. The appellants fur-ther submit that this is also consistent with the Commitment Letter, underthe heading “Partial Discharge” which states: “Partial Discharges shallbe provided in respect to each condominium unit upon payment to theLender of 100% of the Net Closing Proceeds”.


121 They also point out that the way in which the purchase and sale trans-actions were closed supports their position. In particular, they stress that970365’s lawyers did not pay the purchase proceeds to MCAP uncondi-tionally. The purchase monies paid by purchasers of the condominiumunits were initially paid into the trust account of 970365’s lawyers.Those lawyers in turn then paid those funds to MCAP but those pay-ments were expressed to be conditional on receiving partial discharges ofboth MCAP’s mortgage security and Caveat. Thus, according to the ap-pellants, those funds were open to being returned to 970365’s lawyers ifMCAP failed to comply with its obligations to provide a partial dis-charge of both its mortgage security and Caveat. More important, on theappellants’ theory, these funds remained the purchasers’ funds until thepurchasers received clear title. Accordingly, in their view, MCAP re-ceived those payments “on behalf of a developer”, thereby making it adeveloper within the meaning of s. 14.

122 I have concluded that there is a genuine issue for trial as to whetherMCAP should, in the particular circumstances of this case, be properlycharacterized as a “developer” for purposes of s. 14 of the Act. Ac-cepting, without deciding, that ordinarily, an interim financier would notbe found to have received funds “on behalf of a developer” when it re-ceives proceeds of sale of condominium units in repayment of the debt adeveloper owes to it, it does not follow that this will invariably be thecase. Depending on the facts, there may well be instances in which aninterim financier is properly included within the definition of “devel-oper” under s. 14 of the Act. A trial judge considering this issue in thiscase will need to address and resolve a number of matters.

3. Material Disputes Remain on Whether MCAP was a “developer”123 First, there is the issue of the intended scope of the legislation and s.

14 in particular. Interpreting legislation is best done in context. It is amatter of statutory construction as to what the Legislature intended unders. 14 and in particular s. 14(1)(c), the definition of developer. This defini-tion is special to s. 14; the Act contains another definition of “developer”for other purposes under the Act. Statutory construction assesses notmerely the words of an act in their grammatical and ordinary sense; itdoes so in their entire context, harmoniously with the scheme of the act,its object and the intention of the Legislature.


124 It is preferable for the development of the law that a trial judge con-sider the intended breadth and scope of s. 14 and the definition of “devel-oper” thereunder. We have had no argument on the policy implicationsof different interpretations of the definition of “developer” contained ins. 14(1)(c). As noted, this is part of a parcel of consumer protection legis-lation designed to protect purchasers of condominium units from beingunfairly taken advantage of by developers. But what precisely do thewords “on behalf of a developer” in this section mean? Do the wordssimply mean “for the benefit of” and “in the interest of”? Or does thiswording require that the developer or a third party to whom the devel-oper may otherwise be accountable for those funds have retained someclaim on those funds? And if so, what kind of claim will do for a court toconclude that the recipient of the purchase proceeds has received thosemonies “on behalf of a developer”?

125 Further, did 970365 retain an absolute or some lesser claim on themonies paid by its lawyers to MCAP? The payments that MCAP re-ceived from 970365 were paid in partial satisfaction of the debt 970365owed to MCAP. But if so, does this necessarily mean that MCAP re-ceived those proceeds solely in its own right and for its own benefit?Also, since the limitation “on behalf of a developer” does not state “onbehalf of a developer alone”, could a recipient of purchase proceeds befound to be a developer where the recipient has arguably received fundson two grounds, namely “on behalf of a developer” and in the recipient’sown right? And if so, what would be the consequences to the recipient?

126 MCAP contends that it received the funds in question solely for itsown benefit, pointing out that they were not sent to them in trust. Whilethe funds received were not sent in trust in the sense of their being sub-ject to lawyer’s trust conditions, a trial judge will need to considerwhether it follows that MCAP received the funds unconditionally and forits sole benefit. The record reveals that they were paid by 970365’s law-yers on the “understanding” that MCAP would provide partial dischargesof both its mortgage security and Caveat. This “understanding” is not asolicitor’s trust condition and would not be enforceable as such. But theCommitment Letter imposed a contractual obligation on MCAP in cer-tain circumstances to provide partial discharges on receipt of Net ClosingProceeds as defined therein. MCAP points out that if 970365 had been indefault when MCAP received the Net Closing Proceeds, it would havehad no obligation to provide even the partial discharges. Whether this isso and how it affects MCAP’s contention that it received the Net Closing


Proceeds unconditionally and for its sole benefit is also for the trialjudge.

127 Second, the basis on which, and circumstances under which, a lenderreceives funds may be relevant to this issue. Here, the structure of thetransactions of purchase and sale may raise the question whether therewas in fact any privity of contract as between MCAP and unit purchasersas a result of the security granted by 970365 to MCAP. Certain evidencemay be relevant to this issue. While MCAP was not a party to any of theagreements of purchase and sale, nevertheless, in accordance with theCommitment Letter, those agreements were required to be on terms satis-factory to MCAP. The sales prices had to be not less than the amountsset forth in Schedule “C” in the Commitment Letter. Further, MCAP re-quired that 970365 provide “satisfactory confirmation that each of thepurchasers has qualified and accepted take out mortgage financing at afinancial institution acceptable to” MCAP: Commitment Letter FundingCondition 2 at AEE A17. Of particular note, in accordance with theCommitment Letter, 970365 was required to deliver to MCAP a generalsecurity agreement registered under the Personal Property Security Actof Alberta granting a first general assignment of all Agreements ofPurchase and Sale inclusive of purchaser’s deposits. In addition, 970365was required to pay the Net Closing Proceeds of sale of each condomin-ium unit to MCAP: see Commitment Letter at AEE A14.

128 Third, this issue is further complicated by reason of the appellants’outstanding claims against MCAP for knowing assistance and knowingreceipt. If an interim lender to a developer is found to have received saleproceeds knowing, or being deemed to know, that the developer hasfailed to comply with its statutory obligations under s. 14 of the Act andthe funds in question are the proceeds of sale, then it may be open to atrial judge to conclude that those funds were then impressed with a statu-tory trust. If so, then the issue is whether they were received by thelender “on behalf of a developer” and were required to be returned forthe benefit of the beneficiaries of the statutory trust. I am not suggestingthat the dragnet of liability as a “developer” under s. 14 should be ex-panded to sweep within it all interim lenders. But where an interimlender is liable for knowing assistance or knowing receipt, then a trialjudge must assess whether that lender properly falls within the definitionof “developer” under s. 14. Simply because a lender is liable for knowingassistance or knowing receipt does not innoculate the lender from poten-tial liability on another basis, that is as a “developer” under s. 14. It also


goes without saying that any lender liable for knowing assistance orknowing receipt is not carrying on business in accordance with accept-able commercial practices.

129 Fourth, public policy issues will no doubt factor into a trial judge’sanalysis of this issue. On the one hand, an interpretation of this legisla-tion that seriously compromises the integrity of the commercial lendingindustry ought to be rejected. On the other hand, a court will need toconsider how best to ensure that this legislation protects those whom itwas intended to protect. This will include an assessment of whetherclaimed risks from the lender’s perspective are valid or whether meansexist by which any risks might be obviated.

130 The trial judge may explore whether this situation is analogous to thebuilders’ lien regime. Lenders require appropriate land titles searches toensure that as advances are made, no builders liens are registered againstthe title to the lands. The concept underlying the builders’ lien regime isthat in certain circumstances, employees and suppliers of materials maygain priority over the interests of a secured lender. Prudence dictatestherefore that lenders follow certain procedures to minimize the risk ofthis occurring by demanding that borrowers provide evidence of cleartitle as and when advances are made plus whatever additional assurancesthe lender may consider appropriate to ensure that workmen and suppli-ers are being paid as required.

131 A trial judge will no doubt consider as part of this analysis the stepsthat may reasonably be available to a lender to mitigate the risk that itmight lose priority over purchase proceeds if the developer has failed tosubstantially complete a unit and related common property at the time ofsale. And what steps, if any, a lender is required to take to avoid the riskthat it may be considered a developer for purposes of s. 14. In otherwords, is it possible for a lender to protect itself from being treated as adeveloper under s. 14 by the simple expedient of requiring an appropriatecertificate of substantial completion from a cost consultant each time itreceives purchase proceeds from the sale of units in a new condominiumproject to which the statutory trust and holdback provisions apply? Andif a lender does not do so — if this degree of due diligence is not fol-lowed — then what consequences, if any, should properly flow fromthis? All of this is for a trial judge.

Condo. Corp. No. 0321365 v. 970365 Alta. J.D. Bruce McDonald J.A. 57

132 For these reasons, I have concluded that whether MCAP is a devel-oper for purposes of s. 14 of the Act is also a genuine issue for trial andought not to have been summarily dismissed.

IX. Conclusion133 In conclusion, the appellants have shown that there are a number of

genuine issues for trial in connection with certain claims against MCAP.Therefore, for the reasons explained, I allow the appeal from the order ofthe chambers judge summarily dismissing the claims for negligent mis-representation, knowing assistance, knowing receipt, unjust enrichmentand the s. 14 developer issue. This case should go to trial on these vari-ous claims. However, the chambers judge was correct in summarily dis-missing the negligence claim and thus, the appeal on this ground isdismissed.

Jack Watson J.A.:

I concur:

J.D. Bruce McDonald J.A. (dissenting in part):

Introduction134 I have had the benefit of reading the Reasons for Judgment Reserved

of the majority. While there is much with which I agree, I have respect-fully come to a different conclusion regarding the issues of negligentmisrepresentation (paragraphs 65 - 91) and whether or not MCAP is adeveloper within the meaning of section 14 of the Act (paragraphs 115 -132).

135 In particular, I agree with the comments contained in paragraph 43 ofthe Reasons for Judgment Reserved regarding the two-step process to befollowed in a successful application for summary judgment. The firststep involved requires the moving party to adduce evidence to show thatthere is no genuine issue for trial. This is admittedly a high threshold. Ifthe evidentiary record establishes that either there are missing links in theessential elements of the cause of action, or that there is no cause of ac-tion in law at all, there will then be no genuine issue for trial. The factthat there is no genuine issue for trial must be proven; relying on mereallegations or the pleadings will not suffice: Papaschase Indian BandNo. 136 v. Canada (Attorney General), 2008 SCC 14, [2008] 1 S.C.R.


372 (S.C.C.) at para 11. Secondly, once the burden on the moving partyhas been met, the party resisting the summary judgment application maythen adduce evidence to persuade the court that a genuine issue remainsto be tried.

136 Ultimately this devolves to the question as to whether there is “nomerit to any of the alleged causes of actions”.

Background137 The background to this appeal, including the facts of the case and the

decision of the chambers judge below, is set out in paragraphs 1 through37 of the Reasons for Judgment Reserved of the majority.

138 That said, there are certain facts, or more accurately, a lack of anyevidential basis, relevant to the points on which I diverge from my col-leagues that I will need to highlight in the appropriate sections below.

Claim for Negligent Misrepresentation139 In paragraph 65 the majority, citing Queen v. Cognos Inc. [1993

CarswellOnt 801 (S.C.C.)], identified the necessary elements for a claimin negligent misrepresentation. I repeat these again for convenience. Inorder to succeed in establishing negligent misrepresentation, the plaintiffmust prove:

(i) a duty of care based on a “special relationship” between therepresentor and the representee;

(ii) the representation in question was untrue, inaccurate ormisleading;

(iii) the representor acted negligently in making the representation;

(iv) the representee relied, in a reasonable manner, on the negligentmisrepresentation; and

(v) the reliance was detrimental to the representee in the sense thatdamages resulted.

140 I concede that there may be a genuine issue for trial with respect towhether, on the unique and specific facts of this case, there was a “spe-cial relationship” between MCAP and the appellants, in large partthrough the involvement of RESG, sufficient to give rise to a duty of carein this case. I further concede that, as noted in paragraphs 72 through 74of the Reasons for Judgment Reserved, the question of whether there wasin fact an implied representation made by MCAP that it would enforce


the terms of the Commitment Letter may be a live issue. Consequently,there may be a genuine issue for trial as to whether such an implied rep-resentation was untrue, inaccurate or misleading, and furthermorewhether it was made negligently. Finally, there is no question that theappellants suffered damages in this case. However, I respectfully disa-gree with the majority on the issue of reasonable reliance.

141 The majority writes at paragraph 84, that “[t]he proposition that itwas not reasonably foreseeable by MCAP that any prospective purchasercould reasonably rely on the alleged representation and that there is noevidence that any purchasers did so ignores the fact that these matters aretied up with a dispute on other material facts, namely the relationshipbetween RESG and the appellants, on the one hand, and RESG andMCAP, on the other.”

142 With the greatest of respect, in my opinion, there is no evidence tosupport the argument that the appellants were aware of any alleged repre-sentation or that they reasonably relied on it if it was in fact made. Fur-thermore, there is no evidence of an agency relationship between RESGand the appellants, and therefore no basis upon which to impart any reli-ance by RESG to the appellants themselves.1

143 No where in the substantial affidavit evidence before the chambersjudge was there any indication that RESG communicated its understand-ing of the alleged representations by MCAP to the purchasers, or that thepurchasers themselves relied on MCAP’s representations. The chambersjudge expressly found that “there is no evidence that any such purchaseror plaintiffs did rely on the [sic] upon that alleged undertaking”: ABDF101 at para 55. This court owes deference to the findings of fact of thechambers judge. I see no palpable and overriding error in his conclusionthat there was no evidence of reliance by the appellants, and therefore, Isee no basis for interfering with his conclusion on this point.

144 The evidence is clear that RESG believed MCAP had represented itwould enforce the terms of the Commitment Letter, and furthermore thatRESG relied on that perceived representation when making recommen-dations to the purchasers. Penner, of RESG, deposed that “a critical fac-

1By virtue of a Letter Agreement dated May 8, 2008, between RESG and970365, RESG was named as a “co-developer” and it was contemplated that itwould have involvement as a financial participant in the Condo Project. AEEA85 at para 26.


tor that influenced RESG to recommend that purchasers enter into thePurchase Agreements, and subsequently close their transactions, wasRESG’s reliance on MCAP’s assurances and representations that it in-tended to enforce the terms of the Commitment Letter”: AEE A50 at para31 [emphasis added]. See also AEE A95 at para 42. However, RESG’sreliance is not the same as the appellants’ reliance.

145 Penner further deposed that “All [the potential purchasers] were pre-pared to enter into agreements based solely on the reputation of Bamber,Frey, and I. Nor did they enquire as to the exact nature of what theyunderstood to be a co-venture relationship between RESG and the Devel-oper Group. Rather, their only concern was that they were acquiringwhat was represented to them by the Developer Group and RESG”: AEEA87 at para 30. There was no mention of any representations made byMCAP to the appellants. To succeed in establishing negligent misrepre-sentation the appellants must demonstrate that they relied on the allegedmisrepresentation by MCAP; the absence of any evidence on this point is,in my opinion, fatal to their claim.

146 Having failed to provide any evidence of an essential element of thecause of action of negligent misrepresentation, the appellant’s claim wasbound to fail and accordingly the chambers judge’s decision summarilydismissing this aspect of the appellant’s action was not unreasonable.

147 The majority finds, at paragraph 85, that “... there is a genuine issuewhether RESG was acting as an agent for the purchasers or in some othercapacity such that knowledge by or representations that MCAP made toRESG, if any, could be held to be knowledge of the appellants.” Againwith the greatest of respect, I disagree with this conclusion.

148 The onus of establishing an agency relationship lies with the partyalleging that the agency existed: Tanouye v. KJM Developments Ltd.(1980), 25 A.R. 200 (Alta. Q.B.) at para 25 citing CanadawideInvestment Ltd. v. Muirhead (1958), 15 D.L.R. (2d) 526, 26 W.W.R. 460(Alta. C.A.). See also Stevens v. Merchants Bank (1919), 30 Man. R. 46,49 D.L.R. 528 (Man. C.A.) at page 561. In this case, if the appellantsdesire to establish the essential element of reliance through an agencyrelationship with RESG, they must lead evidence to establish the exis-tence of such a relationship. Based on the record before us, there is noevidence capable of supporting an argument that RESG was agent for theappellants.


149 The essential elements of a relationship of agency include (i) consentof both the agent and the principal, (ii) the ability of the agent to affect oralter the principal’s legal relationship with third parties, and (iii) the prin-cipal’s control over the agent’s actions: Royal Securities Corp. v.Montreal Trust Co. (1966), [1967] 1 O.R. 137, 59 D.L.R. (2d) 666 (Ont.H.C.) at page 684. Consent is particularly important because, in general,“[n]o one can become the agent of another person except by the will ofthat other person”: Johnson v. Forbes (1931), 26 Alta. L.R. 268, [1932] 1D.L.R. 219 (Alta. C.A.), at 2222.

150 The record in the present appeal provides no evidence of the appel-lants’ consent or desire that RESG act as their agent; nor is there anyevidence that RESG had authority to act on behalf of or bind any of theappellants by its own actions, or alter the appellants’ legal relationshipswith other parties. In my opinion, in the absence of any evidence onthese essential points, there can be no genuine issue whether RESG wasacting as agent for the appellants. Therefore RESG’s reliance onMCAP’s alleged representation cannot be imputed to the appellants andone fundamental element of a claim in negligent misrepresentation is stilllacking.

151 In any event and regardless of the exact nature of the relationshipbetween RESG and the appellants, it bears repeating that the SupremeCourt of Canada decision in Hercules Management Ltd. v. Ernst &Young, [1997] 2 S.C.R. 165 (S.C.C.), makes clear the necessity of a partybeing able to satisfy the court that reliance on a statement actually oc-curred. La Forest J. stated, in part, at para 18:

Needless to say, actual reliance is a necessary element of an action innegligent misrepresentation and its absence will mean that the plain-tiff cannot succeed in holding the defendant liable for his or herlosses; see: Queen v Cognos Inc., [1993] 1 S.C.R. 87 at p.110.

Although the above comment was strictly speaking obiter, it is a correctstatement of the law. There being no evidence given by any plaintiff thatMCAP’s alleged representations were a factor in his/her purchase of a

2There are, of course, exceptions to this general proposition (eg. agent by neces-sity) but none of these are applicable to the facts of this case. Unquestionably, acontract of agency requires the consent of both parties.


unit in the Condo Project, there can be no basis for a successful claim innegligent misrepresentation.

152 Based on the reasons above, I conclude that there is no genuine issuefor trial based on a claim in negligent misrepresentation. I would dismissthe appeal on this point.

Claim that MCAP is a “Developer” Under Section 14 of the Act153 I repeat here, again for convenience, the test for determining who is a

“developer” for the purposes of section 14 of the Act, as stated in para-graph 118 of the Reasons for Judgment Reserved of the majority. A “de-veloper” includes a person who:

(i) received money paid by or on behalf of a purchaser;

(ii) pursuant to a purchase agreement; and

(iii) on behalf of a developer.3

I concede that there may be genuine issues for trial as to whether thefunds MCAP received through the purchase transactions of units in theCondo Project was money “paid on behalf of a purchaser” “pursuant to apurchase agreement”. However, I cannot accept the suggestion that thosefunds were received “on behalf of a developer”.

154 The majority concludes that it is an open question what precisely thewords “on behalf of a developer” in section 14 means: paragraph 124.However, in my opinion, whatever the scope of that phrase might be, itcannot be so broad as to include money received by MCAP, pursuant to aloan agreement, to pay off the debt owed by 970365. Money received inthis way is fundamentally received by MCAP on its own behalf. Thechambers judge clearly held that, based on the arrangement between theparties, the money received by MCAP was 970365’s money, and it waspaid by 970365, not on behalf of 970365.

155 Again, I see no reversible error with respect to the chambers judge’sfinding on this point. Having concluded that one element of the defini-tion in section 14 was not established, the chambers judge summarily

3The reference to a “developer” here is to the general definition contained insection 1(i)(j) of the Act, viz “a person who, alone or in conjunction with otherpersons, sells or offers for sale to the public units or proposed units that have notpreviously been sold to the public by means of an arm’s length transaction”.


dismissed the appellants’ claim on this point; his decision to do so wasnot unreasonable.

156 I respectfully disagree with the majority’s position that the Legisla-ture’s failure to state “on behalf of a developer alone” opens the door toclaims based on money paid by a developer that benefits both the devel-oper and the recipient; after all, every payment, save for perhaps purecharity, provides some benefit to the payor in that it either relieves thepayor of an obligation owed to the payee or creates an obligation that thepayee owes back to the payor. Such an interpretation of section 14 is, inmy opinion, too broad and unsupportable on the words of the legislation.

157 As further support for the position that there is a genuine issue on thesection 14 developer argument, the majority also concludes, at paragraph127, that there remains an unanswered question as to whether there mightbe privity of contract in this case between MCAP and the appellantsbased on the security granted by 970365 to MCAP. Again, I respectfullydisagree. I can see no evidential basis for this suggestion on the recordbefore this court.

158 Furthermore, the chambers judge expressly held that “[t]here was nocontractual relationship between MCAP and the plaintffs [appellants] ...The only interest of MCAP in any purchase agreement between the de-veloper and the plaintiffs is the enforcement of the covenant by the de-veloper to ensure that the developer paid the net proceeds of the sales soreceived from a purchaser to MCAP”: ABD F96 at para 26.

159 This was part of the lending arrangement between MCAP and970365. I see no basis upon which this court can disturb this factual find-ing. And in any event, I see no way such a finding could affect the natureof the money MCAP received from 970365; even if there was a contrac-tual relationship between MCAP and the appellants, the specific moneyimpugned in this appeal was still received by MCAP from 970365 inrepayment of 970365’s loan, and therefore was received on MCAP’sown behalf and not on behalf of a developer.

160 Further on this point, the majority notes that the issue of whetherMCAP received money “on behalf of” 970365 is further complicated bythe possibility that MCAP knowingly received trust funds. This reason-ing flows from the fact that if a party receives money knowing that thedeveloper has failed to comply with the Act, those funds may be found tobe impressed with a statutory trust. If they are subject to a statutory trust,then the developer is liable to the purchaser for those funds, i.e. the pur-


chaser can require that they be returned. As such, the money in questionis not unconditionally available to the receiving party, but rather thatparty is in effect holding that trust money for the developer; therefore thereceiving party received the money “on behalf of the developer”.

161 With the greatest of respect, this reasoning is flawed and I disagreewith the majority on this point. As noted by the majority in paragraphs93 and 95 of their Reasons for Judgment Reserved, a condition precedentto a finding that a party knowingly received trust property is a findingthat the party was a stranger to the trust. With respect to a section 14statutory trust, this means the party is not a “developer” for the purposesof section. In paragraph 95, the majority explains that “[t]he second cate-gory, knowing receipt, occurs where a stranger receives trust propertyfor its own use or benefit and with knowledge that the property wastransferred to it in breach of trust” [emphasis added]. This requirementis essential because if the party was a trustee, as opposed to a stranger tothe trust, it would not receive the trust property for its own benefit, butrather for the benefit of the trust’s beneficiaries. Also, a transfer to such aparty would not be a transfer in breach of trust; it would merely be atransfer from one trustee to another. Therefore, if MCAP is liable forknowingly receiving trust property, it cannot have been a developerunder section 14. It begs the question to say that MCAP might haveknowingly received trust property, based on the premise that MCAP is astranger to the section 14 statutory trust, and subsequently use that find-ing to bring MCAP within the definition of “developer” and thereforewithin the ambit of the trust itself.

162 Furthermore, with respect to section 14 holdbacks, that money is sub-ject to a statutory trust. Therefore, if a party receives that money know-ing it is subject to a statutory trust, that party would likely already beheld liable to the beneficiary on that basis. It seems unnecessary to me toextend the analysis to the issue of whether the money is also held “onbehalf of a developer”, simply to engage the definition of “developer” insection 14 of the Act.

163 There is no need to take the further step of categorizing the money asreceived “on behalf of” the developer and thereby bring the receivingparty within section 14 if that party does not otherwise satisfy the criteriaset out in the definition of “developer”. In my respectful opinion, withthis argument the majority is conflating, unnecessarily, the cause of ac-


tion noted above (knowingly receiving trust property) with the meaningof “on behalf of a developer” in section 14.

164 The majority recognizes that public policy issues will be a factor toconsider when analyzing the scope of the definition of “developer” insection 14 of the Act. However, the majority believes this is a questionthat is best left to be decided at trial. With respect, I again diverge on thispoint. In my opinion, even opening the door at trial to an interpretation ofsection 14 that may include interim construction lenders in the definitionof “developer” would clearly be inconsistent with the object of the Actand the intention of the Legislature.

165 The Act is, admittedly, consumer protection legislation aimed at pro-tecting the interests of purchasers and owners of condominiums. How-ever, this is not the only objective of the legislation. The Act attempts tostrike a balance between the need to protect the interests of purchasersand owners, and the need to enable developers to undertake and completecondominium projects in an efficient and effective manner.

166 Section 14 is an example of the balance that the Act attempts to cre-ate. On the one hand, the definition of “developer” is directed at holdinga larger group of persons accountable for the proper construction andcompletion of new condominium projects. In fact, the definition of “de-veloper” presently set out in section 14 was only introduced in 2000 aspart of a package of amendments to the Act (the “2000 Amendments”).

167 Prior to that time, the applicable definition was the much narrowerdefinition of “developer” applicable to the entire Act; the current generaldefinition of “developer” in section 1(j), which was also amended in2000 but for the purposes of this appeal is substantially the same as itwas prior to the amendments, reads:

“developer” means a person who, alone or in conjunction with otherpersons, sells or offers for sale to the public units or proposed unitsthat have not previously been sold to the public by means of an arm’slength transaction.

168 Clearly the section 14 definition encompasses a wider range of per-sons than the definition in section 1(j) of the Act, indicating a focus onconsumer protection. On the other hand, the calculation of trust hold-backs under section 14 now seeks to allow developers easier access tosufficient funds to complete a condominium project, while at the sametime maintaining sufficient holdbacks to ensure the completion of the


units and related common property for which purchase monies have al-ready been paid.

169 Prior to the 2000 Amendments, 50 percent of the money paid to adeveloper or a person acting on the developer’s behalf was required to beheld in trust until the unit and related common property was substantiallycomplete. As such, this money was not available to the developer to fi-nance the completion of the remainder of the condominium project.

170 Under the current section 14, however, the required holdback hasbeen modified, and now the developer (as newly defined) is required tohold in trust that amount of money that is sufficient, when combinedwith the unpaid portion of the purchase price, to substantially completethe unit in question and the related common property.

171 This modified method of calculation makes available to the developermore of the money paid by purchasers of units in a condominium projectin order to complete the project, or an additional phase, while still ensur-ing there are sufficient funds to complete the immediate unit and relatedcommon property to which those purchase monies apply. This exempli-fies the balance struck in the legislation.

172 The Legislature clearly intended a balance in section 14 of the Act.When debating the 2000 Amendments in the Legislative Assembly, oneof the noted effects of the changes was “to protect the rights of the con-dominium owners while allowing the builders to finance their projectsmore easily”: Alberta, Legislative Assembly, Hansard (3 April 2000) at662 (Hon. Mr. Gibbons). As noted, one objective of section 14 is to ex-pand the group of persons who are accountable to the purchasers of unitsin a new condominium project for the completion of the project.

173 However, in my opinion, the Legislature did not intend to cast the netso wide as to include interim finance lenders, since doing so will under-mine the other objective of section 14, namely, ensuring that constructionfinancing is available and funds are accessible to allow developers tocomplete, with reasonable diligence, the construction of new condomin-ium projects. Expanding section 14 to apply to interim construction lend-ers carrying on business in the ordinary course and through well-ac-cepted and time-proven practices will doubtless have a detrimental effecton the availability of financing for new condominium developments.This cannot have been the intention of the Legislature when amendingsection 14.


174 Of course, if the facts of a case are such that a lender clearly fallswithin the definition of a developer in section 14 — based on the particu-lar financing arrangement or lending practices involved in that situa-tion — the policy reasons just referred to will not be a sustainable basisfor shielding that particular lender from the application of section 14. Butwhere the lender has made use of commercially reasonable lending prac-tices and one cannot reasonably fit the arrangement between the lenderand the developer within the definition in section 14, these policy consid-erations support the conclusion that the definition should not be ex-panded unnecessarily to capture the interim lender in thosecircumstances.

175 Based on the analysis above, and supported by the public policy con-siderations just articulated, I conclude there is no genuine issue as towhether MCAP is a developer within the meaning of section 14 of theAct. I would dismiss the appeal on this point.

Conclusion176 While I agree with the majority’s conclusions that there is no genuine

issue for trial based on a claim in negligence and that, on the particularfacts of this case, there is a genuine issue for trial on a claim that MCAPknowing participated in a breach of a statutory trust and that MCAP wasunjustly enriched, I am unable to agree with the balance of their conclu-sions. In my respectful opinion, there is no genuine issue for trial basedon a claim in negligent misrepresentation, and there is no genuine issuewith respect to whether MCAP qualifies as a “developer” within themeaning of section 14 of the Act. Accordingly, I would grant the appealand allow to stand only the claims that MCAP knowingly participated ina breach of a statutory trust and that MCAP was unjustly enriched. Iwould dismiss the appeal on all other issues.

Appeal allowed in part.


[Indexed as: R. v. Keough]

Her Majesty the Queen (Respondent) and Jason AndrewKeough (Appellant)

Alberta Court of Appeal

Docket: Edmonton Appeal 1103-0154-A

2012 ABCA 14

Ronald Berger, Marina Paperny, Frans Slatter JJ.A.

Heard: November 15, 2011


Criminal law –––– Offences — Obscenity and pornography — Child por-nography — Sentencing –––– Sentencing for illegal possession of private-usematerial (PUM) — RCMP recovered videos made in accused’s home of 15-year-old girl, S, and 18-year-old boyfriend, M, having consensual sex, and videoof 16-year-old girl, J, and 20-year-old boyfriend, C, having consensual sex,which boyfriends sold to accused without S or J’s knowledge — Accused wasconvicted of two counts of possession of child pornography — Trial judge sen-tenced accused to two nine month sentences to be served consecutively — Of-fence involved different aggravating and mitigating factors than possession ofother child pornography, as illegality flowed from transfer and retention of ma-terial — Participants’ age was less relevant, as only those of age to legally en-gage in or document nudity or sexual activities could make PUMs, and specifictype of activity did not have to be evaluated because recordings involving coer-cion or lack of consent did not fall into PUM exception — Visual recording ofsexual acts here fell to very serious end of spectrum and warranted greater sanc-tion than nude photo, for example — Promise of consideration to gain posses-sion meant accused took active role in compromising privacy and was seriousaggravating factor — Absence of criminal record and failure to breach pre-trialrelease terms were mitigating factors — Intrusion warranted much more thanminimum 45-day sentence — Absence of pre-sentence report or testimonymeant accused’s character could not be ascertained, but age, experience andtraining indicated accused must have understood effect or blameworthiness ofactivities, and indirect evidence as to psychological state and character indicatedlonger sentence was warranted — Intermittent sentence did not provide properdenunciation and deterrence — Accused appealed — Appeal allowed in part;sentence varied — Nine month sentence was appropriate but should have beenordered to be served concurrently — Trial judge erred in finding that recordingswere PUMs and were legal when made and only became illegal at the moment

R. v. Keough 69

they came into the accused’s possession — Accused was not convicted of mak-ing pornography or of offence of transferring materials — Trial judge erredwhen he mischaracterized those charges and ultimately sentenced accused forcrime he was not even charged with.

Criminal law –––– Sentencing — Principles — Miscellaneous –––– Totalityprinciple — RCMP recovered video materials from accused’s home and chargedaccused with possession of child pornography and voyeurism offences — Ac-cused was charged with and found guilty of two counts of possession of childpornography, one count of voyeurism and one count of copying voyeuristicmaterials — At sentencing hearing, accused was sentenced to 27 months’ im-prisonment for offences — Issue arose as to whether sentence offended totalityprinciple — Trial judge found aggregate sentence of 27 months was not unwar-ranted for accused’s pattern of misconduct and did not offend totality princi-ple — Offences each carried maximum of five years, so cumulative sentenceclearly could not exceed maximums provided by Criminal Code — Accused ap-pealed — Appeal allowed in part; sentence varied — Sentences should be con-current for global sentence of 18 months’ to be followed by two years’ proba-tion — Two nine-month sentences were not excessive but it was not appropriateto impose them consecutively without having regard for total sentence —Sentences were not inappropriate but they should not have been ordered on con-secutive basis.

Criminal law –––– Sentencing — Sentencing for multiple convictions ––––Totality principle — RCMP recovered video materials from accused’s home andcharged accused with possession of child pornography and voyeurism of-fences — Accused was charged with and found guilty of two counts of posses-sion of child pornography, one count of voyeurism and one count of copyingvoyeuristic materials — At sentencing hearing, accused was sentenced to 27months’ imprisonment for offences — Issue arose as to whether sentence of-fended totality principle — Aggregate sentence of 27 months was not unwar-ranted for accused’s pattern of misconduct and did not offend totality princi-ple — Accused appealed — Appeal allowed in part; sentence varied —Sentences should be concurrent for global sentence of 18 months’ to be followedby two years’ probation — Two nine-month sentences were not excessive but itwas not appropriate to impose them consecutively without having regard for to-tal sentence — Sentences were not inappropriate but they should not have beenordered on consecutive basis — .

By working as a community youth worker the accused met and befriendedyoung people. Occasionally the accused would have some of those young peoplevisit his home and sometimes they stayed in his spare bedroom in order to en-gage in sexual activity. It was alleged he videotaped three couples. The first pairof complainants were S, 15 and M, 20-years old and they engaged in sexual


activity and video recorded themselves. S asked M to delete the recordings andhe claimed to have done so but he showed the recording to his friends and theaccused. While the sexual activity and the recording of it were consensual theviewing of it by other people was not consented to by S. A second couple, Jaged 16 and C, 20 also recorded themselves engaged in sexual activity and cop-ies of the tape ended up in the accused’s possession. The third pair of complain-ants L and H were both 18-years old. L paid the accused $200 to use the bed-room and the video camera while H was unaware of the recording and did notconsent to being recorded or to the accused having a copy. The accused wascharged with possession of child pornography and voyeurism. The accused wasconvicted of two counts of possession of child pornography, voyeurism and cop-ying of voyeuristic materials.

The Crown submitted that an appropriate sentence would be six to nine months’concurrent for the possession of child pornography convictions and ninemonths’ each for the voyeurism charges to be served concurrent to each otherbut consecutive to the child pornography charges. The accused submitted that 45days’ plus probation was appropriate. The trial judge found that the convictionfor copying the material was a part of the same transaction as engaging in thevoyeurism and concurrent sentences were appropriate. The trial judge found thatthe range of sentences suggested by the Crown was appropriate but also foundthat since the two child pornography charges took place one year apart and in-volved different people they did not warrant concurrent sentences. The trialjudge also found that the global sentence did not offend the totality principle.The trial judge sentenced the accused to a 27-month global sentence. The ac-cused appealed.

Held: The appeal was allowed in part and the sentence was varied to make thepossession sentences concurrent for a global sentence of 18 months’ and twoyears’ probation.

Per Slatter J.A. (Berger J.A. concurring): The trial judge erred in finding that theoffences took place nearly a year apart. The offences actually took place on thesame date. That the recordings took place at different times with different peoplewas irrelevant as the actual possession was founded on one date when the mate-rial was discovered in the accused’s possession. The different identity of thevictims was not a definitive element in justifying two charges as multiple imagesof one victim can still justify multiple charges. The number of images found inpossession of child pornography cases is generally used as a factor in sentencingbut courts almost always impose one sentence for the act of possession of childpornography even when there are thousands of images involved. The trial judgeerred in finding that the recordings were “private use materials” and were legalwhen made and only became illegal at the moment they came into the accused’spossession. The accused was not convicted of making the pornography either bydoing the recordings or by taking possession. He was also not convicted of the

R. v. Keough 71

separate offence of transferring the materials. It was likely that the Crown laidseparate charges for the possession offences because there were companioncharges of making pornography. The trial judge erred when he mischaracterizedthose charges and ultimately sentenced the accused for a crime he was not evencharged with.

The sentences were not unfit as they were within the appropriate range. Thesentences were not unusually harsh. There was no reviewable error in the assess-ment of the mitigating and aggravating factors for sentencing. Even though therewas no evidence the accused was a paedophile, child pornography inherentlyinvolves victimization of children and the accused was in possession of it. Therewas still abuse and exploitation once the accused took possession of those re-cordings. The trial judge did not err by considering cases in which other accusedwere convicted of making child pornography, something that he was acquittedof. The cases were part of a larger group and were relevant as they includedpossession convictions as well. The trial judge did not increase the sentence onthat basis and was entitled to consider the accused’s active participation in themaking of the pornography as an aggravating factor in sentencing. The trialjudge did err in relying on aggravating facts that were not proven on the correctstandard when crafting the sentence. The errors did not result in a demonstrablyunfit sentence. The trial judge gave lengthy and comprehensive reasons that sup-ported both the convictions and the sentences. The case law, evidence and factswere fully reviewed. There was no basis to overturn the sentences themselves.

During counsel’s submissions the trial judge stated that he departed from therecommended structure as the Crown did not develop position justifying concur-rent sentences. The Crown should have been given an opportunity to do so aswell as defence counsel. Consecutive sentences are within the trial judge’s dis-cretion but the facts of the case showed the possession of the images wasfounded in one date and thus they were closely related. The trial judge shouldhave accepted the Crown’s submission for concurrent sentences as it was rea-sonable. The nine month sentences were not excessive but it was not appropriateto impose them consecutively without having regard for the total sentence. Thesentences for possession of child pornography were not inappropriate but theyshould not have been ordered on consecutive basis. The sentences should beconcurrent for a global sentence of 18 months’ to be followed by two years’probation.

Per Paperny J.A. (dissenting): A trial judge has the authority to impose a fitsentence. In this case the trial judge received lengthy submissions and wrotelengthy and considered reasons. The trial judge did not fail to consider any im-portant principle of law or fact in concluding that two possession of pornogra-phy charges should be served consecutively rather than concurrently.


The trial judge did not err in finding that the two counts of possession of childpornography were not the same transaction and by imposing consecutivesentences for those offences. The trial judge found that the crime of possessionoccurred when the images were transferred to the accused which happened ontwo different dates meaning they were not part of the same transaction. He wascorrect in finding so as that was when the harm was done to the two victims.

That the accused was acquitted of the charges of making pornography does notmean that the trial judge was in error in sentencing the accused for two separateoffences. The trial judge was also not wrong in finding that the accused had twodifferent accomplices. The trial judge did not err when he used the word “ac-complice” to describe the way in which the accused gained possession of thematerial as the word was used in a colloquial sense and not in the legal sense.The trial judge did not err by finding that the offences occurred one year apartbecause of the accused’s acquittals for making pornography. All possessioncharges do not result in concurrent sentences and it should not be mandated thatway. The trial judge did not err in his consideration of the totality principle andclearly considered whether the sentences should be consecutive or concurrent.

