Western Weekly Reports

WESTERN WEEKLY REPORTS Reports of Cases Decided in the Courts of Western Canada and Certain Decisions of the Supreme Court of Canada 2011-VOLUME 1 (Cited [2011] 1 W.W.R.)

All cases of value from the courts of Western Canada and appeals therefrom to the Supreme Court of Canada

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[Indexed as: Prairie North Regional Health Authority v. Kutzner] Prairie North Regional Health Authority (Appellant / Appellant) and Dr. Morley Kutzner and Dr. Thomas Blackwell (Respondents / Respondents) and Dr. Patrick O’Keefe, Regina Qu’Appelle Regional Health Authority and Saskatoon Regional Health Authority (Intervenors) Saskatchewan Court of Appeal Klebuc C.J.S., Lane, Richards JJ.A. Heard: February 10, 2010 Judgment: October 27, 2010* Docket: 1775, 2010 SKCA 132 Christopher Boychuk for Appellant Richard Elson, Q.C., for Respondents Heather MacMillan-Brown for Intervenor, Dr. Patrick O’Keefe Brenda Hildebrandt for Intervenor, Regina Qu’Appelle Regional Health Authority Evert Van Olst for Intervenor, Saskatoon Regional Health Authority Health law –––– Regional matters — Hospitals — Hospital privileges and staff appointment of doctors — Miscellaneous –––– Hospital recruited full time surgeon, Dr. O — Hospital’s board of management (Authority), reduced operating room times of Drs. K and B due to budgetary constraints with addition of new doctor — Drs. K and B appealed Authority’s decision to Tribunal, relying on jurisdiction granted by s. 45(1) of Regional Health Services Act (Act) to entertain appeals relating to amending, suspending or revoking of privileges — Appeal was allowed — Tribunal concluded that privileges were combination of permitted procedures and access to perform them — Authority unsuccessfully appealed to Queen’s Bench — Authority appealed — Appeal allowed — Tribunal ignored definition of privileges in Attending Health Professionals Regulations (Regulations) — “Privileges” in Regulations meant authority granted by board to physician to admit, register, diagnose, treat or discharge patients — Applications for privileges submitted by Drs. K and B contained no reference to any specific allocation of operating

*A corrigendum issued by the court on December 16, 2010 has been incorporated herein. 2 WESTERN WEEKLY REPORTS [2011] 1 W.W.R. room time — Medical staff privileges documents, which formally set out scope of privileges, said nothing about operating room allocations — Documents supported reading of s. 45(1)(c) of Act to effect that privileges do not involve any particular grant of operating room time — Each operating room allocation could impact 287 different physicians — Given complexity of such decisions, Legislature could not have intended to create regime in which every change to room allocations would give rise to right of appeal to Tribunal. Administrative law –––– Review for lack or excess of jurisdiction — Ultra vires –––– Hospital recruited full time surgeon, Dr. O — Hospital’s board of management (Author- ity), reduced operating room times of Drs. K and B due to budgetary constraints with addition of new doctor — Drs. K and B appealed Authority’s decision to Tribunal, relying on jurisdiction granted by s. 45(1) of Regional Health Services Act (Act) to entertain appeals relating to amending, suspending or revoking of privileges — Appeal was allowed — Tribunal concluded that privileges were combination of permitted procedures and access to perform them — Authority unsuccessfully appealed to Queen’s Bench — Authority appealed — Appeal allowed — Tribunal ignored definition of privileges in At- tending Health Professionals Regulations (Regulations) — “Privileges” in Regulations meant authority granted by board to physician to admit, register, diagnose, treat or discharge patients — Applications for privileges submitted by Drs. K and B contained no reference to any specific allocation of operating room time — Medical staff privileges documents, which formally set out scope of privileges, said nothing about operating room allocations — Documents supported reading of s. 45(1)(c) of Act to effect that privileges do not involve any particular grant of operating room time — Each operating room allocation could impact 287 different physicians — Given complexity of such decisions, Legislature could not have intended to create regime in which every change to room allocations would give rise to right of appeal to Tribunal. Cases considered by Richards J.A.: Beiko v. Hotel Dieu Hospital St. Catharines (2007), 2007 CarswellOnt 442, [2007] O.J. No. 331 (Ont. S.C.J.) — considered Beiko v. Hotel Dieu Hospital St. Catharines (2007), 2007 CarswellOnt 7892, 2007 ONCA 860 (Ont. C.A.) — referred to Blanchard v. Control Data Canada Ltd. (1984), [1984] 2 S.C.R. 476, 14 D.L.R. (4th) 289, 55 N.R. 194, 14 Admin. L.R. 133, 84 C.L.L.C. 14,070, 1984 CarswellQue 75, 1984 CarswellQue 94, [1984] S.C.J. No. 51 (S.C.C.) — considered C.U.P.E., Local 963 v. New Brunswick Liquor Corp. (1979), 25 N.B.R. (2d) 237, [1979] 2 S.C.R. 227, 51 A.P.R. 237, 26 N.R. 341, 79 C.L.L.C. 14,209, 97 D.L.R. (3d) 417, N.B.L.L.C. 24259, 1979 CarswellNB 17, 1979 CarswellNB 17F, [1979] S.C.J. No. 45 (S.C.C.) — considered Cadillac Fairview Corp. v. Saskatoon (City) (2000), 13 M.P.L.R. (3d) 220, [2000] 11 W.W.R. 89, 2000 CarswellSask 415, 2000 SKCA 84, 199 Sask. R. 72, 232 W.A.C. 72 (Sask. C.A.) — referred to Macdonald v. Mineral Springs Hospital (2008), 2008 ABCA 273, 2008 CarswellAlta 1089, 295 D.L.R. (4th) 609, 94 Alta. L.R. (4th) 317, 437 A.R. 7, 433 W.A.C. 7 (Alta. C.A.) — referred to Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services) (2004), 45 B.L.R. (3d) 161, 41 C.C.P.B. 106, 2004 C.E.B. & P.G.R. 8112, 242 D.L.R. (4th) 193, 324 N.R. 259, 189 O.A.C. 201, 17 Admin. L.R. (4th) 1, [2004] 3 S.C.R. 152, 75 O.R. Prairie North Regional Health Authority v. Kutzner 3

(3d) 479 (note), 2004 CarswellOnt 3172, 2004 CarswellOnt 3173, 2004 SCC 54, [2004] S.C.J. No. 51, REJB 2004-68722 (S.C.C.) — referred to New Brunswick (Board of Management) v. Dunsmuir (2008), 372 N.R. 1, 69 Admin. L.R. (4th) 1, 69 Imm. L.R. (3d) 1, (sub nom. Dunsmuir v. New Brunswick) [2008] 1 S.C.R. 190, 844 A.P.R. 1, (sub nom. Dunsmuir v. New Brunswick) 2008 C.L.L.C. 220-020, D.T.E. 2008T-223, 329 N.B.R. (2d) 1, (sub nom. Dunsmuir v. New Bruns- wick) 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.) — followed Q. v. College of Physicians & Surgeons (British Columbia) (2003), 2003 SCC 19, 2003 CarswellBC 713, 2003 CarswellBC 743, 11 B.C.L.R. (4th) 1, 223 D.L.R. (4th) 599, 48 Admin. L.R. (3d) 1, (sub nom. Dr. Q., Re) 302 N.R. 34, [2003] 5 W.W.R. 1, (sub nom. Dr. Q. v. College of Physicians & Surgeons of British Columbia) [2003] 1 S.C.R. 226, (sub nom. Dr. Q., Re) 179 B.C.A.C. 170, (sub nom. Dr. Q., Re) 295 W.A.C. 170, [2003] S.C.J. No. 18, REJB 2003-39403 (S.C.C.) — referred to R. v. Shirose (1999), (sub nom. R. v. Campbell) 237 N.R. 86, 1999 CarswellOnt 948, 1999 CarswellOnt 949, 133 C.C.C. (3d) 257, (sub nom. R. v. Campbell) 42 O.R. (3d) 800 (note), 171 D.L.R. (4th) 193, (sub nom. R. v. Campbell) 119 O.A.C. 201, (sub nom. R. v. Campbell) 43 O.R. (3d) 256 (note), (sub nom. R. v. Campbell) [1999] 1 S.C.R. 565, 24 C.R. (5th) 365, [1999] S.C.J. No. 16 (S.C.C.) — referred to Regina (City) v. Kivela (2006), 55 C.H.R.R. D/403, 2006 SKCA 38, 2006 CarswellSask 162, 275 Sask. R. 271, 365 W.A.C. 271, 266 D.L.R. (4th) 319, [2006] S.J. No. 195 (Sask. C.A.) — referred to 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 Shoes Ltd. (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 Labour) 98 C.L.L.C. 210-006, [1998] S.C.J. No. 2 (S.C.C.) — followed Statutes considered: Regional Health Services Act, S.S. 2002, c. R-8.2 Generally — referred to s. 27(1) — considered s. 43 — considered s. 43(a.2) [en. 2004, c. 49, s. 9] — considered s. 43(4) — referred to s. 44 — considered s. 45 — referred to s. 45(1) — considered s. 45(1)(b) — considered s. 45(1)(c) — considered s. 45(4) — considered 4 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Regulations considered: Regional Health Services Act, S.S. 2002, c. R-8.2 Attending Health Professionals Regulations, R.R.S. c. R-8.2 Reg. 4 s. 2(i) “privileges” — considered Practitioner Staff Appeals Regulations, R.R.S. c. R-8.2 Reg. 5 Generally — referred to s. 3 — referred to s. 14(1) — considered

APPEAL by hospital board of management from decision upholding Tribunal’s authority to hear appeals regarding changes to operating room time allocations.

Richards J.A.: I. Introduction 1 This appeal concerns the jurisdiction of the Practitioner Staff Appeals Tribu- nal, a board created pursuant to The Regional Health Services Act, S.S. 2002, c. R-8.2 (the “Act”). In particular, it concerns the scope of the Tribunal’s authority in relation to physicians’ appeals from decisions changing their allocations of operating room time. 2 The appellant, Prairie North Regional Health Authority (the “Authority”), reduced the operating room times of the respondents, Drs. Morley Kutzner and Thomas Blackwell. The doctors appealed the Authority’s decision to the Tribu- nal, relying on its jurisdiction to entertain appeals in relation to the amending, suspending or revoking of privileges. The Authority argued that the Tribunal had no jurisdiction to entertain the appeal because, in the Authority’s view, the changes in operating room times for Drs. Kutzner and Blackwell involved no more than normal administrative-type allocations of scarce hospital resources. In a preliminary ruling, the Tribunal held that it could entertain the appeal. Its decision was upheld by a Court of Queen’s Bench judge in Chambers. The Authority now asks this Court to overturn the decision of the Chambers judge. 3 I conclude, for the reasons detailed below, that the Tribunal made a reviewable error in its interpretation of the relevant provisions of the Act. Specifically, it erred in concluding that any and every change to a physician’s allocation of operating room time gives rise to a right of appeal. As a result, the complaints of Drs. Kutzner and Blackwell must be remitted to the Tribunal so that it may consider them anew in light of the interpretation of the Act set out in these reasons.

II. Factual Background 4 The Authority is responsible for the delivery of health services to the Prairie North Health Region and owns and operates two hospitals: Battlefords Union Hospital and Lloydminster Hospital. It was established pursuant to, and is governed by, the Act. Prairie North Regional Health Authority v. Kutzner Richards J.A. 5

5 The Authority has had difficulty recruiting and retaining a resident ophthalmologist to provide the full slate of medical and surgical ophthalmological services. As a result, many residents from the Health Region have been obliged to travel to centres outside the Region to receive ophthalmological care. 6 In 2007, the Authority recruited an ophthalmologist, Dr. Patrick O’Keefe, who agreed to reside in the Health Region and to provide a full range of ophthalmic services, including surgical services. Dr. O’Keefe began his practice in North Battleford in June of 2007. 7 Prior to Dr. O’Keefe’s arrival, Drs. Kutzner and Blackwell provided limited surgical ophthalmological services to residents of the Prairie North Health Re- gion. Dr. Kutzner’s primary practice is in Edmonton, Alberta. He was appointed as a visiting member of the medical staff of the Authority in 1993 with privileges in ophthalmology, general surgery and ophthalmic surgery, including cataract surgery. His appointment was renewed annually thereafter. Notwithstand- ing the scope of his privileges, the only ophthalmic services provided by Dr. Kutzner were cataract surgeries. 8 Dr. Blackwell does not reside in the Health Region either. His primary practice is in Saskatoon. He has been a visiting member of the medical staff of the Authority since 1995. The only privileges held, or sought, by Dr. Blackwell were in relation to cataract surgery. His practice with the Authority has been restricted to surgeries of that kind. 9 The operating room time available for cataract surgeries in the Prairie North Health Region is limited by the funding provided by the provincial government. At the time relevant to the disposition of this appeal, the Authority’s budget permitted two surgical days per month at the Lloydminster Hospital and one surgical day per month at the Battlefords Union Hospital. 10 The admission of Dr. O’Keefe to the medical staff of the Authority meant that the Authority had to make decisions as to the allocation of operating room time for cataract surgeries. Given the resources available to it, the Authority decided to reduce Dr. Kutzner’s allocation from two days per month at the Lloydminster Hospital to one day every second month. The remaining cataract surgery days were allocated to Dr. O’Keefe. Dr. Blackwell’s allocation of surgical days for cataract surgery for the year ending March 31, 2008 was reduced to six days out of the 12 days available at the Battlefords Union Hospital. Effective April 1, 2008, Dr. Blackwell was allocated one surgical day every six months. The remaining days were allocated to Dr. O’Keefe.

III. The Appeals to the Tribunal 11 Drs. Kutzner and Blackwell were unhappy with the Authority’s decisions concerning their operating room time. As a result, both launched appeals to the Tribunal. 6 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

12 The appeals were taken pursuant to s. 45(1) of The Regional Health Services Act. It reads as follows: 45(1) A person who is aggrieved by a decision of a regional health authority or an affiliate made in relation to the following matters may, in accordance with the regulations, appeal the decision to a tribunal established by the regulations: (a) the appointment of the person to the practitioner staff or the reappointment, suspension or termination of appointment of the person; (b) the disciplining of the person as a member of the practitioner staff; (c) the granting of privileges to the person as a member of the practitioner staff, or the amending, suspending or revoking of privileges granted to the person. [emphasis added] 13 The Authority argued that the Tribunal had no jurisdiction to hear the appeals. In its view, the “privileges” referred to in s. 45(1) related to the entitlement to use a health authority’s facilities for particular purposes but did not comprehend the allocation of any specific access to those facilities and, in the context of this case, did not comprehend that Drs. Kutzner and Blackwell would have any specific amounts of operating room time. 14 The Tribunal did not accept this line of argument. It said privileges are “the combination of permitted procedures and the access to perform them.” The core of its reasoning is set out below: ... In the Tribunal’s opinion, the nature and scope of the privileges granted cannot be isolated from the ability to exercise them, and, in fact, the application for privileges reflects that understanding. Dr. Kutzner’s application for privileges states, “I ... wish to apply for the privilege of performing the following procedures within the Lloydminster Hospital as indicated in the attached list”. Dr. Blackwell’s application is similar and the privileges he has been granted, based on his application, are restricted to the performance of cataract surgeries. This application is not just for permission to perform certain medical procedures, but also to perform them in the facilities of the regional health authority identified. All parties agree that the regional health authority cannot use the allocation of operating room time as a means of circumventing the provisions of the Act and regulations relating to amending or revoking privileges. This means, for example, that PNRHA cannot reduce the access to operating room time to zero and then claim that this is simply an allocation of resources, rather than an amendment of privileges. In the Tribunal’s opinion, this is an acknowledgment of the intrinsic link between the privilege granted to perform certain medical services and the actual access to the facility in order to perform them. Privileges without access are obviously meaningless. Prairie North Regional Health Authority v. Kutzner Richards J.A. 7

15 In the end, the Tribunal decided that it would hear the appeals of Drs. Kutz- ner and Blackwell because, in its view, their privileges had been changed. The Tribunal concluded as follows: ... In other words, the jurisdictional issue here is simply whether the privileges have been changed. Since, as is set out above, the Tribunal has concluded that privileges are the combination of permitted procedures and the access to perform them, the privileges of Drs. Blackwell and Kutzner have been changed and the Tribunal has jurisdiction to consider their appeal.

IV. The Queen’s Bench Decision 16 The Authority appealed the Tribunal’s decision to the Court of Queen’s Bench pursuant to s. 45(4) of the Act. Its appeal was dismissed. 17 The Chambers judge read the Tribunal’s decision as saying only that it had the authority to embark on the process of considering whether the reallocation of operating room times by the Authority was an amendment of privileges within the meaning of s. 45(1) of the Act. He said this: [5] It may well be that resource allocation was an underlying issue of concern for the Authority; nonetheless, it was open to the Tribunal to conclude that the amendment, suspension or possible revocation of privileges was an issue, such that its jurisdiction to hear the appeal was engaged. [6] The Authority was constrained to agree that at some point within the spectrum of possible resource allocations, be it by board direction or administrative action, privileges previously granted may be affected. This validates the Tribunal’s acceptance of jurisdiction over these particular complaints. [7] Having embarked on its inquiry, the Tribunal will be obliged to hear and consider both parties’ evidence and submissions as to whether, in the case before it, this particular change in allocation of operating room time does, indeed, constitute an amendment or affecting of privileges and, if so, the remedies to be provided. Conversely, it may decide those privileges were not affected in this case. ... [12] The Tribunal properly and correctly interpreted its true jurisdiction, the jurisdictional issue and its governing statute. Consequently, the appeal is dismissed and the matter returned to the Tribunal so that the appeal may be heard on its merits.

V. Analysis A. Clarifying the Question Underlying This Appeal 18 It is useful to begin the examination of the merits of this appeal by commenting on the Chambers judge’s understanding of the Tribunal decision. This is important because, in my respectful view, the Chambers judge misread the decision. The Tribunal did not say merely that it had jurisdiction in the limited sense of having the authority to embark on a consideration of whether the privileges of 8 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Drs. Kutzner and Blackwell had been amended, suspended or revoked within the meaning of s. 45(1)(c) of the Act. Rather, it said (a) the concept of privileges included the allocation of operating room time, (b) the allocations of operating room times for Drs. Kutzner and Blackwell had been changed, and (c) as a result, their privileges had been changed. In other words, the Tribunal made a clear decision to the effect that the privileges of Drs. Kutzner and Blackwell had been modified in a way which engaged s. 45(1)(c). Contrary to the Chambers judge’s understanding of the matter, the Tribunal did not leave the final resolution of that question for another day. 19 I also note that, during argument before this Court, there was no agreement between counsel for the Authority and Drs. Kutzner and Blackwell as to the specifics of the issue that was before the Tribunal. In order to unravel this problem, I turn first to the notices of appeal filed by Drs. Kutzner and Blackwell. Both described the grounds of appeal as follows: a. The Board’s decision, and that of its administrative and management staff, was made without any basis in law or in fact and without the due process expressly provided for in the Medical Staff Bylaws of the Respondent; and b. The Board’s decision, and that of its administrative and management staff, was made solely for the purpose of accommodating the arrival of a new member of the medical staff, and, as such, was made without any evidentiary foundation. 20 The landscape mapped by these notices of appeal was obviously altered during the proceedings before the Tribunal because the Tribunal said the question before it was “whether the privileges [of Drs. Kutzner and Blackwell] had been changed.” The notices of appeal to the Court of Queen’s Bench and to this Court, as well as the facta filed on behalf of the Authority and the doctors in this Court, are consistent with this view of the proceedings in that they focused on the question of whether “privileges” is a concept which takes into account a physician’s access to hospital facilities and other resources. 21 Nonetheless, in the course of oral argument in this Court, counsel for Drs. Kutzner and Blackwell appeared to move away from his factum somewhat and described the issue before the Tribunal as having been whether the Authority had done indirectly what it could not have done directly, i.e. whether it had reduced privileges for a reason not related to clinical care but, rather, for the purpose of accommodating Dr. O’Keefe, or fulfilling commitments made to Dr. O’Keefe. Counsel suggested that all of this had been done without consultation or compliance with the Authority’s own procedural rules. For his part, counsel for the Authority took exception to all of this and said Drs. Kutzner and Blackwell have never alleged that the reduction in their operating room hours was aimed at getting them to stop practicing in the Health District or as having been otherwise based on an ulterior motive. Prairie North Regional Health Authority v. Kutzner Richards J.A. 9

22 I acknowledge the change of tack taken by Drs. Kutzner and Blackwell during oral argument, but believe I am constrained to approach this appeal in a way that reflects the Tribunal’s understanding of the issues presented to it and that is consistent with the notices of appeal to the Court of Queen’s Bench and this Court. As a result, the issue before the Tribunal must be taken as having been whether the Authority’s decision to reduce the operating room hours for Drs. Kutzner and Blackwell amounted to amending, suspending or revoking their privileges within the meaning of s. 45(1)(c) of the Act. This is the sole question dealt with by the Tribunal and it is the only point considered by the Chambers judge. If Drs. Kutzner and Blackwell have other arguments to present, they will need to consider whether it is possible to bring them forward in a new proceeding.

B. The Applicable Standard of Review 23 The Chambers judge did not expressly indicate what standard of review he applied in assessing the Tribunal’s decision. However, it appears that he used the “correctness” standard. 24 The Authority says the correctness standard is applicable here because the question before the Tribunal was one of “pure jurisdiction.” For their part, Drs. Kutzner and Blackwell say the “reasonableness” standard is appropriate. 25 The problem of identifying the proper standard of review must be resolved by reference to the Supreme Court of Canada’s decision in New Brunswick (Board of Management) v. Dunsmuir, 2008 SCC 9, [2008] 1 S.C.R. 190 (S.C.C.). There, the Court said administrative decisions are to be reviewed on either a correctness or a reasonableness standard. At para. 55, the Court said three factors should be considered in determining whether the reasonableness standard should be applied: the presence or absence of a privative clause, the existence of a discrete and special administrative regime with specialized decision-making and the nature of the question of law in issue. However, the Court also said that a detailed inquiry along these lines is not required in every case. In this regard, it said the questions of jurisdiction or vires will, by their nature, attract the correctness standard. This is the notion seized on by the Authority in pressing for the application of the correctness standard in this case. 26 I am not persuaded by this aspect of the Authority’s submissions. “Jurisdic- tion” is often an elusive notion. Seen most broadly, it can embrace virtually every dimension of administrative decision-making. This possibility was explained as follows by Paul Craig in Administrative Law (London: Sweet & Max- well, 1983) at p. 302, as quoted by Lamer J. (as he then was) in Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476 (S.C.C.), at pp. 490-491:

The enabling statute always, explicitly or implicitly, states, if X1, X2, X3 exist, you may or shall do [Y1, Y2, Y3]. 10 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

It is clear that all the “X” conditions can to some extent be categorized as prerequisites to the exercise of the “Y” powers. In my view, there is no logical reason for distinguishing between condition X1 and condition X2 and concluding that one is preliminary and the other is not. Thus, if all the “X” conditions are said to be preliminary, the administrative tribunal has lost the capacity to err: it can only exercise the power conferred on it by the law if it is right in its interpretation of what is meant by X1, X2 and X3. Ultimately, the distinction between an appeal and judicial review is somewhat fine. This distinction becomes nonexistent if we also adopt the theory that the administrative tribunal cannot err as to the content of powers Y1, Y2 and Y3, since it is then exercising a power that the law does not confer on it. 27 As a result, the Supreme Court was at pains in New Brunswick (Board of Management) v. Dunsmuir to emphasize that only “true” questions of jurisdiction automatically attract the correctness standard of review. Bastarache and Le- Bel JJ., for the majority, wrote as follows at para. 59: [59] Administrative bodies must also be correct in their determinations of true questions of jurisdiction or vires. We mention true questions of vires to distance ourselves from the extended definitions adopted before CUPE. It is important here to take a robust view of jurisdiction. We neither wish nor intend to return to the jurisdiction/preliminary question doctrine that plagued the jurisprudence in this area for many years. “Jurisdiction” is intended in the narrow sense of whether or not the tribunal had the authority to make the inquiry. In other words, true jurisdiction questions arise where the tribunal must explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter. The tribunal must interpret the grant of authority correctly or its action will be found to be ultra vires or to constitute a wrongful decline of jurisdiction: D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf), at pp. 14-3 to 14-6. An example may be found in United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19. In that case, the issue was whether the City of Calgary was authorized under the relevant municipal acts to enact bylaws limiting the number of taxi plate licences (para. 5, per Bastarache J.). That case involved the decision-making powers of a municipality and exemplifies a true question of jurisdiction or vires. These questions will be narrow. We reiterate the caution of Dickson J. in CUPE that reviewing judges must not brand as jurisdictional issues that are doubtfully so. 28 The reference made by Bastarache and LeBel JJ. to C.U.P.E., Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227 (S.C.C.) is telling because it was there that Dickson J. (as he then was) argued against an overly broad approach to “jurisdiction” by famously saying, at p. 233: The question of what is and is not jurisdictional is often very difficult to determine. The courts, in my view, should not be alert to brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so. Prairie North Regional Health Authority v. Kutzner Richards J.A. 11

29 In my view, the Authority’s argument in this case is an invitation to do precisely what the Supreme Court has counselled against. Granted, it is possible to dress up the subject matter of this appeal in a jurisdictional-type costume. How- ever, this does not negate the fact that the root issue here is whether, on the particular facts of this case, the privileges of Drs. Kutzner and Blackwell were changed in a way amounting to their amendment, suspension or revocation. This is not the sort of discrete or preliminary issue which can properly be seen as a question of “true” jurisdiction. As the Supreme Court has directed, courts should not characterize as jurisdictional those issues which are only doubtfully or arguably so. In the result, I conclude the issue raised with the Tribunal was not jurisdictional in the required sense. See: Macdonald v. Mineral Springs Hospi- tal, 2008 ABCA 273, 295 D.L.R. (4th) 609 (Alta. C.A.) at para. 30. 30 However, this conclusion is not the end of the standard of review inquiry. It only means that it is necessary to engage in the extended or full standard of review analysis. As noted, this analysis involves consideration of the significance of the presence or absence of a privative clause, the particulars of the administrative regime in which the decision in issue was generated and the nature of the question in issue. I propose to very briefly consider each of these matters in turn. 31 I turn first to the issue of a privative clause. The existence of such a clause is considered to be a strong indication that judicial review should be conducted on the basis of the reasonableness standard. See: New Brunswick (Board of Management) v. Dunsmuir at para. 52. That said, the Act contains no privative clause to protect or shield the decisions of the Tribunal. This, however, does not necessarily indicate that the correctness standard is appropriate. See: Brown and Evans, Judicial Review of Administrative Action in Canada, vol. 3, looseleaf (Toronto: Canvasback Publishing, 2010) at 14:2521. A related point of more significance concerns s. 45(4) of the Act. It provides that questions of “law or jurisdiction” may be appealed from the Tribunal to the Court of Queen’s Bench. Although the authorities are perhaps not entirely consistent on this point, in my view, the existence of this sort of right of appeal generally weighs in favour of the application of the correctness standard of review. See: Regina (City) v. Kivela, 2006 SKCA 38, 266 D.L.R. (4th) 319 (Sask. C.A.) at para. 43; Cadillac Fairview Corp. v. Saskatoon (City), 2000 SKCA 84, [2000] 11 W.W.R. 89 (Sask. C.A.) at para. 26; Q. v. College of Physicians & Surgeons (British Colum- bia), 2003 SCC 19, [2003] 1 S.C.R. 226 (S.C.C.) at para. 27; Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), 2004 SCC 54, [2004] 3 S.C.R. 152 (S.C.C.) at para. 7; Brown and Evans, Judicial Review of Adminis- trative Action in Canada at 14:2522. 32 What then of the second factor: the nature of the administrative regime and the Tribunal’s expertise? There can be no doubt that the Tribunal enjoys a narrow and specialized mandate. Pursuant to s. 45(1) of the Act, it deals only with appointments to the practitioner staff, the discipline of members of the practi- 12 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tioner staff and the privileges of the practitioner staff. By virtue of s. 3 of The Practitioner Staff Appeals Regulations, R.R.S., c. R-8.2, Reg. 5, the Tribunal consists of a member appointed from among three persons nominated by the College of Physicians and Surgeons, one member appointed from among three persons nominated by the Saskatchewan Medical Association, one member appointed from among three persons nominated by the College of Dental Sur- geons, one member appointed from among three persons nominated by The Chi- ropractors Association, one member appointed from among three persons nominated by the Saskatchewan Association of Health Care Organizations and two members appointed from among six persons authorized pursuant to practise law in Saskatchewan and nominated by the Law Society of Saskatchewan. The members of the Tribunal need not be medical professionals and need not to come to the Tribunal fully versed in all matters concerning practitioner staff. However, a member of the Tribunal who is initially unfamiliar with such matters will quickly develop a specialized knowledge base and a level of expertise with respect to the issues falling within the scope of the Tribunal’s mandate. All of this suggests it would be appropriate to use the reasonableness standard of review in this case. 33 Third and finally, before determining the applicable standard of review, it is necessary to consider the nature of the issue at play in this appeal. In my view, the question of whether a change in operating room hours amounts to an amendment, suspension or revocation of privileges is something that the Legislature intended to delegate to the Tribunal. It falls squarely within the scope of the Tribunal’s mandate and engages its expertise. As well, determining the nature of the remedies properly awarded to a physician if an appeal be allowed would also call into play the Tribunal’s specialized knowledge of the administrative side of the health care system. In short, the nature of the question in issue here tends to point toward the appropriateness of employing the reasonableness standard of review. 34 Considering all three of the relevant factors together, I conclude that — at least in the context of this case — the appropriate standard of review is reasonableness, i.e. the root question in this appeal is whether the Tribunal reasonably concluded that the Authority’s decision to change Drs. Kutzner and Blackwell’s allocations of operating hours amounted to the amending, suspending or revoking of their privileges. 35 As to the nature of the reasonableness standard of review, Bastarache and Lebel JJ. said this in New Brunswick (Board of Management) v. Dunsmuir, at para. 47: [47] Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of apprecia- Prairie North Regional Health Authority v. Kutzner Richards J.A. 13

tion within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision- making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

C. The Interpretation of Section 45(1)(c) 36 The Authority, supported by the Regina Qu’Appelle and Saskatoon Regional Health Authorities, argues that the term “privileges” mentioned in s. 45(1)(c) of the Act refers only to the bare grant of authority to use services or facilities, such as operating rooms, for specific purposes and does not involve any question of the actual allocation of those services or facilities. The Authority says the Tribu- nal and the Chambers judge erred, or acted unreasonably, in concluding otherwise. 37 This difference of views between the Authority and Drs. Kutzner and Blackwell has arisen largely because “privileges” is not defined in the Act or in The Practitioner Staff Appeals Regulations, the regulations governing appeals to the Tribunal. Therefore, in considering the proper meaning of the term “privileges,” it is necessary to give effect to the “modern principle” of statutory interpretation endorsed by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd., Re, [1998] 1 S.C.R. 27 (S.C.C.) at para. 21: [21] . . . Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. 38 In considering this approach, it is apparent that the grammatical and ordinary sense of “privileges” is of little assistance in resolving this appeal. In the circumstances at hand, the term obviously carries a rather specialized or technical meaning which can only be discovered by examining the larger scheme of the Act and the broader context in which the Act was designed to operate. 39 Accordingly, it is necessary to locate s. 45(1)(c) in its statutory context. On that front, it is important to note first that the Act contemplates the granting and variation of privileges by the boards of regional health authorities. Section 27(1) of the Act speaks generally to this responsibility by providing that an authority is responsible for the “planning, organizing, delivery and evaluation” of health services in its region. Section 43 is more specific. It says every authority must 14 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

make bylaws governing practitioner staff, including bylaws with respect to privileges and reads as follows: 43. Every regional health authority and every affiliate prescribed for the purposes of this section shall make bylaws governing the practitioner staff, including bylaws: (a) respecting the appointment, reappointment and termination of appointment of persons to the practitioner staff and the suspension of persons appointed to the practitioner staff; (a.1) respecting the disciplining of members of the practitioner staff; (a.2) respecting the granting of privileges to members of the practitioner staff, including the amending, suspending and revoking of privileges granted; (b) governing the classification and organization of the practitioner staff; (c) governing the appointment of committees and officers of the practitioner staff and prescribing their duties; (d) respecting any other prescribed matter. [emphasis added] 40 The bylaws contemplated by s. 43 have been put in place by the Authority. In this regard, we are advised by counsel that model bylaws were developed as guidelines by the Minister and that the Authority’s Practitioner Staff Bylaws (the “Bylaws”), which track the model bylaws, were subsequently enacted. This is not surprising because s. 44 of the Act goes so far as to require that bylaws made pursuant to s. 43 must be consistent with any guidelines or directions provided by the Minister and that they must be submitted to the Minister for approval. 41 Under the administrative scheme put in place by the Bylaws, the notion of the appointment of physicians to the “practitioner staff” and the grant of privileges to physicians are closely related. Section 37(1) declares that the Board has the exclusive power to appoint members to the practitioner staff and to grant privileges. Section 37(2) goes on to say a physician must hold an appointment to the staff in order to hold any privilege. 42 As provided by s. 39 of the Bylaws, a physician’s application for initial appointment to the practitioner staff must include an indication of the privileges that he or she requests. Pursuant to s. 47(1), the Board may appoint the applicant physician to the practitioner staff and grant privileges to the category of appointment sought and the privileges requested by the applicant, grant the appointment with the privileges considered appropriate by the Board or refuse the application for appointment. The provisions of the Bylaws governing reappointment are broadly similar. Each member of the practitioner staff must apply for reappointment on an annual basis. The Board may reappoint the member to the practitioner staff and grant the privileges sought by the member, reappoint the mem- Prairie North Regional Health Authority v. Kutzner Richards J.A. 15

ber with the privileges considered appropriate by the board, or refuse the application for reappointment. 43 Significantly, the Bylaws do contain a definition of “privileges.” That definition says nothing about a physician’s entitlement to access facilities or other resources. It reads as follows: 3. In these practitioner staff bylaws, the following definitions apply: (t) “privileges” means the authority granted by the Board in accordance with these bylaws to a physician, chiropractor, midwife, dentist or nurse practitioner to admit, register, diagnose, treat or discharge patients/clients/residents in respect of a facility, program or service operated or delivered by the regional health authority. 44 The Tribunal dismissed this definition as having no significance. It did so on the ground that it is contained in the Bylaws only and does not operate in relation to the Act itself. In my opinion, the Tribunal erred by proceeding along this line of thinking. 45 It is true, of course, that legislative instruments like the Bylaws do not directly dictate the meaning of the statute under which they are enacted. They stand “below” statutes on the ladder of legal hierarchy. However, that said, en- actments of this kind can sometimes be quite useful in assessing the meaning of a statutory provision. As pointed out by Ruth Sullivan in Sullivan on the Con- struction of Statutes (Markham, Ont: LexisNexis, 2008), at p. 370, this is especially so when an Act and subordinate legislation form a complete scheme. See also: Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), 2004 SCC 54, [2004] 3 S.C.R. 152 (S.C.C.) at para. 35; R. v. Shirose, [1999] 1 S.C.R. 565 (S.C.C.) at para. 26. 46 That is the case here. As noted above, the Bylaws and ss. 43 and 45 of the Act are tightly interconnected. Section 43(a.2) requires health authorities to make bylaws concerning, among other things, the granting, amending, suspending and revoking of privileges. The Bylaws discharge that obligation by establishing the framework pursuant to which decisions concerning privileges are made. Section 44 then goes on to grant aggrieved physicians the right to appeal health authority decisions concerning, again among other things, the granting, amending, suspending, or revoking of privileges. 47 Accordingly, in my view, the definition of “privileges” found in the Bylaws is a material factor to be considered in determining the meaning of the same term in s. 45(1)(c) of the Act. The Bylaws do not control or dictate the meaning of the Act but they are certainly part of the context which should be considered when construing it. The Tribunal erred in finding the definition of “privileges” in the Bylaws to be of no relevance whatsoever to its analysis. 48 The Tribunal also erred by ignoring the definition of “privileges” found in The Attending Health Professionals Regulations, R.R.S., c. R-8.2, Reg. 4. These regulations authorize certain health care professionals, including physicians, to 16 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

admit and discharge various persons to facilities operated by a health region. They define “privileges” as follows: 2. In these regulations: (i) “privileges” means, in relation to a facility, the authority granted by a board to a physician, chiropractor, dentist, midwife or nurse practitioner to admit, register, diagnose, treat or discharge patients in that facility. 49 The Tribunal disregarded this definition on the basis that it purported to define “privileges” only for the purposes of The Attending Health Professionals Regulations. But, as was the case with the Bylaws, the Tribunal overlooked the fact that The Attending Health Professionals Regulations are part of the overall context in which s. 45(1)(c) of the Act must be interpreted. While these Regula- tions are not as intimately connected with ss. 43 and 45 of the Act as are the Bylaws, the Tribunal should have taken them into consideration when dealing with the problem before it. 50 In construing s. 45(1)(c) of the Act, it is also useful to consider the documents dealing with the privileges granted to Drs. Kutzner and Blackwell. (I take those documents to be representative of how the health care system, as a whole, handles such matters.) They include Dr. Blackwell’s June 25, 1995 application for appointment to the medical staff of the Battlefords Union Hospital. With respect to Dr. Kutzner, the record includes his application for appointment to the medical staff of the Lloydminster Hospital dated May 27, 1993, his application for privileges dated May 28, 1993 and the documents evidencing his medical staff privileges for 1993-94 and 2006-07. The latter two documents are identical (except for the dates) and read as follows: Lloydminster Hospital Medical Staff Privileges 1993-94

Dr. Morley Kutzner Consulting Privileges • Consulting Privileges in Opthalmology General Surgery — Level I • Incision and drainage of superficial abscess • Lipoma & subcutaneous cysts • Removal of superficial foreign body • Sebaceous cysts • Warts, moles, scars, keratosis Ophthalmology — Level I • Chalazion • Removal of foreign body embedded in cornea Prairie North Regional Health Authority v. Kutzner Richards J.A. 17

• Suturing of lid wounds, entropion, ectropion • Cataract • Glaucoma 51 In reviewing these materials, it becomes obvious that the applications for privileges submitted by Drs. Kutzner and Blackwell contain no reference to any specific allocation of operating room time. In relevant part, they say only that the applicant wishes “...to apply for the privilege of performing the following procedures....” The forms then go on to identify the specific procedures which are the subject of the application. Similarly, the “Medical Staff Privileges” documents that formally set out the nature and scope of the privileges granted to Dr. Kutzner say nothing about operating room allocations. Thus, to the extent these documents reflect part of the context in which the Act was enacted and is applied, they tend to support a reading of s. 45(1)(c) to the effect that privileges do not involve any particular grant of operating room time. 52 Another part of the background against which s. 45(1)(c) must be considered is the practical realities involved in the allocation of operating room and other hospital resources. In his affidavit, the Chief Executive Officer of the Authority indicates that allocation decisions reflect a variety of interrelated and sometimes conflicting considerations including patient needs, the availability of funding, the availability of staff, the number of physicians with privileges and physician recruitment and retention needs. The extraordinary complexity of operating room allocation decisions is underlined and made abundantly clear in the affidavit of Mark Ogrady, the Head of the Department of Surgery for the Regina Qu’Appelle Regional Health Authority. He indicates that the Regina Qu’Appelle Regional Health Authority is faced with allocating operating room resources to some 115 physicians holding surgical privileges. His affidavit states that each operating room allocation can potentially impact 287 different physicians. 53 This too tends to suggest that the Legislature did not intend, when enacting s. 45(1)(c), to create a regime in which each and every change to operating room allocations would give rise to a right of appeal to the Tribunal. A system of this sort would bog down the health care system by drawing the Tribunal, on an ongoing basis, into the heart of the day-to-day management of hospital resources. 54 All of this leads to only one result. When s. 45(1)(c) is considered in light of the scheme implemented pursuant to the Act and the whole of the relevant legislative context, it is clear that its reference to the amending, suspending or revoking of privileges should not be read so broadly as to include each and every change made to a physician’s allocation of operating room time. In my view, the Tribunal acted unreasonably in concluding otherwise and the Chambers judge erred in failing to recognize that error. 55 In this regard, I should add that I do not find Beiko v. Hotel Dieu Hospital St. Catharines, 2007 CarswellOnt 442 (Ont. S.C.J.), affirmed 2007 ONCA 860 18 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

(Ont. C.A.), referred to by Drs. Kutzner and Blackwell, to be especially helpful. The analysis of the term “privileges” in that case was very abbreviated and the overall legislative scheme at issue featured no definitions of the sort found in the Bylaws and The Attending Health Professionals Regulations. 56 I should comment too on a possible argument to the effect that, in relation to the amendment, suspension or revocation of privileges, s. 45(1)(c) extends only to those circumstances where there has been an amendment, suspension or revocation of privileges as part of a discipline process formally conducted pursuant to Part VIII of the Bylaws or where privileges are formally suspended pursuant to Part IX of the Bylaws. Such an argument would proceed as follows. Sections 63 and 71(1) of the Bylaws, found in Part VIII, provide that disciplinary action may include, among other things, the amendment, suspension or revocation of privileges. Sections 76 and 79, found in Part IX, allow immediate suspension of privileges in circumstances where such action is necessary to protect patients. Thus, so the argument might go, when s. 45(1)(c) of the Act refers to “amending, suspending, or revoking” privileges, it should be read as referring only to appeals arising because of actions formally taken pursuant to Parts VIII and IX. 57 In my view, this interpretational approach cannot be endorsed because it involves an overly restrictive reading of s. 45(1)(c). That provision is designed to ensure that physicians have a right to appeal whenever their privileges are amended, suspended or revoked and, as a result, it should operate regardless of whether their privileges are affected by a process expressly undertaken pursuant to Parts VIII and IX of the Bylaws or whether they are affected by actions taken on some other basis. In other words, the Act contemplates a right of appeal where, in substance, a physician’s privileges are amended, suspended or revoked even if the specific concepts of “amendment”, “suspension” or “revocation” are not used by the health district and even if there has been no proceeding conducted pursuant to Parts VIII or IX. 58 Significantly, this reading of s. 45(1) appears to be mandated by its own terms. Section 45(1)(b) provides for appeals to the Tribunal from “the disciplining of [the appellant] as a member of the practitioner staff.” In light of that provision, s. 45(1)(c) — which relates specifically to changes to privileges — would be redundant if it covered only sanctions imposed as a result of disciplinary proceedings. Accordingly, it would seem that, in appropriate circumstances, s. 45(1)(c) (insofar as it speaks to the amendment, suspension or revocation of privileges) extends beyond the measures imposed as a result of proceedings pursuant to Parts VIII and IX of the Bylaws. 59 And where does all of this ultimately lead? First, it can be seen that the overall scheme put in place pursuant to the Act means that the notion of privileges does not carry with it an entitlement to any specific allocation of facilities or resources, including operating room time, and that not every change to health district resource allocations is an amendment, suspension or revocation of privi- Prairie North Regional Health Authority v. Kutzner Richards J.A. 19

leges. However, at the same time, it is also extremely difficult to accept the idea that the concept of privileges is wholly and completely disconnected from any consideration of access to health district facilities and services. A grant of privileges would seem to necessarily involve the idea that, subject to factors like the availability of resources and patient demand, the physician in question will have some access to resources and facilities. Otherwise, there would be no point in granting privileges in the first place. 60 In sum, it is apparent that the right of appeal created by s. 45(1)(c) will be engaged in two main sorts of situations. As noted, the most obvious one is where a regional health authority formally declines to grant a physician the privileges he or she seeks or where it formally amends, suspends or revokes a physician’s privileges pursuant to Parts VIII or IX of the Bylaws, or their equivalent in other health regions. 61 A second general situation in which s. 45(1)(c) will be engaged is in the presumably somewhat unusual circumstance where there are no formal proceedings under Part VIII or Part IX but where a physician’s allocation of facilities or resources is nonetheless changed in a way that amounts, in substance, to an amendment, suspension or revocation of the physician’s privileges. As suggested above, the sorts of changes in issue here will not be those found in the mainstream of ongoing, day-to-day adjustments to the allocation of services and facilities that are made in response to considerations like resource availability and patient demand. A grant of privileges contemplates that the physician will work in an environment where such changes occur. But, as explained above, a grant of privileges also contemplates that a physician will have some access to the facilities and services needed to perform those procedures in relation to which he or she has been granted privileges. 62 Giving effect to this latter idea is not necessarily easy. In considering whether a change in operating room allocations amounts to a constructive amendment, suspension or revocation of privileges, the Tribunal will want to consider the combined effect of all relevant factors. One of these factors will certainly be the significance of the change in question. For example, a reduction in operating room time from six days a month to five-and-a-half days a month is presumably something materially different than a reduction from six days a month to one day a year. The closer a change comes to wholly denying a physician the right to perform a specific procedure or specific procedures, the more it will tend to assume the character of an amendment, suspension or revocation of his or her privileges. 63 A second factor the Tribunal will want to consider is the duration of the change. For instance, a reduction in operating room times which is in place for a week is not the same thing as a reduction which is permanent. The longer a change extends, the easier it will be to see it as involving a de facto amendment, suspension or revocation of privileges. 20 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

64 A third factor to be considered might be the reach of the change in issue. A reduction in access to facilities or services that reflects a broad attempt on the part of a health district to reduce expenditures will generally tend to have less of the flavour of a suspension, revocation or amendment of privileges than will a change targeted at a particular physician. By way of a concrete illustration of this idea, a decision that cuts global operating room time by a specific percentage, and which affects all surgeons in the same way, typically will have less of the character of amendment, suspension or revocation of privileges than will a decision which cuts only one physician’s operating room allocation. 65 There might well be other factors that should inform the Tribunal’s decision- making on issues of this sort. The considerations noted above are merely indica- tors of whether the actions of a health district have, in effect, amended, changed or modified a physician’s privileges given the reality that the term “privileges” does not involve any specific allocation of facilities or services but that it does contemplate, subject to the normal realities of matters like resource availability and patient demand, the allocation of some services and facilities. The three factors discussed here are not intended to represent a closed list and, obviously, they might be subject to qualification in some cases. 66 I appreciate that this approach to s. 45(1)(c) does not involve a test which will neatly and clearly indicate at the outset, in all cases, whether a change to operating room time allocations is something the Tribunal can review by way of a physician appeal. However, it is not possible, in the abstract, to draw a bright line precisely separating the sorts of changes which will engage s. 45 of the Act from those which will not. The Tribunal will need to address and consider the relevant issues in the context of the facts of specific appeals as they arise, always bearing in mind that s. 45 should not become something that draws it into the ongoing detail of the ordinary day-to-day administration of hospitals or health districts. As the Tribunal’s decisions accumulate, both physicians and health authorities will develop a clearer working sense of the sorts of situations which might be expected to come within the scope of s. 45(1)(c). 67 I note, as well, that finding a physician’s privileges to have been amended, suspended or revoked is only the first stage of the inquiry the Tribunal will be obliged to make when dealing with an appeal pursuant to s. 45 of the Act. As- suming there is an amendment, suspension or revocation, the Tribunal will also have to determine what, if any, relief it will order. Section 14(1) of The Practi- tioner Staff Appeals Regulations says the Tribunal may either confirm the decision of the board, vary the decision of the board or quash the decision of the board and substitute its own decision. In contemplating which of these options is warranted in an individual case, the Tribunal will obviously have to take into account both the appropriateness of the health authority’s decision in light of the various factors relevant to the allocation of scarce health region resources and consider the extent to which deference should be shown to the authority’s deci- Prairie North Regional Health Authority v. Kutzner Lane J.A. 21

sion-making in light of the overall complexity of the problems surrounding the allocation of such resources.

VI. Conclusion 68 In my view, the Chambers judge erred by endorsing the Tribunal’s interpretation of the Act. Section 45(1)(c) cannot be reasonably interpreted as meaning that every change to a physician’s allocation of operating room time is an amendment, suspension or revocation of privileges giving rise to a right of appeal to the Tribunal. 69 The Tribunal’s conclusion that it should hear the appeals of Drs. Kutzner and Blackwell flowed directly from its interpretation of s. 45(1)(c), i.e. it said that the simple fact of changing the operating times allocated to Drs. Kutzner and Blackwell meant that their privileges had been modified within the meaning of s. 45(1)(c). In light of its interpretation of the Act, the Tribunal did not consider whether those changes amounted to an amendment, suspension or revocation of privileges in the more limited sense explained above. As a result, it is necessary to remit this matter to the Tribunal for reconsideration in light of these reasons for decision. In this regard, I suggest that the Tribunal might wish to avoid any attempt to hive off, as a free standing preliminary issue, the question of whether the changes to the operating times allocated to Drs. Kutzner and Blackwell constitute an amendment, suspension or revocation of privileges. As the proceedings to date in this appeal have shown, it is often an exercise in false economy to separate out a “jurisdictional” issue on the theory that it should be dealt with separately from the balance of the proceedings. 70 The Authority’s appeal is allowed and the decision of the Chambers judge is set aside. The appeals of Drs. Kutzner and Blackwell are remitted to the Tribu- nal for reconsideration. In light of the fact that the Authority has not prevailed fully in this Court, and in light of the fact that the legislative provisions in issue here were previously untested, there will be no order as to costs.

Klebuc C.J.S.:

I concur.

Lane J.A.:

I concur. Appeal allowed. 22 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

[Indexed as: R. v. Gargan] Her Majesty the Queen (Respondent) and Christopher Gargan (Appellant) Northwest Territories Court of Appeal Jack Watson, Susan Cooper, Myra Bielby JJ.A. Heard: October 19, 2010 Judgment: October 29, 2010 Docket: Yellowknife A-1-AP-2009-000002, 2010 NWTCA 11 S. Smallwood for Respondent Christopher Gargan, Appellant, for himself Criminal law –––– Trial procedure — Selection of jury — Discharge of jurors — In- dividual juror –––– Accused was convicted of sexual assault — Trial was held in very small town where selecting jurors that did not have knowledge of or relation to accused or victim was difficult — After judge had charged jury but before jury began to hear evidence, one juror informed judge that she was related to accused and was visibly upset — Judge excused jury member and began trial with eleven jurors instead of twelve — Accused was convicted — Accused appealed — Appeal allowed — Conviction quashed and new trial ordered — Judge did not consult with counsel for parties prior to discharging juror — Judge did not make attempts to replace excused juror and did not seek input from counsel prior to continuing with trial — Judge mentioned only juror’s emotional state as reason for dismissal and did not cite her relation to accused — Emotional concerns were not sufficient to assume that juror would be unable to perform duties expected of her — Trial judge did not lack lawful alternatives to consider before proceeding, such as recalling members of panel or use of talesmen — Trial judge’s actions were procedurally erroneous both in excusing juror and failing to attempt to replace her — Mistakes deprived accused of twelve person jury, which was his right under law. Criminal law –––– Post-trial procedure — Appeal from conviction or acquittal — Right of appeal of accused — Miscellaneous –––– Accused was convicted of sexual assault — Trial was held in very small town where selecting jurors that did not have knowledge of or relation to accused or victim was difficult — After judge had charged jury but before jury began to hear evidence, one juror informed judge that she was related to accused and was visibly upset — Judge excused jury member and began trial with eleven jurors instead of twelve — Accused was convicted — Accused appealed — Appeal allowed — Conviction quashed and new trial ordered — Judge did not consult with counsel for parties prior to discharging juror — Judge did not make attempts to replace excused juror and did not seek input from counsel prior to continuing with trial — Judge mentioned only juror’s emotional state as reason for dismissal and did not cite her relation to accused — Emotional concerns were not sufficient to assume that juror would be unable to perform duties expected of her — Trial judge did not lack lawful alternatives to consider before proceeding, such as recalling members of panel or use of talesmen — Trial judge’s actions were procedurally erroneous both in excusing juror and failing to R. v. Gargan 23 attempt to replace her — Mistakes deprived accused of twelve person jury, which was his right under law. Cases considered: Bushell’s Case (1670), 89 E.R. 2, 124 E.R. 1006, 1 Freem. K.B. 1, Vaugh. 135, 6 State Tr. 999 (Eng. K.B.) — considered Patton v. United States (1930), 281 U.S. 276, 50 S.Ct. 253 (U.S. Okl.) — considered R. v. Basarabas (1982), [1982] 2 S.C.R. 730, 46 N.R. 69, 1982 CarswellBC 674, [1983] 4 W.W.R. 289, 31 C.R. (3d) 193, 144 D.L.R. (3d) 115, 2 C.C.C. (3d) 257, 1982 Car- swellBC 745, [1982] S.C.J. No. 96 (S.C.C.) — considered R. v. Belliveau (2005), 2005 BCCA 283, 197 C.C.C. (3d) 307, 2005 CarswellBC 1216, 212 B.C.A.C. 279, 350 W.A.C. 279 (B.C. C.A.) — referred to R. v. Cruickshank (2002), 2002 ABCA 168, 2002 CarswellAlta 879, 312 A.R. 187, 281 W.A.C. 187 (Alta. C.A.) — considered R. v. Emile (1988), [1988] N.W.T.R. 196, 1988 CarswellNWT 49, [1988] 5 W.W.R. 481, 65 C.R. (3d) 135, 42 C.C.C. (3d) 408 (N.W.T. C.A.) — considered R. v. Fontaine (2002), 2002 CarswellMan 391, 2002 MBCA 107, 168 C.C.C. (3d) 263, [2003] 1 W.W.R. 634, 166 Man. R. (2d) 214, 278 W.A.C. 214, 30 M.V.R. (4th) 163, 7 C.R. (6th) 139, [2002] M.J. No. 363 (Man. C.A.) — referred to R. v. Hazlett (2005), 205 O.A.C. 298, 2005 CarswellOnt 7454 (Ont. C.A.) — referred to R. v. Lunden (1998), 244 A.R. 346, 209 W.A.C. 346, 1998 ABCA 398, 1998 Carswell- Alta 1436, [1998] A.J. No. 1499 (Alta. C.A.) — considered R. v. Nest (1999), 228 A.R. 369, 188 W.A.C. 369, 1999 ABCA 46, 1999 CarswellAlta 92, [1999] A.J. No. 76 (Alta. C.A.) — considered R. v. Piche (1997), 1997 CarswellBC 183, 113 C.C.C. (3d) 149, 86 B.C.A.C. 188, 142 W.A.C. 188 (B.C. C.A.) — referred to R. v. Plato (1985), 40 Alta. L.R. (2d) 200, 1985 CarswellAlta 185, 60 A.R. 73 (Alta. C.A.) — referred to R. v. S. (L.H.) (1999), 122 B.C.A.C. 300, 200 W.A.C. 300, 1999 CarswellBC 1018, 1999 BCCA 307, (sub nom. R. v. L.H.S.) [1999] B.C.J. No. 1073 (B.C. C.A.) — referred to R. v. S. (R.J.) (1996), 110 C.C.C. (3d) 535, 154 N.S.R. (2d) 118, 452 A.P.R. 118, 1996 CarswellNS 388, [1996] N.S.J. No. 387 (N.S. C.A.) — considered R. v. S. (R.J.) (1997), 227 N.R. 286 (note), 169 N.S.R. (2d) 151 (note), 508 A.P.R. 151 (note), [1997] 2 S.C.R. xv, 113 C.C.C. (3d) vi (note), [1996] S.C.C.A. No. 628, (sub nom. Canada (Procureur g´en´eral) c. Savarie) [1996] C.S.C.R. No. 570 (S.C.C.) — referred to R. v. W. (L.K.) (1999), 138 C.C.C. (3d) 449, 126 O.A.C. 39, 1999 CarswellOnt 3014 (Ont. C.A.) — referred to R. v. W. (L.K.) (2000), 2000 CarswellOnt 4252, 2000 CarswellOnt 4253, 264 N.R. 393 (note), 145 O.A.C. 398 (note), [2000] S.C.C.A. No. 383 (S.C.C.) — referred to R. v. Wucherer (2005), 2005 CarswellBC 1829, 2005 BCCA 390, 199 C.C.C. (3d) 61, 215 B.C.A.C. 83, 355 W.A.C. 83 (B.C. C.A.) — referred to Wu v. R. (1999), 199 C.L.R. 99, [1999] H.C.A. 52 (Australia H.C.) — considered Statutes considered: Bill of Rights, 1689 Generally — referred to 24 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

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 Generally — referred to s. 15 — referred to Criminal Code, R.S.C. 1970, c. C-34 s. 573 — referred to Criminal Code, R.S.C. 1985, c. C-46 Generally — referred to s. 631(2.1) [en. 2001, c. 32, s. 82(4)] — considered s. 631(5) — referred to s. 642 — referred to s. 642(1) — referred to s. 642.1 [en. 2002, c. 13, s. 57] — referred to s. 643 — referred to s. 644(1) — considered s. 644(1.1) [en. 1997, c. 18, s. 75] — considered s. 644(2) — referred to s. 670 — referred to s. 686(1)(b)(iv) — considered Magna Carta, 1215 (17 John) Generally — referred to

APPEAL by accused on conviction for sexual assault.