Cases considered by Frans Slatter J.A.:

Labatt Brewing Co. v. NHL Enterprises Canada L.P. (2011), 106 O.R. (3d) 677,86 B.L.R. (4th) 226, 2011 CarswellOnt 6140, 2011 ONCA 511, 282 O.A.C.151 (Ont. C.A.) — considered

Murphy v. Wyatt (2011), [2011] 1 W.L.R. 2129, [2011] EWCA Civ 408 (Eng.C.A.) — considered

Public Trustee v. Lawrence (1971), (sub nom. Lawrence’s Will Trusts, Re)[1972] 1 Ch. 418 (Eng. Ch. Div.) — considered

R. v. Abel (2011), 2011 CarswellNWT 39, 2011 NWTCA 4, [2011] N.W.T.J.No. 39 (N.W.T. C.A.) — considered

R. v. Al-Fartossy (2007), 2007 ABCA 427, 83 Alta. L.R. (4th) 214, 165 C.R.R.(2d) 108, 53 C.R. (6th) 257, [2008] 3 W.W.R. 391, 418 W.A.C. 336, 2007CarswellAlta 1753, 425 A.R. 336, [2007] A.J. No. 1446 (Alta. C.A.) —considered

R. v. Beal (2011), 267 C.C.C. (3d) 424, 44 Alta. L.R. (5th) 306, 502 A.R. 177,517 W.A.C. 177, 2011 CarswellAlta 91, 2011 ABCA 35, [2011] A.J. No. 74(Alta. C.A.) — considered

R. v. Davis (1999), 139 C.C.C. (3d) 193, 248 N.R. 44, 179 D.L.R. (4th) 385, 29C.R. (5th) 1, [1999] 3 S.C.R. 759, 182 Nfld. & P.E.I.R. 78, 554 A.P.R. 78,1999 CarswellNfld 291, 1999 CarswellNfld 292, [1999] S.C.J. No. 67(S.C.C.) — referred to

R. v. E. (W.) (2010), 293 Nfld. & P.E.I.R. 52, 906 A.P.R. 52, 2010 NLCA 4,2010 CarswellNfld 8, 251 C.C.C. (3d) 213 (N.L. C.A.) — considered

R. v. Keough 73

R. c. Gagnon (2006), [2006] 1 S.C.R. 621, 208 C.C.C. (3d) vi (note), 2006 Car-swellQue 3559, 2006 CarswellQue 3560, 2006 SCC 17, 37 C.R. (6th) 209,(sub nom. R. v. G. (L.)) 207 C.C.C. (3d) 353, (sub nom. R. v. Gagnon) 347N.R. 355, (sub nom. R. v. G. (L.)) 266 D.L.R. (4th) 1, [2006] S.C.J. No. 17(S.C.C.) — referred to

R. v. Gardiner (1982), 1982 CarswellOnt 90, [1982] 2 S.C.R. 368, 68 C.C.C.(2d) 477, 1982 CarswellOnt 739, 30 C.R. (3d) 289, 140 D.L.R. (3d) 612, 43N.R. 361, [1982] S.C.J. No. 71 (S.C.C.) — considered

R. v. Gauthier (2008), 2008 ABCA 39, 2008 CarswellAlta 172, 418 W.A.C.267, 425 A.R. 267, [2008] A.J. No. 138 (Alta. C.A.) — considered

R. v. Hood (2011), 2011 CarswellAlta 954, 2011 ABCA 169, 505 A.R. 243, 522W.A.C. 243, [2011] A.J. No. 619 (Alta. C.A.) — considered

R. v. Johnson (2009), 2009 CarswellAlta 264, 2009 ABCA 74, 457 W.A.C. 103,457 A.R. 103 (Alta. C.A.) — considered

R. v. Keough (2011), 267 C.C.C. (3d) 193, [2011] 9 W.W.R. 561, 2011CarswellAlta 98, 2011 ABQB 48, 501 A.R. 26, 43 Alta. L.R. (5th) 1, [2011]A.J. No. 89 (Alta. Q.B.) — referred to

R. v. M. (B.C.) (2008), 238 C.C.C. (3d) 174, 2008 CarswellBC 1966, 2008BCCA 365, 259 B.C.A.C. 222, 436 W.A.C. 222, [2008] B.C.J. No. 1774(B.C. C.A.) — considered

R. v. M. (C.A.) (1996), 46 C.R. (4th) 269, 194 N.R. 321, 105 C.C.C. (3d) 327, 73B.C.A.C. 81, 120 W.A.C. 81, [1996] 1 S.C.R. 500, 1996 CarswellBC 1000,1996 CarswellBC 1000F, EYB 1996-67066, [1996] S.C.J. No. 28(S.C.C.) — followed

R. c. M. (L.) (2008), 2008 CarswellQue 4417, 2008 CarswellQue 4418, (subnom. R. v. L.M.) 374 N.R. 351, (sub nom. R. v. M. (L.)) 293 D.L.R. (4th) 1,(sub nom. R. v. L.M.) [2008] 2 S.C.R. 163, (sub nom. R. v. M. (L.)) 231C.C.C. (3d) 310, 2008 SCC 31, 56 C.R. (6th) 278, [2008] S.C.J. No. 31(S.C.C.) — followed

R. v. M. (T.E.) (1997), (sub nom. R. v. McDonnell) 43 C.R.R. (2d) 189, 1997CarswellAlta 213, 6 C.R. (5th) 231, (sub nom. R. v. McDonnell) 145 D.L.R.(4th) 577, (sub nom. R. v. McDonnell) 196 A.R. 321, (sub nom. R. v. Mc-Donnell) 141 W.A.C. 321, [1997] 7 W.W.R. 44, 49 Alta. L.R. (3d) 111, (subnom. R. v. McDonnell) [1997] 1 S.C.R. 948, (sub nom. R. v. McDonnell) 210N.R. 241, (sub nom. R. v. McDonnell) 114 C.C.C. (3d) 436, 1997 Carswell-Alta 214, (sub nom. R. v. McDonnell) [1997] S.C.J. No. 42 (S.C.C.) —considered

R. v. Peterson (2006), 402 A.R. 372, 2006 ABPC 177, 2006 CarswellAlta 872,[2006] A.J. No. 827 (Alta. Prov. Ct.) — considered

R. v. Sharpe (2001), 264 N.R. 201, [2001] 6 W.W.R. 1, [2001] 1 S.C.R. 45, 86C.R.R. (2d) 1, 2001 SCC 2, 2001 CarswellBC 82, 2001 CarswellBC 83, 194D.L.R. (4th) 1, 150 C.C.C. (3d) 321, 39 C.R. (5th) 72, 88 B.C.L.R. (3d) 1,


146 B.C.A.C. 161, 239 W.A.C. 161, REJB 2001-22168, [2001] S.C.J. No. 3(S.C.C.) — followed

R. v. Stirling (2008), 59 M.V.R. (5th) 1, 2008 CarswellBC 506, 2008 Car-swellBC 507, [2008] 5 W.W.R. 579, 77 B.C.L.R. (4th) 1, 371 N.R. 384,[2008] 1 S.C.R. 272, 420 W.A.C. 62, 251 B.C.A.C. 62, 2008 SCC 10, 54C.R. (6th) 228, 229 C.C.C. (3d) 257, 291 D.L.R. (4th) 1, [2008] S.C.J. No.10 (S.C.C.) — referred to

R. v. T. (S.G.) (2010), 402 N.R. 24, [2010] 1 S.C.R. 688, 255 C.C.C. (3d) 1,[2010] 6 W.W.R. 583, 2010 SCC 20, 2010 CarswellSask 304, 2010 Car-swellSask 305, 350 Sask. R. 14, 487 W.A.C. 14, 211 C.R.R. (2d) 222, 74C.R. (6th) 217, 319 D.L.R. (4th) 1, [2010] S.C.J. No. 20 (S.C.C.) —considered

R. v. Wharry (2008), 2008 CarswellAlta 1143, 2008 ABCA 293, 94 Alta. L.R.(4th) 293, 234 C.C.C. (3d) 338, 60 C.R. (6th) 160, 437 A.R. 148, 433W.A.C. 148, [2008] A.J. No. 945 (Alta. C.A.) — considered

Cases considered by Marina Paperny J.A. (dissenting):

R. v. Abel (2011), 2011 CarswellNWT 39, 2011 NWTCA 4, [2011] N.W.T.J.No. 39 (N.W.T. C.A.) — referred to

R. v. Adams (2010), 291 N.S.R. (2d) 206, 922 A.P.R. 206, 2010 NSCA 42, 2010CarswellNS 310, 255 C.C.C. (3d) 150, [2010] N.S.J. No. 275 (N.S. C.A.) —considered

R. v. Barton (2002), 2002 CarswellOnt 3584, 165 O.A.C. 294, [2002] O.J. No.4105 (Ont. C.A.) — referred to

R. v. Booh (2003), 171 C.C.C. (3d) 108, [2003] 4 W.W.R. 242, 170 Man. R. (2d)249, 285 W.A.C. 249, 2003 CarswellMan 31, 2003 MBCA 16 (Man.C.A.) — referred to

R. v. C. (G.W.) (2000), 89 Alta. L.R. (3d) 217, 2000 ABCA 333, 2000 Carswell-Alta 1533, 150 C.C.C. (3d) 513, 277 A.R. 20, 242 W.A.C. 20, [2001] 5W.W.R. 230, [2000] A.J. No. 1585 (Alta. C.A.) — considered

R. v. Chisholm (1965), [1965] 2 O.R. 612, [1965] 4 C.C.C. 289, 1965 Carswell-Ont 153 (Ont. C.A.) — considered

R. v. Cooper (1977), 37 C.R.N.S. 1, 74 D.L.R. (3d) 731, 1977 CarswellOnt484F, [1978] 1 S.C.R. 860, 14 N.R. 181, 34 C.C.C. (2d) 18, 1977 Carswell-Ont 10, [1977] S.C.J. No. 81, [1977] A.C.S. No. 81 (S.C.C.) — considered

R. v. Draper (2010), 251 Man. R. (2d) 267, [2010] 8 W.W.R. 609, 478 W.A.C.267, 253 C.C.C. (3d) 351, 2010 MBCA 35, 2010 CarswellMan 98, [2010]M.J. No. 94 (Man. C.A.) — considered

R. v. Erwin (2002), 2002 ABCA 210, 317 A.R. 379, 284 W.A.C. 379, 2002CarswellAlta 1828, [2002] A.J. No. 1190 (Alta. C.A.) — referred to

R. v. Fait (1982), 1982 CarswellAlta 91, 68 C.C.C. (2d) 367, 37 A.R. 273, 20Alta. L.R. (2d) 90, [1982] A.J. No. 731 (Alta. C.A.) — referred to

R. v. Keough 75

R. v. Gallant (2004), 2004 NSCA 7, 2004 CarswellNS 10, 220 N.S.R. (2d) 318,694 A.P.R. 318, (sub nom. R. v. A.S.G.) [2004] N.S.J. No. 10 (N.S. C.A.) —considered

R. v. Gummer (1983), 38 C.R. (3d) 46, 25 M.V.R. 282, 1 O.A.C. 141, 1983CarswellOnt 119, [1983] O.J. No. 181 (Ont. C.A.) — considered

R. v. Hood (2011), 2011 CarswellAlta 954, 2011 ABCA 169, 505 A.R. 243, 522W.A.C. 243, [2011] A.J. No. 619 (Alta. C.A.) — referred to

R. v. Innerebner (2010), 39 Alta. L.R. (5th) 131, 496 A.R. 196, 2010 ABQB188, 2010 CarswellAlta 566, [2010] A.J. No. 341 (Alta. Q.B.) —considered

R. v. Jacks (1986), 50 Sask. R. 150, 1986 CarswellSask 478 (Sask. C.A.) —considered

R. v. Koenders (2007), 221 C.C.C. (3d) 225, 244 B.C.A.C. 271, 2007 BCCA378, 2007 CarswellBC 1668, 403 W.A.C. 271, [2007] B.C.J. No. 1543 (B.C.C.A.) — referred to

R. v. M. (B.S.) (2011), 2011 ABCA 105, 2011 CarswellAlta 522, 44 Alta. L.R.(5th) 240, 502 A.R. 253, 517 W.A.C. 253, [2011] A.J. No. 372 (Alta.C.A.) — considered

R. v. M. (C.A.) (1996), 46 C.R. (4th) 269, 194 N.R. 321, 105 C.C.C. (3d) 327, 73B.C.A.C. 81, 120 W.A.C. 81, [1996] 1 S.C.R. 500, 1996 CarswellBC 1000,1996 CarswellBC 1000F, EYB 1996-67066, [1996] S.C.J. No. 28(S.C.C.) — referred to

R. v. M. (T.E.) (1997), (sub nom. R. v. McDonnell) 43 C.R.R. (2d) 189, 1997CarswellAlta 213, 6 C.R. (5th) 231, (sub nom. R. v. McDonnell) 145 D.L.R.(4th) 577, (sub nom. R. v. McDonnell) 196 A.R. 321, (sub nom. R. v. Mc-Donnell) 141 W.A.C. 321, [1997] 7 W.W.R. 44, 49 Alta. L.R. (3d) 111, (subnom. R. v. McDonnell) [1997] 1 S.C.R. 948, (sub nom. R. v. McDonnell) 210N.R. 241, (sub nom. R. v. McDonnell) 114 C.C.C. (3d) 436, 1997 Carswell-Alta 214, (sub nom. R. v. McDonnell) [1997] S.C.J. No. 42 (S.C.C.) —considered

R. v. Oldham (1975), 1975 CarswellNS 55, 11 N.S.R. (2d) 312 (N.S. C.A.) —considered

R. v. Ross (2005), 2005 ABCA 231, 2005 CarswellAlta 926, [2005] A.J. No.822 (Alta. C.A.) — considered

R. v. Smith (1980), 40 N.S.R. (2d) 272, 73 A.P.R. 272, 1980 CarswellNS 269(N.S. C.A.) — considered

R. v. Tkachuk (2001), 2001 ABCA 243, 2001 CarswellAlta 1318, 17 M.V.R.(4th) 4, 159 C.C.C. (3d) 434, 293 A.R. 171, 257 W.A.C. 171, [2001] A.J.No. 1277 (Alta. C.A.) — considered

R. v. White (1974), 16 C.C.C. (2d) 162, 1974 CarswellOnt 19, 27 C.R.N.S. 66(Ont. C.A.) — considered


Statutes considered Frans Slatter J.A.:

Criminal Code, R.S.C. 1985, c. C-46Generally — referred tos. 162(1) — considereds. 163.1(1) “child pornograhpy” [en. 1993, c. 46, s. 2] — considereds. 163.1(2) [en. 1993, c. 46, s. 2] — considereds. 163.1(3) [en. 1993, c. 46, s. 2] — considereds. 163.1(4) [en. 1993, c. 46, s. 2] — considereds. 163.1(4)(a) [en. 1993, c. 46, s. 2] — considereds. 718.01 [en. 2005, c. 32, s. 24] — considereds. 718.1 [en. R.S.C. 1985, c. 27 (1st Supp.), s. 156] — considereds. 718.3(4) [en. 1995, c. 22, s. 6] — considereds. 724(3)(b) — considereds. 724(3)(d) — considereds. 724(3)(e) — considereds. 732.1(2) [en. 1995, c. 22, s. 6] — referred to

Statutes considered by Marina Paperny J.A. (dissenting):

Criminal Code, R.S.C. 1985, c. C-46Generally — referred toss. 718-718.2 — referred tos. 718.2(c) [en. 1995, c. 22, s. 6] — considereds. 718.3(4) [en. 1995, c. 22, s. 6] — referred to

APPEAL of judgment reported as R. v. Keough (2011), 217 C.C.C. (3d) 486,2011 CarswellAlta 747, 2011 ABQB 312, 51 Alta. L.R. (5th) 364, [2012] 2W.W.R. 548 (Alta. Q.B.).

J.C. Robb, Q.C., for RespondentA.M. Konye, for Appellant

Frans Slatter J.A.:

1 The appellant appeals the sentences imposed on him for possession ofchild pornography and voyeurism. He submits that the trial judge erred inimposing a sentence more severe than the one recommended by theCrown, that the sentences should have been concurrent, not consecutive,and that the sentences are unfit.

R. v. Keough Frans Slatter J.A. 77

Facts2 The appellant was a community youth worker, and through that em-

ployment and other social contact, he became acquainted with a numberof young people. From time to time those young people would visit orstay in the appellant’s residence. The residence had a spare bedroom, andthe appellant would permit young couples to use it as a location to en-gage in sexual activities.

3 The appellant’s convictions arose out of three sets of incidents in thespare bedroom. In the first situation, a couple identified as S.C., aged 15,and M.A., aged 18, engaged in sexual activity in the bedroom. They bothagreed to make a video recording of their sexual activities, using a videocamera borrowed from the appellant. S.C. later told M.A. to destroy therecordings, and while he apparently agreed to do so, M.A. showed therecordings to some of his roommates and gave copies to the appellant.The sexual activity and the recording of it were consensual, but theshowing of the recordings to third parties was not consented to by S.C.

4 The second situation involved the couple J.W., aged 16, and C.V.,aged 20. This couple also engaged in sexual activities which were re-corded. The recordings were initially made for the couple’s own use, butthe appellant ended up in possession of copies.

5 The third situation involved the couple L.C. and S.H., both aged 18.The appellant concealed the video camera in the spare bedroom, and re-corded sexual activity between L.C. and S.H. S.H. was aware of the pres-ence of the camera, and was paid $200 by the appellant for his participa-tion in the arrangement. L.C. was not aware of the camera, did notconsent to being recorded, and did not consent to the appellant having acopy of the recording.

6 As a result of these events the appellant was convicted of four ofseven charges laid against him: R. v. Keough, 2011 ABQB 48, 501 A.R.26, 267 C.C.C. (3d) 193 (Alta. Q.B.):

(a) Possession of child pornography, relating to the S.C. and M.A.recordings.

(b) Possession of child pornography, relating to the J.W. and C.V.recordings.

(c) Engaging in voyeurism, relating to the L.C. and S.H. recordings.

(d) Copying of voyeuristic materials, relating to the L.C. and S.H.recordings.


The appellant was acquitted of the two charges of making child pornog-raphy (relating to the S.C./ M.A. and J.W./C.V. recordings respectively),and one count of touching a young person for sexual purposes by a per-son of authority.

7 The trial judge concluded that because J.W. and S.C. were under theage of 18, the recordings of them engaged in sexual activity met the defi-nition of child pornography in s. 163.1(1) of the Criminal Code. Theirconsent to the sexual activity, and their consent to the recording of thatactivity, did not change the legal character of the recordings in the handsof the appellant. Since the appellant was in possession of those record-ings, he was guilty of possession of child pornography. The trial judgeconcluded, however, that the appellant’s limited connection to the crea-tion of the recordings was not sufficient to support convictions for mak-ing child pornography.

8 Since L.C. and S.H. were both 18, the recordings of them did notmeet the definition of child pornography. However, since L.C. did notconsent to being recorded, the appellant’s act of concealing the camerafor that purpose amounted to committing voyeurism contrary to s. 162(1)of the Criminal Code. While the trial judge held that the appellant’s ac-tivities did not amount to making voyeuristic material, he was also foundguilty of the offence of copying that material.

9 On a subsequent date the appellant was sentenced for the fourconvictions: R. v. Keough, 2011 ABQB 312, 217 C.C.C. (3d) 486 (Alta.Q.B.). The Crown submitted that the two possession of child pornogra-phy charges called for concurrent sentences of 6 to 9 months. The twovoyeurism related charges called for 9 month sentences, concurrent toeach other, but consecutive to the possession sentences. In total, theCrown advocated a global 15 to 18 month sentence, followed by proba-tion and certain ancillary orders. The appellant argued for the minimum45 day sentences on the two possession of child pornography charges,plus probation. He argued that a suspended sentence was adequate for thevoyeurism charges.

10 The trial judge imposed 9 month sentences (the top of the range sug-gested by the Crown) for the two possession of child pornographycharges. Contrary, however, to the submission of the Crown, he madethose two sentences consecutive. He agreed with the Crown submissionthat the two voyeurism related charges called for 9 month sentences, con-current to each other, but consecutive to the possession sentences. The


global result was a 27 month sentence, without any probation, along withthe ancillary orders requested by the Crown.

11 The maximum sentence for each of the four charges on which theappellant was convicted is five years imprisonment. The trial judge notedthat the Criminal Code has recently been amended, and it now mandates45 day minimum jail sentences for possession of child pornography. Heconcluded at paras. 48-9 that the introduction of the minimum sentenceshad the effect of “shifting” the appropriate sentence for any particularoffence towards the upper end of the five-year spectrum. Following anextensive review of the case law, and the aggravating and mitigating cir-cumstances, he concluded that the range of sentencing recommended bythe Crown was appropriate.

12 The trial judge concluded, however, that the possession of child por-nography charges did not warrant concurrent sentences. He reasoned atpara. 172 that the two offences occurred over a year apart, and involveddifferent complainants. As two separate transactions, they warranted con-secutive sentences.

13 The trial judge was aware that he was imposing a sentence greaterthan that suggested by the Crown. At para. 173 he explained that he didso because the Crown did not justify concurrent, as opposed to consecu-tive, sentences, and the Crown’s submissions did not take account of thefact that the child pornography was “private use material”.

14 The trial judge accepted the range of sentences suggested by theCrown for the two voyeurism offences, again after an extensive reviewof the case law, and the aggravating and mitigating circumstances. Heconcluded that the conviction for copying the material was a part of thesame transaction as engaging in the voyeurism itself, so concurrentsentences were called for. He concluded that the global sentence of 27months did not offend the totality principle.

Issues and Standard of Review15 The appellant raises five grounds of appeal:

(a) The trial judge imposed a sentence outside the range suggested bycounsel, without affording counsel an opportunity to address theissue.

(b) The child pornography sentences should have been concurrent,not consecutive.


(c) The trial judge imposed sentences that were disproportionate tothe gravity of the offences and the moral blameworthiness of theappellant.

(d) The trial judge imposed sentences that are demonstrably unfit.

(e) The trial judge relied on cases respecting the making and distribu-tion of child pornography, not simple possession.

16 This Court will only interfere with a sentence if it discloses an errorin principle, it fails to consider a relevant factor, it overemphasizes theappropriate factors, or the sentence imposed is demonstrably unfit: R. v.M. (C.A.), [1996] 1 S.C.R. 500 (S.C.C.) at paras. 89-90; R. c. M. (L.),2008 SCC 31 at para. 14, [2008] 2 S.C.R. 163 (S.C.C.). The grounds ofappeal that address the general fitness of the sentence engage this defer-ential standard of review; the appellant must demonstrate that the sen-tence is demonstrably unfit. Imposing sentences outside the range sug-gested by counsel, and imposing consecutive instead of concurrentsentences, may indicate the presence of an error in principle, which mayreflect reviewable error under this standard. The same standard of reviewapplies to whether sentences should be consecutive or concurrent. Sub-ject to a specific direction in the Criminal Code that a sentence must beconsecutive, it is within the discretion of a trial judge to make a prisonterm run consecutively or concurrently: s. 718.3(4) of the Criminal Code;R. v. M. (T.E.), [1997] 1 S.C.R. 948 (S.C.C.) at paras. 44-46.

17 Whether sentences should be consecutive is related to the “totality”principle. The sentencing judge is to consider whether an accumulationof sentences is unduly long or harsh, but the fundamental principle is toachieve a result that is proportional to the gravity of the offences com-mitted and the degree of responsibility of the offender: s. 718.1 of theCriminal Code; R. v. Wharry, 2008 ABCA 293 at paras. 34-36, 94 Alta.L.R. (4th) 293, 437 A.R. 148 (Alta. C.A.).

Sentencing Outside the Suggested Range18 The Crown’s recommendation of a global 15 to 18 month sentence

was premised on the two child pornography sentences being concurrent.The trial judge concluded that these sentences should be consecutive,recognizing that this would take the sentence beyond the range recom-mended. He reasoned at paras. 173-4:

173 In coming to this conclusion I acknowledge that the sentence Ihave ordered is greater than what was suggested by the Crown. It is


in my discretion to do so. The longer sentence is appropriate on twobases, the Crown:

1. did not develop a position whether the Offender’s two childpornography offences warranted concurrent or consecutivesentences, and

2. appears to have based its sentence recommendation on theprinciple of sentencing parity with child pornography posses-sion sentences that did not involve private use materials or thespecial considerations relevant to those kinds of sexually ex-plicit expression.

174 Expanding on that latter point, the vast majority of child pornog-raphy possession sentencing judgments focus on the quantity andcharacter of the child pornography in the offender’s possession, andthe relationship between that material and the offender’s psyche andrehabilitation. This judgment has explored how illegal possession ofprivate use materials involved different factors, both aggravating andmitigating. When his actions are viewed from the perspective of theright of the two young persons, S.C. and J.W., to explore themselvesand express their sexuality in private, the Offender’s conduct is akind that requires stronger criminal sanction than what was providedby the Crown’s sentencing recommendation.

The appellant argues that the trial judge erred in exceeding the range rec-ommended by counsel, without giving the Crown and the appellant anopportunity to address the trial judge’s concerns.

19 Sentencing takes place in an adversarial context. It is anticipated thatin most cases the sentence imposed will fall at the boundaries, or withinthe range of sentences recommended by counsel. While there is no legalrequirement that the sentencing judge stay within that range, or adopt therecommended structure of the sentences, it is of concern when that is notdone. As the Court observed in R. v. T. (S.G.), 2010 SCC 20 at paras. 36-7, [2010] 1 S.C.R. 688 (S.C.C.): “... trial judges are expected to be im-partial arbiters of the dispute before them; the more a trial judge second-guesses or overrides the decisions of counsel, the greater is the risk thatthe trial judge will, in either appearance or reality, cease being a neutralarbiter and instead become an advocate for one party.” The accused isentitled to reasonable notice of the jeopardy he faces, and a fair opportu-nity to make submissions. The Crown is also entitled to a reasonable op-portunity to explain its position. Where the Crown makes a recommenda-tion that the accused finds to be acceptable or fair, both sides may


believe the point is not in contention, and the accused may not make anysubmissions on the point; a subsequent sentence inconsistent with thatrecommendation can catch both parties by surprise. An accused who re-ceives a sentence outside the recommended range may in such circum-stances harbour a feeling of unfairness and injustice.

20 The case law recognizes the importance of a trial judge giving fairwarning to counsel when he or she proposes to sentence outside the rec-ommended range: R. v. Hood, 2011 ABCA 169 (Alta. C.A.) at para. 15;R. v. Abel, 2011 NWTCA 4 (N.W.T. C.A.) at para. 23; R. v. Beal, 2011ABCA 35 at paras. 15, 18, 502 A.R. 177, 44 Alta. L.R. (5th) 306 (Alta.C.A.). This is a component of a wider principle that the parties are enti-tled to reasonable notice if the judge proposes to decide the case in a waynot advocated by either party: R. v. Al-Fartossy, 2007 ABCA 427 at pa-ras. 22-5, 83 Alta. L.R. (4th) 214, 425 A.R. 336 (Alta. C.A.); Murphy v.Wyatt, [2011] EWCA Civ 408, [2011] 1 W.L.R. 2129 (Eng. C.A.) at pa-ras. 13-19; Labatt Brewing Co. v. NHL Enterprises Canada L.P., 2011ONCA 511 at paras. 5, 14, 106 O.R. (3d) 677 (Ont. C.A.); In PublicTrustee v. Lawrence (1971), [1972] 1 Ch. 418 (Eng. Ch. Div.) at p. 436-7. Nevertheless, the sentencing judge has an obligation to impose a fitsentence, and neither exceeding the recommended range, nor failing togive counsel notice of intention to exceed the range, is, without more,reviewable error. If the sentence imposed is not demonstrably unfit hav-ing regard to the principles of sentencing in the Criminal Code, appellateinterference is not warranted. Failing to seek the input of counsel may,however, make it more likely that the trial judge may overlook or over-emphasize the relevant factors, rely on an irrelevant factor, impose a sen-tence based on an error in principle, or commit some other reviewableerror.

21 In some cases the failure to warn counsel that the sentencing judge isconsidering exceeding the recommended range may have no practical ef-fect. It may well be that the relevant points, and the supporting case law,were fully canvassed during argument, and there was little more thatcould have been said; the trial judge simply disagreed with counsel. Thatwas not, however, the case with this sentencing. The trial judge ex-plained that his departure from the recommended structure of thesentences resulted because the Crown “did not develop a position” justi-fying concurrent sentences. This is precisely the type of situation inwhich counsel should have been given an opportunity to make furthersubmissions. The Crown (as will be seen from the next section of these


reasons) would have been able to “develop such a position”. Given thesubmissions being made by the Crown at the sentencing hearing, counselfor the appellant also likely did not emphasize the appropriateness ofconcurrent sentences. As such, counsel for the appellant may well havehad much to say in support of the Crown’s position, if an opportunity hadbeen extended. Similar observations can be made about the trial judge’sperception that the Crown had overlooked the “private use materials” di-mension of the charges.

Consecutive Sentences22 Notwithstanding the submissions of the Crown, the trial judge im-

posed consecutive sentences for the two possession of child pornographycharges. He summed up his reasoning as follows:

172 The two offences occurred over a year apart, and involved differ-ent complainants. The Offender’s ‘accomplices’ were also differentin each case. I therefore conclude that though the two offences arevery similar in that both involved the Offender coming into posses-sion of a private use material that involved a teenage girl, these weretwo separate transactions. I will later in the judgment comment onthe application of the ‘totality principle’, and whether those sentencesshould be decreased on that basis.

Earlier in his reasons (at paras. 50-3) the trial judge had concluded, afterdiscussing the relevant case law, that concurrent sentences were not ap-propriate for convictions arising out of separate transactions, involvingseparate victims.

23 The two possession of child pornography charges were very similarlyworded:

1. On or about the 5th day of September, 2008, at or near Athabasca,in the province of Alberta, did have in his possession child pornogra-phy, of S.C. contrary to section 163.1(4) of the Criminal Code.

. . .

5. On or about the 5th day of September, 2008 A.D., at or nearAthabasca, in the province of Alberta, did have in his possessionchild pornography, of J.W. contrary to section 163.1(4) of the Crimi-nal Code.


The wording of the two counts is identical, except for the identification(by initials) of the person depicted in the images.

24 It can be seen from the wording of the two counts that the trial judgewas in error in concluding that the “two offences occurred over a yearapart”. Both counts contain the same offence date, namely September5th. It is on that date that the appellant was found in possession of thematerials, and that is the foundation of the offences. It is true that theevidence revealed that the recordings were made over a year apart, butthe appellant had been acquitted of the charges of making pornography.The trial judge was similarly in error in stating that the appellant had“different accomplices” for the two charges; while different male part-ners were involved in making the recordings, the appellant’s “posses-sion” of the materials on September 5th did not involve any accomplices.

25 The trial judge’s description of the two teenagers shown in the re-cordings is problematic. It is true that there are different teenagers in thedifferent images, and they are also clearly “victims” of the child pornog-raphy. But they are not fully “different complainants” as that term is usedin the case law on consecutive sentencing. They are individually men-tioned in the two counts, primarily to identify more precisely the materialunderlying the charge. Where the charge is “possession” the offence ismade out whether or not different persons are depicted in differentimages. For example, 10 images of child pornography involving thesame child could support 10 different charges.

26 It is common in pornography cases for the accused to be found inpossession of hundreds, and even thousands of images. Theoretically, theCrown could lay a separate charge for each image, but the thousands ofconvictions that would result would not justify consecutive sentences.The act of possession occurs on a particular date, at a particular time, andthe number of images (as well as the content of the images) is generallydealt with as an aggravating factor in sentencing.

27 In practice, the Crown lays one charge of possession for the multipleimages, and argues that a greater number of images warrants a highersentence. Indeed, during this trial the Crown applied to collapse the twopossession counts into one. That application was dismissed, but duringsentencing counsel for the Crown stated:

The Crown: Yes. Yeah. And to address that point, sir, you’ll recall Ifell on my sword and said I had made a mistake on the indictmentand wanted to have one global count of child pornography.


The Court: Yes.

The Crown: And — and whether we did four and a half or four and ahalf consecutive for the two that are here today, my range is a globalrange of six to nine months. It can be one sentence, concurrent one tothe other. That — that’s fair. (AR p. 17, l. 27-36)

The Crown argued the appellant was somehow estopped by his success-ful resistance of the application to join the two counts, and could not nowargue that they were not separate transactions. No such estoppel arises.This particular component of this appeal does however demonstrate thatthe Crown’s recommendation of concurrent sentences was based in prin-ciple. The trial judge’s reasoning why the two counts could not be col-lapsed into one foreshadowed the subsequent error in characterizingthem during sentencing as unrelated transactions.

28 The case law shows that the courts consistently impose a single sen-tence for the single act of possession of pornography, even whenthousands of images are involved: see for example, R. v. Gauthier, 2008ABCA 39, 425 A.R. 267 (Alta. C.A.), (over 2,000 images); R. v. Peter-son, 2006 ABPC 177, 402 A.R. 372 (Alta. Prov. Ct.) (over 7,000images). It is considerations of that nature that likely were behind theCrown’s position that concurrent sentences were appropriate here. Byanalogy, if the accused was found with 6 spitballs of cocaine in separatepockets, and the Crown chose to lay 6 separate charges of possession ofcocaine, it would still not be appropriate to impose consecutivesentences. Ten convictions for break and enters in the same day wouldresult in 10 sentences, but while the global sentence must reflect thenumber of events, it would still not be appropriate to impose consecutivesentences without regard to the total. As the Crown pointed out in thiscase, it did not make any difference if there were two nine-month con-current sentences, or two consecutive 4.5 months sentences.

29 The trial judge’s treatment of the two possession offences as separatetransactions arose from his analysis that the recordings were “private usematerials”, and were legal when made. They only became illegal whenthey came into the possession of the appellant, and accordingly he con-cluded that the “moment of illegality” was at the time of transfer. Corre-spondingly, that was when the appellant’s possession commenced. Butthe appellant was not convicted of “making” the pornography under s.163.1(2), either in the sense of him making the physical recordings, or inthe sense that he “made them illegal” by taking possession of them. Spe-


cifically, he was never charged with or convicted of “transferring” thepornographic materials, which is a separate offence of “transmitting ordistributing” pornography under s. 163.1(3). The appellant was chargedonly with “possession” under s. 163.1(4), not “making” or “transmit-ting”. He was only charged with possession on one fixed day, and all ofhis “possession” on that day was a single transaction.

30 In this case the Crown chose to lay a separate charge for each set ofimages of each of the teenagers. (There were in fact multiple images ofeach of them.) The Crown was entitled to proceed in this fashion, andlikely did so because there were companion charges of “making” pornog-raphy for each of the “possession” charges. The trial judge, however,mis-characterized the latter charges. He essentially sentenced the appel-lant for a crime of which he was neither charged nor convicted.

31 As noted, it is within the discretion of the trial judge to impose con-secutive sentences. However, the mis-characterization of the two of-fences by the trial judge reflects an error of principle, calling for appel-late intervention. On the offence date the appellant was found inpossession of a number of images of child pornography. While separatecharges were laid, all of his “possession” was closely related, and thesentences should have been based on them being very closely relatedtransactions. The Crown’s submission for concurrent sentences was rea-sonable, and should have been accepted.

Fitness of the Sentences32 The last three grounds of appeal all challenge the general fitness of

the sentences, and can be considered together. They all engage a deferen-tial standard of review.

33 The primary objective of the prohibition of the possession of childpornography is to protect children: R. v. Sharpe, 2001 SCC 2 (S.C.C.) atparas. 82-94, [2001] 1 S.C.R. 45 (S.C.C.). The enactment of s.163.1(4)(a), with its attendant minimum penalty of 45 days, and maxi-mum penalty of five years, reflects society’s disapproval of such con-duct. The Criminal Code specifically provides:

718.01. When a court imposes a sentence for an offence that in-volved the abuse of a person under the age of eighteen years, it shallgive primary consideration to the objectives of denunciation and de-terrence of such conduct.


Denunciation and deterrence are the primary considerations in sentencingfor offences involving predatory crimes against children; rehabilitation isa secondary consideration: R. v. Johnson, 2009 ABCA 74 at para. 2, 457A.R. 103 (Alta. C.A.). The trial judge did not err in emphasizing thesefactors.

34 The trial judge concluded at paras. 48-9 that the introduction of thenew 45 day minimum sentences for possession of child pornography hadthe effect of “shifting” the appropriate sentence for any particular offencetowards the upper end of the five-year spectrum. The new minimumsentences undoubtedly mandate more onerous sentences, and set an “in-flationary floor” on the sentences: R. v. M. (B.C.), 2008 BCCA 365 atparas. 32-4, 238 C.C.C. (3d) 174 (B.C. C.A.). The minimum sentencessignal that the offence is considered to be more serious, but the mainpurpose of introducing them was to eliminate the prospect of a condi-tional sentence. Henceforth, any sentence for child pornography wouldinvolve actual custody; community based sentences were no longer anoption: R. v. E. (W.), 2010 NLCA 4 at para. 12, 251 C.C.C. (3d) 213(N.L. C.A.). The minimums mandate more onerous sentences, but do notnecessarily signify that sentences should be longer. That being said, thesentences imposed here are within the appropriate range.

35 The appellant argues that the sentences imposed are higher than thoseimposed in other child pornography cases. The appellant and the Crowneach provided the Court with numerous examples of other sentencing de-cisions, some higher and some lower than those imposed here. Whilerelevant, the different factual matrix underlying each of these sentencingprecedents renders them of limited assistance.

36 The appellant argues that the sentences are unduly harsh becausethere is an absence of many of the aggravating factors often present inchild pornography cases. He argues that there was no evidence of distri-bution, he had no prior record, the sexual acts depicted were not perverseor repulsive, the children were not very youthful, there was only a smallnumber of images, and his acquisition of the images was not commercial.The Crown argues the employment of the appellant, and its connection tothe young couples, is aggravating. While there may not have been anydistribution or commercial activity, the offences involved a gross breachof the privacy of the three young couples. The Crown also submits thatthe appellant’s role in facilitating the making of the recordings is aggra-vating. The trial judge gave extensive reasons analyzing the moral culpa-


bility of the appellant, and his weighing of the aggravating and mitigat-ing factors does not disclose any reviewable error.

37 The appellant also argues that there was no evidence “the offender isa pedophile with the attendant risk that the pornography may in someway be instrumental in the physical victimization of children”. As notedin Sharpe, child pornography inherently involves the victimization ofchildren. There is no merit to this argument.

38 The appellant argues that the trial judge sentenced him on the basisthat he was “of bad character”, and that he improperly used the appel-lant’s silence against him. The appellant did not testify, either at trial oron the sentencing hearing. There was no expert evidence or pre-sentencereport to assist the trial judge. The trial judge made note of the fact thatthere was no such evidence to assist him in assessing whether the appel-lant posed a risk of re-offending. As such, the sentencing judge had todraw inferences from the nature of the crimes, and the appellant’s in-volvement in them. If the appellant wanted to rely on “good character”,or that he was a good candidate for rehabilitation, it was incumbent onhim to prove it: s. 724(3)(b). The trial judge’s observations that he hadno direct evidence of the appellant’s psychological profile does not re-flect an error in approach.

39 The appellant also relies on the finding of the trial judge that the childpornography was “legal when produced”. This is based on the findingthat each of the two couples consented to both the sexual activity and themaking of the recordings, and all were of an age that allowed them tolegally consent. As such, the appellant argues, this child pornography isnot abusive or exploitative of the children involved. This argument over-looks the fact that the female partners only consented to the creation ofthe recordings for private use. They never consented to them being givento third parties, and the minute the recordings came into the possessionof the appellant they did become abusive and exploitative. Whatever mit-igating effect this factor may have, it is also overtaken or neutralized inthis case by the unusual role the appellant played in motivating the initialproduction of the recordings. That was also abusive and exploitative.

40 The appellant argues that while he was acquitted of making pornogra-phy, the trial judge relied on case law imposing sentences for that of-fence. The trial judge did conduct an extensive review of the case law,including some cases that involved making (often in addition to posses-sion) of child pornography. On a full reading of the reasons it is not,


however, reasonable to conclude that he mistakenly increased the lengthof the sentence. He had extensively analyzed the case law and the evi-dence in acquitting the appellant of the two charges of making pornogra-phy. In some instances the cases he analyzed involved both possessionand making. The trial judge was also entitled to analyze the aggravatingfactor that the appellant was not the ordinary passive consumer of thepornography. He was a part of the contemplated audience of the record-ings. While his activities did not amount to “making”, he played a role inenabling, facilitating or encouraging the recordings. His moral blame-worthiness is enhanced by these circumstances. While it is not appropri-ate to sentence him for the offence of making pornography, firmsentences for simple possession were still warranted.

41 The appellant argues that the trial judge misstated the standard ofproof. In sentencing, facts relied on by the Crown as aggravating must beadmitted, or proven beyond a reasonable doubt: s. 724(3)(e); R. v. Gar-diner, [1982] 2 S.C.R. 368 (S.C.C.) at p. 414-16. Other facts relied on indetermining a fit sentence need only be proven on a balance of probabili-ties: s. 724(3)(d). The appellant argues that in some places the trial judgeinappropriately used the “balance of probabilities” standard. For exam-ple, the trial judge was unable to definitively conclude whether the appel-lant had paid the male members of the couples for the recordings. Hestated at paras. 4, 6 and 119 of his reasons that the recordings were“probably in exchange for someform of consideration”. At para. 109 heconcluded: “I conclude that the Offender probably in some manner pro-vided some form of consideration ... [which is] a serious aggravating fac-tor”. Later, at paras. 163 and 166, he based the sentence, in part, on thebasis that: “I have concluded ... he in some manner provided some formof consideration ...”. At para. 110 he stated: “... I still am satisfied on abalance of probabilities that the Offender was the person who suppliedthem with the video camera ...”. It was an error for the trial judge to relyon aggravating facts that had not been admitted or proven beyond a rea-sonable doubt. The errors, however, did not result in demonstrably unfitsentences.

42 As previously mentioned, the trial judge gave comprehensive, lengthyreasons supporting both the convictions and the sentences. He exten-sively reviewed the facts, the evidence and the case law. In reasons ofthat complexity, it is often possible to extract specific comments thatmight be subject to some criticism. Reasons are not, however, dissectedminutely nor read out of context: R. v. Davis, [1999] 3 S.C.R. 759


(S.C.C.) at para. 103; R. c. Gagnon, 2006 SCC 17 at paras. 19-20, [2006]1 S.C.R. 621 (S.C.C.); R. v. Stirling, 2008 SCC 10 at para. 13, [2008] 1S.C.R. 272 (S.C.C.). The operative consideration is whether thesentences ultimately imposed are demonstrably unfit. Overall the reasonsdisclose no further errors justifying appellate intervention, and (apartfrom the consecutive nature of the sentences) the sentences on both thepornography and voyeurism convictions are not demonstrably unfit.

Conclusion43 In conclusion, the appeal is allowed in part. The consecutive nine

month sentences for possession of child pornography should be madeconcurrent. That will have the effect of reducing the global sentence to18 months, enabling the Court to impose a period of probation as recom-mended by the Crown, and concurred in by the appellant. The appellantwill be placed on probation for a period of two years, on the followingconditions:

(a) the statutory conditions in s. 732.1(2);

(b) the appellant shall report to a probation officer within seven daysof the date of these reasons, and thereafter when, and how, di-rected by the probation officer;

(c) the appellant shall attend, participate in and successfully completeany assessment, counselling or programming, as directed by theprobation officer;

(d) the appellant shall notify the probation officer of his existing and,in advance, of any change of name, address, employment andoccupation;

(e) the appellant shall have no contact of any kind, direct or indirect,with S.C., M.A., J.W., C.V., L.C. or S.H.

The appeal is otherwise dismissed.

Ronald Berger J.A.:

I concur:

R. v. Keough Marina Paperny J.A. 91

Marina Paperny J.A. (dissenting):

Introduction44 Three issues arise on this sentence appeal. The first is whether, apart

from a joint submission, it is a reversible error for a trial judge to imposea sentence outside the range provided by the Crown and defence withoutadvising counsel beforehand. I agree with the majority’s statement in thethird sentence of [20]. The answer is “no”. The second issue is whether itwas a reversible error here to impose a consecutive rather than a concur-rent sentence. In my view, having regard to the nature of the offences, allthe principles of sentencing, and the discretion afforded a sentencingjudge under the Criminal Code, the answer is “no”. The third issue thatarises is whether the combination of these two alleged errors resulted inan unfit sentence in this case. Again, the answer must be “no”.

45 I agree with the facts set forth in the majority decision. However, thefollowing additional facts are also significant. During the trial and in theintroduction to his detailed reasons for sentencing, the sentencing judgecategorized the offences into three groups. He said at [3]:

In introduction I will briefly review the circumstances of the threeoffence groups. Each offence involved one or more videocassette re-cordings of a couple engaged in sexual activities. All these record-ings were recovered by the RCMP from the Offender’s bedroom.

46 The sentencing judge described the three “offence groups” as follows:

A. S.C./M.A. recording - Child Pornography Possession #1

S.C., a 15 year old girl, and M.A., her 18 year old boyfriend, re-corded their consensual sexual activities with a video camera pro-vided by the Offender. S.C. asked that the recording be destroyed,but instead it was given to the Offender. S.C. was neither told of norauthorized that transfer. I rejected M.A.’s claim he gave the record-ing to the Offender so that the Offender could destroy the recording;I concluded that transfer was probably in exchange for some form ofconsideration from the Offender.

B. J.W./C.V. recordings - Child Pornography Possession #2

A 16 year old girl, J.W., and her 20 year old boyfriend, C.V., re-corded their consensual sexual activities with a video camera pro-vided by the Offender. One or both of this couple resided with theOffender. They testified that these recordings were coerced by theOffender who demanded this couple record their sexual activities inexchange for the opportunity to visit together.


I rejected the testimony of both J.W. and C.V. on most aspects ofhow and why the recordings were made. I concluded that the record-ings were made for the couple’s own use, but that at some point C.V.transferred those recordings to the Offender without J.W.’s knowl-edge or consent. Again, I concluded that this transfer was probably inexchange for some form of consideration from the Offender.

C. L.C./ S.H. recordings - Voyeurism and Making VoyeuristicMaterials

L.C. and S.H. described their relationship as “friends with benefits”.Both were 18 years old when they met and had sex in the Offender’sspare bedroom. S.H. and the Offender had an arrangement where theOffender recorded S.H. and L.C. having sex in the spare bedroom.That occurred on three occasions. The Offender deployed and con-cealed a video camera in the spare bedroom, the couple then arrivedand were recorded having sex. L.C. was unaware she was recorded.On one of these occasions, the Offender paid S.H. $200 in exchangefor his part in this arrangement.

47 The appellant pled not guilty to all counts. Following a trial, the trialjudge found the appellant guilty of the four offences involving the threevictims, as described above. He sentenced the appellant to nine months’imprisonment for each child pornography count and nine months’ totalfor the voyeurism counts. Crown counsel had sought nine months on thevoyeurism charges and six to nine months for each possession charge,the latter to be served concurrently to each other but consecutive to thevoyeurism count, for a global sentence of 15 to 18 months. In extensivereasons, the sentencing judge concluded that the three nine monthsentences should be served consecutively rather than concurrently, for aglobal sentence of 27 months. The difference, then, between Crowncounsel’s submission and the sentencing judge’s ultimate decision lies inthe imposition of consecutive rather than concurrent sentences for thetwo child pornography counts.

48 The appellant argues that the global sentence is unfit as being undulyharsh and that the sentencing judge erred in imposing a sentence outsidethe range put forward by Crown and defence and in imposing sentencesconsecutively rather than concurrently, as proposed by counsel. The ma-jority conclude that while there was no reversible error in the process, aconclusion with which I agree, the resulting consecutive sentence wasunfit. I disagree.


Sentencing outside the range proposed49 The proposition advanced by defence counsel is that a sentencing

judge has a legal obligation to advise counsel that he or she is consider-ing sentencing outside the range proposed by counsel and that failure todo so is reversible error. In my view, apart from joint submissions, thatproposition is not supported in the Canadian jurisprudence. Moreover,imposing such an obligation would have limiting effects on judicial dis-cretion in sentencing and unintended consequences not contemplated bythe Criminal Code.

50 A review of any impugned sentence by an appellate court must beginwith the highly deferential standard to be applied to a sentencing deci-sion. Courts of appeal have been repeatedly directed that there is no basisfor interference in the absence of errors in law or principle or a demon-strably unfit sentence: see R. v. M. (C.A.), [1996] 1 S.C.R. 500 (S.C.C.).Sentencing judges have a broad discretion in imposing individualizedsentences having regard to the principles of sentencing outlined in theCriminal Code, ss 718-718.2.

51 In the absence of a joint submission, there is no mandated processrequiring advance notice to the Crown and defence that their respectivesentencing submissions do not accord with the views of the sentencingjudge. The joint submission is distinct in this regard. In R. v. C. (G.W.),2000 ABCA 333, 277 A.R. 20 (Alta. C.A.) and R. v. Tkachuk, 2001ABCA 243, 293 A.R. 171 (Alta. C.A.), this Court outlined a process tobe followed before a sentencing judge rejects a joint submission. Morethan one rationale underlies the requirement for a judge to notify counselin advance if the judge proposes to reject or exceed a joint submission:for example, a representation by Crown counsel as to sentence may in-duce a guilty plea that might not otherwise be obtained (R. v. Cooper(1977), [1978] 1 S.C.R. 860 (S.C.C.)); the underlying considerationsleading to a joint submission, such as gaps in the evidence or missing orunavailable witnesses, are not likely known to the sentencing judge; anda lack of confidence by accused persons in the efficacy of joint submis-sions may undermine the plea bargaining process.

52 As the Crown correctly points out, one can foresee potential prejudicein those circumstances. Arguably, even in the absence of a joint submis-sion, where there is a guilty plea and an agreed statement of facts someof the same or similar rationales may apply. Such was the suggestion inR. v. Hood, 2011 ABCA 169 (Alta. C.A.) and R. v. Abel, 2011 NWTCA


4 (N.W.T. C.A.), both of which are relied upon by the appellant. How-ever, that is not this case. Here there was neither a joint submission noran agreement leading to a guilty plea. There was a conviction following atrial, followed by a sentencing hearing in which each counsel made anindependent assessment and submissions based on their respective viewsof the offences and the offender. In such circumstances, there is no legalbasis to interfere with an otherwise fit sentence.

53 This court noted in R. v. Ross, 2005 ABCA 231 (Alta. C.A.), that inthe absence of a joint submission failure to sentence within a proposedrange without alerting counsel beforehand is not in itself a reversible er-ror. Nor should it be. Where both counsel have fully argued the point orpoints raised by the sentencing hearing, including the nature of, length ofand terms of an appropriate sentence, it is then incumbent on the sentenc-ing judge to exercise his or her discretion and impose a fit sentence.

54 That is not to say that it is not good practice to seek further submis-sions. It is. Where a sentencing judge has reservations about the sentencerange proposed by both counsel, it is always prudent to seek further sub-missions before imposing sentence. That is the preferred course, but it isnot a mandatory one: see R. v. Booh, 2003 MBCA 16 (Man. C.A.); R. v.Koenders, 2007 BCCA 378 (B.C. C.A.); R. v. Barton (2002), 165 O.A.C.294 (Ont. C.A.) at para. 15. The same concerns simply do not arisewhere both counsel have independently assessed, and made full submis-sions on, the appropriate range and sentencing principles.

55 In my view, the potential negative effects of requiring a sentencingjudge to invite further submissions every time he or she is consideringsentencing outside the range proposed by counsel significantly under-mine the argument that natural justice demands this course of action. Af-ter receiving submissions, a sentencing judge will often adjourn to reflecton the authorities provided and the evidence led. He or she may wellconclude that the range or terms proposed by counsel are inappropriate inthe circumstances. The possibility of unfairness is seriously diminished ifcounsels’ own submissions or authorities support the sentence ultimatelyimposed. How far can the appellant’s proposition realistically be ex-tended? Is a sentencing judge required to seek additional submissions tochange the length or terms of probation and other conditions of sentence?If the sentence is lower than the proposed range, is that an error? If so,does that give the Crown a right of appeal as an issue of law?


56 Any concern that an accused may be taken by surprise suggests thatdefence counsel incorrectly advise their clients that the jeopardy they arein lies within the range of sentence provided by counsel. That is not so. Itcannot seriously be argued that the range of sentences proposed reflectsthe outer limits of potential sentences. The discretion always remainswith the sentencing judge. Elevating a good practice to a mandated re-quirement would have the unintended effects of undermining judicialdiscretion, prolonging sentencing hearings and minimizing the vital roleof defence counsel. If a sentence is unfit or if there has been an error inprinciple, a court of appeal can intervene.

57 While discussion between the court and counsel is to be encouraged,a sentencing is not a three way dialogue, a negotiated settlement or aJDR. The Criminal Code rests the authority to impose a fit sentence onthe sentencing judge.

Consecutive vs. Concurrent Sentences58 The discretionary ability to impose consecutive sentences is found in

sub-section 718.3(4) of the Criminal Code. Generally, deference is owedto the sentencing judge’s decision of whether to impose consecutive orconcurrent sentences. In R. v. M. (T.E.), [1997] 1 S.C.R. 948, 145 D.L.R.(4th) 577 (S.C.C.), the Supreme Court of Canada stated:

The decision to order concurrent or consecutive sentences should betreated with the same deference owed by appellate courts to sentenc-ing judges concerning the length of sentences ordered. The rationalefor deference with respect to the length of sentence clearly stated inboth Shropshire and M. (C.A.) applies equally to the decision to or-der concurrent or consecutive sentences. In both setting duration andtype of sentence, the sentencing judge exercises his or her discretionbased on his or her first-hand knowledge of the case; it is not for anappellate court to intervene absent an error in principle, unless thesentencing judge ignored factors or imposed a sentence which, con-sidered in its entirely, is demonstrably unfit.

59 Of course, the discretion is not unfettered. There are well establishedprinciples a sentencing judge is directed to consider in determiningwhether to impose a consecutive or concurrent sentence. As the sentenc-ing judge in this case pointed out, generally offences are served consecu-tively where they arise from “separate transactions”. In R. v. M. (B.S.),2011 ABCA 105 (Alta. C.A.), this Court commented on whether sexual


interference and making child pornography had occurred in the same orseparate transactions. Cote J.A. observed at [30]:

Closeness in time is not enough. One must ask whether the twocrimes were “essentially different in character and involve[d] differ-ent subject matter”: R. v. Nichols (1978), 9 A.R. 203 (C.A.)

60 A review of how a series of similar offences with different victimsought to be treated can be found in R. v. Innerebner, 2010 ABQB 188(Alta. Q.B.). In summary, Read J. stated:

Sentences for multiple offences should be consecutive unless there isa good reason for making them concurrent: R. v. SPM, 2005 NLCA36at para. 11; Clayton Ruby et al, Sentencing, 7th Ed. (Markham:Lexis Nexis Canada Inc. (2008) at ss. 14.2)

. . .

Consecutive sentences should be imposed when multiple convictionsare unrelated to one another, or were not part of the same “transac-tion”, even if they are similar in fact. Sentencing at ss. 14.10 (citesomitted).

61 Where different offences constitute “one continuous criminal act” thecourt should impose concurrent sentences: R. v. Oldham (1975), 11N.S.R. (2d) 312 (N.S. C.A.). Similarly, if there is “sufficient nexus be-tween the offences”, concurrent sentences are warranted: R. v. Jacks(1986), 50 Sask. R. 150 (Sask. C.A.). Conversely, where there is a breakin criminal activity, consecutive sentences will be appropriate: R. v.White (1974), 27 C.R.N.S. 66 (Ont. C.A.); R. v. Chisholm, [1965] 2 O.R.612 (Ont. C.A.). Also, where different offences, although arising out ofthe same transaction or incident, violate separate legally protected inter-ests, the normal rule of concurrent sentences does not apply: R. v. Gum-mer (1983), 38 C.R. (3d) 46, 1 O.A.C. 141 (Ont. C.A.).

62 The sentencing process involves first identifying what is a fit sen-tence for each of the convictions. The analysis focuses on the nature ofand circumstances surrounding each of the criminal acts for which theoffender is convicted and does not start or end with the offence date asfound in the indictment. Put simply, where offences are perpetratedagainst different victims at different times, over a number of months oryears, it is appropriate to sentence consecutively.

63 Consecutive sentences are always subject to the principle of totality.Sub-section 718.2(c) of the Criminal Code directs a sentencing judgethat where consecutive sentences are imposed the combined effect


should not be unduly long or harsh. Where the total projected sentence isexcessive, the individual sentence must then be adjusted below the figurewhich would be appropriate for each offence taken in isolation so that thetotal sentence is proper: R. v. Fait (1982), 37 A.R. 273 (Alta. C.A.); R. v.Erwin, 2002 ABCA 210 (Alta. C.A.) at para. 4.

Application to this case64 The appellant was found guilty of two charges of possession of child

pornography, one charge of engaging in voyeurism and one charge ofhaving made voyeuristic materials. As noted at the beginning of thesereasons, the trial judge (and counsel during the trial) categorized the de-tails of the various offences into three groups, distinguishing them by thethree different victims, their ages, the nature of their relationships withthe appellant (whether in his capacity as community youth worker,school guidance counselor or roommate), and the circumstances of themaking or procurement of the recordings. The three sets of recordingswere made at different times and were provided to the appellant by themale participants. They were recovered in a number of different versionsand had been assembled together into a compilation tape.

65 After convicting the appellant, the sentencing judge received lengthysubmissions on the appropriate sentence for the three “offence groups”and reserved his decision. Approximately three and a half months later,he issued a 51 page sentencing decision. In that decision, he consideredthe authorities that had been put forward in relation to the child pornog-raphy convictions, but concluded they were of limited assistance. All ad-dressed possession of what could be called illegal materials; they all in-volved sexual material depicting children and the acts depicted werethemselves illegal. The sentencing judge concluded that this case repre-sented an entirely different kind of sexually explicit material involvingpersons under 18.

66 The sentencing judge found the materials that were the subject of thechild pornography charges here to be “private use materials” when ini-tially created that became illegal only when the materials were trans-ferred without the consent of all the recordings’ owners. He stated at[71]:

Put another way, the offence occurred when the Offender receivedand retained the S.C./M.A. and J.W/C.V recordings. That is thewrongful act.


67 And at [74]:

Illegal possession of private use materials is thus an offence thatflows not from the sexually explicit material and its content - that islegal - but rather from the transfer and retention of that material. Ibelieve that means that sentencing of a person guilty of unauthorizedpossession of private use materials involves a somewhat different setof sentencing considerations than ‘conventional’ child pornography.

(emphasis in original)

68 At [94] he said:

I believe an important principle on which illegal possession or distri-bution of private use materials should be evaluated is the degree towhich the unauthorized possession intrudes into the privacy of ayoung person participant. In the trial judgment I stressed that privateuse materials and their possession and use are legal as long as theprivate use materials remain the in the possession and control of their‘owners’. Injury to the ‘owners’ of private use materials thereforeflows from the negative effects on those young persons when theirintimate legal activities are disclosed and they lose their right to ex-press themselves and explore their sexuality in private.

(emphasis in original)

69 With this view of the offences in mind, the sentencing judge notedthat the two child pornography offences occurred over a year apart andinvolved different victims. He also noted, at [172]:

The Offender’s ‘accomplices’ [note the quotation marks] were alsodifferent in each case. I therefore conclude that, though the two of-fences are very similar in that both involved the Offender cominginto possession of a private use material that involved a teenage girl,these were two separate transactions.

70 In my view, these reasons are thorough, thoughtful and correct. Itcannot be said that the sentencing judge overlooked some important prin-ciple of law or fact in arriving at his conclusion that the two possessionof pornography charges should be served consecutively rather thanconcurrently.

71 The majority concludes that the following are errors on the part of thesentencing judge regarding several aspects of the sentencing reasons:

1. because the date of both counts of possession of child pornogra-phy were the same date, the delict is on the date charged. Accord-ingly, they are basically the same transaction;


2. because the appellant was acquitted of making pornography, thestatement by the sentencing judge that the two offences occurredover a year apart was in error;

3. the statement that the appellant had different “accomplices” wasin error;

4. because the Crown had sought a joinder at the commencement ofthe trial of the two possession of pornography charges, it would bewrong in principle for them to be treated as separate transactionsfor sentencing purposes; and

5. because the act of possession occurs on one date and at one partic-ular time, and, in practice, the Crown usually lays one charge ofpossession for multiple images of child pornography, it is an errorto treat them separately for sentencing purposes.

72 I disagree with these conclusions.73 The sentencing judge’s view of these particular offences was that the

crime of possession of the private use materials was committed whenthose materials were transferred to the appellant. That was when theharm was done and the harm continued while the offender retained themin his possession. Thus, the date he was charged for being in possessionof that material did not determine the character of the offences for thepurpose of sentencing. The heart of the delict was when the materialswere transferred to and remained in the possession of the appellant. Thistransfer took place on two separate occasions over a year apart. The harmdone was to separate victims: young adolescent women whose privatesexuality and self expression were intruded into in a serious and damag-ing manner.

74 Secondly, the sentencing judge’s use of the word “accomplice” wasintended in its colloquial sense, and not as a legal term. He correctlynoted that the appellant came into possession of the recordings by way oftransfer by two different men, each of whom gave sexually explicit pri-vate material to the appellant, without the knowledge of their respectivefemale partners, the victims. The crime, as the sentencing judge saw it,involved different transactions, different people, different times, differentcircumstances and separate harm. He also noted that the offences couldnot have occurred without the willingness on the part of the male part-ners to “share” with the appellant. It is true that the sentencing judgeincorrectly refers to the young women as “complainants.” In fact they are


the victims. However, none of this affects the sentencing judge’s charac-terization of the offences.

75 As is noted by the majority, the Crown applied at the beginning of thetrial to join the two possession of child pornography counts into one. TheCrown was seeking to amend count one to include pornographic materi-als involving other young persons than those already named in the indict-ment. The application was resisted by defence counsel, who argued thatthe defence case had only involved preparation for two possessioncharges, each of which was associated with a specific named young per-son. The judge accepted those submissions and noted in his reasons forrefusing the application that the charges involved “quite a specific pair oftransactions for possession of child pornography”. The judge acceded tothe view that the two possession charges were discrete transactions, atleast for purposes of trial.

76 Finally, it is not the case that because some dispositions of possessioncharges result in concurrent sentences, that all must. The Code has nu-merous provisions involving illegal possession: possession of stolen pro-perty, illegal substances, firearms, proceeds of crime, child pornographyand voyeuristic materials to name but a few. Sentencing dispositions forpossession vary as to whether they are concurrent or consecutive basedon the nature and circumstances of the offence. It is the relationship ofeach offence to the other, or the lack thereof, that determines whether thesentences should be consecutive or concurrent.

77 Moreover, the process of sentencing starts with the proposition that acourt must impose a fit sentence in relation to each offence and then de-termine if, in aggregate, it is fair, not the other way around: see R. v.Gallant, 2004 NSCA 7 (N.S. C.A.). In other words, the approach is to fixa fit sentence for each offence first and then consider the totality princi-ple: see R. v. Draper, 2010 MBCA 35 (Man. C.A.)at para. 30-31. Theproper inquiry in sentencing for possession charges does not commence(nor does it end) with the date charged on the indictments. Rather, thecourt must determine whether the offences should properly be viewed asdistinct: see R. v. Adams, 2010 NSCA 42 (N.S. C.A.). In that case, thecourt relied at para. 57 on R. v. Smith (1980), 40 N.S.R. (2d) 272 (N.S.C.A.), where MacKeigan C.J.N.S stated:

14 [The trial judge] treated concurrently all charges against RaymondSmith arising from the search of October 29, 1979, even though thegoods came from different thefts. ...Where two batches came from


the same theft, their possession would, in my opinion, warrant con-current sentences, even though they were found in the accused’s pos-session at different times. Where, however, the fruits of several theftswere in an accused’s possession at the same time, consecutivesentences would seem appropriate, where, as here, the accused musthave known that they had been separately stolen.

78 The sentencing judge in this case viewed the two possession of childpornography charges as two separate crimes. He relied on well estab-lished legal principles for doing so.

79 The sentencing judge then turned to a consideration of the totalityprinciple. He noted that third party possession of private use materials isillegal where possession is without the consent of all persons recorded, isobtained by fraud or deception, a result of coercion, threat or extortion,results in the loss of control of the private use material, in exchange forany form of consideration or is otherwise exploitive or abusive. He un-dertook an exhaustive review of the case law involving private use mate-rial and noted that an appropriate consideration is the degree to which theunauthorized possession intrudes into the privacy of a young person par-ticipant. The injury, he concluded, flows from the negative effects on theyoung persons when their intimate sexual activities are disclosed andthey lose their right to express themselves and explore their sexuality inprivate.

80 The sentencing judge considered the nature of the private use materi-als in this case, recordings of two young women engaged in sexual actswith male partners. He viewed this kind of disclosure as extremely intru-sive. He stated at [104]: “An attempt to weigh the kinds of acts illustratedor recorded simply fails to recognize a simple fact; the young person hada right to have his or her sexual activity remain private, no matter whatkind of act is involved.”

81 The sentencing judge considered as an aggravating factor that the ap-pellant undertook to obtain the material through fraud, coercion and, insome instances, consideration. He also considered the relationship of theappellant to the private use participants, noting evidence that the appel-lant had used his employment as a way to meet and contact the personswho would ultimately become the “owners” of the private use material.The appellant was a guidance counsellor, a youth counsellor and a socialworker. His employment placed him in a position of opportunity to meetyoung individuals. The sentencing judge found that the appellant indi-rectly used his employment to further his illegal activities. He noted later


in his reasons that the appellant was “professionally involved with youngpersons, yet his home was a place where youth went to drink and havesex. Even in the most generous light, his conduct went past being afriend to acting as a facilitator for questionable activity. At worst he wasa predator.”

82 The sentencing judge acknowledged that the global sentence imposedwas greater than that suggested by the Crown, but correctly noted that itwas in his discretion to impose a greater sentence. He went to greatlengths to explain the difference between the vast majority of child por-nography possession sentencing judgements provided by the Crown,which focus on the quantity and character of the pornography in the of-fenders possession. He said at [174]:

This judgment has explored how illegal possession of private usematerials involved different factors, both aggravating and mitigating.When his actions are viewed from the perspective of the right of thetwo young persons, S.C. and J.W. to explore themselves and expresstheir sexuality in private, the Offender’s conduct is a kind that re-quires strong criminal sanction that what was provided by theCrown’s sentencing recommendation.

83 Having regard to the reasons refusing the Crown’s proposed joinderapplication and the extensive reasons for conviction, it cannot fairly besaid that the sentencing judge’s views as to the distinct nature of the pos-session offences as two separate delicts took counsel by surprise. Theirsubmissions were directed to what was a live issue, how the sentencesshould be served. The reasons make clear that the sentencing judge care-fully considered whether the sentences ought to have been concurrent orconsecutive and offered a detailed explanation as to why, in his view, thesubmission from the Crown could not be sustained. There is no error inhis principled approach to the exercise of his discretion in making thetwo sentences consecutive. The failure to request additional submissionson the point cannot raise what is otherwise a principled approach and afit sentence to reversible error.

84 Nor can it be said that the totality of the sentence is demonstrablyunfit. These reasons exemplify why sentencing is an individualized pro-cess. Sentencing judges are asked to consider the circumstances of theoffence or offences and the circumstances of the offender and then toensure that the totality of the sentence imposed is not unduly harsh. Thesentencing judge here did exactly that.


85 The sentence is fit and the reasons for it in all respects are considered,clear and supported by the findings of fact and the law of sentencing. Iwould dismiss the appeal.

Appeal allowed in part; sentence varied.


[Indexed as: R. v. Whatmore]

Her Majesty the Queen and Ted Lea Whatmore, Accused

Alberta Provincial Court

Docket: Ponoka 110037280P1

2011 ABPC 320

B.D. Rosborough Prov. J.

Heard: July 22, 2011

Judgment: October 21, 2011

Criminal law –––– Offences — Operation of motor vehicle while disquali-fied — Elements — Miscellaneous –––– Registration and compliance with in-terlock programs — Accused was stopped by police for having only one head-light — Accused had previously been banned from driving with exception thathe could drive if he registered in alcohol ignition interlock device program andcomplied with conditions — Accused was charged with driving while disquali-fied — Accused convicted — Absence of evidence meant Crown had proventhat accused was disqualified from driving — Proof of disqualification does notrequire proof accused was not registered in interlock program or was not incompliance with program — Onus of proving condition of compliance with in-terlock program was on accused — Offence of driving while disqualified wasnot changed by amendment to s. 259(4)(b) of Criminal Code — Participation ininterlock programs in voluntary and registration in program puts obligation onparticipant to ensure compliance with conditions — Interpretation of s. 794(2)did not require that Crown take burden of proof — Amendments to s. 259(4)(b)did not affect definition of disqualification or operation of interlock program —There was no indication Parliament intended to alter offence — Exemption byregistration in interlock program and operation of exemption remained same af-ter changes were made — There was no evidence accused was registered in or incompliance with any interlock program — Wording in s. 259(4)(b) was not ex-press assignment of burden of proof but placing burden on accused was appro-priate given legislative scheme and meaning of words used.

Cases considered by B.D. Rosborough Prov. J.:

R. v. Arcand (2010), 264 C.C.C. (3d) 134, (sub nom. R. v. A. (J.L.M.)) 499 A.R.1, (sub nom. R. v. A. (J.L.M.)) 514 W.A.C. 1, 83 C.R. (6th) 199, 40 Alta.L.R. (5th) 199, [2011] 7 W.W.R. 209, 2010 ABCA 363, 2010 CarswellAlta2364, [2010] A.J. No. 1383 (Alta. C.A.) — considered

R. v. Dumais (2009), 2009 SKPC 32, 2009 CarswellSask 123, 332 Sask. R. 312(Sask. Prov. Ct.) — considered

R. v. Whatmore 105

R. v. Dumais (2009), 348 Sask. R. 147, 2009 CarswellSask 865, 2009 SKQB481 (Sask. Q.B.) — considered

R. v. Edwards (1975), [1975] 1 Q.B. 27 (Eng. Q.B.) — followedR. v. Friebe (2004), 2004 ABQB 469, 2004 CarswellAlta 807, 7 M.V.R. (5th)

251, 362 A.R. 302 (Alta. Q.B.) — followedR. v. H. (P.) (2000), 2000 CarswellOnt 307, 49 M.V.R. (3d) 265, 143 C.C.C.

(3d) 223, 129 O.A.C. 299, 71 C.R.R. (2d) 189, [2000] O.J. No. 306 (Ont.C.A.) — referred to

R. v. Hammoud (2009), 2009 ABPC 26, 2009 CarswellAlta 181 (Alta. Prov.Ct.) — considered

R. v. Hundal (1993), 79 C.C.C. (3d) 97, 43 M.V.R. (2d) 169, 149 N.R. 189, 14C.R.R. (2d) 19, 22 B.C.A.C. 241, 38 W.A.C. 241, [1993] 1 S.C.R. 867, 19C.R. (4th) 169, 1993 CarswellBC 489, 1993 CarswellBC 1255, EYB 1993-67097, [1993] S.C.J. No. 29 (S.C.C.) — considered

R. v. Hunt (1986), 79 N.R. 220, [1987] 1 All E.R. 1, [1987] A.C. 352 (U.K.H.L.) — considered

R. v. Lee’s Poultry Ltd. (1985), 43 C.R. (3d) 289, 7 O.A.C. 100, 17 C.C.C. (3d)539, 12 C.R.R. 125, 1985 CarswellOnt 72, [1985] O.J. No. 4 (Ont. C.A.) —considered

R. v. Letourneau (2008), 176 C.R.R. (2d) 270, 100 Alta. L.R. (4th) 142, [2009] 5W.W.R. 721, 2008 ABPC 192, 2008 CarswellAlta 912, 447 A.R. 218,[2008] A.J. No. 752 (Alta. Prov. Ct.) — considered

R. v. Lifchus (1997), 118 C.C.C. (3d) 1, 216 N.R. 215, 150 D.L.R. (4th) 733,1997 CarswellMan 392, 1997 CarswellMan 393, 9 C.R. (5th) 1, 118 Man. R.(2d) 218, 149 W.A.C. 218, [1997] 3 S.C.R. 320, [1997] 10 W.W.R. 570,[1997] S.C.J. No. 77 (S.C.C.) — referred to

R. v. Liptak (2009), 18 Alta. L.R. (5th) 377, 2009 ABPC 342, 2009 CarswellAlta1897, 481 A.R. 116, 90 M.V.R. (5th) 132, [2009] A.J. No. 1271 (Alta. Prov.Ct.) — considered

R. v. Oakes (1986), [1986] 1 S.C.R. 103, 26 D.L.R. (4th) 200, 65 N.R. 87, 14O.A.C. 335, 24 C.C.C. (3d) 321, 50 C.R. (3d) 1, 19 C.R.R. 308, 53 O.R. (2d)719, 1986 CarswellOnt 95, 1986 CarswellOnt 1001, [1986] S.C.J. No. 7,EYB 1986-67556 (S.C.C.) — referred to

R. v. Poitras (2011), 13 M.V.R. (6th) 252, 2011 SKPC 53, 2011 CarswellSask290 (Sask. Prov. Ct.) — referred to

R. v. Schwartz (1988), [1989] 1 W.W.R. 289, [1988] 2 S.C.R. 443, 55 D.L.R.(4th) 1, 88 N.R. 90, 56 Man. R. (2d) 92, 45 C.C.C. (3d) 97, 66 C.R. (3d)251, 39 C.R.R. 260, 1988 CarswellMan 170, 1988 CarswellMan 260, EYB1988-67146, [1988] S.C.J. No. 84 (S.C.C.) — considered

R. v. Starr (2000), 2000 CarswellMan 449, 2000 CarswellMan 450, 36 C.R.(5th) 1, 2000 SCC 40, 190 D.L.R. (4th) 591, [2000] 2 S.C.R. 144, [2000] 11W.W.R. 1, 147 C.C.C. (3d) 449, 148 Man. R. (2d) 161, 224 W.A.C. 161,


258 N.R. 250, [2000] S.C.J. No. 40, [1998] S.C.C.A. No. 141, REJB 2000-20233 (S.C.C.) — referred to

R. v. Truong (2008), 2008 CarswellBC 1785, 2008 BCSC 1151, 235 C.C.C. (3d)547, [2008] B.C.J. No. 1614 (B.C. S.C.) — considered

R. v. Whyte (1988), 1988 CarswellBC 761, 1988 CarswellBC 290, 6 M.V.R.(2d) 138, [1988] 2 S.C.R. 3, [1988] 5 W.W.R. 26, 51 D.L.R. (4th) 481, 86N.R. 328, 29 B.C.L.R. (2d) 273, 42 C.C.C. (3d) 97, 64 C.R. (3d) 123, 35C.R.R. 1, EYB 1988-67019, [1988] S.C.J. No. 63 (S.C.C.) — referred to

Statutes considered:

Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982,being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11

s. 1 — referred tos. 11(d) — considered

Criminal Code, R.S.C. 1970, c. C-34s. 106.7(1) [en. 1976-77, c. 53, s. 3] — considered

Criminal Code, R.S.C. 1985, c. C-46Generally — referred tos. 2 “motor vehicle” — referred tos. 89(1) — considereds. 145(3) — considereds. 253 — referred tos. 253(1)(b) — referred tos. 254 — referred tos. 259(1.1) [en. 1999, c. 32, s. 5(1)] — considereds. 259(1.2) [en. 2001, c. 37, s. 1] — considereds. 259(4)(b) — considereds. 794(2) — considered

Interpretation Act, R.S.C. 1985, c. I-21s. 44(f) — considereds. 45(2) — considered

Meat Inspection Act (Ontario), R.S.O. 1980, c. 260Generally — referred tos. 3 — referred to

Provincial Offences Act, R.S.O. 1980, c. 400s. 48(3) — considered

TRIAL of accused on charge of driving while disqualified.

L. Faught, for CrownK. Beyak, for Accused

R. v. Whatmore B.D. Rosborough Prov. J. 107

B.D. Rosborough Prov. J.:

1 The accused operated a motor vehicle while he was prohibited bycourt order from doing so. That order provided that the accused couldoperate his motor vehicle during part of the prohibition period if he regis-tered in an alcohol ignition interlock device program (‘interlock pro-gram’) and complied with the conditions of that program. This case in-volves determination of whether it is necessary for the prosecution toprove that the accused was not registered in or did not comply with theconditions of that program in order to prove the offence of ‘disqualifieddriving’ (s.259(4)(b) C.C.).

Background2 On December 29th, 2010 Sheriff David Payne of the Ponoka Freeway

Traffic Unit was operating his police cruiser eastbound on Highway 53near Ponoka, Alberta, when he observed a vehicle proceeding westboundon Highway 53 with a burnt out left headlight. He activated the emer-gency equipment on his police cruiser and initiated a traffic stop. TedLea Whatmore (‘Whatmore’) was the driver and lone occupant of thatvehicle.

3 Sheriff Payne asked Whatmore to produce his operator’s licence, re-gistration and insurance. In fact, it was necessary for Sheriff Payne tomake that request several times before the licence was eventually pro-duced. Whatmore was observed to be very nervous and his hands wereshaking as he did so. Information later received by Sheriff Payne led himto arrest Whatmore for operating a motor vehicle while he was disquali-fied from doing so.

4 On September 3rd, 2010 the accused had been convicted of the of-fence described in s.253(1)(b) C.C. As part of his sentence, he was, “...prohibited from operating a motor on any street, road, highway or otherpublic place for a period of 1 year”. A formal Order of Driving Prohibi-tion Against an Offender was drafted and signed by the accused. Exhibit1.

5 The sentencing court not having ordered otherwise, Whatmore wasentitled to operate a motor vehicle within the 1 year period of disqualifi-cation imposed on September 3rd, 2010 providing that he was registeredin and in compliance with the terms of Alberta’s interlock program. See:


ss.259(1.1), (1.2) C.C. The Order of Driving Prohibition Against an Of-fender explicitly recognized this, stating:

Pursuant to Section 259(1.1) and (1.2) of the Criminal Code, the of-fender is authorized to operate a motor vehicle equipped with an al-cohol interlock device during the prohibition period after the expiryof 3 month(s) if the offender registers and is accepted in a programestablished by a province.

6 Alberta’s ‘Ignition Interlock Program’ is described in Appendix A.

Burden of Proof7 Whatmore is presumed to be innocent of the charge brought against

him. That presumption remains unless and until the prosecution hasproven the essential elements of the offence alleged against him beyonda reasonable doubt. Reasonable doubt means a doubt that is based uponreason and common sense and is logically connected to the evidence orabsence of evidence: it is not based on sympathy or prejudice. This doesnot mean that the prosecution is required to prove all elements to an ab-solute certainty as that would be an impossibly high standard. However,the reasonable doubt standard falls much closer to absolute certainty thanto proof on a balance of probabilities: R. v. Lifchus, [1997] 3 S.C.R. 320(S.C.C.) and R. v. Starr, [2000] 2 S.C.R. 144 (S.C.C.).

8 One of the essential elements of the offence described in s.259(4)(b)C.C. is the fact of disqualification. While Whatmore was prohibited bycourt order from operating a motor vehicle when observed by SheriffPayne, was that order qualified by Whatmore’s registration in and com-pliance with the conditions of Alberta’s interlock program? Does proofof disqualification mandate proof that Whatmore did not register in orotherwise comply with the conditions of that program?

9 If proof that Whatmore was not registered in or was otherwise incompliance with the conditions of an interlock program is not part of theessential element of disqualification - if it constitutes an exception, ex-emption, proviso, excuse or qualification to that essential element - itneed not be proven beyond a reasonable doubt. Subsection 794(2) C.C.provides that:

The burden of proving that an exception, exemption, proviso, excuseor qualification prescribed by law operates in favour of the defendantis on the defendant, and the prosecutor is not required, except by wayof rebuttal, to prove that the exception, exemption, proviso, excuse or


qualification does not operate in favour of the defendant, whether ornot it is set out in the information.

An exception, exemption, proviso, excuse or qualification is not an ele-ment of the offence charged and, thus, the burden of proof of registrationin and compliance with the conditions of the interlock program wouldrevert to Whatmore. Assigning to the him the burden of proving an ex-ception, exemption, proviso, excuse or qualification is constitutionallypermissible. See: R. v. Schwartz, [1988] 2 S.C.R. 443 (S.C.C.)(‘Schwartz’); R. v. Lee’s Poultry Ltd. (1985), 17 C.C.C. (3d) 539 (Ont.C.A.) (‘Lee’s Poultry Ltd.’).

Essential Elements10 The essential elements of the offence alleged against Whatmore are

as follows:

Date: December 29th, 2010Jurisdiction: Ponoka, AlbertaIdentity: Whatmore was the person observed by

Sheriff PayneMotor vehicle: The vehicle observed by Sheriff Payne

was a ‘motor vehicle’Operation: Whatmore was operating that motor

vehicleDisqualification: Whatmore was ‘disqualified’ from

driving at the time he was observed

11 Certain of these elements appear not to be in dispute. These includethe date, jurisdiction, Whatmore’s identity as the person observed bySheriff Payne, operation of the vehicle in question and that it was a mo-tor vehicle as that term is defined in the Criminal Code. Nevertheless, Ihave considered the evidence as a whole in relation to each of these ele-ments and am satisfied that each has been proven beyond a reasonabledoubt. Counsel have focused the evidence and their argument on the finalessential element of this crime: ‘disqualification’. Its characterization andproof are the central issues in this case.

Issue12 Has the prosecution proven beyond a reasonable doubt that

Whatmore was ‘disqualified’ from operating a motor vehicle at the time


he was observed by Sheriff Payne? More particularly, does proof of ‘dis-qualification’ (as that term is used in s.259(4)(b) C.C.) require proof thatWhatmore was not registered in an interlock program established underthe law of the province in which he resides or that he otherwise did notcomply with the conditions of that program?

Position of the Parties13 Whatmore submits that the prosecution has failed to prove beyond a

reasonable doubt that he was disqualified from operating a motor vehicleon the occasion in question. Having regard to the reference to the inter-lock program in the offence provision itself, it is incumbent upon theprosecution to lead evidence that he was not registered in such a programor otherwise did not comply with its conditions. Reliance is placed uponthe court’s ruling in R. v. Liptak, 2009 ABPC 342 (Alta. Prov. Ct.)(‘Liptak’).

14 The prosecution submits that registration in and compliance with theconditions of an interlock program is an exception, exemption, proviso,excuse or qualification prescribed by law and, accordingly, must beproven by Whatmore. See: s.794(2) C.C. It is further submitted thatLiptak was wrongly decided as the court in that case erroneously heldthat knowledge of registration in and compliance with the conditions ofthe interlock program is not within the peculiar knowledge of the ac-cused and that Parliament intended to change the offence of ‘disqualifieddriving’ when it amended the provision in 2008. Finally, the prosecutionsubmits that the court is bound by the judgment of the court in R. v.Friebe, 2004 ABQB 469 (Alta. Q.B.) (‘Friebe’) which found that theprovisions of s.794(2) C.C. apply to the burden of proof on this issue.

Subsection 794(2) C.C.15 Canadian criminal law recognizes few instances where a burden of

proof or ‘persuasive burden’ is cast upon the accused. Some provisionsof that nature have been found to violate the Canadian Charter of Rightsand Freedoms (‘Charter’), s.11(d) and have been declared inoperative.See, for example, R. v. Oakes, [1986] 1 S.C.R. 103 (S.C.C.). Others havebeen found to violate the Charter, s.11(d) but constitute reasonable limitson that right and retain their constitutional vitality. See, for example, R.v. Whyte, [1988] 2 S.C.R. 3 (S.C.C.). In many of these instances, theimpugned provisions were ‘reverse onus’ provisions.


16 In Schwartz, the accused was convicted of 2 counts of possessing arestricted weapon (s.89(1) C.C.). The statutory provision creating that of-fence provided:

89. (1) Every one who has in his possession a restricted weapon forwhich he does not have a registration certificate:

(a) is guilty of an indictable offence and is liable to imprisonmentfor five years; or

(b) is guilty of an offence punishable on summary conviction.

17 No registration certificate was produced at trial (by either the prose-cution or the defence). The prosecution relied upon the provisions ofs.106.7(1) C.C. (now s.117.11 C.C.). The defence argued that this provi-sion was a reverse onus clause that violated the Charter, s.11(d) andcould not be ‘saved’ by the Charter, s.1. Subsection 106.7(1) C.C. pro-vided that:

106.7 (1) Where, in any proceedings under any of sections 83 to106.5, any question arises as to whether a person is or was the holderof a firearms acquisition certificate, registration certificate or permit,the onus is on the accused to prove that that person is or was theholder of such firearms acquisition certificate, registration certificateor permit.

18 The Supreme Court held that s.106.7(1) C.C. did not create a reverseonus. The absence of authorization to acquire the restricted weapons wasnot an element of the offence charged. In the court’s own words:

There is no reverse onus imposed upon the accused by s. 106.7(1),despite the words which are employed in the section. The holder of aregistration certificate cannot be made subject to a conviction unders. 89(1). He is not required to prove or disprove any element of theoffence or for that matter anything related to the offence. At most, hemay be required to show by the production of the certificate that s.89(1) does not apply to him and he is exempt from its provisions.

The accused’s appeal from conviction was dismissed. Subsection106.7(1) C.C. was found not to offend the Charter, s.11(d).

19 In Lee’s Poultry Ltd. the accused corporation was charged and con-victed of “the offence of engaging in the business of a plant other than anestablishment without a licence”contrary to the Meat Inspection Act,R.S.O. 1980, c.260, s.3. The Act required that those operating such abusiness have a licence to do so. No evidence was led at trial (by theprosecution or defence) about any licence to engage in this business.


Rather, the prosecution relied upon the provisions of the Provincial Of-fences Act, R.S.O. 1980, c. 400, s.48(3). In terms virtually identical tothose in s.794(2) C.C. this subsection provided that:

The burden of proving that an authorization, exception, exemption orqualification prescribed by law operates in favour of the defendant ison the defendant, and the prosecutor is not required, except by wayof rebuttal, to prove that the authorization, exception, exemption, orqualification does not operate in favour of the defendant, whether ornot it is set out in the information.

20 The accused corporation was convicted at trial. The conviction wasoverturned on summary conviction appeal, however. The summary con-viction appeal court found that s.48(3) violated the Charter, s.11(d) andcould not be saved by the Charter, s.1. In doing so, the court found thatrequiring the accused corporation to prove the existence of a licencewould put it in “a most unfair position”. Acquittals were entered.

21 On further appeal by the prosecution, the Ontario Court of Appealrecognized that provisions such as s.48(3) derogated from the fundamen-tal principle that the prosecution must prove the essential elements of itscase beyond a reasonable doubt. Nevertheless, it noted the developmentof a long-standing exception to that principle. The court stated:

It is a fundamental rule of criminal law that the accused is presumedto be innocent until his or her guilt is proved beyond a reasonabledoubt and, as such, the onus is on the Crown to prove each elementof the offence to the degree required. At common law an exceptiondeveloped to this fundamental rule for a class of offences created byregulatory legislation. Often such legislation created offences by ban-ning specified activities but excepted persons who had authority ofthe regulatory body to do the acts banned. That exception is ex-pressed in the terms of s. 48(3) of the Provincial Offences Act. It isalso found, for example, in s. 730 of Part XXIV of the Criminal Code[now s.794(2) C.C.] which applies to summary conviction offences.Both sections have their origin in Canada in s. 852 of the CriminalCode, 1892 and the common law.