Per curiam: Introduction 1 Fort Providence, in the Northwest Territories of Canada, is a hamlet of approximately 750 people located at 61°21’N (lat.) and 117°39’W (long.) on the shore of the Mackenzie River. As with the rest of Canada, the selection of a jury in Fort Providence to try a criminal case is governed by the provisions of the Criminal Code of Canada which in turn draw both strength and direction from the Canadian Charter of Rights and Freedoms and from centuries of tradition and inherited confidence in the good judgment, fairness and wisdom of a collec- tion of impartial people sworn to try the case fairly. 2 The difficulty of ensuring that a jury selected in such a small and isolated place both is and appears to be an impartial and complete adjudicative body chosen in conformance with the requirements of the Code, the Charter and those traditions, is plain. This is not to suggest anything about the people in such places. Rather, it is to state the common sense that in such places it may well be that many people will be related by family or will know each other well. As a result, some such link to a complainant, to a crucial witness, or to the accused, may very well exist for many of the adult persons available for jury duty. In- deed, some degree of linkage may be inevitable. This appeal exemplifies that R. v. Gargan Per curiam 25

situation and the effort of a fair minded and highly experienced trial judge to deal with concerns that arose from the situation. 3 Unfortunately, the manner in which the trial judge dealt with the problem that arose in this trial did not accord with the law, and the error of law constituted a jurisdictional defect in the proceedings that cannot be cured by application of s. 686(1)(b)(iv) of the Code or any other curative proviso. The appellant’s conviction for sexual assault arising from a verdict of guilty by eleven persons must be set aside and the case returned for a new trial.

Legal Context 4 For many years the number of jurors that would be regarded as a sufficient complement for a criminal trial in the Northwest Territories was six persons, which was found to be inconsistent with the equality right guaranteed by s. 15 of the Charter: see R. v. Emile (1988), 42 C.C.C. (3d) 408, 65 C.R. (3d) 135 (N.W.T. C.A.). That Constitutional inconsistency could not be sustained even though, as pointed out in Emile at para. 37, “the noble objective of this discrimi- nation is to ensure that jury trials can be conducted in the remote and sparsely- populated communities of the Northwest Territories and to preserve the right of an accused to trial by jury”. 5 The Court in Emile at para. 42 characterized the stipulation of twelve jurors as “not magic” and as a tradition or convention. Twelve is the number specified by Parliament for a full criminal trial jury: see ss. 631(5), 642.1 and 643 of the Code. Twelve is the number in addition to which one or two alternates may be selected: s. 631(2.1) of the Code. One of these alternates may be called upon to replace a juror before evidence starts to be called: s. 644(1.1) of the Code. Twelve is also the number from which a trial judge may under certain circumstances discharge as many as two persons as long as the jury does not go lower than ten persons: s. 644(2) of the Code. 6 The concept of twelve jurors seems intrinsic to our comprehension of what is a jury. According to Holdsworth, A History of English Law, 5th ed. (1931), vol. 1, pp. 312-50, the concept of the jury can be traced back to William the Con- queror. But with the Assize of Clarendon and Henry II, a judicial role of the petit jury started to be separated from the state agent role of the grand jury in Wil- liam’s era. Although the 39th clause in Magna Carta may have had little to do with trial by jury when written, it is a legacy forming part of the underpinning of Constitutionality of the modern jury. In Bushell’s Case (1670), Vaugh. 135, 124 E.R. 1006 (Eng. K.B.), the independence of the jury was declared. By The Bill of Rights of 1689, 1 Will. & Mary, Sess. 2, c. 2, the practice of the selection of “partial, corrupt and unqualified persons” as jurors was to be ended. Blackstone explained the number of jurors when he wrote, in Commentaries on the Laws of England (1902), Book 4, W. D. Lewis ed., p. 1735, “the truth of every accusa- tion, whether preferred in the shape of indictment, information, or appeal, 26 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

should afterwards be confirmed by the unanimous suffrage of twelve of his equals and neighbours indifferently chosen and superior to all suspicion.” Lord Devlin, in Trial by Jury, The Hamlyn Lectures, [London: Stevens & Sons, 1956] at p. 164 stated that “no tyrant could afford to leave a subject’s freedom in the hands of twelve of his countrymen”. See also Patton v. United States, 281 U.S. 276, 50 S.Ct. 253 (U.S. Okl. 1930) which held that the reference to a jury in the United States Constitution since the beginning was to twelve people and a trial by eight people could not be consented to even by the accused. See also Wu v. R., [1999] H.C.A. 52, 199 C.L.R. 99 (Australia H.C.) where it was held that a twelve person jury had to start the trial, even though the Court acknowledged that the number might have been an historical accident.

Case Context 7 As noted above, this case was tried by eleven persons. This number came about after the selection of a jury of twelve persons in a morning session at one building in Fort Providence, and an adjournment to another building for the trial. According to the appeal materials provided to this Court, the appellant attended with counsel that morning as did a jury panel. The trial judge provided instructions to the panel as to who was qualified to sit on the jury and to the process to be followed. He explained the factors which might lead to an exemption, including whether they were “closely related” to either the accused or the complainant. A process was then followed which led to the exemption of an unspecified number of jurors. The specifics of those events are not transcribed in the appeal book before us. However, no complaint is made to us about this procedure. 8 Immediately following this procedure of excusing some potential jurors, the appellant was arraigned on the indictment and entered his plea of not guilty. The trial judge then addressed with the panel how the selection of the actual jury would proceed including what he called the accused’s “ right to challenge”. Once again we are not provided with a transcript of the jury selection process, but no complaint is made to us about this procedure either. 9 Twelve jurors were selected through this process and all of them were sworn. The trial judge then directed the clerk to put the appellant in charge of this jury, which the clerk did by reading the count charged, and telling the jury “The accused has pled not guilty to this charge. Your duty is to listen to the evidence and decide whether he is guilty or not.” The trial judge evidently regarded this as putting the appellant in the charge of the jury. The trial judge then instructed the jury to come back after lunch at 1:30 p.m. to the Snowshoe Centre where the trial would start. He provided additional comments about procedure then and let them separate. He instructed counsel and the appellant to meet him there at 1:15 p.m. 10 At a time which the trial judge described as “almost an hour” after the appointed time, juror number 11 arrived at the court room. One page of the tran- R. v. Gargan Per curiam 27

script covers what happened. Addressing the juror by name, the trial judge asked if she had an explanation for being late. She explained that “Well, when I went up, I told them that I was related to Chris.” What followed: JUROR NO. 11: Well, when I went up, I told them that I was related to Chris. THE COURT: You are concerned about being on the jury because you know Chris Gargan? JUROR NO. 11: Yeah. Why did he pick me? THE COURT: Is this causing you some difficulty, [name] about being on the jury? [Name] why is it you didn’t come to court this afternoon? Why didn’t you let us know? JUROR NO. 11: I did. THE COURT: Counsel, in the circumstances, I am not satisfied that this juror is in a condition that is going to allow her to carry out her duties. So I am going to excuse her. We are going to continue with the trial with 11 jurors. [Name], I am going to release you from your jury summons now. You are free to go. Go ahead. JUROR NO. 11: Thank you. 11 The rest of the jury appears to have been waiting in another room. They were brought in and the trial judge explained that he excused her because “she is in a fairly distraught and upset condition” and “Because of the condition that she is in, I am not satisfied that she could carry out her duties, and I have excused her from the jury.” He then went into his opening instructions to the remaining jurors, and granted an order excluding witnesses with consent of counsel. Neither counsel said anything about the decision to excuse Juror No. 11. Crown counsel went into his opening address to the remaining jurors and called his first witness. At the end of the Crown’s case, the appellant’s counsel did not make an opening address to the jury and called the appellant to testify. 12 The appellant challenges his conviction on more than one ground, but the jury selection process is the only matter that we need to address.

Analysis 13 The first point to consider is whether the trial was in its “course” within the meaning of s. 644(1) of the Code. If it were not, the discharge of the juror was invalid. In R. v. Basarabas, [1982] 2 S.C.R. 730, 2 C.C.C. (3d) 257 (S.C.C.), the facts were similar to the present situation, in that After the appeals had entered their respective pleas of not guilty, and after twelve jurors were sworn but before the appellants had been given in charge to the jury and before the Crown was called upon to present its case, the court was informed that one of the jurors was a fellow employee of the brother of the alleged victim. 28 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

14 The trial judge and counsel briefly questioned the juror about comments he may have made to other jurors. The trial judge excused the juror and asked for submissions as to whether the trial should continue with eleven jurors. Counsel for the appellants sought a mistrial on the basis his presence may have tainted the other jurors. The trial judge in Basarabas refused this motion. The next day the jury was instructed as to the charge facing the appellants and the plea which had been given by each upon arraignment. The appellants were then put in the charge of the jury and the trial proceeded with eleven jurors. 15 This description of the situation in Basarabas suggests that the entry of a plea and the swearing of the twelve jurors did not constitute putting the accuseds in the charge of the jury. Indeed, it suggests that instructing the jury as to the pleas that had been taken likewise did not itself put the accuseds in charge of the jury. What constituted, for the purposes of the Supreme Court, the fact of putting the accused in charge of the jury, was not elaborated. Dickson J. wrote that the discharge of the juror occurred before the trial started for the purposes of what was then s. 573 (now s. 642) of the Code. In his view, the trial would start with the accused being put in charge of the jury so that the later discharge of the juror would be in the “course of the trial” as set out in that section. The effect of the premature discharge of the juror, in his view, was that the accuseds were deprived of their “right” to be tried by a “full jury” of twelve persons. A new trial was required. 16 Later cases emphasized the importance of the accused being in the charge of the jury before a juror can be discharged: see e.g. R. v. Piche (1997), 113 C.C.C. (3d) 149, 86 B.C.A.C. 188 (B.C. C.A.); R. v. Plato (1985), 40 Alta. L.R. (2d) 200 (Alta. C.A.). Significantly, the strong line of authority suggests that it is not necessary to call evidence for it to be found that the accused was put in charge of the jury: Piche at paras. 14 to 40 (where the B.C. Court of Appeal sat five to depart from some of its cases that suggested evidence had to be called in order to say the trial was in its “course”); R. v. W. (L.K.) (1999), 138 C.C.C. (3d) 449, 126 O.A.C. 39 (Ont. C.A.), leave denied [2000] S.C.C.A. No. 383 (S.C.C.) at paras. 57 to 60; R. v. S. (R.J.) (1996), 110 C.C.C. (3d) 535, 154 N.S.R. (2d) 118 (N.S. C.A.), leave denied (1997), [1996] S.C.C.A. No. 628 (S.C.C.) at paras. 40 to 65. 17 The same is suggested, albeit indirectly, by R. v. Lunden (1998), 244 A.R. 346, 1998 ABCA 398 (Alta. C.A.) at paras. 2 to 12. By the time of Lunden, s. 644(1.1) of the Code had been enacted. It allowed for a trial judge to find a replacement for a discharged juror in order to proceed with twelve jurors by drawing a name from the panel from which the jury had been chosen, or by the talesmen process. Under s. 644(1.1), the substitution of a juror was allowable before the jury commenced to hear evidence. The section does not define putting “in charge” but since s. 644(1.1) follows from a discharge pursuant to s. 644(1), it is plain that Parliament distinguished between being “in charge” and calling R. v. Gargan Per curiam 29

evidence. This section also indicates the view of Parliament that the “course of the trial” commences before the calling of evidence. 18 For its part, Lunden did not define what amounted to putting the accused in the charge of the jury, but it accepted that the presence of two alternate jurors, which had been arranged when the original twelve were picked, could meet the requirements of s. 644(1.1) if the Code provisions as a whole were observed. The pre-legislative procedure of picking two alternates from the panel did not fulfil its objective in Lunden although it did in R. v. Nest (1999), 228 A.R. 369, 1999 ABCA 46 (Alta. C.A.) and R. v. Cruickshank (2002), 312 A.R. 187, 2002 ABCA 168 (Alta. C.A.). The use of alternates failed in Lunden because the accused still had several peremptory challenges left and evidently there had been no challenge process applied to the selection of the alternates. By comparison, the accused had no challenges left in Nest and Cruickshank. As Lunden wished to use one of his challenges on the first alternate (he was in favour of the second alternate to replace the discharged juror) and this was not allowed by the trial judge, the Court in Lunden found non-compliance with the Code that could not be rescued by either s. 670 or s. 686(1)(b)(iv) of the Code. 19 We note that s. 631(2.1) of the Code now provides for formal selection of as many as two alternates, and that an additional peremptory challenge is allowed for each alternate selected. Had there been alternates selected in the case at bar, and had one of those been substituted for the discharged juror, the appellant could not succeed on this issue. This amendment may have been driven in part by inconsistent lines of authority about whether ‘common law’ alternates (as selected in Alberta) could be used as substitutes after the accused was in the charge of the jury: see W. (L.K.); R. v. S. (L.H.) (1999), 122 B.C.A.C. 300, 1999 BCCA 307 (B.C. C.A.); R. v. Hazlett (2005), 205 O.A.C. 298 (Ont. C.A.). 20 At any rate, we are persuaded by the cases that the trial commenced when the appellant was put in charge of the jury. It was not necessary for the Crown to have opened its case or called a witness for that to be said to have happened. In our view, the process directed by the trial judge here was sufficient to constitute putting the appellant in charge of the jury. That is because the trial judge, being the judicial and legal authority contemplated by the Code as competent to try the case with the jury, had formally, and in open court, engaged the jury in its role as part of the court with him to try the appellant. By this way, the trial judge and the jury had merged into the court with Constitutional competence to try the case. As part of this process of putting in charge, the judge also explained to the jury that they were now to commence the trial of the accused as per their oath. The fact that the trial judge spoke through a clerk in formally establishing the court for this shared responsibility does not change anything. We are given no authority to suggest this process, as simple as it was here, was insufficient to constitute putting the accused in charge of that jury. 30 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

21 Accordingly, s. 644(1) of the Code did apply to the situation and the juror could be lawfully discharged if the basis for doing so existed and the Code contemplated process was followed: see e.g. S. (R.J.) at paras. 55 to 67. So this brings us to a second issue which is whether the process of discharging the juror and not substituting for her was incomplete and erroneous in law. 22 The trial judge did not ask for submissions from counsel or for their agreement to discharge the juror – or, at least, from what the record can tell us. It is possible that the trial judge looked at counsel and got from counsel an unstated acknowledgment from them that the juror could be discharged but that is speculation. On the other hand, Crown counsel at the appeal hearing suggested that trial judges generally do not consult counsel on the question of discharging a juror under similar circumstances. This is, of course, not really evidence of a practice so we make no finding. If there were such a tendency, it would be incorrect. The trial judge should have sought and obtained the position of counsel for the parties before his decision to discharge the juror. We do not purport to set a rule as to how much consultation or submission is necessary. Nor do we suggest that acknowledgment or consent may not be sufficient, even if informally given. Nor do we suggest that it would be impossible on appeal to infer the existence of consent (depending of course on the circumstances) – although waiver of a right of these dimensions should be clearly shown. Nor do we suggest that the trial judge would be bound to agree with the submissions of either side. But none of that happened here. Counsel may have gotten instructions to consent to proceed with eleven jurors but we do not know. In his (in person) documents on appeal, the appellant says that he did not agree with Juror No. 11 being discharged. 23 Also on this second issue, the reasons given for discharge of Juror No. 11 do not completely address the test in s. 644(1) of the Code. A trial judge must be satisfied that the juror could not “continue” due to “illness or other reasonable cause”. This is not the case to elaborate on what might constitute “other reasonable cause”. The range of possibilities is wide: see e.g. R. v. Belliveau (2005), 197 C.C.C. (3d) 307, 2005 BCCA 283 (B.C. C.A.) at paras. 48 to 70. Nonetheless, the most that the record here elucidates is that Juror No. 11 was highly upset. She had also mentioned being somehow related to the appellant. The trial judge did not mention the latter factor, however, as being relevant to his decision to discharge her. It is reasonable to infer that Juror No. 11 was in some sort of emotional state that was apparent to the trial judge. We can infer that the trial judge felt she was not in a state to start the trial. However, this was a short trial. There is no indication that there was any pressure of time to complete the case. It is not on the record before us whether the juror could have been given some time to compose herself and, if so, whether that might have resolved her difficulty sufficiently to “continue”. Further, there are both attitudinal and behavioural components to consider as to a challenge to the partiality of a potential juror, and the same considerations would apply to a discharge if partiality or R. v. Gargan Per curiam 31

something like it is raised. Merely because a selected juror now reveals an atti- tude or deportment which is of concern does not automatically mean the juror cannot be trusted to set aside the matters giving rise to the concern and to perform her duty. As counsel did not participate in the process of discharging the juror, no such option was proposed or pursued. Nor is there evidence related to this topic in the record from which we can determine that the result would have been the same. We do not really know if it was feasible to “continue” her participation. 24 A third issue arises. This is that the trial judge moved immediately from discharging Juror No. 11 to deciding that the trial would proceed with eleven members of the jury. Once again, the submissions of counsel should have been sought before doing this. Discharging a juror and proceeding with less than twelve are two steps of significance to the accused: see e.g. R. v. Fontaine (2002), 168 C.C.C. (3d) 263, 2002 MBCA 107 (Man. C.A.) at paras. 74 to 80; see also Lunden. This does not mean that counsel has a veto or that counsel for an accused can sleep on their objections: see e.g. R. v. Wucherer (2005), 199 C.C.C. (3d) 61, 2005 BCCA 390 (B.C. C.A.) at paras. 4 to 18. Nonetheless, consultation with counsel may have produced other options. 25 For example, there were other former jurors in the panel who may well have been “available” still to be recalled or that there might be a talesman available to replace Juror No. 11. This all happened on the same day in a small community. S. 642 of the Code does not suggest that the release of the panel members dis- qualifies them from being returned in a talesman capacity. Indeed, a talesman group can be recruited “whether qualified jurors or not” under the section. Alter- natively, counsel may perhaps have consented to treat any members of the original panel who returned to the court as being available for consideration as a substitute under one or more sections of the Code. There were, apparently, no jury alternates chosen during the selection process and the panel was allowed to leave, but that does not necessarily diminish the meaning of s. 644(1.1). 26 Crown Counsel urges S. (R.J.) in support of what happened here. Crown counsel submits that there was no point in seeking the position of counsel on the discharge or replacement of Juror No. 11 as the panel had been allowed to dis- perse. Crown counsel argues the view of the Court in S. (R.J.) to suggest that there was no lawful means to seek talesmen under s. 642(1) of the Code. We note that in S. (R.J.) there had been consent of counsel to putting the accused in charge of the jury before dealing with the concern of the reluctant juror: para. 61. Counsel there obviously knew that doing so would engage s. 644(1) of the Code and thus that if the juror was discharged, the trial judge would possess discretion to continue with eleven. Counsel had asked for talesmen to be pursued in S. (R.J.) but the trial judge did not think he could do so. When that avenue was foreclosed counsel did not seek a mistrial. In other words, the record is clear that in S. (R.J.) the counsel had essentially consented to the process 32 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

there. That is not this case. Further, S. (R.J.) was prior to the Code amendment to s. 644(1.1) which allows the trial judge to ..... select another juror to take the place of a juror who by reason of illness or other reasonable cause cannot continue to act, if the jury has not yet begun to hear evidence, either by drawing a name from a panel of persons who were summoned to act as jurors and who are available at the court at the time of replacing the juror or by using the procedure referred to in section 642. 27 The section does not define what “available” means. Nor does it limit “the procedure referred to in s. 642” to a situation where the panel is exhausted. While we agree with Crown counsel that the trial judge had a discretion under s. 644(1) of the Code, and could ultimately have been persuaded to proceed with eleven jurors, we do not agree that he lacked lawful alternatives to consider before deciding. A common sense interpretation of the language in s. 644(1.1), so as to allow for recalling members of the panel, or a common sense interpretation of ss. 642 and 644(1.1) so as to seek and use talesmen were ideas open to consideration. Although the Court in S. (R.J.) rejected as impractical the step of rounding up talesmen, on the facts of S. (R.J.), such a notion may not be as impractical in a community like Fort Providence. The judge can decide. 28 In the end result, we are persuaded that there are several reasons to conclude that the trial judges no doubt sincere desire to accommodate the upset juror and to yet proceed efficiently and fairly was procedurally erroneous both as to (a) the discharge of Juror No. 11 and (b) the failure to take steps to seek a substitute for her. The effect of these errors was to effectively deprive the appellant of the jury of twelve persons which was his right under law. There is no proof before us of waiver of this important right. Even though we do not know how Juror No. 11 might have behaved or voted during her participation in the trial, we cannot speculate that her absence was harmless. As exemplified in Lunden, an un- waived trial defect going to the very structure of the court is jurisdictional in nature. The general curative proviso in s. 686(1)(b)(iv) of the Code cannot apply to a situation without jurisdiction and it would not apply unless this Court were satisfied there was no prejudice. None of the other several Code provisions applying to cure jury selection defects apply to this situation although they might have if a substitute juror had been sworn in a manner that in retrospect is not thought to be technically correct.

Conclusion 29 The appeal must therefore be allowed, the conviction must be quashed and a new trial ordered. We gave our decision orally at the hearing with reasons to follow. These are those reasons. Appeal allowed. Bradley v. Groves 33

[Indexed as: Bradley v. Groves] Charlene Marie Bradley (Respondent / Plaintiff) and Sheila Groves (Appellant / Defendant) British Columbia Court of Appeal Huddart, Levine, Garson JJ.A. Heard: February 3, 2010 Judgment: July 29, 2010 Docket: Victoria CA037005, 2010 BCCA 361 A. Gunn for Appellant M. Hunt, D. Murphy for Respondent Torts –––– Negligence — Practice and procedure — Costs — Miscellaneous. Torts –––– Negligence — Causation — Intervening causes –––– Plaintiff was injured in two separate motor vehicle accidents — In first accident, plaintiff’s vehicle was struck from behind by defendant — Plaintiff complained of, and received treatment for soft tissue injuries to her head and neck — In second accident, plaintiff’s vehicle was again struck from behind — Plaintiff claimed that second accident aggravated soft tissue injuries suffered in first accident — Trial judge determined that defendant was 100 percent liable for damages flowing from both accidents — Trial judge concluded that injuries in second accident were indivisible from injuries in first accident — Defendant appealed — Decision varied on other grounds — Trial judge did not err in refusing to apportion damages between defendant and driver of vehicle in second accident — There was no basis on which to interfere with trial judge’s findings of fact — Flowing from findings of fact was joint and several liability. Cases considered: Anderson v. Routbard (2007), 2007 BCCA 193, 2007 CarswellBC 647, 396 W.A.C. 98, 239 B.C.A.C. 98, 41 C.P.C. (6th) 95, 67 B.C.L.R. (4th) 66, [2007] B.C.J. No. 627 (B.C. C.A.) — followed Ashcroft v. Dhaliwal (2008), 59 C.C.L.T. (3d) 1, [2008] 11 W.W.R. 579, 59 C.P.C. (6th) 222, 2008 CarswellBC 1926, 2008 BCCA 352, 83 B.C.L.R. (4th) 279, 259 B.C.A.C. 176, 436 W.A.C. 176, 298 D.L.R. (4th) 509, [2008] B.C.J. No. 1742 (B.C. C.A.) — considered Ashcroft v. Dhaliwal (2009), 476 W.A.C. 319 (note), 282 B.C.A.C. 319 (note), 395 N.R. 387 (note), 2009 CarswellBC 367, 2009 CarswellBC 368, [2008] S.C.C.A. No. 488 (S.C.C.) — referred to Athey v. Leonati (1996), [1997] 1 W.W.R. 97, 140 D.L.R. (4th) 235, 81 B.C.A.C. 243, 132 W.A.C. 243, 203 N.R. 36, [1996] 3 S.C.R. 458, 31 C.C.L.T. (2d) 113, 1996 CarswellBC 2295, 1996 CarswellBC 2296, [1996] S.C.J. No. 102 (S.C.C.) — followed 34 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

B. (B.P.) v. B. (M.M.) (2009), 97 B.C.L.R. (4th) 73, 2009 CarswellBC 2171, 2009 BCCA 365, [2010] 3 W.W.R. 628, 276 B.C.A.C. 22, 468 W.A.C. 22 (B.C. C.A.) — followed B. (B.P.) v. B. (M.M.) (2010), 2010 CarswellBC 1199, 2010 CarswellBC 1200, [2010] S.C.C.A. No. 90 (S.C.C.) — referred to Blackwater v. Plint (2005), 216 B.C.A.C. 24, 356 W.A.C. 24, 48 B.C.L.R. (4th) 1, [2005] 3 S.C.R. 3, 258 D.L.R. (4th) 275, [2005] R.R.A. 1021, [2006] 3 W.W.R. 401, 2005 SCC 58, 2005 CarswellBC 2358, 2005 CarswellBC 2359, 35 C.C.L.T. (3d) 161, 46 C.C.E.L. (3d) 165, 339 N.R. 355, [2005] S.C.J. No. 59 (S.C.C.) — followed G. (E.D.) v. Hammer (2003), 2003 CarswellBC 2407, 2003 CarswellBC 2408, 2003 SCC 52, 18 B.C.L.R. (4th) 42, 187 B.C.A.C. 193, 307 W.A.C. 193, 310 N.R. 1, [2003] R.R.A. 1069, [2003] 2 S.C.R. 459, 230 D.L.R. (4th) 554, [2003] 11 W.W.R. 244, 19 C.C.L.T. (3d) 38, 2004 C.L.L.C. 210-011, [2003] S.C.J. No. 52, REJB 2003-48043 (S.C.C.) — followed Hanke v. Resurfice Corp. (2007), 69 Alta. L.R. (4th) 1, 404 A.R. 333, 394 W.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 Long v. Thiessen (1968), 65 W.W.R. 577, 1968 CarswellBC 139, [1968] B.C.J. No. 1 (B.C. C.A.) — followed Majewska v. Partyka (2010), 2010 CarswellBC 1208, 2010 BCCA 236, 5 B.C.L.R. (5th) 53 (B.C. C.A.) — referred to Misko v. John Doe (2007), 2007 ONCA 660, 2007 CarswellOnt 6002, (sub nom. Misko v. Doe) 87 O.R. (3d) 517, (sub nom. Misko v. Doe) [2007] I.L.R. I-4644, 286 D.L.R. (4th) 304, 51 M.V.R. (5th) 206, 229 O.A.C. 124, [2007] O.J. No. 3615 (Ont. C.A.) — referred to Skidmore v. Blackmore (1995), 1995 CarswellBC 23, 2 B.C.L.R. (3d) 201, [1995] 4 W.W.R. 524, 27 C.R.R. (2d) 77, 55 B.C.A.C. 191, 90 W.A.C. 191, 35 C.P.C. (3d) 28, 122 D.L.R. (4th) 330, [1995] B.C.J. No. 305 (B.C. C.A.) — considered Statutes considered: Negligence Act, R.S.B.C. 1996, c. 333 Generally — referred to Rules considered: Rules of Court, 1990, B.C. Reg. 221/90 R. 66 — referred to R. 66(29) — considered Forms considered: Rules of Court, 1990, B.C. Reg. 221/90 App. A, Form 137 — referred to

APPEAL by defendant from judgment reported at Bradley v. Groves (2010), 2010 Car- swellBC 2056, 2009 BCSC 1882 (B.C. S.C.), awarding plaintiff damages for injuries sustained in two motor vehicle accidents. Bradley v. Groves Per curiam 35

Per curiam: Introduction 1 This appeal is concerned with liability for injuries caused by both a defendant’s tortious act and a subsequent event. In particular, in this case a second accident aggravated the injuries sustained in the first accident. 2 A second ground of appeal concerning costs was also argued and is conceded by the respondent. 3 We conclude that the main ground of appeal raised by the appellant cannot be sustained. We allow the appeal with respect to the costs awarded at trial.

Background Facts 4 The respondent Ms. Bradley was injured in two separate motor vehicle accidents. The first accident occurred on March 24, 2006, when Ms. Bradley’s vehicle was struck in the rear by a vehicle operated by the appellant Ms. Groves. Before the commencement of the trial, Ms. Groves admitted she was at fault for the first accident. 5 Following the first motor vehicle accident, Ms. Bradley felt pain in the back of her head and neck. She missed approximately one week of work. She continued to complain of residual symptoms associated with a soft-tissue injury. She received treatment from her physician, as well as from a chiropractor and a physiotherapist. 6 On November 15, 2007, Ms. Bradley commenced an action against Ms. Groves. The action was made subject to R. 66 by virtue of a Form 137 endorsement included in Ms. Grove’s statement of defence. 7 On July 26, 2008, Ms. Bradley was involved in a second motor vehicle accident. This accident occurred in a parking lot. Another vehicle backed into Ms. Bradley’s vehicle. Ms. Bradley testified that the second accident aggravated the soft tissue injuries suffered in the first accident. She estimated that she had been 80% recovered from the first accident by the time of the second accident, but that she was only 65% recovered by the time of the trial.

Reasons for Judgment of the Trial Judge 8 The trial judge found that Ms. Bradley’s injuries had persisted for three years with a period of acute aggravation following the second accident. He found that Ms. Bradley was not fully recovered from the effects of the first accident at the time of the second accident. He said: [47] The aggravation brought about by the July 2008 accident, I find, was as acute as it was because the first accident left Ms. Bradley, who was not then fully recovered from the effects of the first accident, in a somewhat more vulnerable position and exposed to injury to a greater extent because of the incomplete recovery from the first accident. 36 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

9 The trial judge considered the effects of the second accident and concluded that the injuries in the second accident were indivisible from the injuries in the first accident: [59] The plaintiff has testified, as I have said, that this second accident set her back to square one in terms of her recovery. Dr. Woodburn has said that the complaints of injury from the second accident were essentially in the same pattern as the first accident and that his findings after the second accident were similar to his findings after the first accident but perhaps less traumatic. The plaintiff generally said that the areas of pain and suffering were the same after the second accident. [60] That evidence leads me to conclude that the injuries in the second accident are indivisible from the injuries in the first accident. Those indivisible injuries were caused by consecutive torts, the first being the negligence of Ms. Groves in causing the accident of March 24, 2006, and the second being the negligence of the driver of the pickup truck that backed into Ms. Brad- ley’s vehicle while she was sitting in her parked car. [61] The negligence of both drivers, Ms. Groves and the driver of the pickup truck whose identity was not disclosed at trial, were both necessary causes of the indivisible injuries to Ms. Bradley and of the losses resulting from those indivisible injuries. 10 At para. 65, the trial judge found that Ms. Bradley was not contributorily negligent. He held that Ms. Groves was liable for 100% of the damages flowing from both accidents, concluding: [66] In light of those findings, and on the authority of Ashcroft v. Dhaliwal [2007 BCSC 533], and s. 4 of the Negligence Act, I conclude that the defendant Groves is liable to pay 100 percent of the damages awarded to Ms. Bradley flowing from both accidents. Because there is no contributory negligence on the part of Ms. Bradley, apportionment is not necessary. It is also not necessary because both tortfeasors are not before the court, and I refer here to Ashcroft v. Dhaliwal at paras. 19-21. [67] I would say, however, that had I been required to apportion damages, that would not have affected by one penny the amount that Ms. Bradley would receive in damages. It would simply permit the tortfeasors to deal with each other in terms of their contribution to what Ms. Bradley will receive. [68] I will also say that had I been required to apportion, I would conclude that, given the relatively short time it took Ms. Bradley to get back to the position she was in prior to the second accident, I would have apportioned the damages at 80 percent to the first accident and 20 percent to the second accident. [69] In summary, therefore, the defendant Groves shall pay to Ms. Bradley non-pecuniary damages of $30,000, loss of income of $480, special damages of $1,324, court order interest as calculated, and I will hear counsel on costs. Bradley v. Groves Per curiam 37

First Ground of Appeal – Apportionment 11 The position of the appellant is that aggravation of a pre-existing tortiously- caused injury is not the same as an indivisible injury. She contends that the trial judge must strive to identify and disentangle any earlier tortiously-caused injury from later harm, and, as in Blackwater v. Plint, 2005 SCC 58, [2005] 3 S.C.R. 3 (S.C.C.), assess damages for each injury separately. Each defendant should be liable only to the extent of the harm they created. 12 The appellant contends that the trial judge erred in failing to apportion damages for the first and second accident. The appellant argues that in cases of aggravated injury, resulting from successive independent torts, this Court ought to continue to follow the formulaic approach set out in Long v. Thiessen (1968), 65 W.W.R. 577 (B.C. C.A.). That approach, described in Long v. Thiessen, is as follows (at 591): Upon whom should the burden resulting from the difficulty of assessing damages fall? I think that it should fall on the defendant who caused the second accident, Laliberte. When he “found” the plaintiff, the plaintiff had a cause of action against the Thiessens; if Laliberte made the proof of the plaintiff’s damages resulting from the first accident more difficult, Laliberte should make good any loss thereby resulting to the plaintiff. At the same time, the plaintiff should not be compensated twice for any injuries that are hard to segregate. I think that the way in which justice can best be done here is: (a) To assess as best one can what the plaintiff would have recovered against the Thiessens had his action against them been tried on April 22, 1966 (the day before the second accident), and to award damages accordingly; (b) To assess global damages as of the date of the trial in respect of both accidents; and (c) To deduct the amount under (a) from the amount under (b) and award damages against Laliberte in the amount of the difference. I think that nothing I have said in this paragraph is inconsistent with Baker v. Willoughby, [1968] 2 W.L.R. 1138, [1968] 2 All E.R. 236, or any of the cases referred to there. 13 Alternatively, the appellant submits that this Court’s line of cases on indivisibility (primarily Ashcroft v. Dhaliwal (2008), 83 B.C.L.R. (4th) 279, 298 D.L.R. (4th) 509 (B.C. C.A.), leave to appeal ref’d (2009), [2008] S.C.C.A. No. 488 (S.C.C.), has been wrongly decided, and should be overturned. The appellant acknowledged that if this Court were faced with overruling Ashcroft a five- judge division to hear re-argument of the appeal would be necessary: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201, 122 D.L.R. (4th) 330 (B.C. C.A.). 14 In conclusion, the appellant contends that she and the motorist who caused the second accident should be approached as several tortfeasors and that the total damage sustained by the plaintiff should be apportioned in accordance with the Long v. Thiessen approach. She requests that this Court substitute for the award below an apportionment of damages of 60% to the first accident and 40% to the second accident. 38 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

15 The respondent submits that there is no distinction between aggravation of an injury and the concept of indivisibility and that, absent contributory negligence, any injury found to be indivisible results in joint and several liability for the tortfeasors. The Long v. Thiessen approach, according to the respondent, may be applicable to apportion the liability amongst tortfeasors but Athey v. Le- onati, [1996] 3 S.C.R. 458, 140 D.L.R. (4th) 235 (S.C.C.) has displaced its application to indivisible injuries. 16 Ultimately, the question that is dispositive of this appeal is whether the Su- preme Court of Canada’s decision in Athey has overruled the line of cases in this Court stemming from Long v. Thiessen on the method of apportioning damages between multiple tortfeasors. In other words, the issue is whether the holding in Athey that indivisible injuries require joint and several liability between tortious causes contributing to the same injury means the Long v. Thiessen approach is no longer available as a means of determining responsibility among multiple tortfeasors. If that is so, and we conclude that it is, it follows that Justice Hud- dart’s obiter comment at para. 18 in Ashcroft to the effect that apportionment of liability under the Negligence Act may be determined by the devaluation or the percentage approach cannot apply in the case of an indivisible injury.

Athey v. Leonati 17 Athey was a case involving both multiple tortious and non-tortious causes. The plaintiff had been injured in two motor vehicle accidents. While still recov- ering, he herniated a disc in his back during stretching at the gym. The question before the Court was how the damages should be apportioned between the tortious and non-tortious causes. 18 The Supreme Court of Canada found apportionment between tortious and non-tortious causes contrary to the principles of tort law, and therefore imper- missible. The liability for any injury caused or contributed to by a tortious action should be borne jointly and severally by the tortfeasors, and not attributed to non-tortious action. 19 At paras. 12 and 17, Justice Major set out the basic principle of liability for injuries caused or contributed to by a tortious act: [12] The respondents’ position is that where a loss is created by tortious and non-tortious causes, it is possible to apportion the loss according to the degree of causation. This is contrary to well-established principles. It has long been established that a defendant is liable for any injuries caused or contributed to by his or her negligence. If the defendant’s conduct is found to be a cause of the injury, the presence of other non-tortious contributing causes does not reduce the extent of the defendant’s liability...... [17] It is not now necessary, nor has it ever been, for the plaintiff to establish that the defendant’s negligence was the sole cause of the injury. There will frequently be a myriad of other background events which were necessary Bradley v. Groves Per curiam 39

preconditions to the injury occurring. ... As long as a defendant is part of the cause of an injury, the defendant is liable, even though his act alone was not enough to create the injury. There is no basis for a reduction of liability because of the existence of other preconditions: defendants remain liable for all injuries caused or contributed to by their negligence. [Emphasis added.] 20 In the course of the discussion, Major J. (for the Court) described injuries produced by more than one cause as either “divisible” or “indivisible”. Divisible injuries are those capable of being separated out and having their damages assessed independently. Indivisible injuries are those that cannot be separated or have liability attributed to the constituent causes. At paras. 22-25, he commented on apportionment between multiple causes and the issue of divisibility: (1) Multiple Tortious Causes [22] The respondents argued that apportionment between tortious and non- tortious causes should be permitted just as it is where multiple tortfeasors cause the injury. The two situations are not analogous. Apportionment between tortious causes is expressly permitted by provincial negligence statutes and is consistent with the general principles of tort law. The plaintiff is still fully compensated and is placed in the position he or she would have been in but for the negligence of the defendants. Each defendant remains fully liable to the plaintiff for the injury, since each was a cause of the injury. The legislation simply permits defendants to seek contribution and indemnity from one another, according to the degree of responsibility for the injury...... (2) Divisible Injuries [24] The respondents submitted that apportionment is permitted where the injuries caused by two defendants are divisible (for example, one injuring the plaintiff’s foot and the other the plaintiff’s arm): Fleming, supra, at p. 201. Separation of distinct and divisible injuries is not truly apportionment; it is simply making each defendant liable only for the injury he or she has caused, according to the usual rule. The respondents are correct that separation is also permitted where some of the injuries have tortious causes and some of the injuries have non-tortious causes: Fleming, supra, at p. 202. Again, such cases merely recognize that the defendant is not liable for injuries which were not caused by his or her negligence. [25] In the present case, there is a single indivisible injury, the disc herniation, so division is neither possible nor appropriate. The disc herniation and its consequences are one injury, and any defendant found to have negligently caused or contributed to the injury will be fully liable for it. [Emphasis added.] 21 Accordingly, liability to a plaintiff for indivisible injuries is joint and several. 40 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

22 The conclusions in Athey were further refined in the decision of the Supreme Court in G. (E.D.) v. Hammer, 2003 SCC 52, [2003] 2 S.C.R. 459 (S.C.C.). Though not dispositive of that appeal, the judgment reinforced the distinction between divisible and indivisible injuries, and the principle that tortfeasors who cause or contribute to a single injury will be held jointly liable. G. (E.D.) was a case involving a plaintiff who had suffered sexual abuse as a child at the hands of the defendant, Mr. Hammer, who was a janitor at her school. The plaintiff was also sexually abused by a number of other individuals as a child. She sought to recover from, in addition to Mr. Hammer, the School Board which had employed him. 23 In G. (E.D.) the majority of the Court per McLachlin C.J.C., said as follows: 3. Did the Trial Judge Properly Apportion the Damages Between Mr. Ham- mer and E.D.G.’s Subsequent Abusers? [28] Since I have concluded that the Board is not liable to E.D.G. for any of the damage caused by Mr. Hammer, it is not strictly necessary to consider the issue raised on the Board’s cross-appeal. However, because the Board rests its challenge on the claim that Vickers J. misapplied a principle laid out in Athey v. Leonati [1996] 3 S.C.R. 458, it will be useful to consider the Board’s challenge. [29] The Board’s challenge concerns that portion of the damages that was, in the view of Vickers J., caused jointly by Mr. Hammer and the subsequent abusers. Vickers J. held Mr. Hammer liable for the sum total of these damages, stating that “[a]s long as he [Mr. Hammer] is a part of the cause of the injury, even though his acts alone did not create the entire injury, his responsibility for the [entire] damage that flows from that injury is established” (para. 57). As an authority for this proposition, Vickers J. cited Major J.’s claim in Athey, supra, at para. 17, that “[a]s long as a defendant is part of the cause of an injury, the defendant is liable, even though his act alone was not enough to create the injury”. ([underline] emphasis in original). [30] In the Board’s submission, Vickers J. was incorrect in applying this principle to the case at bar. The principle applies, the Board claims, only where the other cause is non-tortious and is a precondition of the injury, not where it is tortious and occurs subsequently. [31] In my view, the Board’s reading of the principle articulated in Athey is overly narrow. After making the claim cited above, Major J. further expanded upon his reasoning, stating at para. 19 that: The law does not excuse a defendant from liability merely because other causal factors for which he is not responsible also helped produce the harm .... It is sufficient if the defendant’s negligence was a cause of the harm.... [First emphasis added; second emphasis in original.] This principle is not confined to cases involving non-tortious preconditions. It applies to any case in which the injuries caused by a number of factors are indivisible. Bradley v. Groves Per curiam 41

[32] The matter is governed by the Negligence Act, R.S.B.C. 1996, c. 333, s. 4, which provides that “[i]f damage or loss has been caused by the fault of 2 or more persons”, then “(a) they are jointly and severally liable to the person suffering the damage or loss”. This rule implies that Mr. Hammer is liable to E.D.G. for the full cost of any injuries that are indivisible and caused both by Mr. Hammer and by the subsequent tortfeasors. [Underline emphasis in original; bold emphasis added.] 24 We take from this that indivisible injuries, whether occasioned by a combination of non-tortious and tortious causes or solely by tortious causes, result in joint liability for tortfeasors. This does not prevent jointly liable parties from seeking contribution and indemnity from each other under the Negligence Act, R.S.B.C. 1996, c. 333. 25 This conclusion is supported by the Supreme Court’s comments on apportionment in Blackwater. Blackwater was a case involving an individual who was repeatedly and brutally sexually assaulted at a residential school, for which assaults the defendants, Canada and the United Church of Canada, were found liable. However, the plaintiff was already injured by previous traumas. Although the reasons for judgment dealt primarily with the question of how to address the plaintiff’s pre-existing elevated susceptibility to injury (sometimes referred to as a “thin-skull”) and the likelihood the plaintiff would continue to suffer debilitat- ing effects from other injuries even without additional tortious harm (sometimes referred to as a “crumbling skull”), there is helpful commentary on the effect of a finding of indivisibility (or, conversely, a finding of divisibility). Chief Justice McLachlin, for the Court, stated: [78] It is important to distinguish between causation as the source of the loss and the rules of damage assessment in tort. The rules of causation consider generally whether “but for” the defendant’s acts, the plaintiff’s damages would have been incurred on a balance of probabilities. Even though there may be several tortious and non-tortious causes of injury, so long as the defendant’s act is a cause of the plaintiff’s damage, the defendant is fully liable for that damage. The rules of damages then consider what the original position of the plaintiff would have been. The governing principle is that the defendant need not put the plaintiff in a better position than his original position and should not compensate the plaintiff for any damages he would have suffered anyway: Athey. Mr. Barney’s submissions that injury from traumas other than the sexual assault should not be excluded amount to the contention that once a tortious act has been found to be a material cause of injury, the defendant becomes liable for all damages complained of after, whether or not the defendant was responsible for those damages.

Athey v. Leonati in British Columbia Jurisprudence 26 This question of the responsibility of a subsequent tortfeasor for global damages has been addressed most recently in this Court’s decision in B. (B.P.) v. B. (M.M.), 2009 BCCA 365, 97 B.C.L.R. (4th) 73 (B.C. C.A.), leave to appeal 42 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

ref’d [2010] S.C.C.A. No. 90 (S.C.C.). The majority of the Court (Chiasson J.A., K. Smith J.A. concurring) adopted the Athey approach to apportionment, and held the tortfeasors to be jointly liable. Mackenzie J.A. dissented on the basis that Athey was not intended to alter the long-standing approach and principles of causation and assessment of damages between separate non-concurrent torts. He would not have distinguished the injuries in B. (B.P.) from those in Blackwater. Ultimately, the majority reached no conclusion on the implications of Athey on the continued relevance of Long in cases of indivisible injuries. 27 Justice Chiasson set out the joint liability approach to indivisible injury in his reasons: [33] In a case such as this where there are multiple causes of a plaintiff’s injury, the core question is whether the injury is divisible. If it is, a plaintiff can recover from a defendant only the damages attributable to the injury caused by that defendant. If the injury is indivisible, subject to considerations I shall discuss, a plaintiff can recover 100% from the defendant of the damages attributable to the injury which is caused or contributed to by the defendant regardless of the contribution to the injury by others (Athey, paras. 17- 20). 28 Justice Smith concurred with this approach to indivisibility and provided a useful explanation for the imposition of liability for global damages on a subsequent tortfeasor where the injuries are not divisible. 29 B. (B.P.) concerned a claim by a daughter against her father for physical and emotional abuse. The plaintiff was subsequently sexually abused by an uncle. The father contended that the trial judge was correct in apportioning the responsibility for damages between the father and the uncle, who was not a party. Smith and Chiasson held that apportionment where the injury was indivisible was an incorrect application of Athey. Smith J.A. held: [69] Tortfeasors are joint tortfeasors when one is the principal or is vicari- ously liable for the other, or where a duty imposed jointly on them is not performed, or where there is concerted action between them to a common end. Tortfeasors who are not joint tortfeasors are several (or “separate” or “independent”) tortfeasors. The latter are of two kinds - several tortfeasors whose acts combine to produce the same damage and several tortfeasors whose acts cause different damage. ... [70] ... [for] purposes of this proceeding, the appellant and the respondent’s uncle were several tortfeasors and the question is whether or not they were concurrent tortfeasors, that is, whether their tortious acts combined to produce the same injury to the respondent or whether they produced different injuries. [71] Several tortfeasors whose tortious conduct causes different damage are liable only to the extent of the damage they cause: Athey at para. 24; Joint Torts at 20. Bradley v. Groves Per curiam 43

[72] On the other hand, tortfeasors whose tortious acts combine to produce the same injury are jointly and severally liable to the full extent of the injury: Athey v. Leonati, [1996] 3 S.C.R. 458 at paras. 17 - 20; Blackwaterv. Plint, [2005] 3 S.C.R. 3 at para. 78; Joint Torts at 3 - 4; Negligence Act, R.S.B.C. 1996, c. 333, s. 4(2)(a). Accordingly, a tortfeasor whose tortious conduct is part of the cause of an injury is liable to the full extent of the injury even though other tortious or non-tortious causal factors for which he is not responsible helped to produce the harm: Athey at para. 19, adopted in E.D.G.v. Hammer, [2003] 2 S.C.R. 459 at paras. 30 - 32, Blackwater at para. 78. Al- though each is fully liable to the plaintiff for the entire loss, such tortfeasors are entitled to contribution as between themselves on the basis of their respective degrees of fault...... [73] Thus, these rules accord with basic notions of fairness and justice -they ensure that an innocent injured plaintiff receives full compensation and cast the burden of adjusting responsibility for payment on the wrongdoing tortfeasors. [74] Whether damage is divisible for purposes of determining the extent of the liability of multiple tortfeasors is a question of fact in each case, not a question of law: Hutchings at para. 13; E.D.G. at para. 33; Dinglev. Associ- ated Newspapers Ltd., [1961] 2 Q.B. 162 at 189 (C.A.). [75] In Dingle, the question was whether damages for libel should be reduced because, as the defendant argued, the defamatory matter had previously been published in a privileged report of a Parliamentary committee and the plaintiff’s reputation had already been damaged by the privileged publication. The Court of Appeal rejected this argument and held the defendant liable to the full extent of the plaintiff’s damaged reputation. Lord Justice Devlin observed that this conclusion exemplified “a fundamental principle in the law of damage”, which he described as follows, at 188 - 89: Where injury has been done to the plaintiff and the injury is indivisible, any tortfeasor whose act has been a proximate cause of the injury must compensate for the whole of it. As between the plaintiff and the defendant it is immaterial that there are others whose acts also have been a cause of injury and it does not matter whether those others have or have not a good defence. These factors would be relevant in a claim between tortfeasors for contribution, but the plaintiff is not concerned with that; he can obtain judgment for total compensation from anyone whose act has been a cause of his injury. If there are more than one of such persons, it is immaterial to the plaintiff whether they are joint tortfeasors or not. If four men, acting severally and not in con- cert, strike the plaintiff one after another and as a result of his injuries he suffers shock and is detained in hospital and loses a month’s wages, each wrongdoer is liable to compensate for the whole loss of earnings. If there were four distinct physical injuries, each man would be liable only for the consequences pecu- 44 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

liar to the injury he inflicted, but in the example I have given the loss of earnings is one injury caused in part by all four defendants. It is essential for this purpose that the loss should be one and indivisible; whether it is so or not is a matter of fact and not a matter of law. If, for example, a ship is damaged in two separate collisions by two wrongdoers and consequently is in dry dock for a month for repairs and claims for loss of earnings, it is usually possible to say how many days’ detention is attributable to the damage done by each collision and divide the loss of earnings accordingly. These are elementary principles and readily recognisable as such in the law of damage for physical injury. [76] These remarks are, in my view, entirely consistent with what the Su- preme Court of Canada has said in Athey and in other cases that bear on these issues. I adopt them as a lucid exposition of the legal principles applicable in the case at bar. 30 Smith J.A. discussed and distinguished Blackwater, a case relied upon by the appellant here. He said at para. 88 the distinction is between an already damaged plaintiff, which was the case in Blackwater, and one who was “pristine”, as was the case of B. (B.P.), and as is the case of Ms. Bradley. As he explains the proper approach is to consider the plaintiff’s original position: [87] She [the Trial Judge] concluded (at para. 85) that “the plaintiff is in a position similar to that of Mr. Barney in the Blackwater case” and that “the plaintiff should not be compensated for damages she would have suffered anyway”. However, the original position of Mr. Barney in Blackwater was quite different from the original position of the respondent in the case at bar. Mr. Barney’s original position was a damaged position as a result of previous traumas suffered by him. Since he was entitled to damages from the tortfeasor that would return him only to his original position, he was not entitled to damages for the consequences of his pre-existing condition he would have suffered anyway. Accordingly, the trial judge in Blackwater (2001 BCSC 997, 93 B.C.L.R. (3d) 228) found as facts on the evidence that the defendant’s sexual assaults did not contribute to Mr. Barney’s “instinc- tive ‘meanness’, and the overwhelming urge to resort to violence” (para. 520), his alcoholism and abuse of marijuana (paras. 523 -24, 529), his inability to work as a logger (para. 528), or his post-traumatic stress disorder (para. 531). However, he concluded that the sexual assaults made a material contribution to Mr. Barney’s personality disorder (para. 507) and assessed damages on that basis. 31 Last, Smith J.A. declined to expressly consider the Long v. Thiessen approach, leaving it, as he said, to another day when it might be expressly argued by a party, as it was here: [91] My colleague Mr. Justice Mackenzie expresses reservations about the application in this case of the principle of joint and several liability for indivisible injury in light of the approach illustrated by Long v. Thiessen (1968), Bradley v. Groves Per curiam 45

65 W.W.R. 577 (B.C.C.A.). As I have explained, it is my view, with respect, that this case falls to be decided on the well-settled approach affirmed in Athey (paras. 17 - 20) and, since neither Long nor the approach it exemplifies were mentioned by the trial judge or by counsel on this appeal, I would leave the question of the viability of that approach for another day.