(emphasis added)

22 The Ontario Court of Appeal looked to the judgment in R. v. Ed-wards, [1975] 1 Q.B. 27 (Eng. Q.B.) (‘Edwards’) for an expression ofthis common law exception. (It should be noted that the decision in Ed-wards was later approved in R. v. Hunt (1986), [1987] A.C. 352 (U.K.


H.L.).) Brooke J.A. cited with approval the following passage from Ed-wards (at p.39):

In our judgment this line of authority establishes that over the centu-ries the common law, as a result of experience and the need to ensurethat justice is done both to the community and to defendants, hasevolved an exception to the fundamental rule of our criminal law thatthe prosecution must prove every element of the offence charged.This exception, like so much else in the common law, was hammeredout on the anvil of pleading. It is limited to offences arising underenactments which prohibit the doing of an act save in specified cir-cumstances or by persons of specified classes or with specified quali-fications or with the licence or permission of specified authorities.Whenever the prosecution seeks to rely on this exception, the courtmust construe the enactment under which the charge is laid. If thetrue construction is that the enactment prohibits the doing of acts,subject to provisos, exemptions and the like, then the prosecution canrely upon the exception.

And further that (at p.40):

In our judgment its application does not depend upon either the fact,or the presumption, that the defendant has peculiar knowledge ena-bling him to prove the positive of any negative averment.

23 With respect to the balancing of interests and potential unfairness tothe accused person (or corporation) Brooke J.A. commented:

Lawton L.J. in R. v. Edwards, supra, said, referring to the experienceof centuries, that the exception was needed “to ensure justice is doneboth to the community and the defendant.” Weighing the fundamen-tal rule, the exception with which he was concerned and justice, heclearly did not consider the exception put the accused “in a most un-fair position”, rather that it was a just position and I think it is fair tosay that our Legislature and Parliament, has so regarded it over thesemany years. As my brother Dubin commented during the argument:How could it be unfair to ask a person to produce his licence or evi-dence that he has one? Surely it is the sensible thing to do.

24 The Ontario Court of Appeal overruled the decision of the summaryconviction appeal court. It concluded that s.48(3) did not violate theCharter, s.11(d). The convictions were not reinstated but for reasonswhich are not relevant to this case.

25 The overwhelming weight of authority favours the conclusion thats.794(2) C.C. is constitutionally valid. While Whatmore has not takenissue with that proposition in this case, it is important to emphasize the


principles upon which the courts have drawn that conclusion. Those prin-ciples are called into question by Whatmore’s argument in this case.

Liptak and the Application of s.794(2) C.C.26 In Liptak, the accused was charged with the offence of disqualified

driving (s.259(4)(b) C.C.). Proof of disqualification took the form of anOrder of Driving Prohibition Against an Offender similar to that used bythe prosecution in this case. It was argued by the accused and acceptedby the court that reference to the interlock program in that order requiredthe prosecution to prove that the accused was not registered in the inter-lock program or was not otherwise in compliance with its conditions.The accused was acquitted.

27 The court found that s.794(2) C.C. was of no assistance to the prose-cution and did so for the following reasons:

a. citing R. v. H. (P.) (2000), 143 C.C.C. (3d) 223 (Ont. C.A.) theprovision,“... applies in narrow circumstances, usually regulatoryoffences, where a status in law has been conferred upon the ac-cused who otherwise would be culpable”;

b. there is competing jurisprudence on the issue of whether breach ofa condition in a recognizance (s.145(3) C.C.) engages the provi-sions of s.794(2) C.C.;

c. registration in and compliance with the conditions of the interlockprogram are not facts peculiarly within the accused’s realm ofknowledge. It is as easy or easier for the prosecution to provethose facts as it is for the accused;

d. s.259(4)(b) C.C. contains no phraseology such as “unless he orshe establishes that” or “proof of which lies on the offender” or“without lawful excuse”;

e. the Order of Driving Prohibition Against an Offender specificallymakes reference to the interlock program. This suggests that it ispart of the terms of the disqualification and, thus, an element ofthe offence; and

f. s.259(4)(b) C.C. was amended on October 1st, 2008 to include thewords, “... other than an offender who is registered in an alcoholignition device program established under the law of the provincein which the offender resides and who complies with the condi-tions of the program.” By incorporating these words into the of-


fence provision itself, Parliament should be taken to have identi-fied this component as an element of the offence which theprosecution must prove.

Judicial Comity and the Doctrine of Stare Decisis28 The judgment of the court in Liptak is directly relevant to the issue

before this court. Over and above the fact that it is a reasoned judgmentpronounced by an experienced jurist, I am obliged to consider the doc-trine of ‘judicial comity’. That doctrine was explained by Allen P.C.J. inR. v. Letourneau, 2008 ABPC 192 (Alta. Prov. Ct.); (‘Letourneau’) (atparas.42-50). Judicial comity requires that judges of coordinate jurisdic-tion ought to follow pronouncements on the law made by each other.

29 Exceptions to that doctrine were detailed by Allen P.C.J. as follows(at para.43):

The general rule was summarized in Hansard Spruce Mills Ltd., Re[1954] 4 D.L.R. 590 (Hansard) where Justice Wilson opined that hewould follow the decision of trial Judges from their own court. At p.591 he explained that he would only go against the judgment of an-other Judge in three situations:

(a) subsequent decisions have affected the validity of the impugnedjudgment;

(b) it is demonstrated that some binding authority in case law, orsome relevant statute was not considered; and

© the judgment was unconsidered, a nisi prius judgment given incircumstances

familiar to all trial Judges, where the exigencies of the trial require animmediate decision without opportunity to fully consult authority.

30 Allen P.C.J. noted one final exception to the doctrine of judicial com-ity and then summarized the rule and exceptions as follows (at para.50):

Judicial comity causes Judges in a criminal case to follow otherJudges of coordinate jurisdiction absent exceptional circumstances.In criminal cases, those circumstances include those listed in Han-sard, or when a Judge believes upon full consideration of the authori-ties that the other Judge is wrong.

31 In summary, judicial comity requires that I follow the judgment of thecourt in Liptak unless one or more of the exceptions noted by AllenP.C.J. in Letourneau applies. Complicating the application of that doc-trine, however, is the judgment of the Court of Queen’s Bench of Alberta


(sitting as an appeal court) in Friebe. It is essential to examine that judg-ment and determine whether the doctrine of stare decisis requires that Ifollow it.

32 In Friebe, the trial judge had convicted the accused of disqualifieddriving after having concluded that s.794(2) C.C. placed the onus ofproving registration in and compliance with the conditions of the inter-lock program on the accused. His decision was appealed to the Court ofQueen’s Bench of Alberta. Watson J. (as he then was), sitting as a sum-mary conviction appeal court, upheld the decision of the trial judge andconfirmed that s.794(2) C.C. placed the onus of proving registration inand compliance with the conditions of the interlock program on theaccused.

33 The prosecution has submitted that this court is bound by the Friebedecision. I agree. The doctrine of stare decisis requires that trial courtsabide by the rulings of appeal courts whether they be provincial Courtsof Appeal or intermediate appeal courts. The efficacy of the doctrine wasmade clear by the Alberta Court of Appeal in R. v. Arcand, 2010CarswellAlta 2364 (Alta. C.A.); 2010 ABCA 363 (Alta. C.A.) where itstated (at para.183):

Stare decisis is essential to law. It is a “central pillar of our law”.Unpredictability is unworkable. Unprincipled differing results in sim-ilar cases are unjust. Since the top court (anywhere) can hear fewcases, most predictability and consistency have to come from courtsof appeal. Trial courts would be immediately overwhelmed if everycase (civil or criminal) had to go to trial on every issue. Settlementsand plea bargains are vital. Accused persons and counsel have toknow what the case law is and what sentence to expect. Without that,no negotiation can be realistic, and every trial would become a horserace.

34 The court also commented upon the breadth of the doctrine, caution-ing trial courts to defer to and give liberal breadth to rulings of appealcourts. This, even where the trial court believes the appeal court’s rulingto be erroneous. The Alberta Court of Appeal stated in Arcand (atpara.184):

A trial court (and intermediate appeal courts) must follow precedentsof appellate courts which hear appeals (directly or indirectly) fromthose courts. Appellate decisions bind even if the lower court thinksthat the higher court’s precedent is clearly wrong or that the highercourt’s decision is wider than its rationale requires. Court of appeal


decisions also bind trial judges even if the trial judges think that thecourt of appeal decisions were based on some reasoning or precedentnow shaken or even gone, or that the general trend of higher courts’views is now contrary.

35 Where a statutory provision has been interpreted in a particular fash-ion by an appeal court, trial courts called upon to interpret the statutoryprovision must abide by that interpretation. It is true that where a statu-tory amendment substantively changes a similar provision interpreted bythe appeal court, reconsideration may be required. Nevertheless, the ap-peal court’s interpretation ought to be rejected by trial courts only whereit is obvious that the amendment was intended to change the law anddoes, in fact, do so.

36 For the reasons to follow, and with respect to those who may hold acontrary view, I am unable to conclude that the October 2008 amend-ment to s.259(4)(b) C.C. was intended to or did, in fact, change the of-fence of driving while disqualified. The onus of proving that the accusedwas registered in or otherwise in compliance with the interlock programrests with the accused. I note that at least one other court has come to thatsame conclusion, even after the October 2008 amendment. See: R. v.Poitras, 2011 SKPC 53 (Sask. Prov. Ct.).

37 In the event that I am in error with respect to the application of thedoctrine of stare decisis, I must nevertheless, and with the greatest ofrespect, decline to follow the judgment in Liptak.. In doing so, I willaddress, seriatim, the considerations made by the court in that case. Inote at the outset that one of the authorities relied upon by the court inLiptak has, since Liptak was decided, been overruled on summary con-viction appeal.

38 Provinces are authorized by law to regulate the operation of motorvehicles on their highways. Alberta has acted upon that authorization byrequiring that one is not at liberty to operate a motor vehicle on its high-ways unless and until they are licenced to do so. And the specific licenceobtained may impose a variety of restrictions on a driver depending uponthe nature of the individual, the nature of the motor vehicle, the mannerin which the vehicle is to be operated or the purpose of its operation.Applying for an operator’s licence imposes upon the licencee the obliga-tion to know and abide by its terms.

39 The interlock program is part of Alberta’s motor vehicle licencingscheme. See: Appendix A. It permits a rehabilitative or restorative excep-


tion to mandatory driving prohibition orders. Nevertheless, participationin the program is voluntary. And, just as “[l]icensed drivers choose toengage in the regulated activity of driving” R. v. Hundal, [1993] 1 S.C.R.867 (S.C.C.), at para.19), so, too, do those participating in the interlockprogram choose to operate their motor vehicles subject to the program’sconditions. Where an individual chooses to register in the interlock pro-gram, it is his or her obligation to ensure compliance with the conditionsof that program.

40 In short, the motor vehicle licencing system is the type of case towhich s.794(2) C.C. would characteristically apply. It is analogous to theregulatory system for firearms referenced in Schwartz. Both require regu-latory permission before possession or use is lawful. Each sets conditionson those seeking to engage in the regulated activity.

41 The licencing system regulating the operation of motor vehicles in aprovince bears little similarity to the system of judicial interim releaseconsidered by the court in Liptak. In addition, use in s.145(3) C.C. of thephrase, “... without lawful excuse, the proof of which lies on them ...”suggests a shift of the persuasive burden to the accused. For those rea-sons, as well as judicial comity, I would be inclined to adopt the reason-ing of the courts in R. v. Hammoud, 2009 ABPC 26 (Alta. Prov. Ct.); andR. v. Dumais, 2009 SKQB 481 (Sask. Q.B.) rather than that in R. v.Truong (2008), 235 C.C.C. (3d) 547 (B.C. S.C.). I note that the judgmentof R. v. Dumais, 2009 SKPC 32 (Sask. Prov. Ct.), relied upon by thecourt in Liptak, was overruled on summary conviction appeal.

42 It is probable that, in any area of regulated activity, both the licensorand licensee have access to information relating to that activity. Restrict-ing application of s.794(2) C.C. to those situations where the licensee has‘peculiar’ knowledge in that regard is an uncertain basis upon which todetermine burdens of proof. I note and adopt the reservations expressedby the court in Edwards in that regard. See: para.22, supra. Similarly,difficulties encountered by the prosecution in proving a fact in issueseems an unusual basis upon which to determine upon whom a burden ofproof should rest.

43 Paragraph 259(4)(b) C.C. does not expressly assign the burden ofproving registration in and compliance with the conditions of the inter-lock program. Nevertheless, use of the phrase “other than an offenderwho is registered in an alcohol ignition interlock device program” can beseen as an alternate way of stating “except for”. In other words, this of-


fence provision does appear to identify ‘exceptions’ or a group of indi-viduals who are ‘exempted’ from application of the general prohibition.While not express, assignment of the onus of proof via s.794(2) C.C. is areasonable interpretation of this wording. This would also respond to thesuggestion that the wording of the Order of Driving Prohibition Againstan Offender makes proof of no registration or non-compliance with theconditions of the interlock program an element of the offence.

44 The interlock program was in existence both before and after theamendment to s.259(4)(b) C.C. in October of 2008. The amendment ex-pressly noted the exemption of those who are registered in and in compli-ance with the conditions of that program to the otherwise blanket drivingprohibition. The fact of exemption and the manner of its implementationremained the same.

45 The court in Liptak concluded that including the terms of this exemp-tion in the statutory provision changed the nature of the essential elementof ‘disqualification’ such that the court’s judgment in Friebe no longerapplied. In short, the offence itself was changed. The offence was notmerely driving while disqualified but driving while disqualified and notexempted from that disqualification by virtue of the interlock program.

46 Before determining whether the present s.259(4)(b) C.C. ought to beinterpreted as a change to the law, however, resort should be made to theInterpretation Act, R.S.C., 1985, c. I-21 and, in particular, to ss.44(f) and45(2). Those provisions provide that:

44. (f) except to the extent that the provisions of the new enactmentare not in substance the same as those of the former enactment, thenew enactment shall not be held to operate as new law, but shall beconstrued and have effect as a consolidation and as declaratory of thelaw as contained in the former enactment;

45. (2) The amendment of an enactment shall not be deemed to be orto involve a declaration that the law under that enactment was or wasconsidered by Parliament or other body or person by whom the en-actment was enacted to have been different from the law as it isunder the enactment as amended.

47 The provisions of s.259(4)(b) C.C. before and after the October 2008amendment are “in substance” the same. The definition of disqualifica-tion is the same. And the interlock program operates in much the samefashion in both instances.


48 In addition, there is nothing in Hansard that would indicate that theamendment contained in then Bill C-13, An Act to Amend the CriminalCode (Criminal Procedure, Language of the Accused, Sentencing andOther Amendments), 2nd Sess., 39th Parl., 2007 was meant in any way tochange the nature of the driving while disqualified offence. See: Houseof Commons Debates, No.170 (13 June 2007) at 1850 (Hon. RobMoore); House of Commons Debates, No.059 (4 October 2006) at 1539(Hon. Vic Toews); Debates of the Senate (Hansard), Vol.143, Iss.108 (14June 2007) at 1519 (Hon. Donald H. Oliver).

49 Finally, the statutory provision considered by the court in Schwartz,viz. s.89(1) C.C. contained a limiting clause analogous to that ins.259(4)(b) C.C.. It was inserted into the offence provision itself. Subsec-tion 89(1) C.C. prohibited anyone from possessing a restricted weapon“... for which he does not have a registration certificate ...”.: Notwith-standing that inclusion, the Supreme Court concluded that s.106.7(1)C.C., a provision analogous to s.794(2) C.C., applied to fix the accusedwith the onus of proving that he had a registration certificate.

50 In light of the above, I am driven to conclude that the proper interpre-tation of s.259(4)(b) C.C., in conjunction with s.794(2) C.C. places theonus of proving registration in and compliance with the conditions of theinterlock program on the accused.

51 There being no evidence in this case that the accused was registeredin or otherwise in compliance with the conditions of the interlock pro-gram, I find that the prosecution has proven beyond a reasonable doubtthat Whatmore was disqualified from driving on the occasion in ques-tion. I find him guilty.

Accused convicted.

Appendix A — Ignition Interlock Program

What is the Ignition Interlock program?

The Ignition Interlock Program allows individuals who have lost theiroperator’s licence through an impaired driving conviction an opportunityto gain conditional driving privileges before the end of their licence sus-pension. Certain restrictions apply and there are specific eligibility crite-ria. The Ignition Interlock Program is administered by the Alberta Trans-portation Safety Board (Board).


When is the Ignition Interlock Program Mandatory?

The program is mandatory for:

• all drivers who have more than one alcohol related Criminal Codeconviction in the past 10 years,

• first offences when the driver is convicted of driving with a bloodalcohol concentration of greater than 80 milligrams percent(mg%), or

• refusing to provide a breath/blood sample.

Are there any exemptions to the Mandatory Ignition InterlockProgram?

If this is your first alcohol related conviction and you provided breath orblood samples of less than 160 mg% on both samples, you may apply tothe Board for an exemption to the mandatory ignition interlock program.

To apply for an exemption you must submit an exemption letter requestthat includes your operator licence number, full name, address, contacttelephone number, date of birth and if available your Motor VehicleIdentification Number (MVID).

A copy of your “Certificate of Analyses” indicating readings of less than160 mg% on both readings must accompany the exemption letter request.

If your request is approved, a revised Notice of Suspension will bemailed to you. The Mandatory Ignition Interlock reinstatement conditionwill no longer apply to your operator’s licence.

How does the program work?

Drivers who meet the Ignition Interlock Program criteria will have analcohol sensing device attached to their vehicle ignition system. Pleaserefer to the Ignition Interlock Participant Guide(pdf) for some importantinformation about the program.

The driver is prevented from starting and/or driving his/her vehicle if thedevice detects a preset level of alcohol. All program activity is recordedand monitored.

A driver registering fails or warns, or inappropriate use or handling ofthe Ignition Interlock device may be requested to appear before theBoard to review their participation in the program.


A driver may be extended on the program if warns or fails are recordedby the device.

The Board expects zero warns and fails while the applicant is on the Ig-nition Interlock

Program Ignition Interlock Program Criteria

Only drivers convicted under sections 253 or 254 of the Criminal Codeof Canada can apply. Drivers convicted of impaired driving causing in-jury or death are not eligible to apply to the Ignition Interlock Program.

The driver must have served the Court-ordered driving prohibition periodand a copy of the prohibition order must be attached to the application.

The Court order must authorize the driver to participate in the IgnitionInterlock Program. If the Court order does not authorize the driver toparticipate in the Ignition Interlock Program, the Board will use the mini-mum terms quoted in the Criminal Code (Canada).

The driver must be a resident of Alberta and eligible for a RestrictedOperator’s Licence.

If the driver is a first time offender, he/she must take the Planning AheadDriver Program.

If the driver is a repeat offender, he/she must take the Impact” DriverProgram and a copy of the Summary Report received at the ImpactDriver Program must be attached to the application.

The driver must have served all other non-alcohol related suspensionssuch as driving while a licence is suspended, and have paid all overduemotor vehicle fines.

The driver must participate in the program a minimum of six (6) months.

The driver’s servicing reports covering the final three (3) months of theprogram must be clear of warn or fail readings to be approved for exitfrom the program.

Program costs

One-time cost of $150.00 (plus GST) for installation and $50.00 (plusGST) for removal of the ignition interlock device.

A $105.00 (plus GST) per month rental fee for the device.

An application fee of $63 and Registry Agent fee.


$220 for the Planning Ahead Driver Program, or $750 for the ImpactDriver Program (costs subject to change).

The fee for a restricted operators licence and road test.

Consequences for not abiding by the rules

All Ignition Interlock Program activity is recorded and monitored. At-tempting to drive after drinking may result in the Board extending thetime in the program and/or a referral for alcohol treatment or counseling.

Any participant who attempts to cheat or bypass the ignition interlockdevice, who has his/her licence suspended or cancelled, or who ischarged with any driving-related Criminal Code offence may be immedi-ately removed from the program and their operator’s licence may besuspended.


[Indexed as: Paniccia Estate v. Toal]

Angela Paniccia, as Executrix for the Estate of Lino Panicciafor the Benefit of the Estate of Lino Paniccia, Angela Paniccia,

Danny Paniccia, Melissa Paniccia, Selena Waugh, JasonPaniccia, and Her Majesty the Queen in Right of Alberta

(Plaintiffs) and Dr. Stephen Toal (Defendant)

Alberta Court of Queen’s Bench

Docket: Edmonton 1003-07117

2012 ABQB 11

D.L. Shelley J.

Heard: September 27 - November 24, 2011


Civil practice and procedure –––– Judgments and orders — Amending orvarying — After judgment entered — Error or inadvertence –––– Incorrectstatement of law — Deceased patient developed and died from stomach cancerten months after diagnosis — Patient, and later his estate, and family success-fully brought action against physician — Parties agreed on reduced scope of is-sues and quantum of damages — Trial judge held that physician’s negligencecaused patient to die of stomach cancer six months earlier than if he had re-ceived timely diagnosis — Paragraph 47 of trial decision stated that Fatal Acci-dents Act did not operate where there was negligence and as result person diesfor certain cause, but at earlier rather than later date — As result, physician re-fused to pay bereavement damages pursuant to s. 8 of Act and special damagesrelating to alternative therapies patient underwent — Parties made submissionsas to whether trial decision required revision — Trial decision was revised bydeleting paragraph 47 — Physician was required to pay agreed upon damages —Rule 9.13(a) of Alberta Rules of Court allowed judge to investigate whethererror existed in judgment, and whether defect warranted correction — Statementin paragraph 47, that bereavement damages in s. 8 of Act were not availablewhere negligence shortened life, was incorrect — Such error required correctionby R. 9.13(a) of Rules — Correction would hopefully make appeal of issue un-necessary or provide benefit to appellate court if appeal were taken — Potentialmischief of incorrect statement of law confusing future judicial analysis de-served immediate attention — Paragraph 47 was obiter to judgment as agreedissues did not challenge whether bereavement damages were available.

Remedies –––– Damages — Practice — Miscellaneous –––– Application tovary judgment — Deceased patient developed and died from stomach cancer ten

Paniccia Estate v. Toal 125

months after diagnosis — Patient, and later his estate, and family successfullybrought action against physician — Parties agreed on reduced scope of issuesand quantum of damages — Trial judge held that physician’s negligence causedpatient to die of stomach cancer six months earlier than if he had received timelydiagnosis — Paragraph 47 of trial decision stated that Fatal Accidents Act didnot operate where there was negligence and as result person dies for certaincause, but at earlier rather than later date — As result, physician refused to paybereavement damages pursuant to s. 8 of Act and special damages relating toalternative therapies patient underwent — Parties made submissions as towhether trial decision required revision — Trial decision was revised by delet-ing paragraph 47 — Physician was required to pay agreed upon damages —Rule 9.13(a) of Alberta Rules of Court allowed judge to investigate whethererror existed in judgment, and whether defect warranted correction — Statementin paragraph 47, that bereavement damages in s. 8 of Act were not availablewhere negligence shortened life, was incorrect — Such error required correctionby R. 9.13(a) of Rules — Correction would hopefully make appeal of issue un-necessary or provide benefit to appellate court if appeal were taken — Potentialmischief of incorrect statement of law confusing future judicial analysis de-served immediate attention — Paragraph 47 was obiter to judgment as agreedissues did not challenge whether bereavement damages were available.

Torts –––– Negligence — Fatal accidents acts — Dependant’s claim fordamages — Defences — Miscellaneous –––– Whether reduced life expectancycause of death — Deceased patient developed and died from stomach cancer tenmonths after diagnosis — Patient, and later his estate, and family successfullybrought action against physician — Parties agreed on reduced scope of issuesand quantum of damages — Trial judge held that physician’s negligence causedpatient to die of stomach cancer six months earlier than if he had received timelydiagnosis — Paragraph 47 of trial decision stated that Fatal Accidents Act didnot operate where there was negligence and as result person dies for certaincause, but at earlier rather than later date — As result, physician refused to paybereavement damages pursuant to s. 8 of Act and special damages relating toalternative therapies patient underwent — Parties made submissions as towhether trial decision required revision — Trial decision was revised by delet-ing paragraph 47 — Physician was required to pay agreed upon damages —Statement in paragraph 47, that bereavement damages in s. 8 of Act were notavailable where negligence shortened life, was incorrect — There was no logicalbasis to deny family of deceased tort victim legislatively mandated bereavementawards — Absurd result would flow from argument that death from mechanismX at earlier date did not cause death if mechanism X would have predictably ledto death at later date — However, previous case held that, to cause death, negli-gence must reduce life expectancy to significant degree for purposes of Act —Physician’s negligence cost patient six months of his life, which was significant.


Remedies –––– Damages — Damages in tort — Personal injury — Specialdamages (pre-trial pecuniary loss) — Expenditures — Medical and dentalexpenses –––– Deceased patient developed and died from stomach cancer tenmonths after diagnosis — Patient, and later his estate, and family successfullybrought action against physician — Parties agreed on reduced scope of issuesand quantum of damages — Trial judge held that physician’s negligence causedpatient to die of stomach cancer six months earlier than if he had received timelydiagnosis — Paragraph 47 of trial decision stated that Fatal Accidents Act didnot operate where there was negligence and as result person dies for certaincause, but at earlier rather than later date — As result, physician refused to paybereavement damages pursuant to s. 8 of Act and special damages relating toalternative therapies patient underwent — Parties made submissions as towhether trial decision required revision — Trial decision was revised by delet-ing paragraph 47 — Physician was responsible to pay agreed upon sum of dam-ages — Special damages issue was not entertained — It was unfair to plaintiffsfor physician to raise issue of entitlement to special damage on question of factat late stage — There was no evidence that patient would have sought alterna-tive cancer treatments regardless of physician’s negligence — Physician did notprovide any reason why issue was not addressed at trial — Physician could haverelied on R. 9.13(b) of Alberta Rules of Court, albeit unsuccessfully, to re-opentrial to consider new evidence on issue — There was no good reason to re-opentrial — Late introduction of foreseeable issue was litigation by instalment andabuse of process — Plaintiffs were unfairly prejudiced.

Civil practice and procedure –––– Costs — Particular orders as to costs —Costs on solicitor and client basis — Grounds for awarding — Miscon-duct –––– Deceased patient developed and died from stomach cancer ten monthsafter diagnosis — Patient, and later his estate, and family successfully broughtaction against physician — Parties agreed on reduced scope of issues and quan-tum of damages — Trial judge held that physician’s negligence caused patient todie of stomach cancer six months earlier than if he had received timely diagno-sis — Paragraph 47 of trial decision stated that Fatal Accidents Act did not oper-ate where there was negligence and as result person dies for certain cause, but atearlier rather than later date — As result, physician refused to pay bereavementdamages pursuant to s. 8 of Act and special damages relating to alternative ther-apies patient underwent — Parties made submissions as to whether trial decisionrequired revision, and made submissions on costs — Trial decision was revisedby deleting paragraph 47 — Physician was ordered to pay plaintiffs’ costs inresponding to special damages issue on solicitor-client basis — Timing and na-ture of physician’s special damages issue prejudiced plaintiffs — Physician’sconduct was abuse of process and serious form of litigation misconduct — Phy-sician’s conduct was contrary to obligation in R. 1.2(3)(a) of Alberta Rules ofCourt — Physician’s conduct unnecessarily lengthened proceeding — Full in-

Paniccia Estate v. Toal 127

demnity costs were not awarded because physician could have relied on R.9.13(b) of Rules, albeit unsuccessfully, to raise issue of entitlement to specialdamages.

Cases considered by D.L. Shelley J.:

Argentia Beach (Summer Village) v. Warshawski (1991), 1991 ABCA 322, 1991CarswellAlta 223, 84 Alta. L.R. (2d) 202, 120 A.R. 27, 8 W.A.C. 27, [1991]A.J. No. 1011 (Alta. C.A.) — considered

Brown v. Silvera (2010), 25 Alta. L.R. (5th) 70, 488 A.R. 22, 58 E.T.R. (3d)141, 2010 CarswellAlta 624, 2010 ABQB 224 (Alta. Q.B.) — followed

C. (L.) v. Alberta (2011), 2011 ABQB 12, 2011 CarswellAlta 31, 4 C.P.C. (7th)323 (Alta. Q.B.) — referred to

Donaldson v. Farrell (2011), 2011 CarswellAlta 21, 2011 ABQB 11 (Alta.Q.B.) — referred to

Envision Edmonton Opportunities Society v. Edmonton (City) (2011), 2011CarswellAlta 72, 2011 ABQB 29, 20 Admin. L.R. (5th) 342, 44 Alta. L.R.(5th) 1, 507 A.R. 275, 78 M.P.L.R. (4th) 300, [2011] A.J. No. 67 (Alta.Q.B.) — considered

Evans v. Sports Corp. (2011), 2011 ABQB 478, 2011 CarswellAlta 1318, 47Alta. L.R. (5th) 254, 85 B.L.R. (4th) 313 (Alta. Q.B.) — considered

Evans v. Sports Corp. (2011), 2011 ABQB 616, 2011 CarswellAlta 1773 (Alta.Q.B.) — considered

Garland v. Consumers’ Gas Co. (2004), 2004 CarswellOnt 1558, 2004 Cars-wellOnt 1559, 2004 SCC 25, 72 O.R. (3d) 80 (note), 237 D.L.R. (4th) 385,319 N.R. 38, 43 B.L.R. (3d) 163, 9 E.T.R. (3d) 163, 42 Alta. L. Rev. 399,186 O.A.C. 128, [2004] 1 S.C.R. 629, [2004] S.C.J. No. 21, REJB 2004-60672 (S.C.C.) — considered

Hanke v. Resurfice Corp. (2007), 69 Alta. L.R. (4th) 1, 404 A.R. 333, 394W.A.C. 333, 2007 CarswellAlta 130, 2007 CarswellAlta 131, 2007 SCC 7,[2007] 4 W.W.R. 1, 45 C.C.L.T. (3d) 1, 278 D.L.R. (4th) 643, [2007] R.R.A.1, 357 N.R. 175, [2007] 1 S.C.R. 333, [2007] S.C.J. No. 7 (S.C.C.) —considered

Hunka v. Degner (2011), 2011 CarswellAlta 472, 2011 ABQB 195 (Alta.Q.B.) — referred to

IBM Canada Ltd. v. Kossovan (2011), 2011 ABQB 621, 2011 CarswellAlta1747 (Alta. Q.B.) — referred to

L. (B.J.) v. L. (M.E.) (2011), 2011 ABQB 72, 2011 CarswellAlta 156 (Alta.Q.B.) — referred to

Lameman v. Alberta (2011), 2011 ABQB 396, 2011 CarswellAlta 2287 (Alta.Q.B.) — referred to

Mainwaring v. Alberta (2000), 2000 CarswellAlta 9, 75 Alta. L.R. (3d) 255,[2000] 3 W.W.R. 215, 2000 ABCA 12, 4 R.F.L. (5th) 287 (Alta. C.A.) —considered


Mitchell Estate v. Labow (1995), 1995 CarswellOnt 2649, [1995] O.J. No. 621(Ont. Gen. Div.) — distinguished

Mitchell Estate v. Labow (1998), 1998 CarswellOnt 936, [1998] O.J. No. 952(Ont. C.A.) — referred to

Peters v. Wilson Estate (2011), 2011 CarswellAlta 1979, 2011 ABQB 689 (Alta.Q.B.) — followed

Polar Ice Express Inc. v. Arctic Glacier Inc. (2009), 2009 ABCA 20, 2009CarswellAlta 25, 446 A.R. 295, 442 W.A.C. 295, 99 Alta. L.R. (4th) 203(Alta. C.A.) — considered

Rizzo & Rizzo Shoes Ltd., Re (1998), 1998 CarswellOnt 1, 1998 CarswellOnt 2,50 C.B.R. (3d) 163, [1998] 1 S.C.R. 27, 33 C.C.E.L. (2d) 173, 154 D.L.R.(4th) 193, 36 O.R. (3d) 418 (headnote only), (sub nom. Rizzo & Rizzo ShoesLtd. (Bankrupt), Re) 221 N.R. 241, (sub nom. Rizzo & Rizzo Shoes Ltd.(Bankrupt), Re) 106 O.A.C. 1, (sub nom. Adrien v. Ontario Ministry of La-bour) 98 C.L.L.C. 210-006, [1998] S.C.J. No. 2 (S.C.C.) — followed

Royal Bank v. LRSCO Investments Ltd. (1994), 18 Alta. L.R. (3d) 148, 149 A.R.241, 63 W.A.C. 241, 1994 CarswellAlta 62, 1994 ABCA 116 (Alta.C.A.) — considered

Vincent v. Moduline Industries (Canada) Ltd. (2011), 2011 ABQB 571, 2011CarswellAlta 2293 (Alta. Q.B.) — referred to

581257 Alberta Ltd. v. Aujla (2011), 2011 ABQB 539, 2011 CarswellAlta 1505(Alta. Q.B.) — considered


Family Law Act, R.S.O. 1990, c. F.3s. 61 — referred to

Fatal Accidents Act, R.S.A. 2000, c. F-8Generally — referred tos. 2 — considereds. 8 — considered

Interpretation Act, R.S.A. 2000, c. I-8s. 10 — referred to

Tort-feasors Act, R.S.A. 2000, c. T-5s. 2.1 [en. 2003 c. F-4.5 s. 125] — referred to

Rules considered:

Alberta Rules of Court, Alta. Reg. 390/68Generally — referred toR. 390 — referred to

Alberta Rules of Court, Alta. Reg. 124/2010Generally — referred toR. 1.2(1) — consideredR. 1.2(2)(b) — considered

Paniccia Estate v. Toal D.L. Shelley J. 129

R. 1.2(2)(e) — consideredR. 1.2(3) — consideredR. 1.2(3)(a) — consideredR. 1.2(4) — consideredR. 1.7(1) — consideredR. 9.12-9.14 — referred toR. 9.13 — consideredR. 9.13(a) — consideredR. 9.13(b) — consideredR. 10.33 — consideredR. 10.33(2)(a) — consideredR. 10.33(2)(d) — consideredR. 10.33(2)(g) — considered

Words and phrases considered:

obiter

. . . obiter is any statement that is “unnecessary to the disposition of the issues ofthe action.”

litigation by installment

. . . an inefficient and procedurally problematic practice [is] commonly referredto as “litigation by installment”. One example of litigation by installments iswhere a party, after a judgment, raises an issue that reasonably could have beenraised at an earlier point . . .

ADDITIONAL REASONS regarding revision of judgment reported at PanicciaEstate v. Toal (2011), 2011 ABQB 326, 2011 CarswellAlta 1372, 88 C.C.L.T.(3d) 89, 51 Alta. L.R. (5th) 299 (Alta. Q.B.), allowing plaintiffs’ action in negli-gence against physician.

B.A. Guido, A.W. Heil, for PlaintiffsV.R. Prather, A.L. Froese, for Defendant

D.L. Shelley J.:

I. Introduction1 This decision flows from a medical malpractice trial conducted in late

2010. A written judgment was released in July 29, 2011, reported asPaniccia Estate v. Toal, 2011 ABQB 326 (Alta. Q.B.) [the “Trial Deci-sion”]. On September 27, 2011 and November 24, 2011 the parties re-turned before me to address disagreements that emerged after the trialhad been completed, and on the issue of costs.


2 Mr. Paniccia developed and ultimately died of a particularly aggres-sive and difficult to treat form of stomach [“gastric”] cancer. In the TrialDecision I concluded that the Defendant’s negligence had caused Mr.Paniccia to die of that stomach cancer six months earlier than if he hadreceived proper care and treatment. Mr. Paniccia’s gastric cancer was ter-minal even if he had received correct treatment.

3 After the Trial Decision was released the Defendant refused to paythe Plaintiffs’:

1. Fatal Accidents Act, [FAA] R.S.A. 2000, c. F-8, s. 8 bereavementdamages [s. 8 bereavement damages] and,

2. certain special damages that the Defendant describes as “alterna-tive therapies”.

That refusal led the parties to return for resolution of the dispute, whichhas now subsequently led to a consideration of whether the Trial Deci-sion requires revision.

II. Chronology

A. Pre-trial and Trial Events4 The history of this matter is critical to this decision. Mr. Paniccia was

diagnosed with gastric cancer on November 25, 2009. On April 30, 2010,he and his family initiated a lawsuit against Dr. Toal. They alleged thatDr. Toal had failed to properly investigate Mr. Paniccia’s complaints ofstomach discomfort, and that error led to late diagnosis of Mr. Paniccia’sgastric cancer.

5 Mr. Paniccia died on September 30, 2010. Immediately prior to trialthe parties had discussions to reduce the scope of trial issues. The trialcommenced on November 29, 2010. On November 30, 2010, the partiesendorsed a document entitled “Agreement Regarding Damages” [the“Agreement”] to restrict the scope of the trial. That document starts withthe following statement:

WHEREAS the Plaintiffs’, together with the Defendant, Dr. StephenToal (collectively referred to as the “Parties”) have agreed throughtheir counsel to the quantification of certain heads of damages for thepurposes of the trial of the within proceedings:


6 At the beginning of the trial the Plaintiffs’ counsel advised me of thescope of the issues to be determined at trial:

The parties are also very close to finalizing an agreement on dam-ages, the agreement on damages isn’t a final number on damages, itis an agreement on certain principles which will avoid the necessityof having the experts on damages testify, and it will leave the courtwith only I believe two or three issues to decide, one of which iswhat would been the retirement age of Mr. Paniccia, and secondlywhen, if ever, would he have returned to work and how long wouldhis life expectancy would have been. We expect to have that final-ized tomorrow, and in that case then we would not need the wit-nesses on damages.

7 The following day Defence counsel said the following:

We are happy to advise that we have concluded our agreement re-garding damages and I do have copies for the court here.... My lady Iwill just go through this report or agreement with you briefly. Thepurpose of this agreement is to dispense with the testimony of theexpert economists in this case required for some of the pecuniarylosses that were claimed in the action, and also to quantify for thecourt some of the ... to quantify for the court the special damages, thebereavement damages under section 8 of the Fatal Accidents Act, aswell as the section 7 damages under the Fatal Accidents Act.

If you look at the agreement, paragraph 7 quantifies the bereavementdamages, paragraph 8 quantifies the section 7 damages under the Fa-tal Accidents Act and sets out what those are, and section 9 quanti-fies what the special damages are, so you won’t need to hear testi-mony from any of the witnesses on the quantum of those expenses.

8 Defence counsel noted paragraph 12 of the Agreement which reads:

12. The factors that the Parties have been unable to agree upon, andwhich the Court will need to determine to calculate the damages de-scribed in this Agreement, other than the damages described inparagraphs 2, 3, and 4 of this Agreement, are:

(a) Mr. Paniccia’s likely age of retirement;

(b) When, if ever, Mr. Paniccia would have resumed employmentand performance of his household services had the treatmentfor his cancer enabled him to return to employment or theperformance of household services;

(c) Mr. Paniccia’s life expectancy given the nature of his diagno-sis of cancer as described by the medical experts in thisAction.


9 The Agreement was entered as an exhibit. Plaintiffs’ counsel did notchallenge the statements by the Defence in relation to the Agreement.

10 At paras. 29-30 of the Trial Decision, I summarized the issues relatedto liability that were still in dispute:

[29] These agreements leave me with two remaining issues. First, Imust decide if Dr. Toal breached the standard of care by either:

1. his diagnosis of gastritis and associated failure to investigatethe possibility of gastric cancer, which led to Dr. Toal notreferring Mr. Paniccia for further diagnostic investigation(specifically, a gastroscopy) following receipt of the incon-clusive barium swallow x-ray report; and

2. his failure to disclose the possibility that Mr. Paniccia hadgastric cancer, either:

a) upon receipt of the barium swallow report, or

b) when directly asked by Mr. Paniccia.

[30] If I find that Dr. Toal breached the standard of care, I must thendetermine whether that breach was the actual and legal cause of Mr.Paniccia’s injury or loss.

11 The Trial judgment also sets out the remaining questions to determinedamages. If I concluded that Dr. Toal had injured Mr. Paniccia then Iwas to investigate a limited set of specific issues:

[27] The parties have also agreed that, if liability is established, Ineed not calculate the amount of damages, as they have entered intoan Agreement regarding damages. That Agreement sets out theagreed amount of s. 7 and s. 8 damages under the Fatal AccidentsAct, R.S.A. 2000, c. F-8 (“FAA”), as well as special damages. It alsosets out various factors which were agreed between the parties as rel-evant to the determination of quantum. In relation to damages, theparties confirm that I may restrict my findings of fact to the follow-ing questions:

1. Mr. Paniccia’s likely age of retirement;

2. when, if ever, Mr. Paniccia wou ld have resumed em-ployment and performance of his household serviceshad the treatment of his cancer enabled him to returnto employment or the performance of household ser-vices; and

3. Mr. Paniccia’s life expectancy given the nature of hisdiagnosis of cancer as described by the medical ex-perts in the action.


12 The Trial Decision concluded that:

1. Dr. Toal had been negligent as a consequence of his failure to in-vestigate Mr. Pannicia’s complaints of stomach pain (paras. 106-107);

2. Dr. Toal’s negligence caused Mr. Paniccia to die on September30, 2010, as proper diagnosis and treatment of Mr. Paniccia’s gas-tric cancer would have instead resulted in Mr. Paniccia survivingfor an additional six months past September 30, 2010, and thendying of gastric cancer (paras. 209-210); and

3. If Dr. Toal had not been negligent Mr. Paniccia would not have:

a. survived to retire (para. 213);

b. resumed employment (para. 213); and

c. resumed performance of household services (para. 213).

B. Trial Decision Paragraph 4713 The Trial Decision included the following paragraph:

[47] In Alberta, the FAA provides for certain awards where negli-gence causes a death. However this legislation does not operatewhere there is negligence and as a result a person dies for a certaincause, but at an earlier rather than a later date. This ‘premature death’is still an injury; the victim has a shortened life.

Notably, this paragraph does not relate to any of the issues that were putto the court.

14 After the Trial Decision was released, the Defendant refused to paythe Plaintiffs s. 8 bereavement damages on the basis that paragraph 47indicated the Defendant had no legal obligation to pay that kind of dam-ages. The Plaintiffs disagreed and responded that the Agreement hadfixed the amount of s. 8 bereavement damages and that that amountwould be payable if the Plaintiffs’ proved at trial that Dr. Toal’s negli-gence either caused Mr. Paniccia’s death, or shortened his life.