Athey v. Leonati Overruled Long v. Thiessen (Continued Application to Indivisible Injuries) 32 There can be no question that Athey requires joint and several liability for indivisible injuries. Once a trial judge has concluded as a fact that an injury is indivisible, then the tortfeasors are jointly liable to the plaintiff. They can still seek apportionment (contribution and indemnity) from each other, but absent contributory negligence, the plaintiff can claim the entire amount from any of them. 33 The approach to apportionment in Long v. Thiessen is therefore no longer applicable to indivisible injuries. The reason is that Long v. Thiessen pre-sup- poses divisibility: Long requires courts to take a single injury and divide it up into constituent causes or points in time, and assess damages twice; once on the day before the second tort, and once at trial. Each defendant is responsible only for their share of the injury and the plaintiff can recover only the appropriate portion from each tortfeasor. 34 That approach is logically incompatible with the concept of an indivisible injury. If an injury cannot be divided into distinct parts, then joint liability to the plaintiff cannot be apportioned either. It is clear that tortfeasors causing or contributing to a single, indivisible injury are jointly liable to the plaintiff. This in no way restricts the tortfeasors’ right to apportionment as between themselves under the Negligence Act, but it is a matter of indifference to the plaintiff, who may claim the entire amount from any defendant. 35 This is not a case of this Court overturning itself, because aspects of Long v. Thiessen were necessarily overruled by the Supreme Court of Canada’s decisions in Athey, G. (E.D.), and Blackwater. Other courts have also come to this same conclusion: see Misko v. John Doe, 2007 ONCA 660, 286 D.L.R. (4th) 304 (Ont. C.A.) at para. 17. 36 It may be that this represents an extension of pecuniary liability for consecutive or concurrent tortfeasors who contribute to an indivisible injury. We do not think it can be said that the Supreme Court of Canada was unmindful of that consequence. Moreover, apportionment legislation can potentially remedy injus- tice to defendants by letting them claim contribution and indemnity as against one another. 37 We are also unable to accept the appellant’s submission that “aggravation” and “indivisibility” are qualitatively different, and require different legal approaches. If a trial judge finds on the facts of a particular case that subsequent 46 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tortious action has merged with prior tortious action to create an injury that is not attributable to one particular tortfeasor, then a finding of indivisibility is inevitable. That one tort made worse what another tort created does not automatically implicate a thin or crumbling skull approach (as in Blackwater), if the injuries cannot be distinguished from one another on the facts. Those doctrines deal with finding the plaintiff’s original position, not with apportioning liability. The first accident remains a cause of the entire indivisible injury suffered by the plaintiff under the “but for” approach to causation endorsed by the Supreme Court of Canada in Hanke v. Resurfice Corp., 2007 SCC 7, [2007] 1 S.C.R. 333 (S.C.C.). As noted by McLachlin C.J.C. in that case, showing that there are multiple causes for an injury will not excuse any particular tortfeasor found to have caused an injury on a “but-for” test, as “there is more than one potential cause in virtually all litigated cases of negligence” (at para. 19). It may be that in some cases, earlier injury and later injury to the same region of the body are divisible. While it will lie for the trial judge to decide in the circumstances of each case, it is difficult to see how the worsening of a single injury could be divided up.

Application to the Present Appeal 38 Without a finding of divisibility, the appellant’s arguments cannot succeed. The trial judge found as a fact that the plaintiff’s injuries from the first accident and the second accident were indivisible. The defendant and the other motorist both caused and contributed to the plaintiff’s soft tissue injuries. He also found those injuries were not separable. There is no basis on which to interfere with these findings of fact. Flowing from them is the conclusion of joint and several liability. 39 We find no error in principle in the reasons of the trial judge, and therefore dismiss the appeal from this part of his order.

Costs in the Court Below 40 The appellant argues that the trial judge erred in awarding the plaintiff double costs “under the tariff” under R. 66, as opposed to double the default R. 66 fixed costs of the trial. The respondent concedes that the appellant ought to succeed on this ground of appeal. The parties agree that subject to the outcome of this appeal, the appropriate award of costs ought to have been $10,976. The parties rely on this court’s judgment in Anderson v. Routbard, 2007 BCCA 193, 67 B.C.L.R. (4th) 66 (B.C. C.A.). The agreement of the parties is consistent with Anderson. It is unnecessary for us to further consider the point. 41 We allow the appeal from this portion of the order and substitute an award of costs of $10,976. 42 We add only this: In order to give effect to the underlying purposes of R. 66 -fast track litigation, meaning timely, less expensive and meaningful access to the courts - the Court in Anderson adjusted the formula in R. 66(29) to permit a Bruni v. Garlicki 47

higher fixed costs award, rather than a resort to the tariff. That is the proper approach to a discretionary award of double costs under R. 66. In failing to follow that approach, the trial judge erred. (See also Majewska v. Partyka, 2010 BCCA 236 (B.C. C.A.).)

Disposition 43 The appeal respecting the trial judge’s apportionment of damages is dismissed. The appeal with respect to the costs of the proceeding below is allowed. Costs below are fixed at $10,976, as agreed by the parties. 44 The respondent is entitled to costs of the appeal. Decision varied.

[Indexed as: Bruni v. Garlicki] GUISEPPE BRUNI (Applicant / Appellant) and LUCY MARIA GARLICKI also known as LUCY MARIA FERGUSON (Respondent / Respondent) Manitoba Court of Appeal Freda M. Steel, Martin H. Freedman, Richard J. Chartier JJ.A. Heard: April 1, 2010 Judgment: July 16, 2010 Docket: AI 09-30-07262, 2010 MBCA 73 M.N. Trachtenberg for Appellant E.G. Zazelenchuk for Respondent Bankruptcy and insolvency –––– Discharge of bankrupt — Effect of discharge — Debts not released by discharge — Fraud — Fraud in fiduciary capacity –––– Trus- tee and GB created tile distribution company — As GB wished to hide involvement in company for competitive reason, trustee was sole director and half of shares of company were held in trust for GB’s benefit — Trustee did not turn over shares on request — GB obtained judgment for shares — Trustee entered bankruptcy — Trial judge found that trustee breached trust relationship, but that judgment did not survive discharge — GB appealed — Appeal allowed — Judgment survived bankruptcy — Trustee’s conduct was clearly wrongful, and trial judge made palpable and overriding error by finding otherwise — Trustee improperly retained shares and failed to account for them — Debt or liability was clearly owed and trust relationship existed as required by s. 178(1)(d) of Bank- ruptcy and Insolvency Act — Trustee’s conduct constituted misappropriation as well as defalcation — Misappropriation under s. 178(1)(d) of Act involves conduct which is wrongful and morally blameworthy, and does not have more benign meaning — Both defalcation and misappropriation under s. 178(1)(d) of Act require element of wrongdo- 48 WESTERN WEEKLY REPORTS [2011] 1 W.W.R. ing — If merely failing to meet obligation was sufficient for judgment to survive bankruptcy, Act would be worded differently — State of business relationship or disparity in risk or work assumed did not affect requirement to surrender shares. Cases considered by Martin H. Freedman J.A.: Abstainer’s Insurance Co. v. Pellegrino (1989), 77 C.B.R. (N.S.) 108, 1989 CarswellOnt 195 (Ont. Dist. Ct.) — considered Canada (Director of Investigation & Research) v. Southam Inc. (1997), 50 Admin. L.R. (2d) 199, 144 D.L.R. (4th) 1, 71 C.P.R. (3d) 417, [1997] 1 S.C.R. 748, 209 N.R. 20, 1997 CarswellNat 368, 1997 CarswellNat 369, [1996] S.C.J. No. 116 (S.C.C.) — followed Confederation Life Insurance Co. v. Waselenak (1997), 57 Alta. L.R. (3d) 38, [1998] 5 W.W.R. 712, [1998] I.L.R. I-3526, 49 C.C.L.I. (2d) 215, 1997 CarswellAlta 1032, 210 A.R. 241 (Alta. Q.B.) — considered Confederation Life Insurance Co. v. Waselenak (2000), 2000 ABCA 136, 80 Alta. L.R. (3d) 1, 20 C.C.L.I. (3d) 200, [2000] 8 W.W.R. 24, 255 A.R. 357, 220 W.A.C. 357, 2000 CarswellAlta 446, [2000] I.L.R. I-3831 (Alta. C.A.) — referred to Dillon v. Catelli Food Products Ltd. (1937), [1937] 1 D.L.R. 353, [1937] O.W.N. 63, [1937] O.R. 114, 1937 CarswellOnt 3 (Ont. C.A.) — considered Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask 179, 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.) — considered International Corona Resources Ltd. v. LAC Minerals Ltd. (1989), 44 B.L.R. 1, 35 E.T.R. 1, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) 69 O.R. (2d) 287, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) 61 D.L.R. (4th) 14, 101 N.R. 239, 36 O.A.C. 57, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) [1989] 2 S.C.R. 574, 6 R.P.R. (2d) 1, (sub nom. LAC Minerals Ltd. v. International Corona Resources Ltd.) 26 C.P.R. (3d) 97, 1989 CarswellOnt 126, 1989 CarswellOnt 965, [1989] S.C.J. No. 83, EYB 1989- 67469 (S.C.C.) — considered Ironwood Investments Joint Venture v. Leggett (Trustee of) (1996), 1996 CarswellOnt 527, 38 C.B.R. (3d) 256, [1996] O.J. No. 527 (Ont. Gen. Div.) — followed Janco (Huppe) v. Vereecken (1982), 40 B.C.L.R. 106, 1982 CarswellBC 500, 44 C.B.R. (N.S.) 211 (B.C. C.A.) — considered M.A.H.C.P. v. Nor-Man Regional Health Authority Inc. (2010), [2010] 7 W.W.R. 1, 2010 CarswellMan 217, 2010 MBCA 55 (Man. C.A.) — referred to McAteer v. Billes (2006), 384 W.A.C. 365, 397 A.R. 365, 2006 CarswellAlta 1389, 2006 ABCA 312, 26 C.B.R. (5th) 119, [2006] A.J. No. 1333 (Alta. C.A.) — considered MG Electric Ltd. v. (CSE) Control Systems Engineering Inc. (2004), [2005] 10 W.W.R. 669, 2004 MBQB 145, 2004 CarswellMan 274, (sub nom. Evancio Estate (Bankrupt), Re) 185 Man. R. (2d) 310, 4 C.B.R. (5th) 50, 37 C.L.R. (3d) 126, [2004] M.J. No. 246 (Man. Q.B.) — followed MG Electric Ltd. v. (CSE) Control Systems Engineering Inc. (2004), 2004 CarswellMan 487, 2004 MBCA 178, [2005] 10 W.W.R. 675, 41 C.L.R. (3d) 296, (sub nom. Evancio Estate (Bankrupt), Re) 190 Man. R. (2d) 224, (sub nom. Evancio Estate (Bankrupt), Re) 335 W.A.C. 224, 9 C.B.R. (5th) 254, [2004] M.J. No. 481 (Man. C.A.) — referred to Bruni v. Garlicki 49

Plan Group v. Bell Canada (2009), 2009 CarswellOnt 3807, 2009 ONCA 548, (sub nom. Bell Canada v. The Plan Group) 96 O.R. (3d) 81, 81 C.L.R. (3d) 9, 62 B.L.R. (4th) 157, 252 O.A.C. 71, [2009] O.J. No. 2829 (Ont. C.A.) — considered Ross & Associates v. Palmer (2001), 22 C.B.R. (4th) 140, 153 Man. R. (2d) 147, 238 W.A.C. 147, 2001 MBCA 17, 2001 CarswellMan 37, [2001] M.J. No. 48 (Man. C.A.) — followed Simone v. Daley (1999), 1999 CarswellOnt 551, 170 D.L.R. (4th) 215, 8 C.B.R. (4th) 143, 118 O.A.C. 54, 24 R.P.R. (3d) 1, 43 O.R. (3d) 511, [1999] O.J. No. 571 (Ont. C.A.) — followed Smith v. Henderson (1992), 64 B.C.L.R. (2d) 144, 10 B.C.A.C. 249, 21 W.A.C. 249, 10 C.B.R. (3d) 153, 1992 CarswellBC 481, [1992] B.C.J. No. 211 (B.C. C.A.) — considered Ste. Rose & District Cattle Feeders Co-operation v. Geisel (2010), 2010 MBCA 52, 2010 CarswellMan 185 (Man. C.A.) — considered Towers Ltd. v. Quinton’s Cleaners Ltd. (2009), 466 W.A.C. 70, 2009 CarswellMan 375, 2009 MBCA 81, [2010] 1 W.W.R. 246, 245 Man. R. (2d) 70, [2009] M.J. No. 286 (Man. C.A.) — followed Valastiak v. Valastiak (2010), 480 W.A.C. 204, 283 B.C.A.C. 204, [2010] 7 W.W.R. 50, 3 B.C.L.R. (5th) 1, 2010 CarswellBC 307, 2010 BCCA 71, 63 C.B.R. (5th) 188 (B.C. C.A.) — followed 3264638 Manitoba Ltd. v. Bruni (2005), 197 Man. R. (2d) 308, 2005 MBQB 283, 2005 CarswellMan 489 (Man. Q.B.) — referred to Statutes considered: Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 s. 178(1)(d) — considered s. 178(1)(e) — referred to Words and phrases considered: misappropriation As other judges have said, the distinction between misappropriation and defalcation is sometimes difficult to discern...Wrongful conduct is clearly implicit in a misappropriation. In my opinion, it is also implicit in a defalcation, for purposes of s. 178(1)(d)....In my opinion, whether the conduct in question is a defalcation or a misappropriation (and it could be both), there must be some element of wrongful conduct shown before a liability survives the fiduciary’s discharge from bankruptcy. Thus, for defalcation as well as misappropriation, some element of wrongdoing, improper conduct or failure to account beyond an innocent breach (which would include a breach caused by negligence, incompetence or inadvertence) will be required before a fiduciary’s liability will survive bankruptcy discharge.

APPEAL by shareholder from judgment reported at Bruni v. Garlicki (2009), 239 Man. R. (2d) 245, 2009 MBQB 289, 2009 CarswellMan 514 (Man. Q.B.), dismissing motion by shareholder regarding effect of bankruptcy on judgment. 50 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Martin H. Freedman J.A.: Overview 1 This appeal involves s. 178(1)(d) of the Bankruptcy and Insolvency Act (the Act). It provides that an order of discharge from bankruptcy does not release the bankrupt from: [A]ny debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity ..... 2 Lucy Garlicki (the respondent) held certain shares in trust for Guiseppe Bruni (the appellant). She refused to turn them over to him when he requested that she do so. He obtained judgment against her for the value of the shares. She later went bankrupt, and after her discharge he moved for an order that the judgment survived the discharge. The motion judge (the judge) found that the respondent had breached the trust relationship by refusing to deliver the shares when demanded of her. The judge also found that for the judgment to survive discharge, the respondent’s conduct had to be “wrongful,” which the judge found it was not. The judge ordered that the judgment against the respondent was released by her discharge from bankruptcy. 3 While I agree with the judge that, as a matter of law, the respondent’s conduct must be “wrongful” before the judgment will survive discharge, I am of the view that her conduct clearly reached that standard and that the judge erred in finding otherwise. For the reasons that follow, I would allow the appeal and order that the judgment survives discharge from bankruptcy.

Facts 4 In the early 1990s the appellant worked as a tile installer and the respondent was employed as a salesperson in the wholesale tile supply industry. They became acquainted. The respondent wanted to start a tile distribution company, and she approached the appellant to become involved. 5 In 1994 each of the parties invested $20,000 in a company which would run a new business to be called Expressions in Tile. The respondent became the sole officer, director and registered shareholder because the appellant’s interest in the company was to be kept confidential for competitive reasons. 6 The business did well for some time, but the relationship between the parties did not keep pace. By late 1998 or early 1999 the appellant was insistent that the respondent sign a document evidencing his 50 per cent ownership of shares in the company. His lawyer prepared a brief agreement, which both parties signed on February 19, 1999. That agreement confirmed that the parties had always been “equal co-owners of all the shares” of the company and that each had been from the date of incorporation the beneficial owner of half the shares. The agree- Bruni v. Garlicki Martin H. Freedman J.A. 51

ment contained a covenant by the respondent that she held half the shares in trust for the appellant and that upon request she would transfer the shares to him. 7 Five days after the execution of the trust agreement the appellant’s lawyer wrote to the respondent’s lawyer demanding the delivery of the appellant’s shares. They were never delivered to the appellant. 8 Shortly thereafter, the respondent sued the appellant, seeking a declaration that he was not a shareholder and that she did not hold shares in trust for him and that the trust agreement was void. That claim and the appellant’s counterclaim were resolved after a trial by a judgment (the first judgment ([3264638 Manitoba Ltd. v. Bruni] 2005 MBQB 283, 197 Man. R. (2d) 308 (Man. Q.B.))) released in December 2005. The issues of liability and damages had been split, and the trial proceeded only on liability. The presiding judge was the same judge who heard the motion and rendered the decision which is the subject of this appeal. 9 In the first judgment the judge found in favour of the appellant. She found that he was “at all material times, the beneficial owner of one-half of the shares” of the company (at para. 52). 10 The next issue dealt with in the first judgment was whether the respondent was “in breach of trust or breach of fiduciary duty for failing to deliver the shares” to the appellant when his lawyer requested them (at para. 53). The judge rejected the respondent’s position that there were unfulfilled conditions attached to her execution of the agreement of February 19, 1999. The judge found that the appellant owned the shares from the inception of the company, even without the confirming agreement, and that the respondent “ought to have delivered the shares when requested” (at para. 55). She made an express finding that the respondent was in breach of trust. 11 As to damages for the breach, she accepted the appellant’s approach, which was to value the shares as at March 31, 1999, finding that he was entitled “to be put in the position as if the breach of trust had not occurred” (at para. 68). The first judgment made it clear that the value of the shares had not yet been ascertained. 12 Other findings in the first judgment, not directly related to the present appeal, were that the respondent was liable to the appellant for misappropriation of funds from the company, also in an amount to be determined. 13 The first judgment was not appealed. 14 In May 2007 the respondent filed an assignment in bankruptcy. The appellant moved, inter alia, for a declaration that the first judgment survive the bankruptcy. The Registrar in Bankruptcy declined to decide the issue, finding that it was more appropriate that the matter be decided by the judge who had issued the first judgment. 52 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

The Judgment under Appeal 15 On motion to that judge, she decided that the respondent’s liability for damages from misappropriations should survive her discharge from bankruptcy, but that her liability for “50% of the value of the shares” of the company should not survive discharge (at para. 27). It is that latter finding in her judgment (the second judgment (2009 MBQB 289, 239 Man. R. (2d) 245 (Man. Q.B.))) which was appealed by the appellant and which is the subject of this decision. 16 In the second judgment the judge referred to some of her findings in the first judgment (at para. 7): .... I also found that Garlicki should have delivered Bruni’s shares to him in March 1999 after his lawyer had requested them and that in failing to do so, she was in breach of trust (paras. 55 and 57). I further found that “there is evidence that Garlicki misappropriated company funds for her own use and was thereby in breach of trust” (para. 59). As a consequence, I concluded that Bruni was entitled to judgment against Garlicki in an amount equal to the fair market value of one-half of the shares of Expressions as at March 31, 1999. I also concluded that he was entitled to judgment for damages flowing from the misappropriations, the exact amount of which had yet to be proven. 17 After referring to s. 178(1)(d) of the Act, the judge said (at paras. 13-15): In Manitoba, the leading authority on s. 178(1)(d) is the decision of the Man- itoba Court of Appeal in Ross & Associates v. Palmer (2001), 153 Man.R. (2d) 147, 238 W.A.C. 147; 2001 MBCA 17,which adopted the approach of the Ontario Court of Appeal inSimone v. Daley et al. (1999), 118 O.A.C. 54; 170 D.L.R. (4th) 215 (C.A.). In Ross (at para. 24), the court held that the elements that must be proved to come within s. 178(1)(d) are: The words “embezzlement”, “misappropriation” and “defalcation” all have similar dictionary meanings. Without suggesting that there is no distinction between the three, all involve the wrongful use of someone else’s money. For s. 178(1)(d) of the Bankruptcy and Insolvency Act to be engaged, the wrongful use of money must have been made by the user as a fiduciary. There are thus three elements which must be proved: (i) the money taken to create the debt must have belonged to someone other than the taker; (ii) the taking must involve a wrongful use of the money; and (iii) the taker must have received the money as a fiduciary. Likewise, in Simone, the court dealt with the words “misappropriation or defalcation while acting in a fiduciary capacity” and concluded that not all breaches committed in a fiduciary relationship will give rise to claims that survive bankruptcy; rather, these words attribute to them some element of dishonesty, wrongdoing or misconduct (Simone, at paras. 36 to 38, Shust Bruni v. Garlicki Martin H. Freedman J.A. 53

Estate v. Urbanoski (2001), 159 Man.R. (2d) 161; 2001MBQB 126, at paras. 25-28). Applying the approach outlined in Ross and Simone, Scurfield, J., in- Evancio Estate (Bankrupt), Re (2004), 185 Man.R. (2d) 310; 2004 MBQB 145, noted at para. 17, as follows, that there are the two extremes of conduct on the part of a trustee and that the question to be decided by the court in connection with application of s. 178(1)(d) is where conduct falls along this continuum: 17 Molloy, J., said in Toro Aluminum Ltd. [(1999), 18 C.B.R. (4th) 134], supra, that there are two extremes. The first is where the breach is one of inadvertence and the other is where a trustee deliberately misappropriates trust money for his own use so as to defeat the claim of beneficiary. In the former, s. 178(1)(d) would not apply, and in the latter, it would. The difficult cases are those that fall between these two extremes. I find this simple analysis persuasive. Consequently, I have no hesitation in applying the principles set out in the decisions in Si- mone and Toro Aluminum Ltd. 18 The judge then found without hesitation that the shares the respondent had refused to deliver belonged to the appellant, thus satisfying the first criterion in Ross & Associates v. Palmer, 2001 MBCA 17, 153 Man. R. (2d) 147 (Man. C.A.). But the more difficult question, she said, was whether the respondent was acting in a fiduciary capacity and whether her actions fell at a point “along the spectrum as described in Evancio Estate (Bankrupt), Re, such that the amounts due under my judgment survive bankruptcy” (at para. 19). 19 Reviewing the evidence, she found that the respondent was an express trustee and that she “was clearly acting in a fiduciary capacity when she failed to deliver up Bruni’s shares” (at para. 22). That finding is not at issue here. 20 Then, in the conclusion that is key for this appeal, the judge said (at para. 23): Was Garlicki’s failure to deliver up the shares to Bruni “wrongful” such that any damages arising therefrom survive bankruptcy? In my view, although Garlicki’s conduct was unquestionably indifferent to Bruni’s position and involved a breach of trust, it was nonetheless not “wrongful” (as required under the test prescribed in Simone and Ross). Throughout the period from 1994 to 1999, Garlicki believed she was enhancing the value of Bruni’s shares by the manner in which she was operating the company; her actions throughout this period did in fact have the effect of substantially increasing the value of his investment. During this time, Bruni made no demand for his shares. When in early 1999, he requested that Garlicki sign the agreement dated February 19, 1999 reflecting his ownership interest, she did so. Her breach of trust occurred when she failed to deliver up the shares after they were demanded by Bruni’s lawyer on February 24, 1999. By this time, relations with Bruni had deteriorated. Bruni was suspicious of her because of 54 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

company cheques he had found that were payable to her husband. Bruni had not signed the form of indemnification attached to the agreement of February 19 whereby he would have agreed to indemnify her for one-half of the amount of Expressions’ indebtedness to the bank that she had personally guaranteed. Garlicki, on the other hand, had done virtually all the work to make the company grow and had taken all the risks. While Garlicki should have delivered up the shares when asked, these circumstances do not lead me to the conclusion that her conduct was “wrongful”. Rather, this more resem- bles a business deal gone bad than the type of conduct the courts have found should result in a debt surviving bankruptcy. [emphasis added] 21 In the other central finding (although not at issue here) the judge concluded that the respondent used money that was not her own, for her personal purposes, without accounting for it until she was caught, and this conduct was clearly “wrongful” (at para. 26). Thus, her liability for misappropriated funds survived, but her liability for the appellant’s share value did not.

Decision Standard of Review 22 The appellant said that the judge erred in law by concluding that the respondent’s actions were not wrongful and hence they did not satisfy s. 178(1)(d). Thus, said the appellant, the standard of review is correctness. 23 The respondent characterized the issue as whether by failing to deliver the shares, her conduct fell within the exceptions listed in s. 178(1)(d). What she did or did not do, she said, was a factual matter subject to the standard of review of palpable and overriding error. Whether her actions fell within the section in the Act was a question of law subject to the standard of correctness. 24 In my opinion the issue before us raises a question of mixed fact and law. There was no issue before the judge of what the respondent had done or failed to do. That had been litigated and conclusively determined in the first judgment. The issue was as to the legal effect of the respondent’s actions. That is, did her refusal to deliver the shares to the appellant when he demanded them constitute a breach of s. 178(1)(d)? That question required a consideration of two matters. First, the judge had to decide the proper interpretation of the section and, in particular, whether, as a matter of law, “wrongful” conduct was required before a debt or liability incurred by a fiduciary would survive bankruptcy discharge. Second, the judge had to determine whether the conduct of the respondent reached the required standard. 25 The nature of the question raised in this appeal was clearly explained by Iacobucci J. for the Supreme Court of Canada in Canada (Director of Bruni v. Garlicki Martin H. Freedman J.A. 55

Investigation & Research) v. Southam Inc., [1997] 1 S.C.R. 748 (S.C.C.) (at para. 35): Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. A simple example will illustrate these concepts. In the law of tort, the question what “negligence” means is a question of law. The question whether the defendant did this or that is a question of fact. And, once it has been decided that the applicable standard is one of negligence, the question whether the defendant satisfied the appropriate standard of care is a question of mixed law and fact. [emphasis added] 26 The standard of review by this court on that type of question was recently explained in Towers Ltd. v. Quinton’s Cleaners Ltd., 2009 MBCA 81, 245 Man. R. (2d) 70 (Man. C.A.) (at para. 23): .... Decisions involving mixed fact and law are reviewed on appeal according to a standard of palpable and overriding error “unless an error of mixed fact and law involves an error relating to an extricable principle of law, in which case the standard of correctness applies to that extricable legal question” (Homestead Properties [2007 MBCA 61, 214 Man.R. (2d) 148], at para. 13, applying Housen v.Nikolaisen et al., [2002] 2 S.C.R. 235, 286 N.R. 1, 219 Sask.R. 1, 272 W.A.C. 1; 2002 SCC 33). See also, Prairie Petroleum- Products Ltd. v. Husky Oil Ltd. et al. (2008), 231 Man.R. (2d) 1, 437 W.A.C. 1; 2008 MBCA 87, .... 27 The judge had to decide a legal principle which was capable of being decided apart from the particular facts of this case. This extricable principle of law involved the extent to which, if at all, in a misappropriation or defalcation by a fiduciary, “wrongful” conduct is required for a liability to survive discharge. The determination by the judge of that legal principle is reviewed on the standard of correctness. See M.A.H.C.P. v. Nor-Man Regional Health Authority Inc., 2010 MBCA 55 (Man. C.A.). 28 In Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.), Iacobucci and Major JJ. said (at para. 36): “Matters of mixed fact and law lie along a spectrum.” In Plan Group v. Bell Canada, 2009 ONCA 548, 96 O.R. (3d) 81 (Ont. C.A.), the Ontario Court of Appeal said (at paras. 26-27): ... where the question at issue is determined to be one of mixed fact and law, the appellate court must take a further step and go on to locate the precise question at the proper point on the Housen spectrum in order to determine the applicable standard of appellate review. Where the matter referred to is more a matter of legal principle and sits towards the error of law end of the spectrum, the standard is correctness. Where the matter is one in which the legal principle and the facts are inextricably intertwined – where the facts dominate, as it were – it falls more to- 56 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

wards the factual end of the spectrum, and significant deference must be ac- corded. ... 29 Once the legal principle here is extricated, as explained above, the remaining part of the question is entirely factual. This involves the weighing of evidence, the evaluation of blameworthiness and a determination of whether, in this case, the respondent’s conduct reached the required standard. This court must show considerable deference to the judge’s view of the matter, which is to be reviewed on a standard of palpable and overriding error.

Analysis 1. Is “wrongful” conduct required under s. 178(1)(d)? 30 Courts in several provinces have wrestled with this question and are not in full agreement on the answer. 31 Section 178(1)(d) refers to the survival, post-discharge, of a debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. There are several elements in this section (and neither fraud nor embezzlement is raised here). To show that the judge erred in the second judgment regarding the survival of the first judgment post-discharge, the appellant must establish that: (1) the respondent owed him a debt or a liability for refusing to turn over the shares; (2) the debt or liability arose out of a misappropriation or defalcation (i.e., that the refusal to turn over the shares was a misappropriation or a defalcation in respect of the shares), and (3) the respondent was acting in a fiduciary capacity when she refused to turn over the shares. See the comments of Finch C.J.B.C. in the British Columbia Court of Appeal in Valastiak v. Valastiak, 2010 BCCA 71, 283 B.C.A.C. 204 (B.C. C.A.) at para. 20. 32 The first and third elements are not in doubt. It is obvious, and not challenged, that the liability constituted by the first judgment, created by the refusal of the respondent to deliver the shares when demanded, is a “liability” for purposes of s. 178(1)(d). 33 It is also clear that at all material times the respondent was acting in a fiduciary capacity in relation to the appellant and the shares she held in trust for him. I agree with the judge’s conclusion to this effect (see para. 19 above), and no serious argument was advanced to challenge that conclusion. (Indeed, holding property in trust for another is a classic example of a fiduciary’s role.) See the dicta of La Forest J. in International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574 (S.C.C.), identifying the following common features of a fiduciary (at pp. 577-78): ... (1) the fiduciary has scope for the exercise of some discretion or power; (2) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and (3) the beneficiary is Bruni v. Garlicki Martin H. Freedman J.A. 57

peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power. 34 That leads to this question: Was the refusal of the respondent to deliver the shares when demanded a “misappropriation” or “defalcation”? Answering that question will require consideration of the standard of conduct by which the respondent’s actions are to be judged. 35 In this court’s recent judgment in Ste. Rose & District Cattle Feeders Co- operation v. Geisel, 2010 MBCA 52 (Man. C.A.), we noted a basic principle of statutory interpretation, the presumption against tautology, which is clearly explained by Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham: LexisNexis Canada Inc., 2008) at 210 (at paras. 70-71): ..... Governing principle. It is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain. Every word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose. In Hill v. William Hill (Park- Lane) Ltd., [[1949] A.C. 530, at 546 (H.L.)], Viscount Simons wrote: [Al]though a Parliamentary enactment (like parliamentary elo- quence) is capable of saying the same thing twice over without adding anything to what has already been said once, this repeti- tion in the case of an Act of Parliament is not to be assumed. When the legislature enacts a particular phrase in a statute the presumption is that it is saying something which has not been said immediately before. The rule that a meaning should, if possible, be given to every word in the statute implies that, unless there is a good reason to the contrary, the words add something which would not be there if the words were left out. In R. v. Proulx [2000 SCC 5, [2000] 1 S.C.R. 61 at para. 28],Lamer C.J. wrote: It is a well accepted principle of statutory interpretation thatno legislative provision should be interpreted so as to renderit mere surplusage. As these passages indicate, every word and provision found in astatute is supposed to have a meaning and a function. For this reason courts should avoid, as much as possible, adoptinginterpretations that would render any portion of a statutemeaningless or pointless or redundant. [emphasis added] The principle was recently affirmed in McDiarmid Lumber Ltd. v.God’s Lake First Nation, 2006 SCC 58, [2006] 2 S.C.R. 846, where McLachlin C.J.C., for the majority, wrote (at para. 36): It is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain: Sullivan, at p. 158. Thus “[e]very word in a statute is 58 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

presumed to make sense and to have a specific role to play in advancing the legislative purpose” (p. 158). This principle is often invoked by courts to resolve ambiguity or to determine the scope of general words. 36 Thus, the presumption in interpreting s. 178(1)(d) is that the words “misappropriation” and “defalcation” have different meanings, although the differences may be slight or subtle. This is not a controversial proposition. See the comments of Blair J. (as he then was) for the Ontario Court of Appeal in Simone v. Daley (1999), 170 D.L.R. (4th) 215 (Ont. C.A.). In referring to the four types of acts mentioned in s. 178(1)(d) and Parliament’s presumed intention, he said (at para. 52): ... It chose to couch the types of debts or liabilities “while acting in a fiduciary capacity” which would attract the exceptions of subsection 178(1), in the context of debts or liabilities arising from fraud, embezzlement or misappropriation, as well as defalcation. While these notions may have slightly different shades or gradations of meaning, I can only conclude that Parliament intended the words “misappropriation” and “defalcation” to bear their plain and ordinary meaning, as the context in which they are used suggests. [emphasis added] 37 See also the comments of this court in Ross & Associates (at para. 24): The words “embezzlement”, “misappropriation” and “defalcation” all have similar dictionary meanings. Without suggesting that there is no distinction between the three, all involve the wrongful use of someone else’s money. For s. 178(1)(d) of the Bankruptcy and Insolvency Act to be engaged, the wrongful use of money must have been made by the user as a fiduciary. .... [emphasis added]

(a) Misappropriation 38 A standard definition (see Oxford Dictionary of English, 2d ed.) of “misappropriate” is to “dishonestly or unfairly take (something, especially money, be- longing to another) for one’s own use.” Webster’s New Encyclopedic Dictionary (1993) defines “misappropriate” as “to appropriate wrongly; to take dishonestly for one’s own use.” Black’s Law Dictionary, 9th ed., has several definitions of “misappropriation,” the most relevant being the first: “The application of another’s property or money dishonestly to one’s own use.” In my opinion, the concept of “misappropriate” and the act of “misappropriation” inherently suggest conduct that is wrongful and morally blameworthy. 39 This is the view held by most of the authorities. In the 1982 decision of the British Columbia Court of Appeal in Janco (Huppe) v. Vereecken (1982), 44 C.B.R. (N.S.) 211 (B.C. C.A.), the court relied on the definition in Black’s Law Dictionary Revised, 4th ed., to find that “misappropriation,” when used in the predecessor to s. 178(1)(d), meant “the act of misappropriating or turning to a wrong purpose” (at p. 213). Thus, the bankrupt’s taking money that had been Bruni v. Garlicki Martin H. Freedman J.A. 59

turned over to him to manage, and failing to return it on request, constituted a misappropriation and turning the money to a wrong purpose. 40 That was also the interpretation adopted by Day J. in Ironwood Investments Joint Venture v. Leggett (Trustee of) (1996), 38 C.B.R. (3d) 256 (Ont. Gen. Div.) (at para. 25): ... [T]he subsection read as a whole includes fraud and embezzlement, both of which are quasi-criminal in nature, along with misappropriation and defalcation. In my opinion if a debt is to survive bankruptcy pursuant to s. 178(1)(d) of the Bankruptcy and Insolvency Act, there must have been some wrongful conduct on the part of the debtor sufficient to exclude the debtor from the relief granted by the Act. One of the prime purposes of the Bank- ruptcy Act is to permit an honest but unfortunate debtor to obtain a discharge from his debts subject to reasonable conditions. The Act is designed to permit a bankrupt to eventually receive a complete discharge so that he can inte- grate himself into the business life of the country as a useful citizen, free from the crushing burden of his debts: .... [emphasis added] 41 In the leading case of Simone the court agreed with that approach, applying it to both “misappropriation” and “defalcation.” While the court did not always specifically distinguish between the two concepts, it recognized (see para. 36 above), of course, that there could be differences between them. Blair J. said (at paras. 22, 38, 51-52): ...... [T]hey [the actions of the bankrupt] do not entail the misapplication of, or failure to account properly for, property or funds entrusted to a fiduciary which is the characteristic of conduct amounting to misappropriation or defalcation...... [T]he courts should avoid attempting to sweep into concepts such as “misappropriation” or “defalcation” - which in their ordinary meanings connote some element of wrongdoing, improper conduct, or improper accounting - any and all failures by the fiduciary to comply with the obligations attending upon that capacity...... Those cases in which it has been held that an innocent default in duty or a failure to meet an obligation on the part of a fiduciary create a debt which survives a bankruptcy all involve at least a failure to account in a proper fashion for monies or [property] entrusted to the fiduciary. .... Consequently, I am not persuaded that the exception to a release of liability upon a bankruptcy discharge which is provided for in paragraph 178(1)(d) of the BIA should be extended to conduct which does not display at least some element of wrongdoing or improper conduct on the part of the fiduciary in question in the sense of a failure to account properly for monies or property entrusted to the fiduciary in that capacity or inappropriate dealing with such trust property. .... [emphasis added] 60 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

42 Valastiak is a very recent decision of the British Columbia Court of Appeal (see para. 31 above). The trial judge found that the defendant husband had controlled and mismanaged the family business and had taken its funds for his personal use. That was found on motion and affirmed on appeal to be a misappropriation. The Court of Appeal found the defendant to have been in a fiduciary capacity, thus the judgment against him survived his discharge. 43 The court considered Simone, as well as its earlier decision in Smith v. Hen- derson (1992), 10 C.B.R. (3d) 153 (B.C. C.A.), which was a case involving defalcation, not misappropriation. The chambers judge in Valastiak had relied on Smith, and the appeal court commented (at paras. 22-23): The learned chambers judge held that the findings of the trial judge “would support the conclusion that Mr. Valastiak misappropriated funds from the Southside Grill business in the sense of being unable (or unwilling) to account for the funds”. In reaching this conclusion the chambers judge appears to have relied upon Smith v. Henderson (1992), 64 B.C.L.R. (2d) 144 (C.A.) [Smith], as authority for holding that the language of s. 178(1)(d) is “wide enough to cover liabilities which do not necessarily involve dishonesty and where the wrongdoing may result from breach of an obligation. A defalcation or misappropriation while acting in a fiduciary capacity does not necessarily entail a dishonest or wrongful act. It is sufficient if there is a failure to meet an obligation by a fiduciary”. With respect, this is a misinterpretation of the judgment in Smith. Section 178(1)(d) uses defalcation and misappropriation disjunctively, so a finding that either occurred will meet the requirements of the section. Furthermore, the definition of one is not the definition of the other. 44 For the court Finch C.J.B.C. found that Smith did not stand for the proposition that “misappropriation” does not require dishonesty or a wrongful act. He then said (at para. 27): .... It is important to note that while there is disagreement over the definition of defalcation among provincial appellate courts, there does not appear to be the same disagreement over the definition of misappropriation. 45 Finch C.J.B.C. continued (at para. 30): .... The Concise Oxford English Dictionary, 11th ed. (Oxford: OUP, 2004), defines “misappropriate” as to, “Dishonestly or unfairly take for one’s own use.” Defining “misappropriation” in the context of s. 178 of the BIA, Houlden, in Bankruptcy and Insolvency Law of Canada, 4th ed. (Toronto: Carswell, 2009), states at pp. 6-258: Misappropriation is the act of misappropriating or turning to a wrong purpose: ... For misappropriation, the following elements must be proven: (a) the money taken by the debtor to create the debt must have belonged to someone other than the debtor; Bruni v. Garlicki Martin H. Freedman J.A. 61

(b) the taking must involve a wrongful use of the money; and (c) the debtor must have received the money as a fiduciary. 46 Finch C.J.B.C. agreed with the approach in Simone as it applied to “misappropriation,” concluding on this point (at para. 31): In my respectful view, the reasoning in Simone is persuasive in relation to the meaning of “misappropriation”. .... I would, therefore, construe “misappropriation” in its ordinary sense to connote some element of wrongdoing, improper conduct or improper accounting. 47 There is some authority for a more benign approach. See Abstainer’s Insurance Co. v. Pellegrino (1989), 77 C.B.R. (N.S.) 108 (Ont. Dist. Ct.), where Herold D.C.J. said (at p. 111): The word “misappropriate” in the Bankruptcy Act is not, as I read the cases, used in any pejorative or accusatory sense; rather, it may simply be the failure of a person to account when he is called upon to do so, particularly where, as here, he is in possession of the necessary funds to do so and chooses for reasons which he believes are valid not to do so. 48 I am satisfied that the interpretation given to “misappropriation” in Valastiak, Simone and Ironwood is correct. “Misappropriation,” when used in s. 178(1)(d), refers to a fiduciary dishonestly taking something for his or her use and clearly implies wrongdoing or improper conduct on the part of the fiduciary. While one might expect that misappropriation will most often occur where money is wrongly or dishonestly applied by the fiduciary for a different purpose than intended (as in this case, with company funds used by the respondent for her own purposes), the concept has equal application when property other than money is wrongly or dishonestly appropriated by the fiduciary for purposes other than intended.

(b) Defalcation 49 The Oxford Dictionary of English (op. cit.) defines “defalcate” as “embezzle (funds with which one has been entrusted).” Webster’s New Encyclopedic Dic- tionary (op. cit.) defines “defalcation” as “a misuse or theft of money placed in one’s keeping.” Black’s Law Dictionary (op. cit.) defines it as “embezzlement; Loosely, the failure to meet an obligation; a nonfraudulent default.” The concept has been applied by the British Columbia Court of Appeal to conduct that did not involve wrongfully taking or dealing with another’s property, and that court has said that no wrongdoing is required in a defalcation for purposes of s. 178(1)(d). See Smith and Valastiak, as discussed below. 50 In Smith (see para. 43 above) there was a judgment against the bankrupt Smith for breach of trust. His company had held a truck and trailer in trust for the plaintiff Henderson and breached the trust by permitting them to be seized, leading to Smith being found responsible for the breach and liable to Henderson. 62 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

51 For the court Legg J.A. found that Smith was acting in a fiduciary capacity. He then said (at paras. 20-23): Mr. Justice Bouck clearly found that Mr. Smith caused Normax to be in breach of trust by allowing the truck and trailer to become encumbered and subject to liens. Under these circumstances there was a defalcation within the meaning of the section. One meaning of “defalcation” given in Black’s Law Dictionary, 5th ed. (St. Paul, Minn.: West, 1979), at p. 375, is as follows: Defalcation: The act of a defaulter ... failure to meet an obligation ... In my opinion, the breach of trust found by Mr. Justice Bouck comes within the definition of “defalcation” given in Black’s Law Dictionary quoted above because Smith caused or allowed Normax to fail to meet its obligations to Smith. My conclusion that there was a defalcation is sufficient reason to reject this second ground of appeal. .... 52 Then Legg J.A. said (at paras. 24-26): Counsel for the appellant submitted that for s. 178(1)(d) to apply there must be an element of wrongdoing by the bankrupt, and that it must be shown that the bankrupt acted improperly. He submitted that the general purpose of the Bankruptcy Act was to enable an honest but unfortunate debtor to rearrange his affairs with his creditors, and that s. 178(1) provided an exception to the general rule that all debts are released on the bankrupt’s discharge. Counsel submitted that it had not been shown that the bankrupt here was guilty of any wrongdoing. It will be noted from the wording of s. 178(1), when it is read as a whole, that it is wide enough to cover liabilities which do not necessarily involve dishonesty and where the wrongdoing may result from the breach of an obligation. The liabilities mentioned in s. 178(1)(b) (alimony), s. 178(1)(c) (maintenance) and s. 178(1)(g) (neces- saries) are examples of such liabilities. The wording of s. 178(1)(d) includes liability for wrongdoing arising out of dishonest acts such as fraud or embezzlement while acting in a fiduciary capacity. However, “a defalcation while acting in fiduciary capacity” does not necessarily entail a dishonest or wrongful act. It is sufficient if there is a failure to meet an obligation by a fiduciary. A breach of trust arises whenever a trustee fails to carry out his obligations under the terms of the trust. The trustee may have committed the breach due to negligence or incompetence rather than fraud or an act of dishonesty. My reading of Mr. Justice Bouck’s judgment indicates that the bankrupt may have committed a breach of trust due to negligence or incompetence. Either was sufficient to bring the liability under the expression “defalcation while acting in a fiduciary capacity.” [emphasis added] Bruni v. Garlicki Martin H. Freedman J.A. 63

53 The reasons in Smith did not receive the endorsement of the Ontario court in Simone. Blair J. observed (at para. 42) that the citation in Smith of Black’s Law Dictionary, 5th ed. (since changed) had omitted important aspects of the full definition of defalcation, and he concluded on this point (at para. 50): Thus, it would appear that the American authorities which have held that a failure by a fiduciary to meet an obligation gives rise to a debt which is not discharged from bankruptcy, and which have given rise to the reference to such an event in the definition of “defalcation” in Black’s Law Dictionary, are all cases where there has been “some portion of misconduct” in the sense, at least, of a failure by the fiduciary to account properly for funds entrusted to the fiduciaries possession and care. 54 As noted earlier (see para. 41 above), the court in Simone concluded that to survive discharge, the liability would have to be based on conduct that displayed “at least some element of wrongdoing or improper conduct [by the fiduciary] in the sense of a failure to account properly for monies or property entrusted to the fiduciary in that capacity or inappropriate dealing with such trust property” (at para. 52). The court did not differentiate here between “misappropriation” and “defalcation.” Simone rejected the notion, which Smith had endorsed, that innocent breaches of trust obligations, arising, for example, through negligence or incompetence, could lead to survival of a liability post-discharge. 55 The question whether for purposes of s. 178(1)(d) “defalcation” requires the same or similar quality of “wrongfulness” as does “misappropriation” was directly addressed in the recent British Columbia decision in Valastiak. Finch C.J.B.C. noted that while there was no disagreement among appellate courts (referring to those in British Columbia and Ontario) over the proper interpretation of misappropriation, there was disagreement about the meaning of defalcation. He said that the view expressed in Simone at para. 52 (quoted above at para. 41) conflicted with the Smith court’s interpretation of defalcation. He said that Smith was authority for the proposition (at para. 31): ...... [T]hat either negligence or incompetence is “sufficient to bring the liability under the expression ‘defalcation while acting in a fiduciary capacity’”. 56 As noted earlier (see para. 17), the judge referred to this court’s decision in Ross & Associates. The comments she quoted were obiter since the court had dismissed the appeal because of lack of evidence of fraud, but the court’s comments that misappropriation and defalcation (as well as embezzlement) “all involve the wrongful use of someone else’s money” (at para. 24) are certainly consistent with the view in Simone. 57 The Simone approach to breaches of fiduciary duty that arose by inadvertence, negligence or incompetence, and not through dishonesty or wrongful conduct, as not constituting misappropriation or defalcation surviving discharge was expressly followed in MG Electric Ltd. v. (CSE) Control Systems Engineering 64 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Inc., 2004 MBQB 145, 185 Man. R. (2d) 310 (Man. Q.B.) [hereinafter Evancio Estate], aff’d 2004 MBCA 178, 190 Man. R. (2d) 224 (Man. C.A.). 58 On the other hand, the Smith approach was followed in Confederation Life Insurance Co. v. Waselenak (1997), 49 C.C.L.I. (2d) 215 (Alta. Q.B.), aff’d 2000 ABCA 136, 20 C.C.L.I. (3d) 200 (Alta. C.A.). The defendant received dis- ability payments from the plaintiff, but failed to account for and reimburse the plaintiff for certain amounts received from the Workers’ Compensation Board. At one point a letter was sent to the defendant asking for a refund. The defendant’s response was described by Gallant J. at trial (at paras. 33-34): Waselenak admits that he must have received the letter, but that he did not pay the monies because he did not think that the plaintiff deserved it. Plaintiff made numerous demands to Waselenak for repayment of the over- payment but Waselenak did not respond. [emphasis added] 59 The defendant later declared bankruptcy and the plaintiff argued that the defendant’s failure to account constituted misappropriation or defalcation within s. 178(1)(d). Gallant J. considered a number of cases and concluded (at para. 74): I respectfully adopt that dishonesty or a wrongful act like fraud or embezzlement need not be present in order to find that an act of defalcation has occurred, within the meaning of that term in the Act. All that is necessary is that a party fails to account to another if he or she has an obligation to do so and is acting in a fiduciary capacity. In this case, Waselenak was obliged to reimburse to the plaintiff part of the amount which he recovered under any Workers’ Compensation Act and he has failed to meet that obligation, thereby committing an act which could constitute an act of defalcation. [emphasis added] 60 I will add that, in my opinion, on the facts in Waselenak, the deliberate refusal to pay the monies could have been construed as a wilful, and wrongful, breach of duty. 61 “Defalcation” by a fiduciary for purposes of s. 178(1)(d) refers to the failure by the fiduciary to meet his or her obligation. As has been shown, at least regarding “defalcation,” the courts of British Columbia and Alberta have said that a defalcation by a fiduciary arising through negligence, inadvertence or incompetence will survive discharge, even though there has been no deliberate, “wrongful” conduct by the fiduciary. The courts of Ontario and Manitoba require some element of “wrongful” conduct by a fiduciary before the liability created by the defalcation will survive discharge.

(c) Conclusion on “wrongful” conduct 62 As other judges have said, the distinction between misappropriation and defalcation is sometimes difficult to discern. It is not necessary on the facts of this case to draw the line precisely, or even to attempt to define each term precisely. Bruni v. Garlicki Martin H. Freedman J.A. 65

This is so because even under an interpretation of either term that is most favourable to the respondent, her conduct, in my opinion, constituted both a misappropriation and a defalcation. 63 Wrongful conduct is clearly implicit in a misappropriation. In my opinion, it is also implicit in a defalcation, for purposes of s. 178(1)(d). This court affirmed the trial decision in Evancio Estate, and its comments in Ross & Associates, while obiter, are nevertheless instructive. 64 In my opinion, whether the conduct in question is a defalcation or a misappropriation (and it could be both), there must be some element of wrongful conduct shown before a liability survives the fiduciary’s discharge from bankruptcy. Thus, for defalcation as well as misappropriation, some element of wrongdoing, improper conduct or failure to account beyond an innocent breach (which would include a breach caused by negligence, incompetence or inadvertence) will be required before a fiduciary’s liability will survive bankruptcy discharge. 65 This interpretation takes into account the important fact that, as Blair J. said in Simone (at para. 37): ... [N]ot all breaches of obligation by a fiduciary are breaches of a fiduciary obligation. They may simply be inadvertence, negligence or incompetence. .... 66 Moreover, this approach is not only fully consistent with the remarks of the panel in Ross & Associates and the persuasive judgment of Blair J. in Simone, it is also, in my view, and importantly, wholly consistent with the underlying purpose and objectives of the Act. See, for example, McAteer v. Billes, 2006 ABCA 312, 26 C.B.R. (5th) 119 (Alta. C.A.), where, in commenting on the purposive approach to s. 178(1)(e), Fruman J.A. said (at para. 10): The bankruptcy scheme is intended to benefit honest, but unfortunate, debtors: Bank of Montreal v. Giannotti (2000), 51 O.R. (3d) 544 (C.A.). In their own way, courts have taken a purposive approach to interpreting s. 178(1)(e), to ensure that dishonest debtors do not benefit from their dishonesty. 67 Further, as a matter of statutory interpretation, Parliament must be presumed to have chosen the language in s. 178(1)(d) with care and deliberation. See Sulli- van (at p. 206): The courts presume that the legislature is a skillful crafter of legislative schemes and provisions ...... [P]rovisions are presumed to be straightforward, exact, grammatically correct, concise and consistent. 68 See also, for example, Dillon v. Catelli Food Products Ltd., [1937] 1 D.L.R. 353 (Ont. C.A.) (at p. 401): ... The modern principle is to credit the legislators with knowing what they intend to enact into law; and with a knowledge of the English language which enabled them to express their meaning. ... 66 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

69 Each descriptor of an act in s. 178(1)(d), namely, the acts of fraud, embezzlement, misappropriation and defalcation, is in its ordinary sense infused with an element of moral blameworthiness or wrongdoing, albeit in varying degrees. 70 Had Parliament intended, as was suggested in Smith (and confirmed, regarding defalcation, in Valastiak), that it be “sufficient if there is a failure to meet an obligation” (at para. 26) by a fiduciary caused, for example, by simple inadvertence, it would be expected that the section would read much differently. One would expect it to use (apart from the reference to Quebec), instead of the four descriptors used, words to the effect that “any breach of duty or failure to meet an obligation” by a fiduciary would not be released by discharge. The language chosen suggests, in my view, that the Simone interpretation, requiring a degree of moral blameworthiness, is consistent with Parliament’s presumed intention. 71 The judge decided on the authority of Ross & Associates and Simone that “wrongful” conduct was required. In this she was correct.

2. Did the respondent’s conduct reach the required standard; was her conduct “wrongful”? 72 The judge’s reasons for finding that the respondent’s conduct was not wrongful are set out in full above at para. 20. They may be summarized in these terms: 1. the respondent believed she was enhancing the value of the appellant’s shares by how she ran the business; 2. when he demanded the shares, relations had deteriorated; 3. he had not signed the bank indemnification document; 4. she had done virtually all the work and taken all the risks; and 5. this was like “a business deal gone bad.” 73 When deciding whether conduct is “wrongful,” for purposes of s. 178(1)(d), the belief or motive of the bankrupt is not relevant. See Ste. Rose & District Cattle Feeders, at paras. 113-16. This is especially the case since the bankrupt was a fiduciary, by definition in a position of some power over the property of the beneficiary/creditor. To permit the fiduciary to escape ongoing liability by pleading subjective belief in the moral rightness of his conduct would be to open the doors, potentially very widely, to the possibility of mischief and abuse. 74 The judge had already made findings in the first judgment that effectively foreclosed her conclusion about the respondent’s liability in the second judgment. In particular, in the first judgment the judge had rejected the respondent’s argument that there were unfulfilled conditions relating to the written trust agreement and she had found unequivocally that the respondent had an obligation to deliver the shares on request. She found that the appellant had acted in good faith. Thus, any subsequent finding that relations had deteriorated or that the respondent had done all the work and taken all the risks and the like could Bruni v. Garlicki Richard J. Chartier J.A. 67

not be justification for denying the appellant’s demands for his shares. That, however, is the effect of the judge’s conclusion in the second judgment. She excused the breach of trust by the business factors which, in her view, favoured the respondent. 75 While the business side of the relationship may well have become “a business deal gone bad,” that was not relevant to the question of whether the respondent’s conduct in refusing to turn over the shares was “wrongful.” The failure of the business relationship could not justify the refusal to turn over the shares, but that is the effect of the judge’s finding. In this, with great respect, the judge committed a palpable and overriding error. 76 The respondent had, from the outset, an obligation as trustee to turn the shares over to the appellant on demand. The written agreement of February 19, 1999, made that obligation expressly clear. The respondent refused to comply with the demand and failed to fulfill her obligation. Moreover, shortly after the demand was made, she sued the appellant, claiming that he owned no shares at all, a position she maintained for over six years, until the first judgment was issued. 77 Thus the respondent’s conduct in refusing to turn over the shares she held in trust for the appellant was deliberate, wilful and extremely persistent. It flew in the face of the agreement between the parties as originally made and as confirmed in writing by both parties. Her conduct constituted, as the appellant argued before us, “a deliberate breach of trust and intentional refusal of a fiduciary to account for trust property.” Her failure to deliver and failure to account was not in any sense innocent or caused by any inadvertence, negligence or mistake. Her conduct was clearly wrongful. 78 The respondent as fiduciary misappropriated the appellant’s shares. She retained them improperly and failed to account for them. Further, her failure to account as fiduciary and to deliver the shares on demand was a clear failure to meet her fiduciary obligation and a defalcation. 79 Whether because her conduct constituted a misappropriation or a defalcation or, as I think is the case, both, and whether the standard regarding defalcation is that expressed in Simone (as I conclude that it is) or that in Valastiak, the respondent has an ongoing liability for the value of the shares that survives her discharge from bankruptcy. I would allow the appeal with costs.