15 That dispute and the associated question of costs led to the September27 application to clarify this point. At that time the chief question for theparties was how to interpret the Agreement, given the scope of the trial.

16 The statement in paragraph 47 flows from an argument advanced bythe Defendant for the first time in his post-trial written final submissions:

385. Because a finding that Mr. Paniccia’s life was merely shortenedby the alleged negligence would necessarily mean that Mr. Paniccia


would have died in any event, the alleged negligence would not bethe cause of Mr. Paniccia’s death and this would not be a wrongfuldeath case falling within the scope of the FAA.

Mitchell Estate v. Labow, [1995] O.J. No. 621 (C.J. Gen.Div.), aff’d [1988] O.J. No 952 (C.A.) [Defendant’s Supple-mental Authorities, Tab 17]

386. In these circumstances, the Estate’s claims for funeral expensesand other special expenses, as well as the dependents’ claims for pastand future loss of dependency, housekeeping, and bereavementwould not be recoverable.

17 The Defendant relied on an Ontario judgment, Mitchell Estate v.Labow, [1995] O.J. No. 621, 54 A.C.W.S. (3d) 173 (Ont. Gen. Div.),affirmed on other grounds, [1998] O.J. No. 952, 78 A.C.W.S. (3d) 182(Ont. C.A.), as a basis in law for its statement. As I will subsequentlydiscuss in detail, the Mitchell Estate v. Labow trial decision does notstand for the proposition advanced by the Defence, and uses a differentrationale to deny the Ontario equivalent of s. 8 bereavement damages.Further, while the Defendant characterizes this as a case confirmed bythe Ontario Court of Appeal, the admittedly brief Court of Appeal deci-sion does not relate to the issue of bereavement damages.

18 Unfortunately I did not detect this misstatement of law during prepa-ration of the Trial Decision. The Defendant continues to hold that hisinitial interpretation of Mitchell Estate v. Labow is correct.

C. Application of Rule 9.13(a)19 The September 27 hearing was set to resolve the parties’ dispute on

costs. A crucial basis for their disagreement was whether the Plaintiffswere owed s. 8 bereavement damages. That in turn affected the parties’relative degree of success.

20 At that hearing I notified the parties that, upon review of the TrialDecision, I had come to the conclusion that:

1. the statement of law in paragraph 47 was probably incorrect,

2. paragraph 47 was obiter and not a necessary part of the Trial De-cision, and

3. if the statement of law in paragraph 47 is incorrect, a suitable rem-edy may be the Alberta Rules Of Court, Alta. Reg. 124/2010, Rule9.13(a) [the “Rules”, or individually a “Rule”] authority to vary a


judgment or order, as that would eliminate the requirement for anappeal on that point.

21 I invited submissions on those points, which were heard on Novem-ber 24.

D. Alternative Cancer Treatments22 At the November hearing the Defendant advanced the new argument

that he should not be liable for certain special damages that flowed from“alternative therapies” pursued by Mr. Paniccia once he was informedhis condition was terminal. The Defendant took the position that, sincethe Trial Decision concluded that Mr. Paniccia would have inevitablydied of gastric cancer, then Mr. Paniccia, absent Dr. Toal’s negligence,would still have engaged in those alternative therapies once Mr. Panicciawas informed his condition could not be treated by conventional means.If so, those expenditures would have been inevitable and were not causedby Dr. Toal’s negligence. The Defendant now refused to pay thoseamounts as well.

III. Issues23 The following issues are now before me:

1. Do I have the authority, per Rule 9.13(a) to review and revise theTrial Decision?

2. If I have the authority to revise the Trial Decision, is the statementin paragraph 47 incorrect and does it warrant correction via Rule9.13(a)?

3. How should I interpret the Agreement between the parties as tothe scope of the damages agreed to by the parties, specifically:

a) whether only the quantum of the s. 8 bereavement dam-ages, and not liability to pay them, is admitted, and

b) whether the cost of Mr. Paniccia’s “alternative therapies” isa valid special damages item, or whether those costs wouldhave inevitably been incurred, with or without Dr. Toal’snegligence?

24 Part of the last issue is potentially affected by my conclusion onwhether the statement of law in paragraph 47 is incorrect, as that is theonly basis on which the Defendant disputes a s. 8 bereavement damagesaward.


25 I will not in this decision comment on the issue of costs, though thatwas raised in the September 27 hearing, as this decision may possiblyassist the parties to resolve that issue.

IV. Analysis

A. Court Authority to Revisit the Trial Judgment

1. Rule 9.1326 I have asked the parties to comment on the potential application of

Rule 9.13(a) to revise the Trial Decision. Rule 9.13 states:

9.13 At any time before a judgment or order is entered, the Courtmay

(a) vary the judgment or order, or

(b) on application, and if the Court is satisfied there is good rea-son to do so, hear more evidence and change or modify itsjudgment or order or reasons for it.

27 The parties acknowledge that no judgment or order has been enteredto date. In this instance I have raised the possibility of a change to thetrial judgment without application from the parties. Thus, this is a poten-tial application of Rule 9.13(a).

2. The Parties’ Positions28 The Plaintiffs argue that under common-law principles the Court is

not functus, as no formal order has been granted, and in any case the newRules provide a broader authority for a judge to revisit a judgment(Rules, 9.12-9.14).

29 The Defendant suggests a more restrictive interpretation of the newRules. He argues that the Court has no basis to review the Trial Decisionand that the Plaintiffs should not have another ‘kick at the can’. He sug-gests that appellate authority on the common-law and Alberta Rules ofCourt, Alta. Reg. 390/1968, Rule 390 [former Rules]remains relevant.The proposition is advanced that the Rules should only apply where anissue was not addressed in full, or had not emerged at trial. He suggeststhat here the interpretation of the FAA was fully argued and I should notreturn to that issue. Thus, the Defendant argues that the only remedy is toappeal the Trial Decision comment on the FAA.


3. Judicial Interpretation of Rule 9.1330 To date there has been minimal application of Rules 9.12-9.14, but

the cases to this point have interpreted the provisions as providing abroader authority to the courts to vary a judgment or order. One conclu-sion that is clear from those cases is that the current Rules provide abroader authority to vary a judgment or order than existed under the for-mer Rules.

31 Justice Graesser, in Evans v. Sports Corp., 2011 ABQB 478 (Alta.Q.B.) at para. 15, (2011), 85 B.L.R. (4th) 313 (Alta. Q.B.), observed that:

[15] Reading the plain language of Rule 9.13, I believe that I haveextremely broad authority to do what I think is correct in thesecircumstances.

[Emphasis added.]

32 Rule 9.13(b) was applied by Justice Topolniski, in 581257 AlbertaLtd. v. Aujla, 2011 ABQB 539 (Alta. Q.B.) at paras. 16-19, to reopen ajudgment to account for an undisclosed offer. She concluded that was a“good reason” that warranted intervention. I note that in Rule 9.13 the“good reason” language applies only to the Rule 9.13(b) option to applyto re-open a decision or order, and possibly hear new evidence.

33 An application under Rule 9.13(b) was also considered and rejectedby Justice Hall in Peters v. Wilson Estate, 2011 ABQB 689 (Alta. Q.B.),where a plaintiff sought to enter new evidence and obtain a different re-sult. Justice Hall commented at para. 3 on the operation of Rule 9.13(a):

[3] Rule 9.13(a) clearly gives the Court a broad discretion to vary thejudgment or order. It makes no reference to an application beingmade. It provides an opportunity to the Judge to vary the judgment ororder, presumably where the judge has come to a view that it needsto be done before the order or judgment is filed, but after reasonshave issued or a decision was made. I consider that the circumstancestherein contemplated are those where the Judge, on his or her own,has rethought a matter or wishes to clarify it.

34 I agree with this description of the scope and operation of Rule9.13(a). It appears that this decision will be the first reported case wherea judge has considered Rule 9.13(a). I conclude that, while the Rule pro-vides the judge a unilateral authority to make any change the judge con-


siders appropriate, that authority should only be exercised after the judgehas:

1. indicated to the parties that the judge is considering varyinga judgment or order via Rule 9.13(a),

2. identified the nature of the proposed variation, and

3. provided an opportunity for the parties to make submis-sions that comment on that proposed variation.

In this case that occurred at the September 27 and November 24, 2011hearings.

35 In my review of the Rule 9.13(a) authority, I am mindful of Rule 1.2,the “Purpose and intention of these rules”, which in part reads:

1.2(1) The purpose of these rules is to provide a means by whichclaims can be fairly and justly resolved in or by a court process in atimely and cost effective way.

(2) In particular, these rules are intended to be used

. . .

(b) to facilitate the quickest means of resolving a claim at theleast expense,

. . .

(e) to provide an effective, efficient and credible system of reme-dies and sanctions to enforce these rules and orders andjudgments.

. . .

(4) The intention of these rules is that the Court, when exercising adiscretion to grant a remedy or impose a sanction, will grant or im-pose a remedy or sanction proportional to the reason for granting orimposing it.

[Emphasis added]

36 Previous applications of the Rules have concluded that the ‘purpose’provision is a substantial basis that guides how a judge should apply theRules. For example, in Envision Edmonton Opportunities Society v.Edmonton (City), 2011 ABQB 29, 507 A.R. 275 (Alta. Q.B.), JusticeMoen highlighted the crucial interpretive role of Rule 1.2:

[47] Under the Foundational Rule of the New Rules, Rule 1.2, how-ever, timeliness and cost-effectiveness is put front and centre along-side the need for a fair and just result. In my opinion, the Legislaturein enacting Rule 1.2 is signalling the need to consider timeliness and


cost-effectiveness in conjunction with the need for fairness and jus-tice. I would go even further, and say that Rule 1.2 recognizes that aresult, to be fair and just, must also be timely and cost-effective. Thismakes perfect sense in light of the seemingly inexorable trend towardlonger and more expensive trials which put access to the courts out ofreach of more and more people. The ordinary citizen in this day andage is hard-pressed to afford a long trial.

[48] As a result, I would say that Rule 7.1(1)(a) must be read in lightof Rule 1.2. The effect of doing so signals that the court should bemore willing to grant remedies with the potential to provide a moretimely and cost-effective result without sacrificing fairness and jus-tice. If the court can narrow the focus of a trial and do away with thenecessity for a long trial without sacrificing fairness or justice, itshould do so, recognizing that providing litigants with a timely andcost-effective result serves the ends of justice.

[Emphasis added]

See also Hunka v. Degner, 2011 ABQB 195 (Alta. Q.B.); Donaldson v.Farrell, 2011 ABQB 11 (Alta. Q.B.) at para. 14; Lameman v. Alberta,2011 ABQB 396 (Alta. Q.B.) at para. 9; L. (B.J.) v. L. (M.E.), 2011ABQB 72 (Alta. Q.B.) at para. 10; Vincent v. Moduline Industries(Canada) Ltd., 2011 ABQB 571 (Alta. Q.B.) at para. 69; IBM CanadaLtd. v. Kossovan, 2011 ABQB 621 (Alta. Q.B.) at paras. 11-12; C. (L.) v.Alberta, 2011 ABQB 12 (Alta. Q.B.) at paras. 75-77.

4. Operation of Rule 9.13(a)37 I disagree with the narrow interpretation of Rule 9.13(a) suggested by

the Defendant. It is inconsistent with the plain language of the Rule. Inote that Rule 1.7(1) emphasizes that the interpretation of these provi-sions should flow from the text itself, “... in light of the purpose andintention of these rules ...”.

38 Rule 1.2 provides that context, and clearly indicates that the generalpurpose of the Rules includes and stresses efficiency. I agree with JusticeMoen that “... a result, to be fair and just, must also be timely and cost-effective.”

39 In light of the general framework of the Rules and the explicit author-ity provided by Rule 9.13(a), I conclude that a judge may investigatewhether an error exists in an order or judgment and, when an error is


identified, then consider whether that defect warrants correction. The po-tential benefits to that kind of judicial intervention are obvious:

1. an otherwise unnecessary and costly appeal may beaverted;

2. if a party does conclude an appeal is warranted after an or-der or judgment has been changed per Rule 9.13(a), thenthe appeal court has the benefit of a more fully developedtrial consideration of the facts and law, where the trial courthas revisited an issue due to:

a) incomplete argument and analysis of an issue,

b) incomplete or incorrect review of facts,

c) an incorrect statement of law, or

d) an issue with ‘emergent’ implications or effects thatmay have not been fully apprehended during prepa-ration of the order or judgment; and

3. an incorrect statement of law can be corrected that mightotherwise confuse future judicial analysis and inappropri-ately bind lower courts.

40 Further, the Defendant’s argument that Rule 9.13(a) should not allowa second ‘kick at the can’ misrepresents the decision in Evans v. TheSports Corporation. There Justice Graesser received a joint agreement bythe parties that the facts as concluded at the trial were wrong, and thatlogically meant the trial judgment had an incorrect result. JusticeGraesser agreed that issue had not been examined with sufficient careand revised the judgment accordingly. That was an application underRule 9.13(b).

41 Here I act on my own authority, which I conclude is only restrictedby the purpose of the Rules, as expressed in Rule 1.2. If I conclude thatparagraph 47 is incorrect, and that revision of that part of the Trial Deci-sion meets the objectives of the Rules, then I am permitted, if notobliged, to revise the Trial Decision accordingly.

B. Is the Statement of Law in Trial Decision Paragraph 47 Incorrect,and Does it Warrant Revision via Rule 9.13(a)?

42 I have concluded that I may apply Rule 9.13(a) to revise the TrialDecision. That revision is obviously most likely warranted if the para-


graph 47 statement restricting the availability of s.8 bereavement dam-ages is incorrect.

1. Is Paragraph 47 Incorrect?

a. The Parties’ Positions43 Unsurprisingly, the parties continue to disagree on whether s. 8 be-

reavement damages are available where a person dies at an earlier date asa consequence of tortious injury.

44 During the November 24 hearing the Defendant clarified the limits ofthe scenario in which he alleges no s. 8 bereavement damages are availa-ble. He argued that a “death of a person” is not “caused by a wrongfulact, neglect or default” (FAA, s. 2) where a court concludes a personwould die of a specific cause, but that negligent misconduct caused theperson to die of the same specific cause, but at an earlier date.

45 For example, s. 8 bereavement damages would be available where aperson with terminal cancer was killed in a motor vehicle accidentcaused by negligence. The ‘cause’ of death in that case would be themotor vehicle accident, rather than the cancer. However, if the motor ve-hicle accident had not directly injured the person with terminal cancerbut instead led the cancer patient to miss a treatment, and that missedtreatment shortened the patient’s life, then s. 8 bereavement damageswould not be available because the ‘cause’ of death was the terminal can-cer, rather than the motor vehicle accident. This dichotomy is expressedin the “but for” test for tort causation: Hanke v. Resurfice Corp., 2007SCC 7, at paras. 21-22, [2007] 1 S.C.R. 333 (S.C.C.).

46 The Defendant distinguishes negligence that “causes death” fromnegligence which “accelerates death”. Dr. Toal did not “cause” Mr. Pan-iccia’s death, the cancer caused his death. Dr. Toal merely ‘advanced’ anexisting and inevitable process. The Defendant relies on Mitchell Estatev. Labow as authority that supports this position. He now also argues thatthe quantum of s. 8 bereavements damages are a kind of windfall, giventhat Mr. Paniccia would have only recovered minimal amounts had hesurvived to trial.

47 The Plaintiffs argue that the interpretation of the FAA in paragraph 47is incorrect. They present a detailed review of the development of thecurrent legislation that they say explains the purpose of the FAA and s. 8bereavement damages. They submit that the presumed remedial characterof the legislation (Interpretation Act, R.S.A. 2000, c. I-8, s. 10) would be


compromised by the interpretation advanced by the Defendant. But thechief focus of the Plaintiffs argument is their observation that, as death isinevitable, any death that results from negligence is an “accelerated”death. That, they argue, makes the Defendant’s interpretation of the FAAan absurdity that causes unjust results.

48 In their written arguments the Plaintiffs provide a number of hypo-thetical scenarios to illustrate this alleged absurdity. The final hypotheti-cal is particularly relevant:

A Plaintiff has a heart condition and will eventually die of a heartattack in 10 years. In order to survive the 10 years with such a heartcondition the Plaintiff will need to be on certain medication. ThePlaintiff’s cardiologist negligently forgets to tell the Plaintiff that heneeds to take the medication and does not prescribe any medication.As a result the Plaintiff dies of a heart attack 10 years earlier than hewould have if he had taken the medication. The cause of death washeart attack and that would have been the inevitable cause of death10 years from now. Does that mean the Plaintiff’s family membersdo not have a claim under the FAA? It is submitted they clearly doand the position put forward by the Defendant leads to absurd results.

b. Mitchell Estate v. Labow49 This is a convenient point to examine and dispose of Mitchell Estate

v. Labow, prior to my analysis of the proper construction of the FAA. Ido not disagree with the analysis or results of that decision, but insteadwith how it has been characterized by the Defendant. I specifically disa-gree with the Defendant’s claim on a key fact:

[i]t is clear from the judgment that [the plaintiff’s] life was shortenedsomewhat by the delay in diagnosis, although the court did notascribe a specific number of days or months to it.

50 Mitchell Estate v. Labow is a medical malpractice decision where theplaintiff had malignant melanoma, a particularly aggressive form of skincancer. The plaintiff had identified a suspicious mole that was excised,examined, and diagnosed as benign. Unfortunately, that examination anddiagnosis was incorrect, as the mole was clearly a melanoma (para. 24).The trial judge concluded that misdiagnosis was negligent (para. 43).

51 Much of the judgment then considers whether that negligence injuredthe plaintiff. Justice Rutherford concluded the cancer’s progression wasinevitable, and that the plaintiff would have had the same life expectancyeven if the diagnosis following the initial biopsy had been correct. Since


the passages that describe this conclusion are apparently the basis for theDefendant’s arguments, it is helpful to review these in detail:

88 After a thorough review of the evidence, I am satisfied that it ismost probable that by August 3, 1984 when the mole was removedfrom Mrs. Mitchell’s thigh, it was a melanoma tumour that hadprogressed and grown to a very aggressive state; a very bad tumour,to paraphrase Dr. Guerry, and tumour cells had penetrated the vascu-lar and lymph systems and been transported throughout her body.The lack of any sign of recurrence of tumour at the original site to-gether with the theory advanced most strenuously by Dr. Shibata,which I accept, that in most cases metastatic spread is as a result ofmigration of tumour cells from the primary site, lead me to concludethat by August, 1984 Mrs. Mitchell most probably had stage III dis-ease. I do not believe that the evidence supports the proposition thathad the tumour been properly identified at that time, the conventionaltreatment of the day, or of today for that matter, would have led toany significantly longer survival for Mrs. Mitchell.

. . .

91 The evidence persuades me that if the mole excised on August 3,1984 had been correctly identified and the conventional treatment ofwide excision and other examinations and tests had been undertaken,Mrs. Mitchell would have died from the disease in any event and herlife could not be expected to have been extended appreciably. I don’tsee this case as even raising what must, since Laferriere v. Lawson,[1991] 1 S.C.R. 541, no longer even exist as a possible head of re-covery, namely, loss of chance. While Dr. Jochimsen used the term“loss of a chance of being cured” in his evidence, and while refer-ence by the plaintiffs’ experts to the data in the statistical models wasto demonstrate that Mrs. Mitchell’s death occurred in the face ofwhat were her “chances of survival”, the evidence presented simplyleaves me no basis on which to conclude that the misdiagnosis ofMrs. Mitchell’s tissue biopsy led to a lack of treatment which in turncost her some discernible chance she might otherwise have had tosurvive the aggressively growing cancer tumour which had alreadyspread within her body. By August 3, 1984, the malignant melanomatumour had, according to the evidence I accept as persuasive, becomea very “bad” tumour, microscopically present in a number of placesin her body and taking hold there. By this time, she had passed thepoint at which she could have been a survivor through surgical re-moval of the primary tumour.

[Emphasis added.]


52 The trial judge concludes that non-negligent treatment would nothave led to “any significantly longer survival” (para. 88) and “her lifecould not have been extended appreciably.” (para. 91). Restated, theplaintiff would have died on about the same date, irrespective of the doc-tor’s negligence. This judgment does not support the Defendant’s argu-ment that an ‘accelerated death’ is not caused by the ‘accelerant’. TheDefendant’s claim that “... [i]t is clear from the judgment that [the plain-tiff’s] life was shortened somewhat by the delay in diagnosis” is not sup-ported by Justice Rutherford’s comments.

53 In Mitchell Estate v. Labow, since the plaintiff’s life expectancy wasnot appreciably shortened by the negligence, the death was not caused bythe negligence (paras. 92. 99). Justice Rutherford therefore denied theclaim by the plaintiff’s husband and daughter for Family Law Act, R.S.O.1990, c. F-2, s. 61 bereavement type damages (paras. 103, 108, 111), lossof housekeeping (paras. 103, 110-111), and special damages (paras. 103,109).

54 The judgment continues to consider a very interesting form of injury.Justice Rutherford concludes that, even though the plaintiff would havedied on about the same date, earlier and correct diagnosis would haveprevented the need for painful surgical treatment to the plaintiff’s lymphnodes (paras. 92-99), and that was an injury that warranted compensationby general damages (paras. 101-102).

55 The Mitchell Estate v. Labow trial decision was appealed to and af-firmed by the Ontario Court of Appeal. That decision is very brief, andconfirmed three points:

1. review was not appropriate for the trial’s findings of fact:

a) on the progression of the melanoma (para. 1), and

b) which surgeries were a consequence of the defen-dant’s negligence (para. 2); and

2. that the $10,000.00 award of general damages for the painand suffering caused by the unnecessary lymph node sur-gery was appropriate (para. 3).

56 None of these conclusions relate to the Defendant’s proposed legalprinciple, nor the trial conclusion that the plaintiff’s life expectancy hadnot been reduced by the negligence and therefore death was not causedby that negligence. The most favorable interpretation of Mitchell Estatev. Labow for the Defendant is that Justice Rutherford concluded that an


FAA-type bereavement claim cannot be advanced where negligence hasnot “significantly” affected the date of death. I will return to that ques-tion later in my analysis.

57 In conclusion, I disagree with the Defendant’s interpretation ofMitchell Estate v. Labow and the position taken by him in his post-trialarguments. I do not agree that it stands for the proposition in the Defen-dant’s final arguments, that:

... a finding that Mr. Paniccia’s life was merely shortened by the al-leged negligence would necessarily mean that Mr. Paniccia wouldhave died in any event, the alleged negligence would not be the causeof Mr. Paniccia’s death and this would not be a wrongful death casefalling within the scope of the FAA.

58 I conclude that Mitchell Estate v. Labow is not relevant to the presentcase, beyond its conclusion that, to cause death, negligence must reducelife expectancy to a significant or beyond a de minimus degree.

c. Does a Reduced Life Expectancy Cause Death?59 The Plaintiffs argue that the paragraph 47 interpretation of the availa-

bility of s. 8 bereavement damages is incorrect. I agree.60 The Defendant attempts to couch his arguments in ‘but for’ test lan-

guage: ‘but for the gastric cancer Mr. Paniccia would not have died onSeptember 10, 2010.’ The ‘cause’ of his death is gastric cancer, not Dr.Toal. However, the ‘but for’ language that the Defendant appears to con-sider crucial can also be used to implicate Dr. Toal. The court also de-cided that ‘but for’ Dr. Toal’s negligence Mr. Paniccia would not havedied of cancer on September 10, 2010. This illustrates how the Defen-dant’s argument is excessively formulaic and turns on semantics ratherthan the manner in which misconduct can lead to deleterious conse-quences. As the Plaintiffs have illustrated, the Defendant’s interpretationleads to absurd results. In particular, the Defendant’s argument in re-sponse to the hypothetical scenarios proposed by the Plaintiffs makes nosense.

61 The possibility that a person’s negligence may lead to a substantiallyearlier death, though by the same cause, is far from impossible. Modernmedicine and science has led to treatments that now routinely stabilizewhat were formerly fatal conditions. Common-place examples of thisrevolution include the discovery and purification of insulin, which allowsdiabetics to live full and healthy lives, and the succession of increasingly


effective pharmaceutical treatments to stabilize the condition of personsinfected with the Human Immunodeficiency Virus. If a person were totake steps to deny either group their medication then that would, predict-ably, lead to deaths. But can one really say that those deaths were insteadcaused by diabetes or the Human Immunodeficiency Virus? These, andthe Plaintiffs’ hypotheticals, are some examples that illustrate the absurdresult that flows from the Defendant’s argument that death from mecha-nism X at an earlier date does not cause death if mechanism X wouldhave predicably led to death at a subsequent point.

62 An ‘absurd interpretation’ is described by Justice Iacobucci in Rizzo& Rizzo Shoes Ltd., Re, [1998] 1 S.C.R. 27, at 43, 154 D.L.R. (4th) 193(S.C.C.) as an interpretation that:

... leads to ridiculous or frivolous consequences, if it is extremelyunreasonable or inequitable, if it is illogical or incoherent, or if it isincompatible with other provisions or with the object of the legisla-tive enactment.

[Emphasis added.]

That statement captures my evaluation of the Defendant’s position.63 Other elements of the Defendant’s arguments are equally problem-

atic. In his November 24 written argument the Defendant says this:

... If Mr. Paniccia were alive at the time of trial, there would havebeen no claim under the FAA for $255,000 for bereavement. Mr.Paniccia would have had a claim for a shortening of his life by 6months. The case law indicates this would have been a nominalamount and certainly not $255,000. Why then should his family beentitled to claim $255,000 simply because he died before trial, whenthe cause of his death was terminal gastric cancer?

64 This argument is troubling for a number of reasons. First, it asks thecourt to evaluate whether the Legislature was correct in setting the FAAawards; and inquire when the quantum of an award is or is not justified.The Legislature set up this scheme and I have no authority to determinewhether those sums are or are not correct. That is a question of policy.Should this Court test and then change amounts mandated by legislation?Of course not; the Legislature has provided a scheme to quantify thoseamounts.

65 Second, the Defendant evaluates the value of life and companionshipby a claim for employment and domestic service losses. Those are tworadically different forms of damages. I cannot understand how it would


be correct to evaluate the trauma of the loss of a family member by noth-ing other than that death’s economic consequences. The Defendant’sanalysis would arguably also invalidate recovery of loss of consortiumdamages authorized by the Tort-feasors Act, R.S.A. 2000, c. T-5, s. 2.1.

66 Though I will not conduct a detailed review of the history of legisla-tion in Alberta that has dealt with the scope of tort action where the in-jured party dies, I agree with the analysis advanced by the Plaintiffs.That, however, is merely an additional basis on which to conclude that a‘death accelerated’ is a ‘death caused’.

67 This issue requires an exercise of common-sense in light of the reme-dial function of the FAA. There is no logical basis to deny the family of adeceased tort victim their legislatively mandated bereavement and fu-neral expense awards. I therefore conclude that the statement of law inparagraph 47 is incorrect.

2. Should Paragraph 47 Be Revised?68 I have concluded that the statement in paragraph 47, that s. 8 bereave-

ment damages are not available where negligence shortens a life, is in-correct. The next step is to evaluate whether that error is one that requirescorrection by Rule 9.13(a).

69 I conclude that it does. In my consideration of Rule 9.13(a), I identi-fied factors that are relevant where a judge considers revision of an orderor judgment on the judge’s own authority. Some of those factors are rele-vant here.

70 The Defendant asserted that the interpretation of the FAA was now aquestion for appeal. Perhaps so, but I hope that my more detailed analy-sis here will make an appeal on that issue unnecessary and save bothparties the costs of a legal proceeding of that kind. If the Defendant doesappeal my conclusion on this point, then the Court of Appeal will havethe benefit of my analysis of the relevant law.

71 Another strong reason to correct the misstatement in paragraph 47 isthat the incorrect statement of law may confuse future judicial analysisand incorrectly bind lower courts. This is a potential mischief that de-serves immediate attention.

72 Last, paragraph 47 is ultimately irrelevant to the Trial Decision. Thus,varying that paragraph has no effect on the trial’s outcome. The misstate-ment in paragraph 47 is obiter. Defence counsel argues the Trial Deci-


sion comment on the availability of FAA bereavement damages is notobiter. However she agreed that obiter is any statement that is “unneces-sary to the disposition of the issues of the action.” The scope of the is-sues for trial was set at the beginning of trial. That list of issues did notchallenge whether the s. 8 bereavement damages were available to thePlaintiffs. That renders the paragraph 47 comment on the FAA as, at best,obiter.

73 In the present case I see no reason not to vary the Trial Decision tocorrect the incorrect statement of law in paragraph 47 and, in paragraphs39, 72, and 73 above, set out several reasons for doing so. I therefore willamend the Trial Decision to eliminate paragraph 47 and add a corrigen-dum to the Trial Decision that references this decision as the explanationfor that amendment.

3. Significant Reduction in Life Expectancy74 That could end my analysis on the question of s. 8 bereavement dam-

ages. However, given the arguments of the parties, it is perhaps helpfulto go one step further. My interpretation of Mitchell Estate v. Labow isthat case stands for the principle that a death is not ‘caused’ when tor-tious misconduct does not “significantly” affect the life expectancy of theinjured person. I concluded that Dr. Toal’s negligence cost Mr. Panicciasix months of his life.

75 This was not an issue that was raised at the beginning of trial. Somecomments from the Defendant in argument suggest the result at trial (thatMr. Paniccia’s life expectancy was reduced by Dr. Toal’s negligence)was an unexpected one. I think the intent of these comments is to suggestthat the potential availability or unavailability of s. 8 bereavement dam-ages was an ‘emergent’ question that the parties could not have antici-pated and therefore did not argue.

76 I find that very difficult to accept. Here, experienced counsel facedthree possible results if Dr. Toal was found negligent:

1. Dr. Toal’s negligence did not injure Mr. Paniccia as Mr. Panicciawould have died on the same date despite Dr. Toal’s negligence;

2. absent Dr. Toal’s negligence Mr. Paniccia’s gastric cancer wouldhave been identified, treated, and cured; therefore Dr. Toal’s neg-ligence caused Mr. Paniccia’s death; and


3. Dr. Toal’s negligence led to late treatment of Mr. Paniccia’s gas-tric cancer with the result that Mr. Paniccia had a reduced lifeexpectancy.

77 Mr. Paniccia’s probable life expectancy was a crucial issue at trialand the subject of expert testimony and extensive Defence argument. Ican only conclude that the Defence was alive to the possibility that Dr.Toal’s alleged negligence could affect Mr. Paniccia’s life expectancy. Itherefore conclude that the result at trial was foreseeable, as would be theopportunity to raise the availability of s. 8 bereavement damages wherenegligence led to a shortened life.

78 The next question is whether six months is “insignificant”. This wasnot an issue that I was asked to decide at trial and is a question of mixedfact and law. As I will later explore in greater detail, it is generally inap-propriate to open a new question of fact and law after a trial has con-cluded. Here, by coincidence, I have the necessary facts to explore thisissue fully. Since this question is apparently relevant to the position takenby the Defendant, I will continue to evaluate whether Dr. Toal’s negli-gence had a significant effect on Mr. Paniccia’s life-expectancy.

79 As a general observation, I do not think six months of a person’s lifeis insignificant. At trial the Plaintiffs argued that an average Canadianmale has a life expectancy of about 82 years. On that scale, Dr. Toal’snegligence cost Mr. Paniccia 0.61% of his life expectancy. However, thatis not what I consider to be the most useful measurement of how Dr.Toal’s negligence affected Mr. Paniccia’s life expectancy. Mr. Panicciawas diagnosed with inoperable gastric cancer in November, 2009 andsurvived for an additional nine months. I concluded at trial that, if Mr.Paniccia’s complaints had been investigated in a non-negligent manner,he would have been diagnosed with gastric cancer in January, 2009(Trial Decision, para. 176). My conclusion was that, on a balance ofprobabilities, Mr. Paniccia’s gastric cancer would have been terminaleven at that earlier point, but with treatment Mr. Paniccia would havesurvived for another 26 months (Trial Decision, paras. 208-209).

80 I think these dates provide a better way to understand what Dr. Toal’snegligence cost Mr. Paniccia - that negligence reduced Mr. Paniccia’spost-diagnosis life expectancy by 65%. I think six months of life is sig-nificant for anyone, but particularly for a person who faces terminal ill-ness and a last opportunity to address their personal affairs, spend time


with their family and friends, and perhaps come to peace with their im-pending death.

81 Damages for bereavement would logically be warranted where a per-son was deprived of their best opportunity to share time and companion-ship with their loved ones. That is what the Plaintiffs lost, and the FAAattempts to compensate where ‘death is accelerated’. I have no difficultyin concluding that Mr. Paniccia’s loss of life expectancy as a conse-quence of Dr. Toal’s negligence was far more than ‘de minimus’.

82 I therefore conclude that, not only is a FAA, s. 8 bereavement awardgenerally available where negligence causes a person to die at an earlierpoint, but also that, in the case of Mr. Paniccia, the negligence of Dr.Toal caused a significant loss of life expectancy so that, to use the lan-guage of the FAA, “death of a person” was “caused by a wrongful act,neglect or default”.

C. Interpretation of the Agreement — Special Damages83 My conclusion in relation to paragraph 47 addresses the question con-

cerning an award of s. 8 bereavement damages to the Plaintiffs. Whilethe Defendant has questioned whether Dr. Toal’s negligence is really‘worth’ an award of $255,000.00 for bereavement, my understanding isthat the Defendant has not challenged the authority of the Legislature toset an award at that level.

84 I therefore will not attempt to interpret whether the Agreement saysthe parties agreed that s. 8 bereavement damages of $255,000.00 wouldbe paid to the Plaintiffs if the Plaintiffs at trial proved that either Mr.Paniccia’s death was a consequence of Dr. Toal’s negligence or that Mr.Paniccia died at an earlier date as a consequence of Dr. Toal’snegligence.

85 That leaves the issue of whether the Plaintiffs have a right to claimthe full special damages described in clause 9 of the Agreement. Beforeentering into my analysis on that final question, I will review a disputebetween the parties in the September 27 and November 24 hearings and adecision I made in relation to it. The Plaintiffs’ September 27 materialsincluded some email correspondence between the parties’ counsel whichpotentially relates to the scope of the Agreement. Defence counsel ar-gued that the principles of contract interpretation mean those communi-cations are not appropriate as evidence or necessary for the Court to un-derstand the scope of the Agreement. At the November 24 hearing I was


asked if I wished to review other allegedly potentially relevant exchangesbetween counsel, which I declined. I did not then, and do not now, be-lieve I require any messages exchanged by the parties’ counsel to evalu-ate the meaning and scope of the Agreement. My analysis that followsdoes not take into account the emails included in the Plaintiffs’ Septem-ber 27 materials.

86 Further, my analysis will not immediately move to the Agreement butwill first examine the manner in which the issue of special damages aroseat this late point in the proceeding.

1. The Special Damages Issue Requires Findings of Fact87 On the remaining issue, of whether special damages ought to be

awarded for the alternative medicine costs, in his November 24 argumentthe Defendant says that:

... It is plain and obvious from this Honourable Court’s ruling thatMr. Paniccia would have been terminally ill regardless of any delayin referring him for gastroscopy. Therefore, Mr. Paniccia would havesought out these alternative therapies in any event.

88 The Plaintiffs respond that that conclusion is not plain and obvious,and that, in the absence of Dr. Toal’s negligence, Mr. Paniccia may have:

... accepted his fate and spent more quality time with his family dur-ing his last days instead of going to the U.S. to try to correct thewrong done to him by Dr. Toal.

89 The nature of this issue is crucial. The relevant question is:

In the absence of negligent injury by Dr. Toal, would Mr. Panicciahave sought alternative cancer treatments if he was diagnosed withterminal cancer?

This is a question of fact. I am asked to determine whether I conclude, ona balance of probabilities, that in a certain scenario a party would havemade a particular choice.

90 The Defendant is asking me to make a finding of fact where that factwas not explored at trial. Further, the parties at the beginning of trial toldme that they had bound themselves in the Agreement to a specific set ofissues that would determine the amount of damages, if liability wasfound.


2. Evidence Concerning Special Damages Before the Court91 The “special damages” issue advanced by the Defendant is a question

of fact and one that I have concluded could have been raised at trial. ThePlaintiffs argue that additional evidence could and would have been ad-vanced at trial in relation to this point if the allegation that certain specialdamages were inevitable had been understood to be a live issue. I acceptthat proposition, and further observe that the most relevant source for thiskind of evidence would have been Mr. Paniccia. At this point it is toolate to obtain evidence from him. Further, the Defendant has denied theneed for evidence on this point, as he asserts it is “plain and obvious”that the alternative therapy special costs were inevitable. It is not plainand obvious to me.

92 There is an additional question of whether or not the “special dam-ages” category is in whole or part properly characterized as “alternativetherapies”. No detailed argument was made on this point at trial, presum-ably because the quantum of special damages was supposedly set by theAgreement, as that contract was explained to the Court. The receipts thatare the basis for the special damages claim were contained in Exhibit 30of the agreed exhibits. Cursory review of that exhibit shows receipts formany kinds of medications. I have no basis on which to conclude which,if any, are “alternative therapies”.

93 I conclude I do not have the evidence that it is “plain and obvious”that the Plaintiffs have no entitlement to special damages. Further, I con-clude that it is unfair to the Plaintiffs that the Defendant at this late stageraises the issue of entitlement to special damage on a question of fact.

3. Litigation By Installment94 I have previously observed how the Rules instruct the Court to act in

an efficient, timely and cost-effective manner. That obligation is alsoshared by the parties to litigation.

1.2(3) To achieve the purpose and intention of these rules the partiesmust, jointly and individually during an action,

(a) identify or make an application to identify the real is-sues in dispute and facilitate the quickest means ofresolving the claim at the least expense ... [Emphasisadded]


This is not only a general principle but also a mandatory requirement forpersons involved in litigation. They are obliged to identify issues in dis-pute and conduct timely, cost-effective litigation.

95 The Defendant’s post-trial introduction of the “special damages” is-sue does not meet that standard. Rather, it is an example of an inefficientand procedurally problematic practice commonly referred to as “litiga-tion by installment”. One example of litigation by installments is where aparty, after a judgment, raises an issue that reasonably could have beenraised at an earlier point: Argentia Beach (Summer Village) v. Warshaw-ski, 1991 ABCA 322, 120 A.R. 27 (Alta. C.A.).

96 Litigation by installment is discouraged by the courts. For example,in Garland v. Consumers’ Gas Co., 2004 SCC 25, at para. 90, [2004] 1S.C.R. 629 (S.C.C.), Iacobucci J. endorsed the observation of the ChiefJustice of the Ontario Court of Appeal that litigation by installment “... isto be avoided where possible, as it does little service to the parties or tothe efficient administration of justice.” In Mainwaring v. Alberta, 2000ABCA 12, at para. 6, 75 Alta. L.R. (3d) 255 (Alta. C.A.), Cote J.A. ob-served that “[l]itigation by instalments is a grave evil to avoid carefully...”. Our Court of Appeal has categorized litigation by installments as anabuse of process: Royal Bank v. LRSCO Investments Ltd., 1994 ABCA116, at para. 11, 149 A.R. 241 (Alta. C.A.).

97 The Defendant has not provided any reason why the issue of specialdamages was not addressed at trial. If the Defendant believed the alterna-tive treatment costs were inevitable and therefore not compensable in anyevent, why did he indicate at the commencement of trial that quantum ofdamages had been agreed to (other than the three factors to be specifi-cally addressed, which do not touch on the alternative treatment costs)?Why were they included in the agreed quantum if the Defendant took theposition he would not have to pay them regardless of the outcome onliability? I conclude that the late introduction of this issue is an exampleof litigation by installment and an abuse of process.

4. Reliance of the Court on Counsel98 Lawyers are called “officers of the court” because that is their rela-

tionship to the court. They do not merely appear in court, they are a partof the court. Judges necessarily rely on counsel to guide the trial process.Judges cannot know the minds or intentions of the parties, other thanwhat they are told.


99 I have previously indicated how Defence counsel explained the scopeof issues that remained for the court to decide in relation to the calcula-tion of damages. That limited set of issues was restated at para. 394 ofthe Defendant’s January 7, 2011 post-trial argument.

100 The Court is now confronted by a new issue of fact relating to dam-ages which was, for some reason, not argued at trial. Parties do not assista court when they engage in this kind of conduct; it impedes the conductof proceedings in an efficient and timely manner, and hampers theCourt’s best attempts to reach findings of fact.

101 Counsel are required to conduct proceedings on behalf of their clientsin a manner that is consistent with their obligations under the Rules. Themanner in which the “special damages” issue has emerged in this trialmay be in breach of the Agreement between the Parties, but it is alsoinconsistent with the Defence counsel’s obligations to this Court. Re-gardless of the text of the Agreement, the Court should be able to rely oncounsel for an accurate statement of what a party will argue is in disputein a trial.

5. Rule 9.13(b)102 As previously referred to, there is a mechanism by which a litigant

can ask an Alberta trial court to address a question not asked at trial, andthat is Rule 9.13(b):

9.13 At any time before a judgment or order is entered, the Courtmay

. . .

(b) on application, and if the Court is satisfied there isgood reason to do so, hear more evidence and changeor modify its judgment or order or reasons for it.

103 This would have been the appropriate mechanism by which the De-fendant could have asked me to expand the trial analysis on damages toconsider whether certain special damages claimed would have been theinevitable result of a diagnosis that Mr. Paniccia had untreatable gastriccancer and therefore were not a result of Dr. Toal’s negligence.

104 I have previously noted that I lack the factual evidence to evaluatewhat the Defendant claims is so “... plain and obvious.” Rule 9.13(b)could allow the Defendant (and Plaintiffs) to provide the necessary fac-tual foundation for my analysis.


105 However, had the Defendant applied under Rule 9.13(b) for the Courtto extend its findings on damages, I would have rejected that applicationas there is no “good reason to do so”. That flows from three facts:

1. late introduction of a foreseeable issue is litigation by installmentand an abuse of process,

2. the Plaintiffs are unfairly prejudiced, as they are unable to ad-vance the most relevant evidence of Mr. Paniccia’s probable con-duct had Dr. Toal not been negligent, and

3. when the parties agree to limit the scope of a court’s investiga-tions, the Court should be able to rely on an explicit and clearstatement by counsel as to the issues to be decided by the Court.