Freda M. Steel J.A.:

I agree.

Richard J. Chartier J.A.:

I agree. Appeal allowed. 68 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

[Indexed as: Alberta (Minister of Justice & Attorney General) v. Pazder] Minister of Justice and Attorney General for Alberta (Respondent / Plaintiff / Respondent) and Paul Pazder (Appellant / Defendant / Applicant) and Royal Canadian Mounted Police (Not a Party to the Appeal / Defendant / Not a Party to the Application) Alberta Court of Appeal Constance Hunt, Ronald Berger, Frans Slatter JJ.A. Heard: March 4, 2010 Judgment: June 14, 2010 Docket: Edmonton Appeal 0903-0245-AC, 2010 ABCA 183 G.K. Epp for Respondent S.M. Tarrabain, Q.C., A.Y. Karbani for Appellant Criminal law –––– Pre-trial procedure — Search and seizure under proceeds of crime legislation — Review of warrant or order –––– RCMP raided ecstasy lab — Ac- cused was charged with possession of ecstasy for purposes of trafficking in connection with raid — RCMP seized $22,000 cash found at accused’s residence and motor vehicle owned by accused — Accused’s application to set aside restraint order was dismissed — Accused appealed — Appeal dismissed — Accused failed to demonstrate any reviewable error — Findings of fact made by judge were entitled to deference — Crown’s case was uncontradicted — Accused declined to provide any innocent explanation for transportation of solvents, and presence of large amount of cash in his home, nor did he deny any involvement in, or knowledge of criminal activities alleged. The RCMP raided an ecstasy lab. The accused was charged with possession of ecstasy for the purposes of trafficking in connection with the raid. The RCMP seized $22,000 cash found at the accused’s residence and a motor vehicle owned by the accused. The accused’s application to set aside the restraint order was dismissed. The accused appealed. Held: The appeal was dismissed. Per Slatter, J.A. (Hunt, J.A. concurring): The accused failed to demonstrate any reviewable error. The findings of fact made by the applications judge were entitled to deference. The Crown’s case was uncontradicted. The accused declined to provide any innocent explanation for the transportation of the solvents, and the presence of the large amount of cash in his home, nor did he deny any involvement in, or knowledge of the criminal activities alleged. Per Berger, J.A. (concurring in the result): Unlike an accused’s onus at a disposal hearing, an accused seeking review of a restraint order need not establish that he has not been involved in the commission of the illegal act in respect of which the property was restrained. Nor need he establish that he did not know and would not reasonably be expected to know that the property had been acquired by illegal means. The question to be Alberta v. Pazder 69 decided is whether the accused’s affidavit in support of the application for review of the restraint order provided an arguable basis upon which a reviewing judge might conclude that there was sufficient reason to vary or set aside the order The accused’s affidavit failed to satisfy the test. Cases considered by Frans Slatter J.A.: Alberta (Minister of Justice & Attorney General) v. Pazder (2009), 2009 ABQB 450, 2009 CarswellAlta 1147 (Alta. Q.B.) — referred to Housen v. Nikolaisen (2002), 10 C.C.L.T. (3d) 157, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, 2002 CarswellSask 178, 2002 CarswellSask 179, 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.) — considered Ontario (Attorney General) v. Chatterjee (2009), 2009 SCC 19, 2009 CarswellOnt 1949, 2009 CarswellOnt 1950, 242 C.C.C. (3d) 129, 65 C.R. (6th) 1, 387 N.R. 206, 304 D.L.R. (4th) 513, 249 O.A.C. 355, 97 O.R. (3d) 399 (note), [2009] 1 S.C.R. 624, [2009] S.C.J. No. 19 (S.C.C.) — considered Statutes considered by Frans Slatter J.A.: Victims Restitution and Compensation Payment Act, S.A. 2001, c. V-3.5 Generally — referred to Pt. 1, Div. 1 — referred to Pt. 1, Div. 2 — referred to Pt. 1.1, Div. 1 [en. 2008, c. 41, s. 4] — referred to Pt. 1.1, Div. 2 [en. 2008, c. 41, s. 4] — referred to s. 2(1)(e) “restraint order” — referred to s. 4 — referred to s. 4(2) — referred to s. 5 — referred to s. 5(2) — referred to s. 7(1)(b) — referred to s. 8 — referred to s. 8(1) — referred to s. 8(2) — referred to s. 8(3) — considered s. 8(3)(a) — referred to s. 8(3)(b) — referred to s. 11(1)(b) — referred to s. 12 — referred to s. 13(1)(a) — referred to s. 13(1)(b) — referred to s. 14 — referred to s. 17 — referred to s. 18(1) — referred to s. 19(1) — considered s. 19.3 [en. 2008, c. 41, s. 4] — referred to s. 19.3(2) [en. 2008, c. 41, s. 4] — referred to s. 19.4 [en. 2008, c. 41, s. 4] — referred to s. 19.4(2) [en. 2008, c. 41, s. 4] — referred to 70 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

s. 19.6(1)(b) [en. 2008, c. 41, s. 4] — referred to s. 19.7 [en. 2008, c. 41, s. 4] — referred to s. 19.7(1) [en. 2008, c. 41, s. 4] — referred to s. 19.7(2) [en. 2008, c. 41, s. 4] — referred to s. 19.7(3) [en. 2008, c. 41, s. 4] — considered s. 19.7(3)(a) [en. 2008, c. 41, s. 4] — referred to s. 19.7(3)(b) [en. 2008, c. 41, s. 4] — referred to s. 19.91(1)(b) [en. 2008, c. 41, s. 4] — referred to s. 19.92 [en. 2008, c. 41, s. 4] — referred to s. 19.93(1)(a) [en. 2008, c. 41, s. 4] — referred to s. 19.93(1)(b) [en. 2008, c. 41, s. 4] — referred to s. 19.94 [en. 2008, c. 41, s. 4] — referred to s. 19.97 [en. 2008, c. 41, s. 4] — referred to s. 19.98(1) [en. 2008, c. 41, s. 4] — referred to s. 19.99 [en. 2008, c. 41, s. 4] — considered

Statutes considered by Ronald Berger J.A.: Controlled Drugs and Substances Act, S.C. 1996, c. 19 s. 5(2) — referred to Criminal Code, R.S.C. 1985, c. C-46 s. 117.01(1) [en. 1995, c. 39, s. 139] — referred to Victims Restitution and Compensation Payment Act, S.A. 2001, c. V-3.5 Generally — referred to s. 4 — referred to s. 5(1) — referred to s. 7(1)(b) — considered s. 8(1) — referred to s. 8(3) — referred to s. 13(1) — considered s. 13(1)(b) — considered s. 19.4(1) [en. 2008, c. 41, s. 4] — referred to s. 19.6(1) [en. 2008, c. 41, s. 4] — considered s. 19.6(1)(b) [en. 2008, c. 41, s. 4] — referred to s. 19.7(1) [en. 2008, c. 41, s. 4] — referred to s. 19.7(3) [en. 2008, c. 41, s. 4] — referred to s. 19.93(1)(a) [en. 2008, c. 41, s. 4] — considered s. 19.93(1)(b) [en. 2008, c. 41, s. 4] — considered s. 19.93(1)(b)(i) [en. 2008, c. 41, s. 4] — considered s. 19.93(1)(b)(ii) [en. 2008, c. 41, s. 4] — considered

APPEAL by accused from judgment reported at Alberta (Minister of Justice & Attorney General) v. Pazder (2009), 2009 ABQB 450, 2009 CarswellAlta 1147 (Alta. Q.B.), dismissing his application to set aside property restraint order. Alberta v. Pazder Frans Slatter J.A. 71

Frans Slatter J.A.:

1 The appellant appeals an order directing the forfeiture of $22,000 in cash and a Silverado motor vehicle, pursuant to the Victims Restitution and Compen- sation Payment Act, R.S.A. 2000, c. V-3.5.

Facts 2 The appellant is the owner of a Silverado motor vehicle that was under surveillance by the police. It was observed picking up containers of solvent in Edmonton, which were then delivered to various locations in British Columbia. The Silverado was also used to return empty solvent drums to Edmonton. Field testing of those returned drums disclosed the presence of methamphetamine, a controlled drug commonly referred to as MDMA or Ecstasy. While the solvent does have legal uses, it can also be used in the manufacture of MDMA. 3 In June of 2008 the RCMP raided a drug production laboratory in British Columbia that was producing MDMA. Neither the appellant nor the Silverado was ever seen at this location, but there was circumstantial evidence linking the transported solvent to the laboratory. 4 The police subsequently obtained a search warrant and found $22,000 hidden in the appellant’s house. Charges were laid against the appellant, but they were eventually stayed, and he has never been convicted of any offence arising out of the production or sale of the MDMA. 5 The Minister applied for a “restraint order” under the Act with respect to the cash and the Silverado. This application was ex parte, as required by the Act. The application was supported by the affidavit of Constable McGowan which summarized the surveillance of the Silverado, the raiding of the drug laboratory, and the seizure of the cash. A further affidavit of Corporal Greene, who is an expert in the field of illicit drugs and proceeds of crime, deposed to his opinion that the cash was the proceeds of crime, given the way it was bundled and hidden. A restraint order was granted on June 23, 2009. 6 The appellant applied for a review of the restraint order, as provided for in the Act. The appellant relied on the cross-examinations on affidavit of the two police officers, as well as his own affidavit. The appellant’s affidavit recited the seizure of his property, summarized the laying of charges against him and the eventual staying of those charges, and outlined some of the procedural steps that had been taken. The appellant’s affidavit did not deny that the Silverado had been used to transport solvents, nor that the cash was the proceeds of crime. The affidavit did not give any legitimate reason for the possession of the solvents, nor did it explain why the solvents were being transported to British Columbia. The affidavit also provided no explanation of the source of the seized cash. The Minister cross-applied for a “property disposal order” or forfeiture order under 72 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

the Act, relying on the two affidavits that had been filed in support of the application for a restraint order. 7 The chambers judge dismissed the appellant’s application for a review of the restraint order, and granted the Minister’s application for a property disposal order: Alberta (Minister of Justice & Attorney General) v. Pazder, 2009 ABQB 450 (Alta. Q.B.). The chambers judge concluded that the appellant and the Min- ister had competing, but equal burdens of proof. The Minister had to establish on a balance of probabilities that the restrained property had been derived from or used with respect to an illegal act, whereas the appellant had to establish on a balance of probabilities that he had not been involved in any illegal act with respect to the property. While the Minister’s evidence was almost entirely circumstantial, it was uncontradicted on this record, because the appellant had elected not to file an affidavit dealing with the substance of the allegations. Ac- cordingly the Minister had met the burden of proof, but the appellant had not. A property disposal order was granted with respect to the Silverado and the cash. 8 The appellant has appealed the dismissal of his application to review the restraint order, and the granting of the property disposal order.

The Structure of the Act 9 The basic objective of the Victims Restitution and Compensation Payment Act is to allow for the seizure and disposition of property that has been impli- cated in criminal activity. When the seized property is disposed of, the proceeds can be used to compensate the victims of the particular crime with which the property was associated, and any surplus is paid to the Crown to be used to compensate victims of crime generally. 10 In Ontario (Attorney General) v. Chatterjee, [2009] 1 S.C.R. 624, 2009 SCC 19 (S.C.C.) the Court considered the constitutionality of similar (but in some respects different) legislation in Ontario. In Chatterjee at paras. 3, 23 the Court observed: 3 . . . Crime imposes substantial costs on provincial treasuries. Those costs impact many provincial interests, including health, policing resources, community stability and family welfare. It would be out of step with modern realities to conclude that a province must shoulder the costs to the community of criminal behaviour but cannot use de- terrence to suppress it...... 23 In essence, therefore, the [Act] creates a property-based authority to seize money and other things shown on a balance of probabilities to be tainted by crime and thereafter to allocate the proceeds to com- pensating victims of and remedying the societal effects of criminality. The practical (and intended) effect is also to take the profit out of crime and to deter its present and would-be perpetrators. Alberta v. Pazder Frans Slatter J.A. 73

The procedures and burdens of proof in the Act are civil in nature: Chatterjee at para. 21. 11 As recently amended, the Act deals with the seizure and disposal of two types of property: (a) “property acquired by illegal means”, and (b) “instruments of illegal activity” that were used to carry out an illegal act. In this appeal the seized cash falls into the former category, and the seized Silverado falls into the latter. The statutory procedures dealing with the two different types of property are parallel, so they can be discussed and analyzed concurrently. 12 The procedure in the Act begins with an application by the Minister for a “restraint order” (ss. 4 and 19.3). These applications must be made ex parte (ss. 4(2) and 19.3(2)). Obviously this is because of the risk that the property will be disposed of or hidden before the court can adjudicate on its forfeiture. The ex parte procedure is also justifiable because the restraint order neither alters the substantive rights of the parties, nor creates or uncovers any new evidence that could be used to the respondent’s detriment (compared, for example, to a wire- tap authorization or a search warrant). The restraint order merely preserves the status quo to allow the court time to adjudicate on the substantive forfeiture or disposal issue. 13 If the court is satisfied that the Minister has shown reasonable and probable grounds to believe that the property is associated with crime, the restraint order can be granted (ss. 5 and 19.4). The restraint order prevents the disposal of, and allows a civil enforcement agency to take possession of the property pending the Minister’s application for disposal. The restraint order must also set a date, not later than 45 days from its granting, for the commencement of a “property disposal hearing” (ss. 5(2) and 19.4(2)). 14 The Act enables certain interested parties to apply for a “review” of the restraint order (ss. 8 and 19.7). The application for review must be accompanied by an affidavit of the person requesting the review setting out “any evidence . . . not before the court at the time of the granting of the restraint order” and “any other matters that the affiant considers relevant” (ss. 8(1) and 19.7(1)). A claim to the property may be made “only by means of evidence provided by the respondent in accordance with this section” (ss. 11(1)(b) and 19.91(1)(b)). The Act does not permit a simple challenge of the ex parte restraint order based on any inadequacies in the affidavits filed by the Minister; an affidavit by the interested party is mandatory. 15 The Act allows for cross-examination on any of the affidavits filed. Sections 12 and 19.92 provide that if the party applying for review of the restraint order fails without a reasonable excuse to attend at the cross-examination on affidavit, or to answer questions put at the cross-examination, that applicant “forfeits all . . . rights to the restrained property”. In this case the appellant was not cross- examined. 74 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

16 At the review of the restraint order, the court can confirm, revoke or vary the order (ss. 8(2) and 19.7(2)). The court, however, can dismiss the application for a review “notwithstanding anything else in this section” if the evidence on the review application is “the same or substantially the same as the evidence that was before the court at the time of the granting of the restraint order” (ss. 8(3)(a) and 19.7(3)(a)). The court can also dismiss the application for review if there is not sufficient reason set out in the supporting affidavit to justify revoking the restraint order (ss. 8(3)(b) and 19.7(3)(b)). 17 Because of the way that the Act is structured it is possible that (as in this case) the application for a review of the restraint order will be proceeding concurrently with the “property disposal hearing” that must be scheduled by the restraint order. In those circumstances the review of the restraint order and the property disposal hearing could occur before the same chambers judge, based on the same evidence. However, ss. 7(1)(b) and 19.6(1)(b) provide that the review must occur before the property disposal part of the hearing. 18 The structure of the Act tends to direct the analysis towards the ultimate substantive issue, namely whether the property was associated with criminal activity, and away from technical arguments about whether the restraint order should have been granted. In particular, the following aspects of the statute’s structure lead to this conclusion: a) the compulsory filing of an affidavit, and submission to cross- examination, before review (discussed supra, paras. 14, 15), b) the ability to go directly to the disposal hearing if the record is the same or substantially the same (supra, para. 16), c) the anticipated timing of the hearings, such that the two hearings will often be heard together (supra, para. 17), and d) the narrowness of the appeal rights (discussed infra, para. 20). This focus is likely because, as previously noted, the restraint order does not alter the substantive rights of the parties, and merely preserves the status quo to allow the court time to adjudicate on the substantive forfeiture or disposal issue. 19 At the property disposal hearing, the court is to determine if the Minister has demonstrated on a balance of probabilities that the restrained property was acquired by an illegal means, or was an instrument of illegal activity. The Act specifically places an onus on the Minister to demonstrate the illegality of the property (ss. 13(1)(a) and 19.93(1)(a)), and an onus on the claimant to establish that he or she has an interest in the property, and that he or she did not participate in or know of any illegality respecting the property (ss. 13(1)(b) and 19.93(1)(b)). The court can direct the disposition of the property, or order that it be returned to its rightful owner (ss. 14 and 19.94). The proceeds can be used to compensate the victims of the particular crime with which the property was as- Alberta v. Pazder Frans Slatter J.A. 75

sociated, and any surplus is paid to the Crown to be used to compensate victims of crime generally (ss. 17 and 19.97). 20 Sections 19(1) and 19.99 of the Act provide a limited right to appeal the property disposal order to the Court of Appeal: No application or order made or step or process taken under this Part other than a property disposal order or an ancillary order made in respect of the property disposal order, may be appealed. The narrow wording of these sections confirms the approach of focusing on the substantive disposal order, not the adequacy of the interlocutory procedures.

Standard of Review 21 The interpretation of a statute is a question of law. The standard of review for questions of law is correctness. The legal standard is a question of law, but whether that standard has been met is a mixed question of fact and law reviewable for palpable and overriding error. The findings of fact of the trial judge, and inferences drawn from the facts, will only be reversed on appeal if they disclose palpable and overriding error: Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33 (S.C.C.).

Review of the Restraint Order 22 The appellant argues that the chambers judge erred in not setting aside the restraint order. His argument before the chambers judge, and before the Court of Appeal, was that the Minister never established “reasonable and probable grounds” sufficient to warrant the restraint order. Therefore the restraint order, and the order directing the property disposal hearing, should be set aside. If the affidavits of the Minister did not prove “reasonable and probable grounds”, they could not meet the burden of proof of a “balance of probabilities” that would justify a disposal order. 23 The appellant argues that the chambers judge never directed his mind to the inadequacies of the restraint order, but rather proceeded directly to consider whether a property disposal order should be made. The review of the restraint order and the granting of the property disposal order are distinct processes, with distinct (if overlapping) burdens of proof and evidentiary requirements, and it is a desirable for the presiding judge to keep the two distinct. In this case there is some blending of the chambers judge’s analysis of the two applications, making it difficult in some places to isolate what portion of his reasoning is related to which. 24 The chambers judge was aware that he was to conduct a review of the restraint order. He ruled that there was sufficient new evidence to meet the threshold requirement for conducting a review. He also specifically dismissed the appellant’s application for review, and awarded the respondent costs of that review. 76 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

25 The appellant argues that the chambers judge erroneously placed some burden on him to prove that the property in issue was not associated with a criminal act. He argues that on the review of the restraint order, the only burden is on the Minister, namely that there are reasonable and probable grounds to justify restraining the property. He argues that an applicant for review has no burden to prove anything. 26 The Act specifically deals with the burdens of proof with respect to granting a property disposal order. There is no provision expressly dealing with the burdens of proof on a review of the restraint order. While an applicant for review may not bear the full burden of proof assigned to him on the property disposal application, the Act signals that there is at least some evidentiary obligation on the applicant. Firstly, the applicant cannot even seek review unless he files an affidavit deposing, inter alia, to “any other matters that the applicant considers relevant to the request for the review”. The mandatory requirement of an affidavit and duty to submit to cross-examination itself places an evidentiary burden on the applicant. Further, the Act allows the court to dismiss an application for review “notwithstanding anything in this section” where the court determines that “there is not sufficient reason set out in the affidavit to cause the court to vary or revoke the restraint order”. It was therefore not a reviewable error for the chambers judge to impose some burden on the appellant to at least produce evidence raising a prima facie case. 27 Further, as pointed out supra, para. 17, notwithstanding ss. 7(1)(b) and 19.6(1)(b) the chambers judge is entitled to proceed directly to the property disposal application if he or she concludes that the evidence at the property disposal hearing does not differ significantly from that before the judge who granted the ex parte restraint order. Under the procedures set out in the Act it is not open to the appellant to simply challenge the restraint order on technical grounds, without addressing the substantive issue of whether the property in question was associated with criminal activity. The Act requires the appellant to swear an affidavit, and then specifically authorizes the court to deal with the issue substan- tively if the appellant’s affidavit does not significantly alter the record.

The Right to Appeal 28 But in any event, the Act does not provide any right of appeal from the review of the restraint order. Even if it could be shown that the chambers judge made some error in his review, the Act only permits an appeal from the property disposal order itself, or “an ancillary order made in respect of a property disposal order”. 29 The right of appeal in the Act is narrow. The words “no application or order made or step or process taken” are clearly wide enough to exclude the review of the restraint order. “Ancillary” orders are those described as such in ss. 18(1) Alberta v. Pazder Frans Slatter J.A. 77

and 19.98(1). Reviews of restraining orders are not included in the type of orders listed, and indeed they are provided for in different divisions of the Act. 30 The appellant argues that a valid restraint order is a condition precedent to a valid property disposal order. If the restraint order was not properly granted, then he argues that the Minister is not even entitled to apply for a property disposal order. Thus, the appellant submits, arguments about the validity of the review of the restraint order are indeed encompassed in an appeal of the property disposal order. 31 Nothing in the Act expressly makes a valid property disposal order depend on the validity of the restraint order that preceded it. There are three reasons why such a condition precedent should not be implied. First, it is possible for the Minister to apply for a property disposal order without there having been any review of the restraint order. In some cases no application to review the restraint order will be brought. In those circumstances, it is not incumbent on the Min- ister to prove the validity of the original restraint order, which merely preserves the status quo, so long as the Minister proves on a balance of probabilities that the property is identified with a criminal act in one of the ways described in the Act. It does not make sense to impose such an obligation on the Minister just because a review application has been brought. 32 Second, the process for a review of the restraint order, and the process for a property disposal order are distinct, even though they may be processed concurrently by the court. In this case, as contemplated by the Act, the appellant applied for a review of the restraint order, and the Minister cross-applied for a property disposal order. The former application arose under Part 1, Division 1 and Part 1.1, Division 1 of the Act. The latter application arose under Part 1, Division 2 and Part 1.1, Division 2 of the Act. There is nothing in the Act that suggests one is dependent on the other. At the property disposal hearing the court is to “determine, based on a balance of probabilities” whether the property was associated with a criminal act in one of the ways described. The Act does not require the court to adjudicate on the validity of the restraint order as a part of the property disposal procedure. The evidence at the two levels could be quite different. 33 Third, the Act specifically allows the reviewing judge to bypass the review of the restraint order, and proceed directly to the property disposal application. Subsections 8(3) and 19.7(3) provide: (3) Notwithstanding anything in this section, the Court may dismiss an application for a review of the restraint order if the Court, on considering the supporting affidavit or other representations made to the Court, is satisfied that (a) the evidence before the Court with respect to the application to review the restraint order is the same or substantially the same as the evi- 78 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

dence that was before the Court at the time of the granting of the restraint order, or (b) there is not sufficient reason set out in the affidavit to cause the Court to vary or revoke the restraint order. This power to essentially bypass the review process is inconsistent with the argument that a valid restraint order is a condition precedent to a valid property disposal order. 34 It follows that there is no right to appeal, directly or indirectly, from the review of the restraint order. Even if the chambers judge erred in some respects in his assessment of the burden of proof on the appellant, and even if he erred in blending his analysis of the two applications, no appeal would lie. Further, no prejudice results to the applicant for review, as the burden of proof on the property disposal application is higher than on the review of the restraint order. It would have been desirable for the chambers judge to indicate that he was relying on ss. 8(3) and 19.7(3) to proceed directly to the property disposal application, but any inadequacies in his reasons likewise do not give a right of appeal. The appellant is therefore restricted to his appeal of the property disposal order.

The Property Disposal Order 35 In this case the appellant declined to file an affidavit denying that the property was associated with crime. He declined to provide any innocent explanation for the transportation of the solvents, and the presence of a large amount of cash in his home. He did not deny any involvement in, or knowledge of the criminal activities alleged. In the circumstances, he failed to meet the burden of proof on a balance of probabilities placed on him by the Act. While the Min- ister’s case was largely circumstantial, it was uncontradicted, and the chambers judge was entitled to order forfeiture of both the Silverado and the cash. The findings in question were findings of fact and are entitled to deference on appeal.

Conclusion 36 In conclusion, the appellant has not demonstrated any reviewable error in the decision under appeal, and the appeal is dismissed.