6. Conclusion - Special Damages106 I refuse to entertain the special damages issue raised in the Defen-

dant’s November 24 arguments as a consequence of my conclusion thatthe late introduction of the special damages issue is unfair, an abuse ofprocess, and contrary to the explicit trial submissions by the Defendant. Ihave also concluded that, if the Defendant had taken the appropriate stepof making an application under Rule 9.13(b), to request the Court evalu-ate a new question of fact, I would have refused that application. TheDefendant had the opportunity to raise and argue entitlement to specialdamages at trial. He chose not to pursue that opportunity.

107 Defence counsel told me that her client had agreed to pay a total of$46,235.79 in special damages. Dr. Toal was responsible for Mr. Panic-cia’s premature death. That agreed sum is due to the Plaintiffs.

7. Interpretation of the Agreement108 That conclusion means I do not have to interpret the Agreement. Nor

do I have to determine whether, properly interpreted, that document indi-cates that the Defendant agreed to pay $46,235.79 in special damages ifthe Plaintiffs established Dr. Toal had injured Mr. Paniccia by reducinghis life expectancy.

109 If I had to interpret the Agreement, I would have favoured the inter-pretation advanced by the Plaintiffs. Here, the parties put in place anAgreement to limit the scope of the trial to minimize cost and complex-ity, and presumably to avoid the “grave evil” of litigation by installment.The most logical interpretation of the Agreement is to meet that objec-tive. To conclude otherwise would be assume that two highly exper-


ienced trial counsel had decided to defy common sense and approvedlitigation procedure, and adopt a procedure that could result in additional‘mini-trials’, each with their own findings of fact.

110 Further, that objective is also consistent with how the trial proceeded,until post-judgment when the Defendant suddenly advanced its new spe-cial costs argument. I think that, alone, provides an adequate basis toconclude that the Defendant has breached the Agreement by advancingthe new special damages argument. In effect, the interpretation suggestedby the Defendant defeats the purpose of an agreement to streamline thetrial process and minimize the associated costs.

111 There is an additional and unusual tool available here to assist theCourt in understanding the nature and intention of the Agreement. Unlikemost contract disputes, I had the opportunity to personally observe theexecution of the Agreement by its parties. It is trite law that the scope ofa contract is set by the intentions of the parties at the time the agreementwas made. To hold a trial which seems, for all appearances, to only relateto a defined set of issues, then post-trial raise a further issue that mayhave been incorporated in the original trial scope is inconsistent with themanner in which the issues were framed to the court, and the way I ob-served the trial proceed.

112 Further, the interpretation of the Agreement advanced by the Defen-dant is conduct inconsistent with the statements and obvious intention ofthe Defendant in its conduct of the trial itself. Defence counsel explicitlyindicated the scope of the damages issues [see para. [8] above]. Damagesflow from tortious misconduct and injury. With those prerequisitesproven by the Plaintiffs, damages are now due.

V. Conclusion113 Paragraph 47 of the Trial Decision will be removed, per Rule 9.13(a).

The Defendant has no basis to refuse to pay s. 8 bereavement damages.The Plaintiffs are due the $256,700.00, consistent with the Defence’sstatements at trial. The Defendant failed to challenge entitlement to spe-cial damages at trial, so $46,235.79 is due to the Plaintiffs as a conse-quence of Dr. Toal’s negligence and its resulting injury to Mr. Paniccia.

VI. Costs114 In Polar Ice Express Inc. v. Arctic Glacier Inc., 2009 ABCA 20, at

para. 21, 446 A.R. 295 (Alta. C.A.), the Court of Appeal clarified that


solicitor-client costs are appropriate where misconduct occurs during alegal proceeding. Recently Moen J., in Brown v. Silvera, 2010 ABQB224, at paras. 29-42, 488 A.R. 22 (Alta. Q.B.), has reviewed the bases onwhich solicitor-client costs, or full indemnity solicitor and own clientcosts may be ordered; see also Evans v. Sports Corp., 2011 ABQB 616(Alta. Q.B.).

115 I agree with Justice Moen’s analysis of elevated cost awards, but addthat I conclude a breach of the general requirements in Rule 1.2(3) is alsoa basis for elevated costs, though that kind of misconduct obviously canbe captured by some of the costs factors identified in Rule 10.33.

116 I have concluded that the timing and nature of the Defendant’s specialdamages issue advanced in his November 24 submissions:

1. unfairly compromised the Plaintiffs’ ability to establish thefactual basis for an opposing position,

2. was litigation by installment which is an abuse of process,

3. was contrary to the Defendant’s Rule 1.2(3)(a) obligation“... to identify the real issues in dispute and facilitate thequickest means of resolving the claim at the least expense”,and

4. represents conduct that unnecessarily lengthened this pro-ceeding (Rule 10.33(2)(a)), was an improper step (Rule10.33(2)(d)), and was a serious form of litigation miscon-duct (Rule 10.33(2)(g)).

117 Considering these factors, I order the Defendant pay the Plaintiffs’costs to respond to the special damages argument on a solicitor-clientbasis. The only reason I have not ordered full indemnity costs is my con-clusion that Rule 9.13(b) offers the Defendant a post-trial and judgmentmechanism to raise the issue of entitlement to some special damages. AsI have previously commented, I would have rejected that application, hadthe Defendant followed the appropriate mechanism and not forced thePlaintiffs to engage in a full argument on that point.

118 If the parties cannot agree on the remaining costs they can bring thematter back before me by contacting my assistant within 30 days of re-ceiving this Judgment.

Order accordingly.


[Indexed as: Kent v. Martin]

Arthur Kent (Plaintiff) and Don Martin, The National PostCompany, Canwest Publishing Inc., National Post Holdings Ltd.

and Canwest Media Works Inc. (Defendants)


Docket: Calgary 080108414

2011 ABQB 675

D.K. Miller J.

Heard: October 11, 2011

Judgment: November 3, 2011

Civil practice and procedure –––– Costs — Costs of particular proceed-ings — Interlocutory proceedings — Amending pleadings –––– Relief fromrule requiring party seeking amendment to bear costs — In furtherance of plain-tiff’s action for defamation, defendant reporter M was examined for discov-ery — In course of discovery, M stated for first time that M had used lawyer R,plaintiff’s former legal counsel and official electoral agent, as source for im-pugned newspaper stories — Plaintiff then brought special chambers applicationfor leave to amend pleadings to include inter alia R as defendant — Applicationwas granted — Pursuant to R. 3.66 of Alberta Rules of Court, party seeking toamend pleadings bears costs of such amendment unless court orders other-wise — Intent and purpose of R. 3.66 is to require parties to get pleadings cor-rect in first instance — In present case, however, plaintiff was simply unable todo so, as until M’s examination, plaintiff was totally unaware that R might havebreached solicitor-client privilege with result that she would properly be defen-dant — Plaintiff was properly relieved from standard effect of R. 3.66 and wasentitled to recover party-and-party costs of application, together with disburse-ments and GST, half to be paid by media defendants and half by R.

Civil practice and procedure –––– Costs — Costs of particular proceed-ings — Interlocutory proceedings — Motions and applications –––– In fur-therance of plaintiff’s action for defamation, defendant reporter M was ex-amined for discovery — In course of discovery, M stated for first time that Mhad used lawyer R, plaintiff’s former legal counsel and official electoral agent,as source for impugned newspaper stories — Plaintiff then brought specialchambers application for leave to bring complaint before Law Society concern-ing R and for relief from implied undertaking rule concerning use of M’s exami-nation — Application was granted — Successful party is generally entitled tocosts, absent exceptional circumstances — As consent order was not forthcom-

Kent v. Martin 159

ing in present case for whatever reason, plaintiff clearly required court order inorder to secure needed relief — While application could have been broughtbefore case management justice, it was conduct of defendants which necessi-tated commencement by way of special chambers application — Plaintiff wasentitled to recover party-and-party costs of application from media defendants“under the appropriate Schedule C Column including the costs of this applica-tion and related disbursements and GST”.

Cases considered by D.K. Miller J.:

Goska Nowak Professional Corp. v. Robinson (2011), 2011 CarswellAlta 1033,2011 ABQB 385 (Alta. Q.B.) — considered

Koppe v. Garneau Lofts Inc. (2005), 385 A.R. 265, 59 Alta. L.R. (4th) 255, 28C.P.C. (6th) 216, 2005 ABQB 727, 2005 CarswellAlta 1437, [2005] A.J. No.1318 (Alta. Q.B.) — considered

869120 Alberta Ltd. v. B & G Energy Ltd. (2011), 2011 ABQB 209, 2011CarswellAlta 512 (Alta. Q.B.) — considered

Rules considered:

Alberta Rules of Court, Alta. Reg. 124/2010R. 3.66 — consideredR. 3.66(a) — consideredR. 10.29 — consideredR. 10.29(1) — consideredR. 10.30 — consideredR. 10.31 — consideredR. 10.33 — considered

Tariffs considered:

Alberta Rules of Court, Alta. Reg. 124/2010Sched. C. — referred to

ADDITIONAL REASONS with resepct to costs to judgment, reported at Kent v.Martin (2011), 45 Alta. L.R. (5th) 422, 2011 CarswellAlta 776, 2011 ABQB298 (Alta. Q.B.), granting plaintiff’s applications for amendment of statement ofclaim to add new defendants and to file complaint concerning plaintiff’s formercounsel and official electoral agent with Law Society.

G. Scott Watson for DefendantsMichael Bates, Gabor Zinner for PlaintiffDavid Pick for Kristine Robidoux, Q.C.


D.K. Miller J.:

1 On April 29, 2011, I gave my reasons for a decision on an applicationby Arthur Kent, allowing him to amend his Statement of Claim and addnew Defendants. I also granted him permission to report his former offi-cial agent and legal counsel for the election to the Law Society of Al-berta and thereby relieved him of his obligation under the implied under-taking rule.

2 The parties have not been able to agree on costs.3 Arthur Kent asks for costs as he was entirely successful. He asks for

costs against what has become known as the “collective media defend-ants” for the amendment application and the application to report Kris-tine Robidoux, Q.C. to the Law Society, and costs against Kristine Robi-doux, Q.C. for the amendment application only.

4 With respect to the amendment application, Rule 3.66 of the AlbertaRules of Court applies:

3.66 The costs, if any, as a result of an amendment to a pleading areto be borne by the party filing the amendment unless

(a) the amendment is a response to an amended pleading, or

(b) the Court otherwise orders.

5 This rule deviates from the standard rule of, “if you win your applica-tion you are entitled to costs”, according to Rule 10.29. The difference ishighlighted by Slatter, J. by way of obiter in Koppe v. Garneau LoftsInc., 2005 ABQB 727 (Alta. Q.B.) at paragraph 19, where he identifiedthe difference in cost consequences under the predecessor rule to Rule3.66:

Therefore, as a general rule where (for example) one party asserts aright to amend pleadings, and the other party denies that right, andthe amending party must take the matter to court, costs should followthe event. If the applicant succeeds on its motion to amend, it shouldget costs. Rule 141 says simply that the amending party must bearthe costs of the amendment...Rule 141 does not say that the applicantmust pay the costs of the fight over whether it has the right to amend,even if it wins that fight. That would be a most undesirable result,because it would mean that the respondents on motions like thatcould defend them with impunity, knowing that win or lose theywould receive costs. Absent some positive misconduct, the success-ful moving party should get costs of the motion to permit theamendment.

Kent v. Martin D.K. Miller J. 161

6 The amendment of the Statement of Claim by Arthur Kent was op-posed by the collective media Defendants and Kristine Robidoux, Q.C.on the basis, not that the Plaintiff was not entitled to amend to his plead-ings. Rather, it was opposed on the basis that the “implied undertakingrule” applied and the Plaintiff was not able to use the information as heintended, and in fact, the Plaintiff’s action was an abuse of process.

7 Rule 3.66 only applies to the amendment application. Rule 10.29(1)applies to the application against the collective media Defendants withregard to the Law Society application.

8 Because of the background leading up to the application, Arthur Kentargues that this case warrants a deviation from the standard, party-partycosts, and that full indemnity, solicitor-client costs are warranted.

9 The collective media Defendants argue that Arthur Kent should beliable for costs of this application based on Rule 3.66(a) and cases869120 Alberta Ltd. v. B & G Energy Ltd., 2011 ABQB 209 (Alta. Q.B.),a decision of Eidsvik, J. and Goska Nowak Professional Corp. v. Robin-son, 2011 ABQB 385 (Alta. Q.B.), a decision of McMahon, J.

10 Further, the media Defendants argue that they should not be liable forcosts of the Law Society application as it was unnecessary and couldhave been resolved in a manner short of bringing a special application.

11 Kristine Robidoux, Q.C. makes a similar argument to that of the me-dia Defendants based on Rule 3.66 and the cases of Goska NowakProfessional Corp. v. Robinson and 869120 Alberta Ltd. v. B & GEnergy Ltd. She only responds to the application concerning amendmentof the Statement of Claim as Arthur Kent is not pursuing her for costsrelative to the Law Society application.

12 Rules 10.30, 10.31 and 10.33 are drafted in such a way as to providea great deal of latitude to the Court. Under these rules, as under the previ-ous rules, a successful party is entitled to costs on a party-party basisunless there are rare and exceptional circumstances.

13 With respect to the application for relief from the implied undertakingrule in order to report Kristine Robidoux, Q.C. it is clear that Arthur Kentneeded to obtain a court order. Given the history of this matter it couldhave simply been brought before the Case Management Justice. How-ever, because of the position taken by the media Defendants and KristineRobidoux, Q.C., it appears that Arthur Kent had no choice but to bring aSpecial Chambers application. No real opposition to the application was


made at the Special Chambers application notwithstanding the Defend-ants as a whole forced the matter to a Special. For whatever reason, aConsent Order was not agreed to and accommodation was not made todeal with the matter before the Case Management Justice. As a result ofthe application before me I granted an Order, and it appears to me thatcosts should be awarded in Arthur Kent’s favour. While it appears thatthe matter could have been resolved short of a Special Chambers applica-tion, this isn’t one of those rare and exceptional circumstances whereanything other than party-party costs should be awarded. Accordingly, Iorder that with respect to the Law Society application, the collective me-dia Defendants shall pay Arthur Kent costs under the appropriate Sched-ule C Column including the costs of this application and related disburse-ments and GST.

14 The application for amendment of the Statement of Claim is some-what different because of Rule 3.66. I note that the cases argued beforeme seem to have conflicting views on how Rule 3.66 should be applied,and this, in essence, is the dispute between the parties on this cost appli-cation. The application had been opposed vigorously by all the Defend-ants and the proposed Defendant on the basis of the implied undertakingrule, not so much on the merits of the amendment.

15 This amendment application was clearly not routine or typical. Itarose as a result of a surprising disclosure by a Defendant in the discov-ery process. After having a new Claim struck as a result of that informa-tion, Arthur Kent brought the application to amend, and it was the De-fendants that insisted on a Special Chambers application. One Defendantalso filed Affidavit material outside the time directed by the Case Man-agement Justice. While it is true that the purpose of Rule 3.66 is to en-courage litigants to get their pleadings right the first time, there is no wayArthur Kent could have gotten his pleadings right at the time of filing hisStatement of Claim because he had no knowledge of Kristine Robidoux’sinvolvement until it was disclosed by Don Martin.

16 The voluntary disclosure by Don Martin clearly changed the game.The vigorous opposition to the amendment on grounds unrelated to thenormal procedure of allowing amendments and forcing the SpecialChambers application takes this case out of the ordinary. This case is notsimilar to what Justice McMahon faced. It seems to me that given thefacts of this case, the more appropriate way to view Rule 3.66 is how

Kent v. Martin D.K. Miller J. 163

Justice Slatter viewed the predecessor rule in Koppe v. Garneau LoftsInc..

17 Accordingly, on the application for amending the pleadings by ArthurKent, I am satisfied that he is entitled to his party-party costs on the ap-propriate column, including the application of October 11, 2011, and allreasonable disbursements and GST. On the division of payment of thecosts for the amendment application the collective media Defendantsshall pay 50% of the costs and Kristine Robidoux, Q.C. should pay 50%of the costs.

18 Again, I do not view this as an exceptional and rare circumstance re-quiring solicitor client costs.

Order accordingly.


[Indexed as: United States v. Sosa]

In the Matter of an Application Pursuant to Section 15 of theExtradition Act for an Order for the Committal of Jorge Sosa

The Attorney General of Canada (On behalf of the UnitedStates of America) (Applicant) and Jorge Sosa, also known as

“Jorge Vinicio Sosa Orantes” (Respondent)


Docket: Calgary 110065638X1

2011 ABQB 534

Neil Wittmann C.J.Q.B.

Heard: August 29, 2011

Judgment: September 2, 2011

Criminal law –––– Pre-trial procedure — Preliminary inquiry — Committalfor trial or discharge — Order to stand trial — Miscellaneous –––– Accusedwas person sought for prosecution by United States for perjury — Accused hadbeen member of Guatemalan Army, and specifically, served as sub-lieutenant ofelite unit responsible for massacre and rape of village — In order to becomecitizen of United States, accused completed application for naturalization — Onhis application, accused answered “no” to question of whether he had ever com-mitted crime or offence for which he had not been arrested, even though in truthand in fact, accused knew that he had committed crimes, including murder, atvillage — Accused also failed to list his membership in Guatemalan military inanswer to question that asked him to list any organization of which he was mem-ber of with which he was associated — Accused swore and certified under pen-alty of perjury that he knew content of his immigration form, and that answershe provided, including any changes, were true and correct to best of his knowl-edge and belief — Authority to proceed was issued by Minister of Justice (Min-ister) authorizing Attorney General of Canada to bring application for order forcommittal of accused — Application granted — Immigration and Customs En-forcement (ICE) Special Agent (SA) was involved in executing search warrantat accused’s home, during which number of items were seized affiliating himwith Guatemalan army — Accused made false statement with intent to mis-lead — Evidence clearly established that accused participated in killings as oneof commanding officers that took decision to slaughter 171 men, women andchildren.

United States v. Sosa 165

Cases considered by Neil Wittmann C.J.Q.B.:

Argentina (Republic) v. Mellino (1987), 1987 CarswellAlta 94, 1987 Carswell-Alta 581, 52 Alta. L.R. (2d) 1, (sub nom. Argentina v. Mellino) [1987] 1S.C.R. 536, (sub nom. Republic of Argentina v. Mellino) 40 D.L.R. (4th) 74,76 N.R. 51, [1987] 4 W.W.R. 289, 80 A.R. 1, 33 C.C.C. (3d) 334, 28 C.R.R.262, EYB 1987-66908 (S.C.C.) — referred to

Calder v. R. (1960), (sub nom. R. v. Calder) [1960] S.C.R. 892, 129 C.C.C. 202,1960 CarswellAlta 84 (S.C.C.) — referred to

Canada (Minister of Justice) v. Fischbacher (2009), 198 C.R.R. (2d) 168, 69C.R. (6th) 21, [2009] 3 S.C.R. 170, 255 O.A.C. 288, 2009 SCC 46, 2009CarswellOnt 6153, 2009 CarswellOnt 6154, (sub nom. Fischbacher v.Canada (Minister of Justice)) 248 C.C.C. (3d) 419, 394 N.R. 139, 312D.L.R. (4th) 1, [2009] S.C.J. No. 46, [2009] A.C.S. No. 46 (S.C.C.) —considered

Cotroni c. Centre de Prevention de Montreal (1989), (sub nom. El Zein c.Centre de Prevention de Montreal) [1989] 1 S.C.R. 1469, (sub nom. UnitedStates v. El Zein) 96 N.R. 321, (sub nom. El Zein c. Centre de Prevention deMontreal) 23 Q.A.C. 182, (sub nom. United States v. Cotroni) 48 C.C.C.(3d) 193, 96 N.S.R. 321, 1989 CarswellQue 1774, (sub nom. El Zein c.Centre de Prevention de Montreal) 42 C.R.R. 101, 1989 CarswellQue 129,[1989] S.C.J. No. 56, REJB 1989-95863 (S.C.C.) — referred to

Czech Republic v. Moravek (2004), 190 C.C.C. (3d) 142, 246 D.L.R. (4th) 22,[2005] 4 W.W.R. 263, 2004 MBCA 174, 2004 CarswellMan 469, 190 Man.R. (2d) 204, 335 W.A.C. 204, [2004] M.J. No. 414 (Man. C.A.) — referredto

Germany (Federal Republic) v. Schreiber (2000), 2000 CarswellOnt 5257,[2000] O.J. No. 2618 (Ont. S.C.J.) — referred to

Germany (Republic) v. Bushati (2007), 2007 CarswellAlta 1762, 85 Alta. L.R.(4th) 321, 438 A.R. 63, 2007 ABQB 592, [2008] 6 W.W.R. 519, [2007] A.J.No. 1447 (Alta. Q.B.) — referred to

Kindler v. Canada (Minister of Justice) (1991), 8 C.R. (4th) 1, [1991] 2 S.C.R.779, 67 C.C.C. (3d) 1, 84 D.L.R. (4th) 438, 129 N.R. 81, 6 C.R.R. (2d) 193,1991 CarswellNat 3, 45 F.T.R. 160 (note), 1991 CarswellNat 831, [1991]S.C.J. No. 63, EYB 1991-67266 (S.C.C.) — referred to

Philippines (Republic) v. Pacificador (1993), 1993 CarswellOnt 571, 19 Imm.L.R. (2d) 241, 14 O.R. (3d) 321, 64 O.A.C. 344, (sub nom. Pacificador v.Philippines (Republic of)) 83 C.C.C. (3d) 210, 23 C.R. (4th) 171, 16 C.R.R.(2d) 299 (Ont. C.A.) — referred to

R. v. Arcuri (2001), 2001 SCC 54, 2001 CarswellOnt 3083, 2001 CarswellOnt3084, 274 N.R. 274, 157 C.C.C. (3d) 21, 203 D.L.R. (4th) 20, 44 C.R. (5th)213, 150 O.A.C. 126, [2001] 2 S.C.R. 828, [2001] S.C.J. No. 52, REJB2001-25685 (S.C.C.) — referred to


R. v. Boisjoly (1970), [1970] Que. C.A. 763, 11 C.R.N.S. 265, 1970 Carswell-Que 2 (Que. C.A.) — referred to

R. v. Boisjoly (1971), [1972] S.C.R. 42, 5 C.C.C. (2d) 309, 23 D.L.R. (3d) 190,1971 CarswellQue 47, 1971 CarswellQue 47F (S.C.C.) — referred to

R. v. Buzeta (2003), 2003 CarswellOnt 1367, [2003] O.T.C. 324, [2003] O.J.No. 1547 (Ont. S.C.J.) — referred to

R. v. Courval (1957), 25 C.R. 239, 1957 CarswellQue 2 (Que. C.A.) —considered

R. v. Kovacs (1974), [1974] 3 W.W.R. 562, 1974 CarswellAlta 44 (Alta.C.A.) — referred to

R. v. Nikolovski (1996), 1996 CarswellOnt 4425, 1996 CarswellOnt 4426, 111C.C.C. (3d) 403, 31 O.R. (3d) 480 (headnote only), 141 D.L.R. (4th) 647, 3C.R. (5th) 362, [1996] 3 S.C.R. 1197, 204 N.R. 333, 96 O.A.C. 1, [1996]S.C.J. No. 122, EYB 1996-67711 (S.C.C.) — referred to

R. v. Schmidt (1987), 61 O.R. (2d) 530, 76 N.R. 12, 39 D.L.R. (4th) 18, 20O.A.C. 161, 33 C.C.C. (3d) 193, (sub nom. Schmidt v. Canada) 28 C.R.R.280, (sub nom. Canada v. Schmidt) [1987] 1 S.C.R. 500, (sub nom. Schmidtv. R.) 58 C.R. (3d) 1, 1987 CarswellOnt 95, 1987 CarswellOnt 961, EYB1987-67458 (S.C.C.) — referred to

R. v. Seath (2000), [2000] 9 W.W.R. 755, 147 C.C.C. (3d) 133, 83 Alta. L.R.(3d) 34, 2000 ABCA 174, 2000 CarswellAlta 612, 266 A.R. 190, 228W.A.C. 190 (Alta. C.A.) — referred to

United States v. Anekwu (2009), 69 C.R. (6th) 48, [2009] 11 W.W.R. 383, 2009SCC 41, 2009 CarswellBC 2516, 2009 CarswellBC 2517, (sub nom. UnitedStates of America v. Anekwu) 393 N.R. 77, (sub nom. United States ofAmerica v. Anekwu) 275 B.C.A.C. 282, (sub nom. United States of Americav. Anekwu) 465 W.A.C. 282, 197 C.R.R. (2d) 315, [2009] 3 S.C.R. 3, (subnom. United States of America v. Anekwu) 247 C.C.C. (3d) 99, 96 B.C.L.R.(4th) 1, 310 D.L.R. (4th) 1, [2009] S.C.J. No. 41, [2009] A.C.S. No. 41(S.C.C.) — referred to

United States v. Cobb (2001), 152 C.C.C. (3d) 270, 197 D.L.R. (4th) 46, 145O.A.C. 3, 267 N.R. 203, [2001] 1 S.C.R. 587, 81 C.R.R. (2d) 226, 2001 SCC19, 2001 CarswellOnt 964, 2001 CarswellOnt 965, 41 C.R. (5th) 81, [2001]S.C.J. No. 20, REJB 2001-23417 (S.C.C.) — referred to

United States v. Drysdale (2000), 2000 CarswellOnt 172, 32 C.R. (5th) 163, 71C.R.R. (2d) 133, [2000] O.J. No. 214 (Ont. S.C.J.) — referred to

United States v. Dynar (1997), (sub nom. United States of America v. Dynar) 44C.R.R. (2d) 189, (sub nom. United States of America v. Dynar) 33 O.R. (3d)478 (headnote only), (sub nom. United States of America v. Dynar) [1997] 2S.C.R. 462, 8 C.R. (5th) 79, (sub nom. United States of America v. Dynar)213 N.R. 321, (sub nom. United States of America v. Dynar) 115 C.C.C.(3d) 481, (sub nom. United States of America v. Dynar) 147 D.L.R. (4th)

United States v. Sosa 167

399, 1997 CarswellOnt 1981, 1997 CarswellOnt 1982, (sub nom. UnitedStates of America v. Dynar) 101 O.A.C. 321, [1997] S.C.J. No. 64(S.C.C.) — referred to

United States v. Ferras (2006), 268 D.L.R. (4th) 1, 209 C.C.C. (3d) 353, [2006]2 S.C.R. 77, 2006 SCC 33, 2006 CarswellOnt 4450, 2006 CarswellOnt 4451,39 C.R. (6th) 207, 351 N.R. 1, 214 O.A.C. 326, 143 C.R.R. (2d) 140, [2006]S.C.J. No. 33 (S.C.C.) — referred to

United States v. Gunn (2007), 389 W.A.C. 241, 212 Man. R. (2d) 241, 154C.R.R. (2d) 258, 2007 MBCA 21, 2007 CarswellMan 60, [2007] 4 W.W.R.707, [2007] M.J. No. 131 (Man. C.A.) — referred to

United States v. Hulley (2007), 2007 BCSC 240, 2007 CarswellBC 354, [2007]B.C.J. No. 338 (B.C. S.C.) — referred to

United States v. Kavaratzis (2004), 2004 CarswellOnt 172, 182 C.C.C. (3d) 176,181 O.A.C. 230, [2004] O.J. No. 173 (Ont. C.A.) — referred to

United States v. Kucan (2001), (sub nom. United States of America v. Kucan)151 O.A.C. 131, 2001 CarswellOnt 3729, [2001] O.J. No. 4162 (Ont.C.A.) — referred to

United States v. Kwok (2001), 152 C.C.C. (3d) 225, 197 D.L.R. (4th) 1, 145O.A.C. 36, 267 N.R. 310, [2001] 1 S.C.R. 532, 81 C.R.R. (2d) 189, 2001SCC 18, 2001 CarswellOnt 966, 2001 CarswellOnt 967, 41 C.R. (5th) 44,[2001] S.C.J. No. 19, REJB 2001-23416 (S.C.C.) — referred to

United States v. Lepine (1994), 163 N.R. 1, 69 O.A.C. 241, [1994] 1 S.C.R. 286,87 C.C.C. (3d) 385, 111 D.L.R. (4th) 31, 1994 CarswellOnt 1171F, 1994CarswellOnt 1171, EYB 1993-67672 (S.C.C.) — referred to

United States v. Mach (2006), 2006 CarswellOnt 4832, (sub nom. United Statesof America v. Mach) [2006] O.J. No. 3204 (Ont. S.C.J.) — referred to

United States v. McAmmond (2005), (sub nom. United States of America v.McAmmond) 126 C.R.R. (2d) 1, 2005 CarswellOnt 7, 192 C.C.C. (3d) 149,(sub nom. United States of America v. McAmmond) 193 O.A.C. 129, [2005]O.J. No. 8 (Ont. C.A.) — referred to

United States v. McDowell (2004), 183 C.C.C. (3d) 149, 185 O.A.C. 306, 237D.L.R. (4th) 677, 2004 CarswellOnt 1126, [2004] O.J. No. 1190 (Ont.C.A.) — referred to

United States v. McVey (1992), [1993] 1 W.W.R. 289, 16 B.C.A.C. 241, 28W.A.C. 241, (sub nom. McVey, Re) 77 C.C.C. (3d) 1, (sub nom. McVey, Re)[1992] 3 S.C.R. 475, 73 B.C.L.R. (2d) 145, 144 N.R. 81, (sub nom. McVey,Re) 97 D.L.R. (4th) 193, 1992 CarswellBC 318, 1992 CarswellBC 914,[1992] S.C.J. No. 95, EYB 1992-67043 (S.C.C.) — referred to

United States v. Prudenza (2007), 2007 ONCA 84, (sub nom. United States v.Anderson) 218 C.C.C. (3d) 225, 219 O.A.C. 369, 2007 CarswellOnt 638,(sub nom. United States of America v. Anderson) 153 C.R.R. (2d) 20, (sub


nom. United States of America v. Anderson) 85 O.R. (3d) 380, [2007] O.J.No. 449 (Ont. C.A.) — referred to

United States v. Saad (2004), 184 O.A.C. 282, 183 C.C.C. (3d) 97, 237 D.L.R.(4th) 623, 21 C.R. (6th) 317, 2004 CarswellOnt 1106, [2004] O.J. No. 1148(Ont. C.A.) — referred to

United States v. Shephard (1976), [1977] 2 S.C.R. 1067, 34 C.R.N.S. 207, 9N.R. 215, (sub nom. United States of America v. Sheppard) 30 C.C.C. (2d)424, (sub nom. United States of America v. Sheppard) 70 D.L.R. (3d) 136,1976 CarswellNat 1, 1976 CarswellNat 433F, [1976] S.C.J. No. 106(S.C.C.) — referred to

United States v. Shulman (2001), 152 C.C.C. (3d) 294, 197 D.L.R. (4th) 69,[2001] 1 S.C.R. 616, 268 N.R. 115, 145 O.A.C. 201, 81 C.R.R. (2d) 245,2001 SCC 21, 2001 CarswellOnt 962, 2001 CarswellOnt 963, 41 C.R. (5th)100, [2001] S.C.J. No. 18, REJB 2001-23415 (S.C.C.) — referred to

United States v. Smith (1984), 44 O.R. (2d) 705, 38 C.R. (3d) 228, 10 C.C.C.(3d) 540, 7 D.L.R. (4th) 12, 2 O.A.C. 1, 8 C.R.R. 245, 1984 CarswellOnt 37(Ont. C.A.) — referred to

United States v. Wong (1995), 98 C.C.C. (3d) 332, 1995 CarswellBC 549, (subnom. United States of America v. Wong (No. 2)) 59 B.C.A.C. 39, (sub nom.United States of America v. Wong (No. 2)) 98 W.A.C. 39, [1995] B.C.J. No.840 (B.C. C.A.) — referred to

United States v. Yang (2001), 2001 CarswellOnt 3141, 149 O.A.C. 364, 56 O.R.(3d) 52, 45 C.R. (5th) 205, 203 D.L.R. (4th) 337, 157 C.C.C. (3d) 225, 87C.R.R. (2d) 300, [2001] O.J. No. 3577 (Ont. C.A.) — referred to

Wolf v. R. (1974), 27 C.R.N.S. 150, [1975] 2 S.C.R. 107, 17 C.C.C. (2d) 425, 47D.L.R. (3d) 741, 2 N.R. 415, 1974 CarswellAlta 98, [1974] 6 W.W.R. 368,1974 CarswellAlta 189 (S.C.C.) — referred to


Criminal Code, R.S.C. 1985, c. C-46s. 131 — referred tos. 131(1) — considereds. 132 — considereds. 133 — considered

Extradition Act, S.C. 1999, c. 18Generally — referred tos. 2 “extradition agreement” — considereds. 2 “extradition partner” — considereds. 3(1) — considereds. 3(1)(a) — considereds. 3(1)(b) — considereds. 3(2) — considereds. 3(3) — referred to

United States v. Sosa Neil Wittmann C.J.Q.B. 169

s. 15 — considereds. 15(1) — considereds. 29 — referred tos. 29(1)(a) — considereds. 29(2) — considereds. 29(3) — considereds. 38(2) — pursuant to

APPLICATION for order for committal of accused on offence of perjury.

Cynthia Dickins, Damon D. Park for ApplicantAlain Hepner, Q.C., Maureen A. McConaghy, Q.C. for Respondent

Neil Wittmann C.J.Q.B.:

Introduction1 An Authority to Proceed was issued pursuant to section 15 of the Ex-

tradition Act, SC 1999, c.18 by the Minister of Justice for Canada (“theMinister”) authorizing the Attorney General of Canada to come beforethis Court to seek an Order for the committal of Jorge Sosa, also know as“Jorge Vinicio Sosa Orantes” (“Sosa”). Sosa is a person sought for pros-ecution by the United States of America and the Authority to Proceedstates that the Canadian offence corresponding to the alleged conduct isperjury, contrary to section 131 of the Criminal Code, R.S.C.1985, c.C-46.

Extradition Act Provisions2 Section 2 of the Extradition Act (“the Act”) contains definitions. The

relevant definitions are:

“extradition agreement” means an agreement that is in force, towhich Canada is a party and that contains a provision respecting theextradition of persons, other than a specific agreement.

“extradition partner” means a State or entity with which Canada isparty to an extradition agreement, with which Canada has enteredinto a specific agreement or whose name appears in the schedule.

3 Section 3 states as follows:

3. (1) A person may be extradited from Canada in accordance withthis Act and a relevant extradition agreement on the requestof an extradition partner for the purpose of prosecuting the


person or imposing a sentence on — or enforcing a sentenceimposed on — the person if

(a) subject to a relevant extradition agreement, the of-fence in respect of which the extradition is requestedis punishable by the extradition partner, by imprison-ing or otherwise depriving the person of their libertyfor a maximum term of two years or more, or by amore severe punishment; and

(b) the conduct of the person, had it occurred in Canada,would have constituted an offence that is punishablein Canada,

(i) in the case of a request based on a specificagreement, by imprisonment for a maximumterm of five years or more, or by a more severepunishment, and

(ii) in any other case, by imprisonment for a maxi-mum term of two years or more, or by a moresevere punishment, subject to a relevant extra-dition agreement.

(2) For greater certainty, it is not relevant whether the conductreferred to in subsection (1) is named, defined or character-ized by the extradition partner in the same way as it is inCanada.


15. (1) The Minister may, after receiving a request for extraditionand being satisfied that the conditions set out in paragraph3(1)(a) and subsection 3(3) are met in respect of one or moreoffences mentioned in the request, issue an authority to pro-ceed that authorizes the Attorney General to seek, on behalfof the extradition partner, an order of a court for the commit-tal of the person under section 29.

(2) If requests from two or more extradition partners are receivedby the Minister for the extradition of a person, the Ministershall determine the order in which the requests will be author-ized to proceed.

(3) The authority to proceed must contain

(a) the name or description of the person whose extradi-tion is sought;

(b) the name of the extradition partner; and


(c) the name of the offence or offences under Canadianlaw that correspond to the alleged conduct of the per-son or the conduct in respect of which the person wasconvicted, as long as one of the offences would bepunishable in accordance with paragraph 3(1)(b).

(4) A copy of an authority to proceed produced by a means oftelecommunication that produces a writing has the same pro-bative force as the original for the purposes of this Part.


29. (1) A judge shall order the committal of the person into custodyto await surrender if

(a) in the case of a person sought for prosecution, there isevidence admissible under this Act of conduct that,had it occurred in Canada, would justify committal fortrial in Canada on the offence set out in the authorityto proceed and the judge is satisfied that the person isthe person sought by the extradition partner; and

. . .

(2) The order of committal must contain

(a) the name of the person;

(b) the offence set out in the authority to proceed forwhich the committal is ordered;

(c) the place at which the person is to be held in custody;and

(d) the name of the extradition partner.

(3) A judge shall order the person discharged if the judge doesnot order their committal under subsection (1).

6 The most prominent applicable sections are quoted above. In addi-tion, there have been many judicial decisions to guide the extraditionjudges conducting an extradition hearing. Cited to me by counsel for theApplicant are the following cases: United States v. Shephard (1976), 30C.C.C. (2d) 424 (S.C.C.); United States v. Smith (1984), 10 C.C.C. (3d)540 (Ont. C.A.); Argentina (Republic) v. Mellino, [1987] 1 S.C.R. 536(S.C.C.); R. v. Schmidt, [1987] 1 S.C.R. 500 (S.C.C.); Cotroni c. Centrede Prevention de Montreal, [1989] 1 S.C.R. 1469 (S.C.C.); Kindler v.Canada (Minister of Justice), [1991] 2 S.C.R. 779 (S.C.C.); UnitedStates v. McVey, [1992] 3 S.C.R. 475 (S.C.C.); Philippines (Republic) v.Pacificador (1993), 83 C.C.C. (3d) 210 (Ont. C.A.); Supreme Court Act,


Section 40; United States v. Lepine, [1994] 1 S.C.R. 286 (S.C.C.); UnitedStates v. Wong (1995), 98 C.C.C. (3d) 332 (B.C. C.A.); R. v. Nikolovski(1996), 111 C.C.C. (3d) 403 (S.C.C.); United States v. Dynar, [1997] 2S.C.R. 462 (S.C.C.); United States v. Drysdale, [2000] O.J. No. 214(Ont. S.C.J.); Germany (Federal Republic) v. Schreiber, [2000] O.J. No.2618 (Ont. S.C.J.); United States v. Cobb, [2001] 1 S.C.R. 587 (S.C.C.);United States v. Kwok, [2001] 1 S.C.R. 532 (S.C.C.); R. v. Arcuri, [2001]2 S.C.R. 828 (S.C.C.); United States v. Yang (2001), 157 C.C.C. (3d) 225(Ont. C.A.); United States v. McDowell (2004), 183 C.C.C. (3d) 149(Ont. C.A.); United States v. Shulman (2001), 152 C.C.C. (3d) 294(S.C.C.); United States v. Kucan, [2001] O.J. No. 4162 (Ont. C.A.);United States v. Kavaratzis (2004), 182 C.C.C. (3d) 176 (Ont. C.A.);Czech Republic v. Moravek (2004), 190 C.C.C. (3d) 142 (Man. C.A.);United States v. McAmmond (2005), 192 C.C.C. (3d) 149 (Ont. C.A.);United States v. Mach, [2006] O.J. No. 3204 (Ont. S.C.J.); United Statesv. Ferras, [2006] 2 S.C.R. 77 (S.C.C.); United States v. Hulley, 2007BCSC 240, [2007] B.C.J. No. 338 (B.C. S.C.); United States v. Prudenza(2007), 218 C.C.C. (3d) 225 (Ont. C.A.); United States v. Gunn, 2007MBCA 21, [2007] M.J. No. 131 (Man. C.A.); Germany (Republic) v.Bushati, 2007 ABQB 592, [2008] 6 W.W.R. 519 (Alta. Q.B.); UnitedStates v. Anekwu, 2009 SCC 41 (S.C.C.); United States v. Saad (2004),237 D.L.R. (4th) 623 (Ont. C.A.); Canada (Minister of Justice) v.Fischbacher, 2009 SCC 46 (S.C.C.). Counsel also put a number of au-thorities before me on the issue of perjury as follows: R. v. Courval(1957), 25 C.R. 239 (Que. C.A.); R. v. Kovacs, [1974] 3 W.W.R. 562(Alta. C.A.); Calder v. R., [1960] S.C.R. 892 (S.C.C.); Wolf v. R., [1974]6 W.W.R. 368 (S.C.C.); R. v. Buzeta, 2003 CarswellOnt 1367 (Ont.S.C.J.), CRIMJ(P) 5848/00, 20030404; R. v. Seath, 2000 ABCA 174(Alta. C.A.); R. v. Boisjoly (1970), 11 C.R.N.S. 265 (Que. C.A.); aff’d(1971), [1972] S.C.R. 42 (S.C.C.).

7 Canada and the United States have entered into a bilateral extraditiontreaty. Therefore, they are extradition partners. There is no substantivedisagreement with respect to the extradition framework as articulated inthe authorities and the Act. The general principles include the following:

1. The jurisdiction of an extradition judge is statutory, derived solelyfrom the Extradition Act.

2. The concept of double criminality is central to the scheme of theAct. The extradition judge is concerned only with domestic crimi-


nality to determine only whether the conduct disclosed by the evi-dence of the requesting state amounts to the Canadian offencestated in the Authority to Proceed.

3. Foreign criminality is determined by the Minister as a condition ofissuing an Authority to Proceed.

4. An extradition hearing is not a trial but is rather intended to be anexpedited process to determine whether a trial should be held inthe requesting state and in this regard, the inquiry is whether thereis sufficient evidence to warrant sending the person sought to therequesting state.

5. An extradition judge does not have the jurisdiction to consider ordeal with defences that could be raised by the person sought at atrial.

6. A duly certified Record of the Case (“ROC”) conclusively deter-mines that the contents of documents contained in the ROC areadmissible into evidence at the extradition hearing.

7. The obligation of the requesting state is to establish a prima faciecase for the committal of the person sought.

8. The test to determine the sufficiency of the evidence at an extradi-tion hearing is akin to that necessary at a preliminary inquiry inorder to commit for a trial. The application of this test includes alimited weighing of the evidence by the extradition judge to deter-mine whether there is a plausible case. This test also incorporatesan inquiry into the reliability of the evidence to the extent that ifthe evidence is “manifestly unreliable” such that it would be un-safe to ground a verdict on it, that evidence will not be used tomake an Order of Committal.

The Record of the Case and the Evidence8 All of the evidence presented at this hearing was by way of a Certi-

fied ROC which was tendered without objection by counsel for Sosa.9 The evidence contained in the ROC includes a factual summary, and

the details of expected testimony from a number of witnesses.

Factual Summary10 Sosa had been a member of the Guatemalan Army, and specifically,

served as a sub-lieutenant of an elite unit known as the “Kaibiles.” The


Kaibiles were trained at a facility located in La Polvora, Guatemala,known as “the Kaibil School.” In early December 1982, a special patrolof approximately 20 Kaibiles from the Kaibil School, including Sosa,was deployed to the village of La Dos Erres, Guatemala to recover ap-proximately 20 or 21 rifles that had been stolen from a GuatemalanArmy convoy by guerrillas. The special patrol had been led to believethat rifles would be located in Dos Erres. In or around December 7, 1982,this special patrol entered Dos Erres, and massacred the men, women andchildren there by, among other means, hitting them in the head with asledgehammer and throwing them into the village well. Members of thespecial forces unit also forcibly raped girls and young women at DosErres before killing them.

11 In order to become a United States citizen, Sosa completed an Appli-cation for Naturalization (Form N-400). On his Form N-400, Sosa an-swered “no” to the question of whether he had ever committed a crime oroffense for which he had not been arrested, even though in truth and infact, Sosa knew that he had committed crimes, including murder, at thevillage of Dos Erres. Sosa also failed to list his membership in the Guate-malan military in answer to a question that asked the applicant to list anyorganization, association, fund, foundation, party, club, society, or simi-lar group in the United States or in any other place of which he was amember or with which he was associated. Finally, Sosa answered “no” tothe question on the Form N-400 that asked whether he had ever givenfalse or misleading information to any U.S. government official whileapplying for any immigration benefit, when in truth and in fact, Sosa hadanswered “NONE” in response to a question asking him to list past mem-berships, to include foreign military service, on his earlier Application toRegister for Permanent Residence or Adjust Status (Form I-485), and af-firmed that answer in an interview with a U.S. Citizenship and Immigra-tion Services (“USCIS”) officer in connection with his Form I-485. Sosacertified, under penalty of perjury, that the answers he provided on hisForm N-400 were true and correct.

12 Sosa was also interviewed by a naturalization examiner - under oath -in connection with his Form N-400, on or about March 18, 2008. Duringthis interview the naturalization examiner reviewed with Sosa his an-swers to the questions on the Form N-400 to ensure that his answers re-mained the same and that there were no changes. At the time of the inter-view, Sosa again swore and certified under penalty of perjury that heknew the content of the Form N-400, and that the answers he provided,


including any changes, were true and correct to the best of his knowledgeand belief.

Witnesses’ Testimony13 The ROC contained the details of the expected testimony of 3 confi-

dential witnesses, so called, because of concerns for their safety and thesafety of their families. The 3 confidential witnesses will testify that eachwas a soldier in the Guatemalan Army assigned to the Kaibil School andthe Special Patrol deployed to the village of Las Dos Erres in December1982. Further, that each knew an individual by the name of Sosa whowas one of the Commanding Officers of the Special Patrol; that the Spe-cial Patrol was formed for the purpose of fighting guerrillas; that the Spe-cial Patrol attended at the village for the purpose of retrieving rifles thatwere stolen by the guerrillas; that upon their attendance at Las Dos Erres,all of the men, women and children were killed on the order of the Com-manding Officers, including Sosa.

14 Each will testify as to the details of the killings and that no residentresisted; that many of the children were killed first by leading them to awell and hitting them on the head with a sledgehammer. Each will testifythat some members of the Special Patrol raped young girls and womenbefore killing them and that Sosa hit people on the head with a sledge-hammer. Two confidential witnesses will say they saw Sosa throw a gre-nade into the well and fire his weapon into the well.

Forensic Expert Witness15 A member of the Argentine Forensic Anthropology Team conducted

the exhumation of remains in the well and on the surface at Dos Erres isexpected to testify that the forensic team extracted 162 remains from thewell and another nine skeletal remains from two surface sites; that manywere children under the age of 12.

USCIS (United States Citizenship and Immigration Services) OfficerJohn Isoldi

16 This USCIS Officer is expected to testify that on November 30, 1998while working at the USCIS office in New York, New York, his dutiesincluded conducting interview of persons who had filed Applications toRegister Permanent Residence or Adjust Status (I-485). This form re-quires the applicant to answer a number of questions. Amongst the ques-


tions asked was that the applicant list present or past memberships in oraffiliations with every political organization, association, fund, founda-tion, party, club, society, or similar group in the United States or in anyother place since their 16th birthday, including foreign military service,and if none, to write “none”. Sosa answered “none” to this question onForm I-485, November 30, 1998. He was also required to sign the formto certify under penalty of perjury under the laws of the United Statesthat the application and the evidence submitted with it was all true andcorrect. In addition, USCIS Officer John Isoldi will testify as to the iden-tity of Sosa by virtue of photographic comparisons.

USCIS Officer Rony Figueroa17 USCIS Officer Rony Figueroa was working at the San Bernardino,

California office of USCIS on March 18, 2008 and his handwriting indi-cates that on that date he interviewed Sosa and determined during theinterview that his oral answers were the same as the written answers onSosa’s Form N0400. Although he had no personal recollection of the in-terview, his regular practice included the review of the immigration fileand asking each of the questions on the N-400 form, which is an applica-tion for naturalization. The N-400 requires applicants to answer variousquestions as to whether he had ever been a members of or associatedwith any “organization, association, fund, foundation, party, club, societyor similar group in the United States or in any other place?” Sosachecked “Yes” and listed only “World Union Budo Sosa-Kai”.

18 On March 18, 2008, there was no specific question asked about for-eign miliary service or military service. There was a question on FormN-400 as to whether the applicant “has ever committed a crime or of-fence for which he or she has not been arrested” to which Sosa answered“no”. Form N-400 also contained a statement that Sosa signed and certi-fied “under penalty of perjury under the laws of the United States ofAmerica, that this application, and the evidence submitted with it, are alltrue and correct.” He affirmed this in the interview and the invariablepractice of Figueroa is to place the applicant under oath before con-ducting the interview. Sosa was also asked whether in completing the N-400 form whether he had ever given false or misleading information toany U.S. Government Official while applying for any immigration bene-fit to which he answered “no”, both in the oral interview and on Form N-400.


Other Evidence19 The ROC further discloses that an Immigration and Customs Enforce-

ment (“ICE”) Special Agent (“SA”) Preston Ober was involved in exe-cuting a search warrant at Sosa’s home in May 2010 during which anumber of items were seized. Those items include: several pictures ofSosa in military uniform including a picture of him with a Kaibil beret,several pictures of Kaibiles wearing a Kaibil beret and Kaibil shirts,Sosa’s diploma to become an officer in the Guatemalan military, a cardbearing Sosa’s name from the Guatemala Sankukai Karate-Do. In addi-tion, Guatemalan records obtained pursuant to a Mutual Legal AssistanceTreaty show that Criminal Trial Court of San Benito Peten in Guatemalaissued an arrest warrant on April 6, 2000 for Sosa for the crime of mur-der; that Sosa served in the Guatemalan military from January 1976 toMay 1985; that he served as an instructor at the Kaibil School; thatSosa’s Guatemalan national identification card includes date of birthMarch 7, 1958, the same date disclosed on his expired Canadian Passportwhich is attached as Exhibit 3 to the ROC.

The Elements of Perjury: Section 131 of the Criminal Code20 Section 131 of the Criminal Code states as follows:

131. (1) Subject to subsection (3), every one commits perjury who,with intent to mislead, makes before a person who is authorized bylaw to permit it to be made before him a false statement under oath orsolemn affirmation, by affidavit, solemn declaration or deposition ororally, knowing that the statement is false.

21 The authorities clearly establish that the elements of the offense ofperjury are:

1. A person making a false statement under oath or affirma-tion by affidavit, solemn declaration or deposition or orally.

2. The person making the false statement knowing that thestatement was false.

3. The person who made the false statement knowing it wasfalse with intent to mislead.

22 Section 132 of the Criminal Code states that every one who commitsperjury is guilty of an indictable offence and liable to imprisonment for aterm not exceeding fourteen years. Section 133 of the Criminal Codestates that no person shall be convicted of an offence under section 132on the evidence of only one witness unless the evidence of that witness is


corroborated in a material particular by evidence that implicates theaccused.

Analysis23 At the heart of modern extradition law in Canada, is the principle of

double criminality. A concise explanation of the concept is set forth inFischbacher at paragraphs 25-27. Reference is made to section 3(1)(a) ofthe Act which has codified the foreign aspect of double criminality andparagraph (b) of section 3(1) describing the domestic aspect of doublecriminality which requires that the conduct giving rise to the foreign of-fence amount to a criminal offence under Canadian law with a specificpenalty. Both the foreign and domestic elements must be satisfied.

24 But the foreign element is satisfied once the Minister makes a deter-mination as required in section 15(1) and paragraph 3(1)(a) of the Act. Itwill be remembered that section 15(1) states that the Minister may issuean authority to proceed if he is satisfied that the conditions set out inparagraph 3(1)(a) and subsection 3(3) are met in respect of the offencesmentioned in the request. Once the Minister makes his determination, theforeign component of double criminality is satisfied: Fischbacher, para-graph 30.

25 The remaining function of an extradition judge at the hearing is todetermine whether that the domestic component of double criminality issatisfied as required by section 3(1)(b) of the Act because the Ministerhas already established that the foreign component of double criminalityis satisfied: Fischbacher, paragraph 35.

26 Turning to the domestic aspect as mandated, I must determinewhether the evidence in the ROC is capable of supporting a convictionfor perjury pursuant to section 131 of the Criminal Code. Sosa has ar-gued, through his counsel, that there is no evidence to suggest that theUSCIS Officer Figueroa asked Sosa whether he had been in the militarywhen conducting the March 18, 2008 interview. Sosa was asked thequestion about foreign military service when he filled out his form I-485on November 30, 1998. That form contained a clause that required Sosato certify under penalty of perjury under the laws of the United States,that the application and evidence submitted with it was all true andcorrect.

27 When USCIS Officer Figueroa put Sosa under oath on March 18,2008, Sosa was asked whether he had ever given false or misleading in-


formation to any U.S. government official while applying for any immi-gration benefit to which he answered “no” both in the oral interview andon Form N-400. Prima facie, I find that Sosa made a false statement, thathe knew it was false and he made it with intent to mislead. Proof of thoseelements is discussed in Courval where Pratte, J. stated that evidenceestablishing replies to questions are false will raise the presumption thatthe accused knew them to be false and that once an accused swears tofalse evidence with knowledge of the facts, it is with intention to deceivebecause people only lie for the purpose of misleading (paragraph 32).

28 Sosa has argued that USCIS Officer Figueroa on March 18, 2008, didnot specifically asked Sosa whether he had been in the military and thatthere is no evidence of this. In my view, the lack of that evidence is notessential to sustaining a prima facie case for perjury.

29 The second issue involves the question as to whether Sosa “has evercommitted a crime or offence for which he or she has not been arrested”on Form N-400 and to which he answered “no”. He made the same an-swer when placed under oath by USCIS Officer Figueroa on March 18,2008. The form he signed and certified was “under penalty of perjuryunder the laws of the United States of America, that this application andthe evidence submitted with it, are all true and correct”.

30 Sosa has argued a number of points on this issue which are, in reality,potential defences to the perjury charge on this aspect of the matter;namely that he forgot what he had said on Form I-485 about the answerwith respect to foreign military service, that he acted out of ignorance,error or carelessness, or the error was that of the person that prepared thedocument, not Sosa.

31 Sosa further argues that the prosecution would have to prove that theincident at Dos Erres occurred, that it constituted an offence, that Sosawas present and involved and that he had some control over the incident,that he bore culpability, that he knew his engagement constituted a crimeor an offence.

32 The evidence of the massacre at Dos Erres clearly establishes thatSosa was present and involved; that he actively participated in the kill-ings with a sledgehammer, with a firearm and a grenade. The evidencealso clearly establishes that he was one of the commanding officers thattook the decision to slaughter 171 men, women and children.

33 It is difficult for this Court to comprehend the murderous acts of de-praved cruelty on the scale disclosed by the evidence. This conduct is


criminal in any civilization. When Sosa was asked the question aboutwhether he has ever committed a crime for which he had not been ar-rested, he knew, based on the evidence in the ROC, what his involve-ment at Dos Erres was and made a false statement about it knowing it tobe false and with intent to mislead. The corroboration element in section133 of the Criminal Code of Canada is satisfied in the instance of thestatements about foreign military service and making false statements toa U.S. Immigration Officer by completion of the forms and by the inter-view under oath. The statement about the crime is similarly corroborated.

Conclusion34 Pursuant to section 29 of the Act, I order Sosa into custody to await

surrender on the basis that there is evidence admissible under the Act ofthe conduct I have described, that had it occurred in Canada would jus-tify committal for trial in Canada on the offence of perjury pursuant tosection 131 of the Criminal Code as set out in the Authority to Proceed.

35 Further, I am satisfied, as I must be, that Sosa is the person sought bythe extradition partner. His identity was admitted through his counsel byagreement at the beginning of this hearing.

36 The Order of Committal will contain Sosa’s full name, the offence setout in the Authority to Proceed for which the committal is ordered, theplace at where Sosa is to be held in custody as well as the name of theextradition partner, namely the United States of America.

37 Pursuant to section 38(2) of the Act, I am required to inform Sosa thathe will not be surrendered until after the expiry of 30 days from the dateof the Order of Committal, that he has a right to appeal the Order and toapply for judicial interim release.

Application granted.

375850 Alberta Ltd. v. Noel 181

[Indexed as: 375850 Alberta Ltd. v. Noel]

375850 Alberta Ltd. (Appellant) and Beverley Noel and theDirector of the Alberta Human Rights Commission

(Respondents)


Docket: Edmonton 1003-17381

2011 ABQB 218

S.J. Greckol J.

Heard: March 2, 2011

Judgment: April 1, 2011

Human rights –––– Practice and procedure — Judicial review — Generalprinciples –––– Standard of review.

Human rights –––– What constitutes discrimination — Sex — Employ-ment — Miscellaneous issues –––– Complainant was hired by D Ltd. to work inoil patch — D Ltd. arranged and paid for complainant’s accommodation at campfor oil patch workers, operated by appellant — Caretaker employed by appellantwas in complainant’s room at camp without permission on two occasions — Af-ter complaining to appellant, complainant quit her job and left camp — Com-plainant filed complaint against appellant alleging gender discrimination in em-ployment contrary to s. 7(1) of Human Rights Act — Human Rights Tribunalallowed complaint — Appellant appealed, alleging that complaint against itunder s. 7(1) could not succeed as it was not complainant’s employer — Appealallowed — Despite finding by Tribunal of discrimination and sexual harassmentin respect of conduct complainant suffered, this discrimination did not fallwithin s. 7(1)(b) of Act as being by employer “with regard to employment orany term or condition of employment” — Complainant was neither directly norindirectly employed by appellant — Appellant did not pay complainant, directher activities, have power to discipline or dismiss her, or benefit from her ser-vices — D Ltd. was complainant’s employer; however, D Ltd. was not named asparty to complaint — Only nexus between complainant and appellant was one ofaccommodation rather than employment, but complaint was not made under s. 4of Act.

Cases considered by S.J. Greckol J.:

Alliance Pipeline Ltd. v. Smith (2011), 328 D.L.R. (4th) 1, 56 C.E.L.R. (3d) 161,16 Admin. L.R. (5th) 157, [2011] 1 S.C.R. 160, 2011 SCC 7, 2011 Car-


swellNat 202, 2011 CarswellNat 203, 102 L.C.R. 1, 412 N.R. 66, [2011]S.C.J. No. 7, [2011] A.C.S. No. 7 (S.C.C.) — considered

Lockerbie & Hole Industrial Inc. v. Alberta (Director, Human Rights &Citizenship Commission) (2011), 2011 CarswellAlta 9, 16 Admin. L.R. (5th)255, [2011] 6 W.W.R. 70, 39 Alta. L.R. (5th) 236, 329 D.L.R. (4th) 76, 502W.A.C. 295, 493 A.R. 295, 2011 ABCA 3, 2011 C.L.L.C. 230-008 (Alta.C.A.) — followed

New Brunswick (Board of Management) v. Dunsmuir (2008), 372 N.R. 1, 69Admin. L.R. (4th) 1, 69 Imm. L.R. (3d) 1, (sub nom. Dunsmuir v. NewBrunswick) [2008] 1 S.C.R. 190, 844 A.P.R. 1, (sub nom. Dunsmuir v. NewBrunswick) 2008 C.L.L.C. 220-020, D.T.E. 2008T-223, 329 N.B.R. (2d) 1,(sub nom. Dunsmuir v. New Brunswick) 170 L.A.C. (4th) 1, (sub nom.Dunsmuir v. New Brunswick) 291 D.L.R. (4th) 577, 2008 CarswellNB 124,2008 CarswellNB 125, 2008 SCC 9, 64 C.C.E.L. (3d) 1, (sub nom.Dunsmuir v. New Brunswick) 95 L.C.R. 65, [2008] S.C.J. No. 9, [2008]A.C.S. No. 9 (S.C.C.) — considered

Robichaud v. Brennan (1982), 3 C.H.R.R. D/977, 82 C.L.L.C. 17,012 (Can.Human Rights Trib.) — considered

Robichaud v. Brennan (1987), 8 C.H.R.R. D/4326, 1987 CarswellNat 907, 1987CarswellNat 1105, (sub nom. Robichaud v. Canada (Treasury Board)) 87C.L.L.C. 17,025, [1987] 2 S.C.R. 84, (sub nom. Robichaud v. R.) 40 D.L.R.(4th) 577, (sub nom. Brennan v. Canada) 75 N.R. 303, EYB 1987-67285,[1987] S.C.J. No. 47 (S.C.C.) — referred to

Walsh v. Mobil Oil Canada (2008), 2008 ABCA 268, 2008 CarswellAlta 1168,94 Alta. L.R. (4th) 209, [2008] 11 W.W.R. 205, 69 C.C.E.L. (3d) 1, 296D.L.R. (4th) 178, 2008 C.L.L.C. 230-033, 64 C.H.R.R. D/84, 438 W.A.C.199, 440 A.R. 199, [2008] A.J. No. 830 (Alta. C.A.) — considered


Alberta Human Rights Act, R.S.A. 2000, c. A-25.5Generally — referred tos. 4 — considereds. 7 — considereds. 7(1) — considereds. 7(1)(b) — considereds. 32(1) — considereds. 32(2) — considereds. 37(1) — considereds. 37(4) — considereds. 37(5) — considered

375850 Alberta Ltd. v. Noel S.J. Greckol J. 183

Human Rights, Citizenship and Multiculturalism Act, R.S.A. 2000, c. H-14s. 7(1) — referred to

APPEAL from decision of Human Rights Tribunal upholding complaint of gen-der discrimination in employment.

Audrey Dean for AppellantKevin Mah, Norman Simons for Respondents

S.J. Greckol J.:

I. Introduction1 On September 16, 2010, a tribunal of the Alberta Human Rights

Commission (the “Tribunal”) upheld a complaint of gender discrimina-tion in employment filed against 375850 Alberta Ltd. by Beverly Noelunder what is now s. 7(1) of the Alberta Human Rights Act, R.S.A. 2000,c. A-25.5 (the “Act”). The Tribunal awarded Ms. Noel $5,000.00 in gen-eral damages and one year’s wages. The Appellant 375850 Alberta Ltd.appeals that decision pursuant to s. 37(1) of the Act on the basis it wasnot Ms. Noel’s employer and, therefore, the complaint could not succeedunder s. 7(1) of the Act. The Director of the Alberta Human Rights Com-mission (the “Director”) cross appeals the remedy granted by theTribunal.

II. Facts2 Beverley Noel accepted employment with Dy-Kel Services Ltd.

(“Dy-Kel”), a company involved in well testing in the oil patch nearManning, Alberta. Dy-Kel arranged and paid for her accommodation atthe Hamburg Open Camp (the “Camp”), a workers’ camp owned by theAppellant, 3475850 Alberta Ltd. Mr. Edwin Wiebe is a Director of theAppellant.

3 According to findings made by the Tribunal, Ms. Noel completed awork shift on February 21, 2006 and returned to her room. She emergedfrom her shower unclothed to discover a camp maintenance employee,Mr. Jacob Chernish, standing in the doorway watching her. She yelled athim, telling him to leave her room. When he did not, she asked him whathe wanted and he replied that she had left her keys in the door. She or-dered him to leave, got dressed, and confronted him in the hall, askinghim what business he had in her room. He accused her of smoking mari-juana in the room.


4 The following day, Ms. Noel was asleep in bed. She awoke to findMr. Chernish standing in her room. He again accused her of smokingmarijuana there. Ms. Noel told her immediate supervisor what had oc-curred, and then the Camp manager, who advised her that he wouldspeak with Mr. Chernish. The manager referred her to Mr. Wiebe, whowas in Edmonton. She spoke with him on two occasions, but he hung upon her when she asked him to wait while she went to retrieve a note ofapology and explanation written to her on February 27th by Mr.Chernish. Ms. Noel was unable to contact Mr. Wiebe again.

5 Ms. Noel began to keep a steak knife under her pillow for self de-fence. On one occasion, when she returned to her room, she found thesteak knife blade broken. As a result of this event, she started sleeping inher truck. Eventually, she quit her job and left the camp.

6 Ms. Noel took the matter to the RCMP and charges were laid againstMr. Chernish. On January 25, 2007, he was convicted of one count ofentering a dwelling house with intent to commit an indictable offence inrelation to the February 22, 2006 incident.

7 On April 7, 2006, Ms. Noel filed a complaint against the Appellantand Wiebe Construction under s. 7(1) of the Human Rights, Citizenshipand Multiculturalism Act, R.S.A. 2000, c. H-14, now s. 7(1) of the Al-berta Human Rights Act (the “Act”) alleging gender discrimination inemployment, specifically sexual harassment. Section 7(1)(b) of the Actprohibits an employer from discriminating against any person with re-gard to employment or any term or condition of employment because ofthe gender of that person or of any other person.

8 The matter was heard by the Tribunal on July 19 and 20, 2010. In adecision dated September 16, 2010, the Tribunal upheld the complaint,finding that the Appellant had discriminated on the basis of gender inrelation to the employment of Ms. Noel.

9 In considering whether the incidents in issue constituted the type ofbehaviour prohibited by s. 7(1)(b) of the Act, the Tribunal relied on thefollowing characteristics listed by the Canadian Human Rights Tribunalin Robichaud v. Brennan [(1982), 3 C.H.R.R. D/977 (Can. HumanRights Trib.)], 1982 CanLII 3at para. 25, upheld by the S.C.C. at [1987]2 S.C.R. 84 (S.C.C.):

(1) it is unsolicited by the complainant, unwelcome to the com-plainant and expressly or explicitly known to be unwel-come by the respondent;


(2) the conduct must be persisted in despite protest by the sub-ject of the sexual advances or, if not persistent, the rejectionof the conduct must have had adverse employment conse-quences; and

(3) if the complainant cooperates with the alleged harassment,such compliance must have been secured by employment-related threats or promises.

10 The Tribunal found that the Appellant knew, as a result of Ms. Noel’sadverse reaction after the first intrusion, that Mr. Chernish’s presencewas unwanted. It noted that the Appellant did not take any steps to ad-dress the incident of intrusion and the effect it had “on their employee.”The Tribunal took from the fact that Mr. Chernish had used his passkeyand stood beside Ms. Noel’s bed while she was sleeping, that sexual har-assment had occurred and it found that this was a repeated incident ofintrusion. The Tribunal was of the view that the incident with the brokenknife indicated that Mr. Chernish or someone else had entered Ms.Noels’ room in her absence in an attempt to send a harassing message toher. It determined that there had been three intrusions into her privatespace and, despite this the Appellant took no steps to address the con-cerns raised by Ms. Noel. As a result, she was traumatized, lived in con-stant fear and had to find other living accommodations.

11 The Tribunal found that the events described constituted prima faciediscrimination. It considered that living at the Camp fell under the “withregard to employment, or any term or condition of employment” wordingin s. 7(1)(b) of the Act. The Tribunal accepted that there is a positiveobligation on employers to take active steps to prevent sexual harassmentin the workplace from happening and a duty to act immediately and ef-fectively to end it if it becomes aware that sexually harassment is occur-ring. It found that when Ms. Noel notified the Appellant’s representativeby telephone of the first intrusion, a “reasonable person” could have in-stalled a simple, inexpensive device such as a sliding deadbolt, whichwould have enabled Ms. Noel to secure the door when she was occupy-ing the room while still enabling cleaning and maintenance staff accessas required.

12 The Tribunal rejected the Appellant’s argument that because Ms.Noel was not its employee, it was not required to take direct action, not-ing that Mr. Chernish was an employee of the Appellant’s. The Tribunalheld that it was insufficient for the Appellant to simply rely on the crimi-


nal justice system, without taking any action on its part to rectify thesituation.

13 The Tribunal concluded that agents for the Appellant discriminatedagainst Ms. Noel contrary to the provisions of the Act and that, as a re-sult, Ms. Noel suffered depression, feelings of fear and violation, hadrecurring nightmares and experienced problems with her appetite, sleep,and finding employment. It determined that the sexual harassment had asignificant effect on Ms. Noel’s emotional well being. The Tribunalawarding her $5,000.00 in general damages for the trauma, pain and suf-fering she had experienced. The Tribunal Chair indicated that a largergeneral damages award was not granted “due to the facts found by theProvincial Court in their judgment regarding the actions of Mr.Chernish.” The Tribunal also awarded 12 months of lost wages to putMs. Noel back in the position she would have been had there been nodiscrimination, together with interest on the general damages and lostwages awards.

14 The Appellant, pursuant to s. 37(1) of the Act, appeals the decision onthe basis it was not Ms. Noel’s employer and, therefore, the complaintcould not succeed under s. 7(1) of the Act. The Director of the AlbertaHuman Rights Commission cross appeals the remedy granted by theTribunal.

III. Issue15 The issues on this appeal include:

A. What is the appropriate standard of review?

B. Did the Tribunal’s interpretation of s. 7(1)(b) of the Actmeet that standard of review?

IV. Legislation16 The relevant provisions of the Act include the following:

4. No person shall

(a) deny to any person or class of persons any goods, services,accommodation or facilities that are customarily available tothe public, or

(b) discriminate against any person or class of persons with re-spect to any goods, services, accommodation or facilities thatare customarily available to the public,


because of the race, religious beliefs, colour, gender, physical disa-bility, mental disability, ancestry, place of origin, marital status,source of income, family status or sexual orientation of that person orclass of persons or of any other person or class of persons.

7(1) No employer shall

(a) refuse to employ or refuse to continue to employ any person,or

(b) discriminate against any person with regard to employment orany term or condition of employment.

because of the race, religious beliefs, colour, gender, physical disa-bility, mental disability, age, ancestry, place of origin, marital status,source of income, family status or sexual orientation of that person orof any other person.

32(1) A human rights tribunal

(a) shall, if it finds that a complaint is without merit, order thatthe complaint be dismissed, and

(b) may, if it finds that a complaint has merit in whole or in part,order the person against whom the finding was made to doany or all of the following:

(i) to cease the contravention complained of;

(ii) to refrain in the future from committing the same orany similar contravention;

(iii) to make available to the person dealt with contrary tothis Act the rights, opportunities or privileges that per-son was denied contrary to this Act;

(iv) to compensate the person dealt with contrary to thisAct for all or any part of any wages or income lost orexpenses incurred by reason of the contravention ofthis Act;

(v) to take any other action the tribunal considers properto place the person dealt with contrary to this Act inthe position the person would have been in but for thecontravention of this Act.

(2) A human rights tribunal may make any order as to costs that itconsiders appropriate.

. . .

37(1) A party to a proceeding before a human rights tribunal mayappeal an order of the tribunal to the Court of Queen’s Bench by


application filed with the clerk of the Court at the judicial centreclosest to the place where the proceeding was held.

. . .

(4) The Court may

(a) confirm, reverse or vary the order of the human rights tribu-nal and make any order that the tribunal may make under sec-tion 32, or

(b) remit the matter back to the tribunal with directions.

(5) Commencement of an appeal under this section does not operateas a stay of proceedings under the order of the human rights tribunalunless the Court so orders.

V. Analysis

A. What is the Appropriate Standard of Review?17 The Appellant contends that the standard of review to be applied to a

decision of a Human Rights Commission tribunal on a question of law iscorrectness, citing Walsh v. Mobil Oil Canada, 2008 ABCA 268 (Alta.C.A.) at para. 55, (2008), 440 A.R. 199 (Alta. C.A.). The Commissioncontends that the standard of review is reasonableness, relying onAlliance Pipeline Ltd. v. Smith, 2011 SCC 7 (S.C.C.) at para. 26, inwhich Fish J., for the majority, provided the following summary of thevarious categories of issues and corresponding standards of review setout in New Brunswick (Board of Management) v. Dunsmuir, 2008 SCC9, [2008] 1 S.C.R. 190 (S.C.C.):

Under Dunsmuir, the identified categories are subject to review foreither correctness or reasonableness. The standard of correctnessgoverns: (1) a constitutional issue; (2) a question of “general law‘that is both of central importance to the legal system as a whole andoutside the adjudicator’s specialized area of expertise’” (Dunsmuir,at para. 60 citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC63, [2003] 3 S.C.R. 77, at para. 62); (3) the drawing of jurisdictionallines between two or more competing specialized tribunals; and (4) a“true question of jurisdiction or vires” (paras. 58-61). On the otherhand, reasonableness is normally the governing standard where thequestion: (1) relates to the interpretation of the tribunal’s enabling (or“home”) statute or “statutes closely connected to its function, withwhich it will have particular familiarity” (para. 54); (2) raises issuesof fact, discretion or policy; or (3) involves inextricably intertwinedlegal and factual issues (paras. 51 and 53-54).


18 In Walsh, which was issued after Dunsmuir but well before Smith,Ritter J.A., for the majority, held at para. 55 that while human rightstribunals may be afforded some deference with respect to findings of factand credibility, reviewing courts will be unconstrained in their assess-ment of the evidence as it relates to the applicable law, particularlywhere an error is found in respect of the tribunal’s articulation of the law.He did not distinguish between questions of law relating to interpretationof the Act and questions of general law that are of central importance tothe legal system as a whole and outside the adjudicator’s specialized areaof expertise.

19 Recently, in Lockerbie & Hole Industrial Inc. v. Alberta (Director,Human Rights & Citizenship Commission), 2011 ABCA 3 (Alta. C.A.) atpara. 8, the Alberta Court of Appeal ruled that a tribunal decision deter-mining the meaning of the word “employer” in s. 7 of the Act must bereviewed against the correctness standard, reasoning that:

The central issue in these appeals is the meaning of the word “em-ployer” found in the Act, which is an extricable question of law. Afull fresh standard of review analysis is not required because thisCourt has previously set a correctness standard of review for deci-sions on questions of law by Human Rights Panels: Alberta (HumanRights and Citizenship Commission) v. Kellogg Brown & Root(Canada), 2007 ABCA 426, 84 Alta. L.R. (4th) 205, 425 A.R. 35 atparas. 18, 27; Walsh v. Mobil Oil Canada, 2008 ABCA 268, 94 Alta.L.R. (4th) 209, 440 A.R. 199 at para. 55; following Canada (Attor-ney General) v. Mossop, [1993] 1 S.C.R. 554; University of BritishColumbia v. Berg, [1993] 2 S.C.R. 353 at pp. 368-9; Gould v. YukonOrder of Pioneers, [1996] 1 S.C.R. 571 at paras. 3, 46-7; Dunsmuirv. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190at paras. 55, 60.Although the Panel was called upon to interpret a term in its homestatute, the key term “employer” is not defined in the statute and is aterm of general application. The determination of who is an “em-ployer” is a question of general importance to the legal system andoutside the specialized area of expertise of the Panel, which also jus-tifies the correctness standard of review: Dunsmuir at para. 55.

20 Slatter J.A., who delivered the Court’s judgment in Lockerbie, justi-fied selection of the correctness standard not only by referring to pastcase law of the Court of Appeal and also by fitting the issue within thecriteria outlined in Smith for application of that standard.

21 Some of the participants in the appeals in Lockerbie apparently ar-gued that deference should be extended to questions of law decided by a


human rights panel, presumably at least those in relation to interpretationof the Act. However, Slatter J.A. responded at para. 9 that the previousdecisions of the Court of Appeal on the appropriate standard to apply arebinding.

22 In the present case, the real issue on this appeal is whether the Tribu-nal applied the proper legal test to the facts before it. As that is a questionof law, correctness is the appropriate standard of review to apply.

B. Did the Tribunal Apply the Proper Legal Test?23 The Appellant argues, as it did before the Tribunal, that the prohibi-

tion in s. 7(1)(b) of the Act is directed at an employer. It says that Ms.Noel was never employed by it. Rather, she was employed by Dy-Kel.

24 This argument was not directly addressed in the Director’s submis-sions on this appeal, although there was an opportunity to do so. Instead,the submissions focussed on the issue of whether Ms. Noel was “in thecourse of employment.”

25 During the hearing before the Tribunal, counsel for the Director ad-vised that the complaint was not dismissed outright because the Appel-lant did not initially raise the issue of it having been brought under thewrong section of the Act. She further stated:

My other thinking was that this was not a service customarily availa-ble to the public. This is an accommodation provided by the em-ployer. It’s not a service. I can’t go up there and live there. So it’svery tied in with the employment. And I will say that I did thinkabout the matter beforehand, but I didn’t research it or write about itbecause I thought, well, it hasn’t been raised, and it’s truly one andthe same.

And in terms of human rights of course, we interpret matters broadly,and I would interpret this broadly and say that, yes, we could add thename of the employer as well, but I think this is good enough in myperspective.

26 I agree with the Appellant that the prohibition in s. 7 applies to anemployer in terms of its behaviour or that of its employees or possiblyagents towards an employee or prospective employee in the course ofemployment. In reviewing the Tribunal’s decision, it is apparent that itdid not consider the question of whether Ms. Noel was employed by theAppellant. Its failure to do so was an error of law.


27 In accordance with s. 37(4) of the Act, I may reverse the order of theTribunal and make any order that the tribunal could have made under s.32, or I may remit the matter back to the Tribunal.

28 In my view, there is no need to send the matter back as there is suffi-cient evidence on the record to determine that the Appellant was not Ms.Noel’s employer and the parties had the opportunity to address that issue.

29 In Lockerbie, the complainant was employed directly by one of Syn-crude’s subcontractors, but was denied access to the Syncrude site due toa failed drug test. The Commission dismissed the complaint, but foundthat Syncrude was an employer of the complainant’s for purposes of theAct. The Court of Appeal disagreed. Slatter J.A., who delivered the judg-ment of the Court, endorsed a contextual approach to interpretation of theterm “employment” under the Act. At para. 25, he listed some of thefactors that must be taken into account in making that determination,including:

(i) whether there is another more obvious employer involved;

(ii) the source of the employee’s remuneration, and where thefinancial burden falls;

(iii) normal indicia of employment, such as employment agree-ments, collective agreements, statutory payroll deductions,and T4 slips;

(iv) who directs the activities of, and controls the employee,and has the power to hire, dismiss and discipline;

(v) who has the direct benefit of, or directly utilizes the em-ployee’s services;

(vi) the extent to which the employee is a part of the employer’sorganization, or is a part of an independent organizationproviding services;

(vii) the perceptions of the parties as to who was the employer;

(viii) whether the arrangement has deliberately been structured toavoid statutory responsibilities.

30 He considered the following additional factors also to be relevantwhen it is alleged there is more than one co-employer:

(ix) the nexus between any co-employer and the employee, in-cluding whether there is a direct contractual relationshipbetween the complainant and the co-employer;


(x) the independence of any alleged co-employer from the pri-mary employer, and the relationship (if any) between thetwo;

(xi) the nature of the arrangement between the primary em-ployer and the coemployer, for example, whether the co-employer is merely a labour broker, compared to an inde-pendent subcontractor;

(xii) the extent to which the co-employer directs the perform-ance of the work.

31 It is obvious from a review of these criteria that the Appellant, whichis the Camp owner, was not Ms. Noel’s employer or a co-employer alongwith Dy-Kel. The Appellant did not pay Ms. Noel, it did not direct heractivities, it did not have the power to discipline or dismiss her, it did notbenefit from her services and neither party appears to have been underthe impression that Ms. Noel was employed by the Appellant. It was Dy-Kel which was Ms. Noel’s employer. However, Dy-Kel was not namedas a party to Ms. Noel’s complaint. The only nexus between Ms. Noeland the Appellant was one of accommodation rather than employment.However, Ms. Noel’s complaint was not made under s. 4 of the Act.

32 Reluctantly, and despite the finding by the Tribunal of discriminationand sexual harassment in respect of the conduct Ms. Noel suffered, Imust conclude that this discrimination did not fall within s. 7(1)(b) of theAct as being by an employer “with regard to employment or any term orcondition of employment.” Ms. Noel was neither directly nor indirectlyemployed by the Appellant.

VI. Conclusion33 The Appeal is allowed and the complaint under s. 7(1)(b) is

dismissed.34 As the appeal is allowed, the Commission’s cross appeal of the rem-

edy granted by the Tribunal is dismissed.35 Unfortunately, the result of this appeal adds insult to the injury suf-

fered by Ms. Noel. Five years have passed since the events giving rise tothe complaint occurred so that the opportunity to cure the problem byadding her employer to the complaint or making her complaint under s. 4has long since elapsed.

Appeal allowed.

R. v. Lewis 193

[Indexed as: R. v. Lewis]

Her Majesty the Queen (Applicant) and Jamie Terrance Lewis,Brandi May Sokol and Ossman Rahime (Accused)


Docket: Edmonton 090764648Q1

2011 ABQB 227

J.M. Ross J.

Heard: March 11, 2011

Judgment: April 4, 2011

Criminal law –––– Trial procedure — Rights of accused — Right to retaincounsel — Miscellaneous –––– Accused L was charged with drug traffickingand possession, conspiracy to traffic, firearms offences and possession of pro-ceeds of crime — Accused R was charged with possession of proceeds of crimeonly — Both accused were represented by counsel C — Crown sought adviceand directions regarding potential conflict of interest in pending trial — C di-rected to stop representing L — There was no actual conflict of interest betweenaccused L and R, but there was potential that conflict of interest could developduring trial, should defence strategies diverge or should R decide to take stand inhis own defence — There was realistic risk that R would choose to testify, andthat conflict of interests would develop during trial — While court had jurisdic-tion to put in place special mechanisms that would allow counsel to act despiteconflict of interests, this was not proper case to do so — Negative effects ofallowing C to continue to act for L in event of actual conflict between L and Routweighed benefits in circumstances of case.

Cases considered by J.M. Ross J.:

R. v. Brissett (2005), 2005 CarswellOnt 370, 28 C.R. (6th) 257, 74 O.R. (3d)248, [2005] O.J. No. 343 (Ont. S.C.J.) — considered

R. v. Caines (2011), 230 C.R.R. (2d) 106, [2011] 9 W.W.R. 275, 2011 ABQB82, 2011 CarswellAlta 181, 43 Alta. L.R. (5th) 226, [2011] A.J. No. 166(Alta. Q.B.) — followed

R. v. Dix (1998), 218 A.R. 18, 1998 ABQB 92, 1998 CarswellAlta 990 (Alta.Q.B.) — distinguished

R. v. McCarroll (2005), 2005 CarswellOnt 949 (Ont. S.C.J.) — referred toR. v. Pangman (1999), 143 Man. R. (2d) 168, 1999 CarswellMan 459, [1999]

M.J. No. 418 (Man. Q.B.) — considered


R. v. Pyszniak (2000), 89 Alta. L.R. (3d) 322, 2000 CarswellAlta 1454, 2000ABPC 199, [2001] 5 W.W.R. 188, 276 A.R. 314, [2000] A.J. No. 1460(Alta. Prov. Ct.) — distinguished

R. v. W. (W.) (1995), 1995 CarswellOnt 983, 43 C.R. (4th) 26, 100 C.C.C. (3d)225, 84 O.A.C. 241, 25 O.R. (3d) 161, [1995] O.J. No. 2383 (Ont. C.A.) —referred to

HEARING to determine whether there was conflict of interest in pending trialfrom fact that two accused were represented by same counsel.

Adam Holliday for RespondentHoward K. Poon for Accused, LewisDale M. Knisely for Accused, SokolSimon Trela for Accused, Rahime

J.M. Ross J.:

1 The Crown seeks advice and directions regarding a potential conflictof interest in this pending trial on charges of drug trafficking and posses-sion, conspiracy to traffic, firearms offences and possession of proceedsof crime.

2 Two of the three accused in this matter were initially represented bythe same counsel, Jamel Chadi. He represented both Jamie Lewis andOssman Rahime for a period of at least 8 or 9 months. He ceased repre-senting Mr. Rahime shortly before the preliminary inquiry. Since thattime Mr. Rahime has had other counsel, first Mr. Juneja and very re-cently Mr. Trela. Mr. Chadi continued to represent Mr. Lewis until De-cember 2010. Since then, Mr. Lewis has been represented by a memberof Mr. Chadi’s law firm, Howard Poon. Mr. Poon never personally actedfor Mr. Rahime, and has represented to the court that he does not person-ally possess any confidential information relating to Mr. Rahime. As amember of Chadi & Company, however, he is imputed to have theknowledge of the law firm.

3 Mr. Lewis is charged with drug trafficking and possession, conspir-acy to traffic, firearms offences and possession of proceeds of crime. Mr.Rahime is charged with possession of proceeds of crime only.

4 Mr. Chadi has also previously represented Eric or Rick Pemberton,who is named in the indictment as an unindicted co-conspirator with Mr.Lewis. However, Mr. Pemberton is not on the Crown’s witness list. I

R. v. Lewis J.M. Ross J. 195

have not been advised whether the matter that Mr. Chadi represented Mr.Pemberton on is factually related to this matter.

5 The Crown relies on a number of passages in the recent decision ofJustice Greckol in R. v. Caines, 2011 ABQB 82 (Alta. Q.B.), in relationto the issue of conflict of interest and the potential for resulting delay andother trial issues. No issue is taken by defence counsel with the accuracyof the statements of law in these passages, and I will refer primarily tothat decision for the applicable principles of law.

6 One principle of law is that the Crown shares a responsibility withcounsel who are representing multiple accused, and, indeed, with thecourt, to take steps where there is a conflict of interest, or potential con-flict of interest, that may affect the accused’s rights to a fair trial within areasonable time. This includes taking steps, where possible, to avoid thedevelopment of a conflict of interest during the course of trial which mayresult in delay affecting not only the accused who have had multiple rep-resentation but co-accused as well: R. v. Caines, para. 356.

7 When the issue of conflict of interest is being considered by the trialjudge before trial, the “trial judge must speculate to a degree as to issuesthat may develop as the trial unfolds. The trial judge must proceed withcaution. When there is any realistic risk of a conflict of interests, the trialjudge must direct that counsel not act for one or possibly either accused”:R. v. Caines, para 338, citing R. v. W. (W.) (1995), 25 O.R. (3d) 161(Ont. C.A.); see also R. v. McCarroll, 2005 CarswellOnt 949 (Ont.S.C.J.).

8 The situation between Mr. Lewis and Mr. Rahime as represented tome at this time is that there is no actual conflict of interest, but there is apotential that a conflict of interest may develop during the trial, shoulddefence strategies diverge or should Mr. Rahime decide to take the standin his own defence. Mr. Poon submits that “most if not all of thedefences of Ossman Rahime and Jamie Lewis coincide and would pointto an acquittal of both individuals given the facts are an alleged posses-sion of proceeds of crime as between them”. Nonetheless, it is concededthat, if Mr. Rahime elects to testify in his own defence, no member of theChadi & Company law firm could cross-examine him. Mr. Poon submitsthat this eventuality cannot be foreseen at this time. Mr. Rahime, ofcourse, is entitled to testify in his own defence and does not have tomake a decision as to whether he will do so until the Crown closes itscase against him. I conclude that there is a realistic risk that Mr. Rahime


will choose to testify, and that a conflict of interests may develop duringthe trial.

9 A primary concern in the context of multiple representation and con-flict of interest is the potential for the misuse of confidential information.Even where there is not an issue in relation to confidential information, alawyer may be unable to represent a client whose interests conflict withanother present or past client. The lawyer’s obligation to his or her clientmust be undivided. Where a lawyer acts or has acted for more than oneclient, there may be a concern about soft peddling the defence of oneclient out of concern for the other client: R. v. Caines, para. 329.

10 The concern about misuse of confidential information is very real inthis situation because Mr. Chadi acted for Mr. Rahime not just on a re-lated matter, but on precisely the charges that are going to court. I don’tquestion Mr. Poon’s statement that he has no personal confidential infor-mation regarding Mr. Rahime, but the matter has to be considered fromthe perspective of the public. From that perspective, Mr. Chadi and Mr.Poon have been practicing in the same office and firm at the time of thejoint representation and since. Not only Mr. Chadi, but other personsworking in the firm in contact with Mr. Poon would likely possess confi-dential information pertaining to Mr. Rahime. There were no protectivescreens in place to make sure that information was not passed on to Mr.Poon. And this is information about the subject matter of the trial, notabout a previous and unrelated retainer.

11 Even if concerns about misuse of confidential information could beresolved, there would remain a concern about divided loyalties. It is be-cause of this concern that Mr. Poon acknowledges that he could notcross-examine Mr. Rahime. Mr. Poon submits that, should this situationarise, he would retain independent counsel to conduct the examination.Both Mr. Poon and Crown counsel refer me to the procedure developedby Madam Justice Veit in the case of R. v. Dix (1998), 218 A.R. 18 (Alta.Q.B.), and suggest that a similar procedure could be employed in thiscase.

12 In R. v. Dix, counsel for the accused was unexpectedly put in a situa-tion of conflict shortly before trial on two first degree murder charges.Less than two months before a complex trial, the Crown disclosed to thedefence the name of a jailhouse informant who would be called to testifyagainst Mr. Dix. The informant had been represented by the accused’scounsel on other unrelated matters in the past. The informant declined to


waive solicitor-client privilege associated with his previous discussionswith the accused’s counsel. The accused’s counsel advised that he had nocurrent memory of his conversations with the informant, he and his asso-ciates had sealed all of the closed files in their office, he was prepared toretain an outside lawyer to cross-examine the informant and Mr. Dix hadagreed to this procedure, and he and his associates would undertake notto discuss their contact with the informant with each other or with thelawyer who would be retained for cross-examination. Mr. Dix advisedthe court that he had confidence in his counsel and felt that if he wererequired to change counsel his chance of a fair and speedy trial would beadversely affected.

13 Justice Veit accepted counsel’s proposal in that case, adding someadditional precautions in relation to members and employees of the lawfirm, and to ensure that there would be no contact between the accused’scounsel’s firm and the independent counsel.

14 The situation in R. v. Dix was very different from the one before mein relation to the way in which the conflict arose and the impact on Mr.Dix’s right to counsel of his choice. In R. v. Dix, the conflict arose unex-pectedly and not because of anything done by Mr. Dix or his counsel.This was also the case in R. v. Pyszniak, 2000 ABPC 199 (Alta. Prov.Ct.), a case cited by the defence. In contrast, in this case, the potentialconflict is due to the conduct of Mr. Lewis, Mr. Rahime, and their mu-tual counsel. The Code of Professional Conduct of the Law Society ofAlberta provides in Chapter 6, Rule 2 that “a lawyer must not act formore than one party in a conflict or potential conflict situation unless allparties consent and it is in the best interests of the parties that the lawyerso act.” Certainly Mr. Chadi was aware of this and I assume that Mr.Lewis and Mr. Rahime were as well as they are required to consent tomultiple representation where there is a potential conflict situation. Pre-sumably they felt it was in their best interests at the time, perhaps be-cause of cost or difficulty in finding other experienced counsel or forsome other reason. But where clients consent to such a situation, theymust be aware that a conflict might develop and that the lawyer wouldthen be required to cease acting for one or both of them. So their choiceof counsel has not been affected by matters beyond their control, but bytheir own actions.

15 Commentary in the Code of Professional Conduct indicates that, in amultiple representation situation, the lawyer must stipulate that, if a dis-


pute develops, the lawyer will be compelled to cease acting altogetherunless, at the time the dispute develops, all parties consent to the lawyercontinuing to represent one of them. Consent given before the fact is in-effective since the party granting the consent will not at that time be inpossession of all relevant information.

16 The circumstances regarding how Mr. Chadi ceased acting for Mr.Rahime and continued to act for Mr. Lewis have not been elaborated. Itwas not on the basis that an actual conflict or dispute has arisen betweenMr. Lewis and Mr. Rahime, but may have been due to the realistic possi-bility of a conflict arising during the trial. While I assume that Mr.Rahime has consented to Mr. Chadi or members of his firm acting forMr. Lewis at this time, the crucial time to consider consent is when anactual conflict of interest arises. This is the point at which Mr. Rahimewould be in possession of all relevant information, and it may be that Mr.Rahime would no longer be prepared to consent to Mr. Chadi or Mr.Poon representing Mr. Lewis at that time. So the first difficulty with themechanism that is being proposed to the court - that independent counselbe appointed to cross-examine Mr. Rahime, if necessary - is that use ofthis mechanism would effectively override Mr. Rahime’s right to with-hold his consent when he is in possession of all relevant facts.

17 The second difficulty with the proposed mechanism is practical: howcould independent counsel be prepared to cross-examine? As I have said,at this point there is a potential conflict only. It is impossible to knowexactly how and when an actual conflict in defence strategies might ariseand what the scope of it would be. Thus it is impossible to know thescope of the potential cross-examination. It is expected that this will be along trial - 21 days for the Garifoli application in June, with evidencefrom that application potentially applied to the trial, followed by a longerperiod for the trial proper in the fall. If independent counsel were notappointed until if and when Mr. Rahime elects to testify, a lengthy ad-journment could be necessary to obtain transcripts and permit indepen-dent counsel to review them. This could be avoided by having indepen-dent counsel attend the trial throughout, but then Mr. Lewis would bearthe cost of paying for two counsel for a lengthy trial.

18 The third issue that I have regarding the use of independent counsel isthat, in the cases I have been referred to, there was a clear benefit to theprocedure. In R. v. Dix, the accused was able to retain his counsel ofchoice and to have a fair trial in a reasonable time. In R. v. Pangman,


[1999] M.J. No. 418 (Man. Q.B.), another case referred to me by Crowncounsel, the court concluded that because of the large number of accusedpersons (35), the limited availability of experienced defence counsel, andthe cost of retaining separate counsel for each accused, multiple repre-sentation was essential. In that case, multiple representation and the po-tential for conflict could not be avoided without seriously delaying thetrial, depriving the accused of counsel of their choice and limiting theexperience of counsel available to take the trial. Thus, when an actualconflict arose, independent counsel was appointed for the accused whoseinterests were in conflict, but previous counsel was permitted to continueto act for the other accused persons regarding whom conflict remainedonly a potential. The defence has also referred to R. v. Brissett (2005), 74O.R. (3d) 248 (Ont. S.C.J.), at para. 49, for comments on the right tocounsel of own’s choice, although Hill J. concluded in that case thatcounsel was disqualified by reason of having previously acted for aCrown witness. He held that the “injection” of independent counsel tocross-examine the witness would not resolve the conflict and that a “veryreal perception would remain of the potential for misuse of confidentialinformation” (at para. 78).

19 In this case, the issue of choice of counsel is not at the forefront asMr. Lewis, in accepting a situation where Mr. Chadi was acting for bothhim and Mr. Rahime, should have been aware that Mr. Chadi and hisfirm might not be able to continue to act for either of them. Further, thereis no suggestion that other expert counsel were not or are not available. Itis also not clear to me that appointing independent counsel will promotethe interest in a speedy trial. If independent counsel were not appointeduntil if and when Mr. Rahime elects to testify, that could result in a sig-nificant delay. If independent counsel were appointed earlier, therewould be the issue of significant additional cost and there might still be adelay in arranging for the availability of independent counsel for thecommencement of trial.

20 Finally, it is not clear that changing counsel at this time would causeany significant delay in the trial. All that has been scheduled so far is avoir dire on a Garifoli application, which is scheduled to commence onJune 2nd. The trial proper has not yet been scheduled. Assuming thattheGarifoli application could not go ahead in June, it could potentially bescheduled for the fall, with the trial proper following soon thereafter.


21 In summary, while I accept that this court has jurisdiction to put inplace special mechanisms that will allow counsel to act despite a conflictof interests, in my view, on balance, this is not a proper case to do so.The negative effects of allowing Chadi & Company to continue to act forMr. Lewis in the event of an actual conflict between Mr. Lewis and Mr.Rahime outweigh the benefits in the circumstances of this case. This isnot a proper case for the court to utilize the mechanism of independentcounsel for cross-examination in order to authorize Mr. Poon to act. Tobe clear, I am not finding that there has been anything improper in Chadi& Company’s representation of Mr. Lewis and Mr. Rahime as of thisdate, as no actual conflict of interests has yet arisen between these co-accused. But, because of the realistic risk that a conflict of interests maydevelop during the course of the trial, I am directing that neither Mr.Poon nor any other member of Chadi & Company may represent Mr.Lewis at the trial of this matter.

Order accordingly.

R. v. Davis 201

[Indexed as: R. v. Davis]

Her Majesty The Queen and Jori Nicole Davis

Alberta Provincial Court

Docket: Calgary 091303453U1-U2

2011 ABPC 264

G.S. Dunnigan Prov. J.

Heard: August 15, 2011

Judgment: September 6, 2011

Criminal law –––– Sentencing — Types of sentence — Conditional sen-tence — Breach — Miscellaneous –––– Supervisor’s reports — Accused wasplaced on conditional sentence order (CSO) requiring her to keep peace and beof good behaviour (“U1”), and to remain in her home 24/7 for first 12 months(“U2”) — Two days later, accused was charged with nine new offences — Su-pervisor alleged that accused breached U1 of CSO — Second series of 12charges formed substance of second allegation, supported by supervisor’s report,that accused breached U2 of CSO — Accused applied for order quashing or dis-missing allegations of breach on basis that supervisors’ reports failed to complywith provisions of s. 742.6(4) of Criminal Code — Application dismissed —Under s. 742.6(4), allegation of breach of condition must be supported by writ-ten report of supervisor, which report must include signed statements of wit-nesses — Interpretation of s. 742.6(4) is driven by default evidentiary rules pro-vided for therein — Supervisor’s reports filed in support of U1 and U2 weredeficient and non-compliant with s. 742.6(4) — They had no signed witnessstatements, and supervisor did not have first-hand knowledge of key evidencesupporting allegations of breach — Attachment of signed witness statements de-tailing first-hand knowledge of witnesses was appropriate and, therefore, neces-sary — Non-compliant supervisor’s report is not fatal to prosecution of breachallegations — Neither Supreme Court of Canada decision interpreting s.742.6(4) nor wording of provision expressly enjoin Crown from adducing vivavoce evidence to prove breach allegations in lieu of inadmissible supervisor’sreport — Fact that supervisor’s reports were inadmissible did not precludeCrown from calling viva voce or other evidence to prove allegations of breach,admissibility of which would be determined by judge at hearing.

Cases considered by G.S. Dunnigan Prov. J.:

R. v. Allwood (2000), 2000 CarswellOnt 5955, [2000] O.J. No. 5826 (Ont.C.J.) — distinguished


R. v. Balaj (2010), 252 C.C.C. (3d) 560, 2010 BCSC 362, 2010 CarswellBC642, [2010] B.C.J. No. 473 (B.C. S.C.) — followed

R. v. Barnes (2009), 2009 CarswellOnt 3320, [2009] O.J. No. 2351 (Ont.S.C.J.) — considered

R. v. Carpentier (2005), 2005 MBCA 134, 2005 CarswellMan 421, 34 C.R.(6th) 395, 203 C.C.C. (3d) 251, 201 Man. R. (2d) 1, 366 W.A.C. 1, [2005]M.J. No. 418 (Man. C.A.) — considered

R. v. Cruz (2001), 2001 CarswellOnt 3372, [2001] O.J. No. 3756 (Ont.S.C.J.) — distinguished

R. v. Hansen (2008), 2008 BCPC 122, 2008 CarswellBC 902, [2008] B.C.J. No.814 (B.C. Prov. Ct.) — considered

R. v. Laporte (2011), 2011 CarswellMan 35, 2011 MBPC 6, 260 Man. R. (2d)313, [2011] M.J. No. 38 (Man. Prov. Ct.) — considered

R. v. Le (2005), 199 Man. R. (2d) 167, 2005 CarswellMan 504, [2005] M.J. No.495 (Man. Prov. Ct.) — followed

R. v. McIvor (2006), 210 C.C.C. (3d) 161, 2006 BCCA 343, 2006 CarswellBC1748, [2006] B.C.J. No. 1608 (B.C. C.A.) — considered

R. v. McIvor (2008), 2008 SCC 11, 55 C.R. (6th) 26, 372 N.R. 135, 290 D.L.R.(4th) 1, 252 B.C.A.C. 41, 422 W.A.C. 41, 2008 CarswellBC 540, 2008 Car-swellBC 541, [2008] 1 S.C.R. 285, 229 C.C.C. (3d) 1, [2008] S.C.J. No. 11(S.C.C.) — followed

R. v. Youan (2006), 2006 ONCJ 4, 2006 CarswellOnt 25, [2006] O.J. No. 30(Ont. C.J.) — considered


Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982,being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11

s. 11(d) — consideredControlled Drugs and Substances Act, S.C. 1996, c. 19

s. 45 — considereds. 51 — considered

Criminal Code, R.S.C. 1985, c. C-46Generally — referred tos. 258 — referred tos. 258(1)(g) — considereds. 742.6 [en. 1995, c. 22, s. 6] — considereds. 742.6(3) [en. 1995, c. 22, s. 6] — considereds. 742.6(3.1) [en. 1999, c. 5, s. 41(2)] — considereds. 742.6(3.3) [en. 1999, c. 5, s. 41(2)] — considereds. 742.6(4) [en. 1995, c. 22, s. 6] — considereds. 742.6(5) [en. 1995, c. 22, s. 6] — referred tos. 742.6(8) [en. 1995, c. 22, s. 6] — considered

R. v. Davis G.S. Dunnigan Prov. J. 203

s. 742.6(9) [en. 1995, c. 22, s. 6] — considered

APPLICATION by accused for order quashing or dismissing allegations ofbreach of conditional sentence order on grounds that supervisors’ reports failedto comply with provisions of s. 742.6(4) of Criminal Code.

G. Harlow for CrownM. Keelaghan for Defence

G.S. Dunnigan Prov. J.:

Introduction1 The Accused, Jori Nicole Davis, was placed on a Conditional Sen-

tence Order (“CSO”) by the Honourable Judge B. L. Veldhuis on March15th, 2011, the conditions of which included, inter alia:

1. Keep the peace and be of good behaviour;

2. For the first twelve months you will remain in your home oron its grounds twenty-four hours a day, seven days a week.

2 On March 17th, 2011, Ms. Davis was charged with nine new chargesunder Docket Number 110310398P10101-0109.

3 In a supervisor’s report dated March 24th, 2011, the supervisor al-leged Ms. Davis breached the condition that she keep the peace and be ofgood behaviour (hereinafter referred to as U1).

4 A second series of charges, totalling 12 in number under DocketNumber 110358199P10101-0112, form the substance of a second breach,supported by a supervisor’s report dated April 4th, 2011. It alleges Ms.Davis breached condition 2 of her CSO, that is, to remain under housearrest, twenty-four hours a day, seven days a week for the first twelvemonths of the CSO (hereinafter referred to as U2).

5 In support of the allegation of breach U1, the supervisor attached aphotocopy of J.O.I.N. file detail inquiry specifying eight charges, theirdate and the Calgary Police Service file number- 11098756.

6 In support of the breach allegation U2, the supervisor attached to hisreport a police synopsis of the circumstances of Ms. Davis’ allegedbreach as well as a summary of evidence linking Ms. Davis to the eventsand certain particulars of the new charges laid against her.

7 Alleged breaches U1 and U2 have yet to proceed to hearing.


Application and Issues8 On behalf of the Accused, Ms. Keelaghan has brought application

under s.742.6(4) of the Criminal Code for an Order quashing or dis-missing breach allegations U1 and U2 on the grounds that the supervi-sors reports failed to comply with the provisions of s.742.6(4) whichstates as follows:

742.6(4) An allegation of a breach of condition must be supportedby a written report of the supervisor, which report must in-clude, where appropriate, signed statements of witnesses.

9 There are two issues in this case:

a) do the supervisor’s reports comply with s.742.6(4) so as tomake them admissible in evidence; and

b) are signed witness statements simply a requirement for the re-ports to be admissible as proof of the breaches unders.742.6(5) or does non-compliance with s.742.6(4) precludethe Crown from adducing other evidence to prove the breachallegations?

Submissions by Defence Counsel10 Ms. Keelaghan asserts that the bare bones recitation of the fact that

Ms. Davis was charged again, without appending witness statements sup-porting the details of those charges, constitutes a failure to comply withthe express provisions of the Criminal Code such that the Court shoulddismiss the breach allegations.

11 In support of her argument, Defence counsel has referred me to thefollowing decisions: R. v. McIvor, [2008] 1 S.C.R. 285 (S.C.C.); R. v.Laporte (2011), 260 Man. R. (2d) 313, [2011] M.J. No. 38 (Man. Prov.Ct.); R. v. Cruz (2001), 51 W.C.B. (2d) 136, [2001] O.J. No. 3756 (Ont.S.C.J.); R. v. Barnes, [2009] O.J. No. 2351 (Ont. S.C.J.) and R. v.Allwood, [2000] O.J. No. 5826 (Ont. C.J.).

Submissions by Crown12 In reply, Mr. Harlow submits that the signed witness statements need

not be attached to the supervisor’s reports at the time the breach allega-tions are laid. Rather, those signed witness statements can be provided ata later date or at the hearing or, if the Crown chooses not to rely ondocumentary evidence, may be supplanted by viva voce evidence.


13 Were it otherwise, Mr. Harlow argues, it would become impossible tolay an allegation in a timely matter in a host of circumstances and delayswould be encountered while the supervisor attempts to collect all rele-vant evidence.

Case Law Analysis

Compliance of the Supervisor’ s Reports14 Section 742.6 establishes the procedural framework for the adjudica-

tion of alleged breaches of Conditional Sentence Orders on an expeditedbasis. In particular, ss.742.6(3), ss.(3.1), ss.(3.3), ss.(4), ss.(8) and ss.(9)provide as follows:

742.6 (3) The hearing of an allegation of a breach of condition shallbe commenced within thirty days, or as soon thereafter as ispracticable, after

(a) the offender’s arrest; or

(b) the compelling of the offender’s appearance in accor-dance with paragraph (1)(d).

(3.1) The allegation may be heard by any court having jurisdictionto hear that allegation in the place where the breach is allegedto have been committed or the offender is found, arrested orin custody.

. . . . .

(3.3) A judge may, at any time during a hearing of an allegation ofbreach of condition, adjourn the hearing for a reasonableperiod.

(4) An allegation of a breach of condition must be supportedby a written report of the supervisor, which report mustinclude, where appropriate, signed statements ofwitnesses.

. . . . .

(8) The offender may, with leave of the court, require the attend-ance, for cross-examination, of the supervisor or of any wit-ness whose signed statement is included in the report.

(9) Where the court is satisfied, on a balance of probabilities,that the offender has without reasonable excuse, the proof ofwhich lies on the offender, breached a condition of the condi-tional sentence order, the court may

(a) take no action;


(b) change the optional conditions;

(c) suspend the conditional sentence order and direct

(i) that the offender serve in custody a portion ofthe unexpired sentence, and

(ii) that the conditional sentence order resume onthe offender’s release from custody, eitherwith or without changes to the optional condi-tions; or

(d) terminate the conditional sentence order and directthat the offender be committed to custody until the ex-piration of the sentence.

[emphasis added]

15 The leading authority on the requirements of s.742.6(4) is the Su-preme Court of Canada’s judgment in R. v. McIvor, supra. In McIvorseveral breaches were alleged by the Crown, including, as here, a breachof the condition to keep the peace and be of good behaviour.1 The breachallegations arose out of a car accident involving the offender. When po-lice arrived, they found Ms. McIvor to be in possession of stolen pro-perty, including identification and credit cards belonging to other peo-ple.2 At the hearing, the Crown relied exclusively on the supervisor’sreport to prove the breach. Included in the report was a summary of evi-dence of several witnesses, including eye witnesses to the collision, po-lice officers, and the people whose property had been stolen. The sum-mary was prepared by the police and no witness statements -signed orotherwise - were included.3

16 Charron, J. on behalf of the majority, examined the procedural frame-work established by s.742.6, stating at para. 18:

18 Parliament, however, intended that allegations of non-com-pliance be dealt in a simpler and more expedited fashionunder the conditional sentence regime. First, the hearing mustbe commenced within 30 days, or as soon thereafter as ispracticable, after the offender’s arrest or the compelling of hisappearance: s.742.6(3). Second, the prosecution of an allega-

1R. v. McIvor, supra at para 62Ibid, para 73Ibid, para 8


tion of a breach of condition is facilitated in four significantrespects: (1) by allowing for documentary proof of the al-leged breach of condition: s.742.6(4); (2) by imposing a leaverequirement on the right to cross-examination: s.742.6(8); (3)by placing on the offender the persuasive burden of provingany reasonable excuse for non-compliance: s.742.6(9); and(4) by lowering the ultimate standard of proof of a breach to abalance of probabilities: s.742.6(9).

17 The Court went on to contrast the relaxed evidentiary burden faced bythe Crown under s.742.6 with the typical proof requirements of othercriminal charges, such as breach of probation, in para. 19:

19 In order to appreciate how these provisions facilitate the pro-cess, it is helpful to consider what evidentiary rules would ap-ply if Parliament had simply been silent on these matters.Again here, a comparison to the prosecution of a non-compli-ant offender for breach of probation is instructive. Sincebreach of probation constitutes a distinct offence, the layingand prosecution of the charge proceed in the usual way. Thehearing judge has the authority, upon finding the offenderguilty of breach of probation (or of any other offence), to re-voke the suspended sentence and impose any sentence thatcould have been imposed if the passing of sentence had notbeen suspended (s. 732.2(5)(d)). However, the Criminal Codeis silent with respect to applicable evidentiary rules. This isnot unusual. In the absence of any applicable statutory provi-sion, hearings are simply conducted in accordance with thecommon law rules of evidence applicable in all criminalcourts. In order to prove an alleged breach of probation, theCrown must adduce admissible evidence and prove the alle-gation beyond a reasonable doubt. Evidence adduced by theCrown must comply with common law evidentiary rules, in-cluding the hearsay exclusionary rule. As in other proceed-ings, evidence is usually presented in the form of viva vocetestimony, and the accused has the right to cross-examine thewitnesses. It is against this basic evidentiary backdrop that theprovisions in question in this appeal must be considered, be-cause it is these rules that would apply had Parliament notprovided otherwise in respect of an allegation of a breach ofconditional sentence order.

18 In McIvor, the Crown submitted that the supervisor’s report, whateverits contents, is admissible so long as the notice and service requirements


have been complied with. The Court rejected this argument having re-gard to the relaxed evidentiary rules against which the statutory provisionwas enacted. At para. 22, Charron, J., observed as follows:

22 If the Crown is correct in saying that the supervisor’s reportis admissible, however formulated, the supervisor alone couldin all cases provide admissible evidence regarding the breach.This would be so regardless of whether he or she had anydirect knowledge of the material facts alleged to constitutethe breach. If Parliament had so intended, there would havebeen no need to make reference to signed statements of wit-nesses at all, let alone provide that they “must” be includedwhere appropriate.

19 The Court makes it clear that its interpretation of s.742.6(4) is drivenby the default evidentiary rules provided for in the section:

23 . . . As I stated in my earlier remarks, subject to leave beinggranted requiring the attendance of any of the witnesses, thelegislative scheme simply allows the Crown to prove thebreach by adducing in documentary form the evidence itwould otherwise have been required to present in the usualway by viva voce evidence.

. . . . .

25 In some cases, the supervisor will be in a position to provideall the information necessary to prove the allegation ofbreach. For example, this would be the case if the allegedbreach consisted of a failure to report to the supervisor, or arefusal to attend for counselling as directed. . . . To the extentthat the supervisor’s report exceeded those boundaries, it wasinadmissible as proof of breach. Given the nature of the alle-gations, it became “appropriate” and necessary to include“signed statements of witnesses” from those persons whocould provide information about the material facts.

. . . . .

27 In my view, Parliament sought to achieve a proper balancebetween the need for an efficient process and the require-ments of procedural fairness. By allowing the prosecution topresent all of its evidence in documentary form, it is not nec-essary to routinely marshall witnesses before the court inevery case. The hearing may proceed in a simpler and moreexpedited fashion. On the other hand, the requirement thatsigned statements of witnesses be included assures a mini-


mum level of reliability. Personal authentication of the mate-rial facts alleged to constitute a breach is important.

20 As Charron, J. noted in para 24 of McIvor:

24 In essence, I am in substantial agreement with the analysis ofthe majority in the Court of Appeal below. However, I wouldnot circumscribe the contents of the documents that may beintroduced under s.742.6(4) in terms of “firsthand knowl-edge” as the majority have ruled (para 38). Under the usualcommon law evidentiary rules, a witness’s testimony is notnecessarily restricted to personal observations. The contentsof the supervisor’s report and of any witness statement shouldlikewise be defined in terms of what the author of the reportor the statement could testify to if called to give viva vocetestimony. Indeed, the supervisor or witness may well end upbefore the court if leave is granted under s.742.6(8) requiringtheir attendance for cross-examination. The contents of thedocuments adduced under s.742.6(4) and (5) should mirrorwhat their testimony would be.

21 It is important to note that the Crown in the McIvor case sought torely solely upon documentary evidence at the breach hearing. In otherwords, despite failing to comply with s.742.6(4), either at the time ofissuance of the supervisor’s report or leading up to or at the hearingproper, the Crown sought to enjoy the benefit of the evidentiary short-cutafforded by the procedural framework, notwithstanding the failure of thesupervisor to append signed witness statements to the report. This wasnot permitted by the Court. The supervisor’s report was ruled inadmissi-ble on the basis that, absent signed witness statements complying withs.742.6(4), it contained no direct knowledge of the material facts allegedto constitute the breach and therefore was ineligible for admission underthe relaxed evidentiary framework contemplated by s.742.6. There beingno other evidence supporting the breach allegations, the charges weredismissed.

22 In the present case, the report filed with respect to U1 contains onlythe “Supervisors Report and Allegations of Breach” with a synopsis anda “Court Brief” indicating that Constable Ma can testify as to the newCriminal Code offences; there are no witnesses statements appended,signed or otherwise. The report filed for U2 appends a synopsis, a printedpolice summary with respect to the incident listing witnesses names andelements about which they may be able to testify, and a “Court Brief”


indicating that Constables Bankonin and MacNeil can testify to the newcharges and to the fact that the offender was outside her residence whileunder house arrest; again, there are no witness statements attached to thereport.

23 In this case, the supervisor’s reports filed in support of U1 and U2 aredeficient and non-compliant. They have no signed witness statementsand the supervisor does not have first-hand knowledge of the key evi-dence supporting the allegations of breach. In my view, the attachment ofsigned witness statements detailing the first-hand knowledge of the wit-nesses was appropriate and, therefore, necessary. I have nothing beforeme as might suggest that such statements could not have been appendedby the supervisor. The wording of the legislation and its interpretation bythe Supreme Court are clear. In their current form, the supervisor’s re-ports are therefore inadmissible as evidence under s.742.6(5).

Effect of Non-Compliance on Breach Hearing24 Does this mean that the Crown is precluded from proceeding with a

breach hearing where a supervisor’s report is ruled inadmissible by rea-son of non-compliance with s.742.6(4)? In McIvor, the Crown proceededbased on a supervisor’s report alone; the case did not directly address anyattempt by the Crown to adduce evidence by a method other than thatoutlined in s.742.6(5). However, the Court specifically referred to thepossibility of other evidence being addressed by the Crown.

25 The British Columbia Provincial Court in R. v. Hansen4 dealt withthe issue of what is admissible under s.742.6(5). That Court applied Mc-Ivor and held that for a report to be admissible under s.742.6(5), it mustcomply with s.742.6(4), which means that it must include a statement ofsomeone with first hand knowledge of the breach (whether the report ofthe supervisor or a signed witness statement). In coming to that conclu-sion the Court examined the Supreme Court of Canada’s decision in Mc-Ivor as well as the British Columbia Court of Appeal’s reasons in thatsame case. The Court quoted McIvor5: “The Crown called no witnesses

4R. v. Hansen, [2008] B.C.J. No. 814 (B.C. Prov. Ct.) (Oral judgment)5R. v. McIvor (2006), 210 C.C.C. (3d) 161, 70 W.C.B. (2d) 625, [2006] B.C.J.No. 1608 (B.C. C.A.)

(B.C.C.A.) at para 7 quoted in Hansen, supra note 4 at para 9


to testify at the breach hearing and relied on the conditional sentencesupervisor’s written report . . .”

26 The failure of the Crown to call witnesses at hearing was specificallymentioned by both the British Columbia Court of Appeal in McIvor andthe British Columbia Provincial Court in Hansen. The Supreme Court ofCanada also referred to the Crown relying exclusively on the supervi-sor’s report. That those three courts adverted to the possibility of theCrown adducing evidence beyond the supervisors’ report is noteworthyas, in my view, it implies that the Crown could have called otherevidence.

27 Defence counsel in the present application relies on several cases.The decision which most strongly supports Ms. Davis’ position is R. v.Laporte, supra. In that case, the offender was alleged to have violated thecondition to keep the peace and be of good behaviour. The hearing on thealleged breach of the CSO was scheduled for January 28th, 2011, andDefence counsel raised the issue that the proceedings should be dis-missed on January 12th, 2011. In Laporte, Defence counsel did receivesigned witness statements about the incident that was alleged to consti-tute the breach, but neither the statements, nor the circumstances of thatincident were included in the supervisor’s report6. The Manitoba Provin-cial Court quoted McIvor for the proposition that it is appropriate, andtherefore necessary, to include signed witness statements in the reportwhere the supervisor could not provide admissible testimony about thefacts alleged to constitute the breach.7 The Court in Laporte also lookedto the judgment of the Ontario Superior Court of Justice in R. v. Barnes8

for support for the proposition that the Crown cannot avoid themandatory language of s.742.6(4) by proposing to follow a different pro-cedure. Carlson, J. ultimately concluded that s.742.6 does not provide fora viva voce hearing, so the breach must be proved on documentary evi-dence.9 As a result, the allegations were dismissed because no admissibleevidence of the breach was before the Court.

6R. v. Laporte, supra, paras. 15 - 187Ibid, paras. 27, 338R. v. Barnes, [2009] O.J. No. 2351 (Ont. S.C.J.)9R. v. Laporte, supra, note 6 paras 38, 40


28 Ms. Keelaghan also relies on Barnes, supra, in which the allegationsof breach were dismissed for failure to comply with the requirements ofs.742.6(4). The alleged breaches arose out of the offender’s arrest forpossession of cocaine.10 The supervisor’s report contained a summary ofthe allegations only, but Defence counsel was later provided with theCertificate of Analyst and a copy of the arresting officer’s notes.11 Onthe day of the hearing the arresting officer and other witnesses were incourt, available to be cross-examined with respect to the breach.12

Horkins, J., for the Ontario Superior Court of Justice, held that the Crimi-nal Code set out a clear procedure to be followed for breach hearings,and that failure to include the statements of witnesses in the report ig-nored that simple procedure.13 Although it is not clear from the decisionwhether the Crown sought to adduce viva voce evidence, it appears theCourt was not prepared to hear evidence beyond the supervisor’s reportruled deficient and inadmissible.

29 The decisions of R. v. Cruz, supra and R. v. Allwood, supra, providedby Defence counsel (each of which notably pre-dates McIvor) are distin-guishable from the case at bar, in that those courts dealt with applicationsto dismiss the breach allegations following hearings in which the Crownfailed to adduce evidence of the breaches beyond the attempted introduc-tion into evidence of non-compliant supervisors’ reports.

30 Similarly, the application in McIvor was made at the breach hearingand the Supreme Court of Canada alluded to the possibility of other evi-dence, beyond the material in the supervisor’s report, being adduced.There being no other evidence adduced, and with the supervisor’s reportruled inadmissible, the Accused was acquitted.

31 Both the Manitoba Provincial Court in Laporte and the Ontario Supe-rior Court of Justice in Barnes appear to conclude that the wording of thelegislation and its interpretation by higher courts result in a non-compli-ant supervisor’s report being fatal to the prosecution of breach allega-tions. Neither decision is binding on this Court and, with the greatest ofrespect, I view those conclusions as misinterpretations of s.742.6 and of

10Barnes, supra note 8 at para 611Ibid, paras 11, 1412Ibid, para 1413Ibid, paras 17 - 18


the reasoning of the Supreme Court of Canada in McIvor. In my view,the express wording of s.742.6(4) and of the Supreme Court of Canadadecision interpreting the sub-section go only as far as to deem a non-compliant supervisor’s report as inadmissible to prove the breach allega-tions. Neither the Supreme Court decision nor the wording of the Crimi-nal Code expressly enjoin the Crown from adducing viva voce evidenceto prove the breach allegations in lieu of an inadmissible supervisor’sreport.

32 In R. v. Balaj14, the British Columbia Supreme Court recently re-jected such a narrow reading of McIvor. In Balaj, the Accused wascharged with extortion, assault and use of an imitation firearm to commitan indictable offence while serving a CSO.15 The Crown intended to callviva voce evidence at the hearing, including the evidence of the victim inrelation to the new charges. The report filed did not contain any signedwitness statements, but Defence counsel had received a copy of the tapedinterview with the victim.16 Counsel for Mr. Balaj argued that a properreport including witness statements was a precondition to the jurisdictionof the Court to hear the breach allegations.17 He argued that this is not asimple evidentiary shortcut, because unlike s.45 and s.51 of the Con-trolled Drugs and Substances Act (“CDSA”)18 or s.258(1)(g) of theCriminal Code, which allow the Certificate of Analyst to be evidence ofthe things stated therein, s.742.6(4) uses the language “must” which re-quires compliance in all cases.19

33 The Crown argued that compliance with s.742.6(4) is simply a re-quirement if the Crown intends to rely on the report as evidence of thebreach as permitted by s.742.6(5).20 Arnold-Bailey J., quotes the BritishColumbia Court of Appeal in McIvor21 “. . . [T]he report is not a “report”

14R. v. Balaj (2010), 252 C.C.C. (3d) 560, [2010] B.C.J. No. 473 (B.C. S.C.)15Ibid, para 1116Ibid, paras 11, 2117Ibid, para 2218Controlled Drugs and Substances Act, S.C. 1996, Chap. 19,19Balaj, supra note 14, paras 27 - 2820Ibid, paras 31-3221McIvor, supra note 5


admissible in evidence at the breach hearing under s.742.6(5) . . .”22 be-cause it did not contain proper witness statements.

34 The Court then considered whether this statement left open the possi-bility of the Crown calling viva voce evidence to prove the breach, andnoted that the cases go both ways. Ultimately, the Court in Balaj heldthat s.742.6 was not intended to prevent the Crown from calling vivavoce evidence to prove the breach at para 47:

47 After carefully considering the provisions of s.742.6 and thedecided cases I prefer the reasoning in the Le decision. I findthat there is no indication at s.742.6(4) of the Criminal Codeis intended to bar the Crown from calling viva voce evidenceto support an allegation of breach of a CSO, provided reason-able notice is given to the offender of the nature of the in-tended evidence.23

35 In R. v. Le24, another case which predates the McIvor decision, theManitoba Provincial Court likewise held that the Crown cannot be pre-vented from calling viva voce evidence to prove a breach of a CSO. OnSeptember 13th, 2005, the Crown served the report on Defence counsel.It included what was essentially disclosure on the new charges alleged toform the substance of the breach, but did not include signed statementsof persons who witnessed the breach.25 The Court held that the report didnot comply with s.742.6(4) and was therefore inadmissible unders.742.6(5).

36 On September 28th, 2005, the Crown informed Defence counsel thatit intended to call the supervisor, two police officers and two civilianwitnesses at the hearing. Defence counsel applied to prevent the Crownfrom calling viva voce evidence. Chartier J, held that because allegationsof breach of a CSO are not the same as the accused being “charged with

22Balaj, supra note 14 para 38 quoting McIvor, supra note 5 at para 3823Ibid, para 4724R. v. Le (2005), 199 Man. R. (2d) 167, 68 W.C.B. (2d) 196, [2005] M.J. No.495 (Man. Prov. Ct.)25Ibid, paras 6, 9


an offence” within the meaning of s.11(d) of the Charter26, hearsay ofthe type allowed by s.742.6 is permissible in evidence.27

37 The Court considered the decision of the Manitoba Court of Appealin R. v. Carpentier28 and noted that the Crown called witnesses to estab-lish its case.29 Chartier J, ruled that s.742.6(4) should be treated likes.258 of the Criminal Code and s.51 of the CDSA. Those sections allowthe Crown to use the Certificate of Analyst as proof of the facts statedtherein, but were never intended to prevent the Crown from calling theAnalyst.30

38 Lastly, in R. v. Youan31, the Court considered the disclosure require-ments for breach of a CSO. The Ontario Court of Justice held that theCrown was entitled to prove the breach by viva voce evidence, subject toprejudice.32 In Youan, Defence counsel received the synopsis of one ofthe officers on October 27th, 2005, and notice that the Crown intended tocall two constables, the supervisor and as well, the notes of the secondofficer on December 1st 2005. The hearing was allowed to proceed onJanuary 5th, 2006, indicating that this was sufficient disclosure in suffi-cient time.

39 As we can see, the Courts have disagreed with respect to the possibil-ity of the Crown calling viva voce evidence to prove the breach allega-tions. Prior to the Supreme Court of Canada decision in McIvor, the deci-sions of R. v. Allwood, supra and R. v. Le, supra, clearly contemplatedthe use of viva voce evidence to permit the Crown to prove its case. Thelatter decision also referenced the 2005 of the Manitoba Court of Appealin R. v. Carpentier, supra, in support of its conclusion.

40 Subsequent to the Supreme Court of Canada decision in McIvor, theBritish Columbia Supreme Court in R. v. Balaj, supra, specifically held

26Canadian Charter of Rights and Freedoms, Part 1, Constitution Act, 1982,Schedule B to the Canada Act 1982 (U.K.), 1982, c-1127Le, supra, note 24 at para 1528R. v. Carpentier (2005), 203 C.C.C. (3d) 251, 201 Man. R. (2d) 1, 34 C.R.(6th) 395 (Man. C.A.)29Le, supra note 24 at para 1930Ibid, para 2031R. v. Youan (2006), 68 W.C.B. (2d) 197, [2006] O.J. No. 30 (Ont. C.J.)32Ibid, para 23


that s.742.6 does not prevent the Crown from calling viva voce evidenceto prove the breach.

41 In contrast, the decisions of Laporte, and Barnes supra, (both heardsubsequent to McIvor) clearly opted to regard non-compliant supervi-sors’ reports as fatal to the Crown’s prosecution of the breach allega-tions. As I stated, neither of these decisions is binding on this Court.Indeed, I could find no binding decision as might guide this Court on theinterpretation of McIvor regarding viva voce evidence. I have alreadynoted, however, the references by the British Columbia Court of Appealin McIvor to the Crown’s failure to call any witnesses which, by implica-tion, would suggest the Crown is entitled to call other evidence to provethe allegations of breach. Furthermore, the Supreme Court did not disa-gree with the appellate court and itself stated that the only evidence wasa non-compliant supervisor’s report.

42 In conclusion, I prefer the reasoning of the Courts in Le and Balaj tothe approaches adopted in Laporte, and Barnes. In my view, the supervi-sor’s reports in their present form in this case are non-compliant and aretherefore inadmissible. However, this does not preclude the Crown fromcalling viva voce or other evidence to prove the allegations of breach, theadmissibility of which will be determined by the judge at the hearing.

43 I expressly make no ruling with respect to any documentary or otherevidence already or to be disclosed or adduced subsequent to the serviceof the supervisor’s reports as no application with respect to any such evi-dence is before me. I am also of the view that the admissibility of anyevidence beyond the supervisor’s reports that I have ruled inadmissible isproperly within the purview of the hearing judge.

Application dismissed.

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