Ronald Berger J.A.:

37 The Victims Restitution and Compensation Payment Act, R.S.A. 2000, c. V- 3.5 sets out the process that the Crown must follow to restrain and dispose of property acquired by illegal means and property which was utilized in carrying out illegal acts. The provisions applicable to proceeds of crime and instruments of illegal activity are, to a large extent, an echo of one another. In the reasons that follow I refer to both concurrently. Alberta v. Pazder Ronald Berger J.A. 79

38 The first step is for the Crown to bring an application ex parte under s. 4 of the Act for a restraint order. Pursuant to ss. 5(1) and 19.4(1), the test is whether there are reasonable grounds to believe that the property that is the subject of the application has been acquired by illegal means or is an instrument of illegal activity. 39 A restraint order does more than “merely preserve the status quo”, as my colleagues suggest; it deprives the rightful owner of the use of the property pending the hearing of a motion to vary or set it aside. 40 If the restraint order is granted, a property disposal hearing must take place no later than forty-five days from the day that the restraint order was granted. 41 Sections 8(1) and 19.7(1) of the Act allow for a review of the restraint order which must occur before the disposal hearing (see para. [46] below). The application must be supported by an affidavit which sets out any evidence with respect to any matters before the Court that were not before the Court when the restraint order was granted, and any other matters that the affiant considers relevant to the request for the review. If the Court is satisfied that the evidence on review is the same or substantially the same as the evidence that was before the Court when the restraint order was granted, the application for review may be dismissed. The Court may also dismiss the application for review when the Court is satisfied that “there is not sufficient reason set out in the affidavit to cause the Court to vary or revoke the restraint order.” 42 It follows that the burden on the applicant seeking review of the restraint order is to satisfy the Court that there is “sufficient reason” to set it aside or vary it. “Sufficient reason” is not defined. It must, however, have a basis in the affidavit. It is unclear whether a procedural irregularity or an evidentiary deficiency or any other reason would suffice. I leave that issue to another day. As I explain later, the affidavit need not identify the source of the impugned property, nor assert the non-involvement of the applicant in illegal activity. Assuming, without deciding, that the burden on the applicant seeking review is persuasive and not merely evidentiary, the proceedings being civil in nature, that onus is satisfied on a balance of probabilities. 43 One thing is clear. Should the matter proceed to a property disposal hearing at the instance of the Crown, the onus on the respondent is very different. Sec- tions 13(1) and 19.93(1) of the Act state: 13(1)(b)the onus is on a respondent to establish, with respect to the restrained property, (i) the nature and extent of that respondent’s claim to any interest in the property, (ii) that the respondent has not been involved in the commission of the illegal act in respect of which the property was restrained, and 80 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

(iii) where the property had been acquired by illegal means and subsequent to the acquisition of the property by illegal means the property was acquired by the respondent, that the respondent did not know and would not reasonably be expected to know that the property had been acquired by illegal means; ..... 19.93(1) At a property disposal hearing (a) the onus is on the Minister to establish that the restrained property is an instrument of illegal activity; (b) the onus is on a respondent to establish, with respect to the restrained property, (i) the nature and extent of that respondent’s claim, if any, to any interest in the property, (ii) that the respondent (A) has not been or would not have been involved in or associated with carrying out an illegal act using, or associated with, the restrained property, and (B) did not know and would not reasonably be expected to know that the restrained property was or was likely to be used in carrying out an illegal act. ... 44 In contrast, no such onus is imposed upon an applicant seeking review of the restraint order. “Sufficient reason to vary or revoke the restraint order” will suffice. Unlike the respondent’s onus at a disposal hearing, an applicant seeking review of a restraint order need not establish that he has not been involved in the commission of the illegal act in respect of which the property was restrained. Nor need he establish that he did not know and would not reasonably be expected to know that the property had been acquired by illegal means. Insofar as a restraint order in respect of an instrument of illegal activity is concerned, the applicant seeking review, unlike the onus on the respondent at a property disposal hearing, need not establish that he was not involved or associated with carrying out an illegal act using or associated with the restrained property. Nor need he establish that he did not know or would not reasonably be expected to know that the restrained property was or was likely to be used in carrying out an illegal act. 45 Accordingly, in the instant case, in marshalling his review application, the Appellant was not required to deny that the cash was the proceeds of crime, nor was he obliged to provide an explanation of the source of the cash. He was also not required to establish that he was not involved or associated with carrying out an illegal act using or associated with the Silverado nor that he did not know or Alberta v. Pazder Ronald Berger J.A. 81

would not reasonably be expected to know that the Silverado was or was likely to be used in carrying out an illegal act. 46 Sections 7(1)(b) and 19.6(1) provide that the review must occur before the property disposal part of the hearing. They read as follows: “7(1) At any time after the granting of a restraint order but prior to the property disposal hearing the following applications may be made to the Court: (b) a respondent may apply for a review of the restraint order; ..... 19.6(1) At any time after the granting of a restraint order but prior to the property disposal hearing the following applications may be made to the Court: (a) any person who is not a respondent but alleges (i) to be a victim in respect of the matters before the Court, or (ii) to have an interest in the restrained property, may apply to be added as a respondent to the action; (b) a respondent may apply for a review of the restraint order; (c) a party to the action may apply for directions with respect to the conduct of the action or other matters related to the action; (d) a party to the action may apply for directions with respect to the addition of other persons as respondents to the action; (e) a party to the action may apply for directions as to whether persons other than parties to the action are to be given notice of the property disposal hearing; (f) a party to the action may apply for an adjournment of the property disposal hearing if the party is not ready to proceed with the property disposal hearing; (g) a party to the action may apply for an ancillary order with respect to any matter referred to in clauses (a) to (f).” [emphasis added] 47 The chambers judge was satisfied that the Appellant had submitted evidence which was not before the judge that issued the restraint order. He concluded that, on that basis, “the review can therefore proceed” (at para. 18). But it did not. The chambers judge immediately turned to a consideration of the “competing onuses of proof”. His reasoning in that regard follows (at paras. 19-22): The effect of ss. 13 and 19.93 is that the Minister and an applicant have competing onuses of proof imposed upon them. The Minister must establish, on a balance of probabilities, that the property or instrument of illegal activ- 82 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

ity was acquired or used respecting an illegal act, whereas the applicant, on a balance of probabilities, must establish that it was not. There is nothing in the Act which can be construed a providing an applicant with a presumption that property in his possession was legally acquired or used. As such, the Minister’s evidentiary onus is no greater than that of the Applicant. Rather, the evidentiary onuses are equal and the competition between them is determined by the Court on the basis of which party presents evidence necessary to satisfy its onus. Accordingly, the next issue which arises is whether the Minister has met the evidentiary onus, on a balance of probabilities, to justify restraint and disposal, or whether the Applicant has met the onus, on a balance of probabilities, that the cash and vehicle should be returned to him. 48 With that in mind, the chambers judge then considered whether or not the Appellant and the Crown had satisfied their respective onuses. Insofar as the cash was concerned, he reasoned as follows (para. 26): ... [G]iven the onus of proof which the Applicant bears to establish, on a balance of probabilities, that the property was not acquired as a result of an illegal act, any applicant who elects not to provide the Court with an explanation as to the source of the impugned property runs the risk that the Court, on the basis of the evidence before it, will conclude that the Minister has satisfied the onus imposed upon him whereas the Applicant has not. 49 The Appellant had not identified the source of the impugned property. Nor was he required to do so in order to demonstrate that the restraint order was unreasonable. The chambers judge erred in holding that the onus on the Appel- lant pursuant to s. 13(1)(b) applied to the review application. 50 Turning his attention to the Silverado, the chambers judge reasoned as follows (at para. 32): Utilizing the same analysis, I do not accept that if the Applicant elects not to deny sworn allegations about the use of the Silverado and provides no evidence in support of his position, he can satisfy the onus imposed upon him by s. 19.93(1)(b) to establish on a balance of probabilities that he was not involved in or associated with carrying out an illegal act with the Silverado, and did not know or would not reasonably expected to know that the Silver- ado was, or was likely to be used in carrying out an illegal act. [emphasis added] 51 The Appellant did not establish that he was not involved in or associated with carrying out an illegal act with the Silverado, and did not know or would not reasonably be expected to know that the Silverado was, or was likely to be used in carrying out an illegal act. Nor was he required to do so in order to demonstrate that there was “sufficient reason” to set aside the restraint order. The chambers judge erred in holding that the onus on the Appellant pursuant to s. 19.93(1)(b) applied to the review application. Alberta v. Pazder Ronald Berger J.A. 83

52 It might well be asked why did the Appellant elect not to offer an explanation as to the source of the cash? Why did he not attempt to establish that he was not involved in or associated with the carrying out of an illegal act with the Silverado? As I explain in paras. [57] and [58] below, the answer is that were he successful in establishing sufficient reason to set aside the restraint order, no disposal hearing could then follow or succeed. 53 My colleagues contend that it was “not a reviewable error for the chambers judge to impose some burden on the appellant to at least produce evidence raising a prima facie case.” But that is not the burden that the chambers judge imposed. The chambers judge erred in holding that the onus on the Appellant pursuant to ss. 13(1)(b) and 19.93(1)(b) applied to the review application. 54 The affidavit in support of the application for review of the restraint order was sworn on May 20, 2009. Mr. Pazder deposed that he had been charged with possession of MDMA for the purposes of trafficking contrary to s. 5(2) of the Controlled Drugs and Substances Act and with possession of ammunition while being prohibited from doing so pursuant to s. 117.01(1) of the Criminal Code. On September 25, 2008, the affidavit explains, the Crown directed the Clerk of the Provincial Court to direct a stay on both charges. As to the issue of “sufficient reason” to set aside the restraint order, the following portions of the depo- sition are said to bear upon the basis for review: 9 I have not been convicted of any charges as a result of my arrest on June 26, 2007. 10 The Items have never been found by a Court to be tainted by criminality. 11 The $22,000 in Canadian currency relating to this Application has never been found by a Court to be proceeds of crime nor was there any evidence provided during the Cross-Examination of James Brian Greene and the Cross-Examination of Jeffrey Michael McGown on March 31, 2009, that the $22,000 in Canadian currency was proceeds of crime. 12 ... I requested, through legal counsel, the return of the property, including the Items seized...... 18 I am advised by legal counsel and verily do believe that there was no legal justification for the continued detention of the Items and that this matter was not raised on the ex parte Application. (Appellant’s Extracts of Key Evidence, Tab 5) 55 The ex parte application was heard and the restraint order granted on June 23, 2009. The demonstration of “sufficient reason” to set it aside was not considered by the chambers judge uninfluenced by the onus provisions applicable only to a disposal hearing. As a result, it cannot be said that the chambers judge turned his mind to a review of the restraint order in the light only of the eviden- 84 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tiary and persuasive burdens imposed upon the applicant for review pursuant to the statute. 56 In granting the disposal order, the chambers judge put the cart before the horse. He should have first decided the review application in accordance with ss. 8(1) and 19.7(1) of the Act. 57 The Minister is not authorized by statute to apply for a property disposal order in the event that a restraint order was either not granted prior in time or was adjudged to have been improperly granted. That is consistent with ss. 7(1)(b) and 19.6(1)(b) of the Act which provide that when both come before the same judge at the same time, the review must occur before the property disposal part of the hearing. If no motion to review the restraint order is brought, I agree with my colleagues that it is not incumbent on the Minister to prove the validity of the original order. That does not, however, lend support to my colleagues’ suggestion that a valid property disposal order does not depend on the validity of an impugned restraint order that preceded it. Because the review application must precede the disposal hearing, if the Court finds that the restraint order should not have been granted, the foundation for the seizure crumbles and, with it, the prospect of confiscation. 58 Nor do I agree with my colleagues that the Act specifically allows the reviewing judge to bypass the review of the restraint order and proceed directly to the property disposal application. That is only so if ss. 8(3) and 19.7(3) are first satisfied. If sufficient reason is set out in the affidavit and exhibits or referenced material to cause the Court to set aside the restraint order, the Court is precluded from then embarking on a disposal hearing. Even if the decision is to vary rather than revoke, depending on the nature and content of the order to vary, the disposal hearing may take on a different character and course. That is why a proper review of the restraint order must precede the disposal hearing. 59 That said, the question to be decided is whether the Appellant’s affidavit in support of the application for review of the restraint order provides an arguable basis upon which a reviewing judge might conclude that there was “sufficient reason” to vary or set aside the order. In my opinion, the content of the affidavit fails to satisfy that test. Accordingly, notwithstanding the errors in law identified in this judgment relative to the review, the chambers judge’s impugned disposal order must stand. I would dismiss the appeal. Appeal dismissed. Carson International Inc. v. Biggar 85

[Indexed as: Carson International Inc. v. Biggar] CARSON INTERNATIONAL INC. operating as CAN AM RV (Plaintiff) and ALAN BIGGAR, and BIGGAR HOLDINGS INC., operating as BIG COUNTRY RV and the said BIG COUNTRY RV (Defendants) ALAN BIGGAR, and BIGGAR HOLDINGS INC., operating as BIG COUNTRY RV and the said BIG COUNTRY RV (Plaintiffs by Counterclaim) and CARSON INTERNATIONAL INC. operating as CAN AM RV, MICHAEL CARSON, and JAMES ZINKO (Defendants by Counterclaim) Manitoba Court of Queen’s Bench Martin J. Judgment: August 30, 2010 Docket: Winnipeg Centre CI 06-01-47019, 2010 MBQB 198 Faron J. Trippier, Karen R. Wittman for Plaintiff Michael J. Clark for Defendants Labour and employment law –––– Employment law — Elements of employment relationship — Duties of employee to employer — Fiduciary duties –––– Plaintiff C owned plaintiff CA Ltd. which was in business of renting out and maintaining recreational vehicles owned by others — Defendant B was 22-year employee of CA Ltd. and was working in sales particularly in leasing vehicles to production companies — CA Ltd. expanded into greater vehicle sales in 2005 and hired more salespeople — After turmoil from expansion and having his responsibilities reduced, B quit — B started his own business that competed with CA Ltd. — CA Ltd. alleged that B was key or fiduciary employee who breached fiduciary duties owed to it — CA Ltd. brought action for damages — Action dismissed — CA Ltd. could not show that B was key or fiduciary employee — B was not in management position — B was long-serving salesman but he had no actual authority to hire or fire anyone, to manage or supervise other employees or to bind company — B had no access to financial statements — B did not run company and did not have written employment contract so he was not bound by non-competition clause — B had actually had his responsibilities reduced along with his pay — When B resigned no one made efforts to change situation that would be expected for resignation of key employee — Evidence showed that C and manager Z did not consider B to be key employee — B was not fiduciary employee under narrow test as he was not integral or indispensable component of management team who guided business, made key decisions and had access to confidential business information — Even under broader test B was not fiduciary employee as he did not have scope to exercise any discretion or power, under his given powers and duties he could not unilaterally business interests and CA Ltd. was not vulnerable to his discretion or power — B’s status as only salesman until 2005 and only person dealing with rentals did not make him fiduciary employee — C and Z had knowledge of structure and operation of RVMP business and should have been able to 86 WESTERN WEEKLY REPORTS [2011] 1 W.W.R. teach other salespeople so that people looking to do business would not have to be turned away — B did not solicit business from his contacts or steal list of clients — B did not intentionally perform poorly in years before he left and did not appropriate corporate opportunities of his employer — B did not take customer lists to use for his own company. Labour and employment law –––– Employment law — Elements of employment relationship — Duties of employee to employer — Duty of good faith and fidelity –––– Plaintiff C owned plaintiff CA Ltd. which was in business of renting out and maintaining recreational vehicles owned by others — Defendant B was 22-year employee of CA Ltd. and was working in sales particularly in leasing vehicles to production companies — CA Ltd. expanded into greater vehicle sales in 2005 and hired more salespeople — After turmoil from expansion and having his responsibilities reduced, B quit — B started his own business that competed with CA Ltd. — CA Ltd. alleged that B was key or fiduciary employee who breached fiduciary duties owed to it — CA Ltd. brought action for damages — Action dismissed — B did not solicit business from his contacts or steal list of clients — B did not intentionally perform poorly in years before he left and did not appropriate corporate opportunities of his employer — B did not take customer lists to use for his own company. Labour and employment law –––– Employment law — Elements of employment relationship — Duties of employee to employer — Use of confidential information –––– Plaintiff C owned plaintiff CA Ltd. which was in business of renting out and maintaining recreational vehicles owned by others — Defendant B was 22-year employee of CA Ltd. and was working in sales particularly in leasing vehicles to production companies — CA Ltd. expanded into greater vehicle sales in 2005 and hired more salespeople — After turmoil from expansion and having his responsibilities reduced, B quit — B started his own business that competed with CA Ltd. — CA Ltd. alleged that B was key or fiduciary employee who breached fiduciary duties owed to it — CA Ltd. brought action for damages — Action dismissed — B did not keep or use proprietary information — B copied brochure and contracts from CA Ltd. but they were not secret or confidential — Docu- ments were not confidential as they had been used and distributed to customers for over 15 years — CA Ltd. did not develop business concepts — As B did possess and use non- confidential documents CA Ltd. and further arguments were required to determine if there were any damages flowing from that. Cases considered by Martin J.: Barton Insurance Brokers Ltd. v. Irwin (1999), 170 D.L.R. (4th) 69, 40 C.C.E.L. (2d) 159, 119 B.C.A.C. 109, 194 W.A.C. 109, 1999 CarswellBC 190, 84 C.P.R. (3d) 417, 63 B.C.L.R. (3d) 215, [1999] 10 W.W.R. 143, 1999 BCCA 73, [1999] B.C.J. No. 220 (B.C. C.A.) — considered Canadian Aero Service Ltd. v. O’Malley (1973), [1974] S.C.R. 592, 40 D.L.R. (3d) 371, 11 C.P.R. (2d) 206, 1973 CarswellOnt 236, 1973 CarswellOnt 236F, [1973] S.C.J. No. 97 (S.C.C.) — considered Frame v. Smith (1987), 1987 CarswellOnt 969, 78 N.R. 40, [1987] 2 S.C.R. 99, 42 D.L.R. (4th) 81, 23 O.A.C. 84, 42 C.C.L.T. 1, [1988] 1 C.N.L.R. 152, 9 R.F.L. (3d) 225, 1987 CarswellOnt 347, [1987] S.C.J. No. 49, EYB 1987-67479 (S.C.C.) — followed Carson International Inc. v. Biggar 87

GasTOPS Ltd. v. Forsyth (2009), 2009 CarswellOnt 5773, [2009] O.J. No. 3969 (Ont. S.C.J.) — considered Gemstar Investments Ltd. v. Lavallee (1998), 133 Man. R. (2d) 10, 1998 CarswellMan 503, [1998] M.J. No. 500 (Man. Q.B.) — considered Glacier National Life Assurance Co. v. Pro Western Corporate Group Ltd. (1988), 1988 CarswellBC 661, 34 C.C.L.I. 32 (B.C. S.C.) — considered Gottcon Contractors Ltd. v. Manzo (1992), 49 C.L.R. 233, 92 C.L.L.C. 14,031, 40 C.P.R. (3d) 498, 1992 CarswellOnt 862, [1992] O.J. No. 24 (Ont. Gen. Div.) — considered Hudson’s Bay Co. v. McClocklin (1986), 1986 CarswellMan 330, [1986] 5 W.W.R. 29, 42 Man. R. (2d) 283, (sub nom. Hudson’s Bay Co. v. McClocklin Hearing Aid Cen- tre) 11 C.P.R. (3d) 523, [1986] M.J. No. 350 (Man. Q.B.) — considered Imperial Sheet Metal Ltd. v. Landry (2007), 2007 NBCA 51, 2007 CarswellNB 298, 2007 CarswellNB 299, 2008 C.L.L.C. 210-008, 315 N.B.R. (2d) 328, 815 A.P.R. 328, [2007] N.B.J. No. 226 (N.B. C.A.) — followed Kent Drugs Ltd. v. Kronson (1983), 1983 CarswellMan 217, 78 C.P.R. (2d) 260, 23 Man. R. (2d) 161 (Man. C.A.) — considered M.E.P. Environmental Products Ltd. v. Hi Performance Coatings Co. (2006), 2006 Car- swellMan 191, 2006 MBQB 119, 204 Man. R. (2d) 40, [2006] M.J. No. 211 (Man. Q.B.) — considered M.E.P. Environmental Products Ltd. v. Hi Performance Coatings Co. (2007), 2007 Car- swellMan 240, 2007 MBCA 71, 395 W.A.C. 212, 214 Man. R. (2d) 212 (Man. C.A.) — referred to Monarch Messenger Services Ltd. v. Houlding (1984), 1984 CarswellAlta 410, 5 C.C.E.L. 219, 2 C.P.R. (3d) 235, 56 A.R. 147, [1984] A.J. No. 1018 (Alta. Q.B.) — considered RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. (2008), 68 C.P.R. (4th) 401, 48 B.L.R. (4th) 1, 2008 C.L.L.C. 210-042, [2008] 3 S.C.R. 79, D.T.E. 2008T-808, [2008] 12 W.W.R. 1, 84 B.C.L.R. (4th) 1, 298 D.L.R. (4th) 1, 69 C.C.E.L. (3d) 163, 380 N.R. 166, 2008 CarswellBC 2099, 2008 CarswellBC 2100, 2008 SCC 54, 260 B.C.A.C. 198, 439 W.A.C. 198, [2008] S.C.J. No. 56 (S.C.C.) — considered Sanford Evans List Brokerage v. Trauzzi (2000), 2000 CarswellOnt 1338, 50 C.C.E.L. (2d) 105, 2000 C.L.L.C. 210-020, [2000] O.J. No. 1394 (Ont. S.C.J.) — considered Steinbach Credit Union Ltd. v. Hardman (2007), 212 Man. R. (2d) 283, 389 W.A.C. 283, [2007] 9 W.W.R. 208, 2007 MBCA 25, 2007 CarswellMan 66, [2007] M.J. No. 54 (Man. C.A.) — considered W.J. Christie & Co. v. Greer (1981), 14 B.L.R. 146, [1981] 4 W.W.R. 34, 1981 Car- swellMan 83, 59 C.P.R. (2d) 127, 121 D.L.R. (3d) 472, 9 Man. R. (2d) 269, [1981] M.J. No. 77 (Man. C.A.) — considered Words and phrases considered: trade secrets In GasTOPS Ltd., supra, Granger J. summarized the indicia of trade secrets or confidential information as follows: [124] Whether or not a particular subject matter is a trade secret is a question of fact. The onus is on the plaintiff to demonstrate that the information alleged to have been misappropriated was at all material 88 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

times confidential. To determine whether information has the necessary “quality of confidence”, courts have considered: (a) The extent to which the information is known outside the business; (b) The extent to which it is known by employees and others involved in the business; (c) Measures taken to guard the secrecy of the information; (d) The value of the information to the holder of the secret and to its competitors; (e) The effort or money expended in developing the information; (f) The ease or difficulty with which the information can be properly acquired or duplicated by others; and (g) Whether the holder and taker of the secret treat the information as secret. [125] In employment-related cases, the courts also consider whether: (a) the employer possesses a trade secret; (b) the employee knew it was secret; (c) the employee acquired knowledge [of] it during his/her employment; (d) the employee has, after termination of his/her employment, used of [sic] this knowledge improperly.

ACTION by employer for damages for breach of fiduciary duty.

Martin J.: Introduction 1 Alan Biggar was a 22-year employee of Can Am RV (“Can Am”) when he resigned from his position in December 2005. By February 2006, he started operating Big Country RV (“Big Country”), competing in some aspects of the recreational vehicle market with Can Am and others. Can Am says Mr. Biggar breached fiduciary or other common-law duties owed to it, before and after starting Big Country, and as such Big Country is liable to account for, or dis- gorge, its profits to Can Am.

Issues 2 There are many issues raised by the pleadings that can be summarized as follows: (a) On the facts of this situation, what class of employee was Mr. Biggar to Can Am: an ordinary employee, or a key or fiduciary employee? Carson International Inc. v. Biggar Martin J. 89

(b) Depending on the class of employee he was, what duties did Mr. Biggar owe to Can Am? (c) Did Mr. Biggar breach those duties? (d) If Mr. Biggar breached any duties, is Can Am entitled to an accounting or a disgorgement of profits, or other damages? (e) If successful, is Can Am entitled to punitive or exemplary damages? What is an appropriate award of costs?

Preliminary Comments 3 This is a fairly fact-driven analysis, as is typical in these sorts of claims. To paraphrase another court, the principles are fairly straightforward but their application to a particular case and their commercial reality demand careful and indi- vidualized scrutiny. As such, I will provide a fairly extensive review of the background facts and, as needed, I will elaborate on the facts on an issue-by- issue basis in the analysis. 4 The trial proceeded with Can Am’s claim against Mr. Biggar and Big Coun- try. A counterclaim was discontinued. It is not disputed that Mr. Biggar and Big Country effectively are one and the same.

Background Can Am 5 Michael Carson is the president and owner of Can Am. He had been a stock- broker for a number of years before buying a “Go Camping” franchise in approximately 1983. The franchisor subsequently encountered business difficulties and Mr. Carson chose not to renew the franchise. Instead, in 1988, he created Carson International Inc. and began operations as Can Am RV. At various times Can Am had a number of dealerships in Canada and the United States of America. 6 Mr. Carson modeled part, if not all, of his business on the Go Camping concept. Specifically, Go Camping created a system and structure whereby recreational vehicles sold to customers were maintained and rented to the public by a Go Camping franchisee. The franchisee profited by being able to charge a fee for maintenance and by keeping a percentage of the rental income, all the while not having to carry the cost(s) of owning the recreational vehicles. The customers benefited by receiving rent for their respective recreational vehicles thereby offsetting their cost(s) and by acquiring related tax benefits or write-offs. 7 This Go Camping program, called a Recreational Vehicle Management Pro- gram (“RVMP”), became an integral part of Can Am’s business. Go Camping’s system and structure and many of its related forms and documents were used and modified to suit Can Am’s purposes. In 1998, Can Am’s RVMP contract (originally from Go Camping) was amended by its lawyers to ensure it complied 90 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

with certain legislation. The words “Copyright January 1998” were affixed even though the document was not registered as copyrighted. 8 There are three types of recreational motor vehicles: class A is a bus-style motor home; class B is a van which has been converted to a motor home; and class C is a van chassis upon which is mounted a living unit. Before 2005, Can Am sold only class A and class C recreational motor vehicles. “Georgie Boy” was its manufacturer/supplier for class A and “Coachmen” for class C recreational motor vehicles. Can Am did not have a dealer agreement with Georgie Boy, but had one with Coachmen. Georgie Boy was owned by Coachmen, but independently operated. 9 Can Am also developed a niche within the rental business, renting recreational motor vehicles to movie production companies operating in Manitoba. Mr. Carson testified that most often class C recreational motor vehicles were rented for this purpose but also, depending on demand, class A recreational motor vehicles. In Manitoba, the majority of movie production rentals were contracted by three or four individuals. At Can Am, they dealt exclusively with Mr. Biggar. 10 In 1997, Mr. Carson hired Can Am’s first director of operations, Robert Hitesman. His role was to oversee all Can Am’s locations in Canada and the United States of America, set policy, centralize operations (order vehicles and advertise), generally look toward expansion of the business, and essentially run the business. All employees reported to him and he reported to Mr. Carson. Mr. Hitesman left in early 1999 and was replaced by James Zinko until he left in June 2009. 11 Ultimately, Mr. Carson decided to move the Winnipeg dealership to a new expanded location in about August 2005. He testified that the basic business of recreational motor vehicle sales and rentals had plateaued. He wanted to grow the Winnipeg business by changing the business model to include much more retail recreational vehicle sales such as trailers, tent trailers and fifth wheel trailers for example. Recreational motor vehicle sales and rentals and the RVMP business were expected to remain the same. 12 This was a dramatic shift for the Winnipeg dealership in terms of the size of the facility, which grew into a new 12,000 square foot building on nine acres of land, and the number of employees, which increased from about five or six to 17. Two more salespeople were hired, retail recreational vehicle inventory was stocked, parts and maintenance service opportunities were emphasized, and financing programs or offerings were designed for retail recreational vehicle sales. The impact was demonstrated in retail recreational vehicle gross sales which increased from $82,900 in 2004, the year before the move, to $4,441,740 in 2007; in finance revenue which went from nil to $747,415; and in parts and service (including warranty) which increased from $54,529 to $482,668. Related operating expenses for the company went from $800,756 to $2,025,992. Of note, Carson International Inc. v. Biggar Martin J. 91

the RVMP sales fell from $1,871,515 to $284,390 and rentals fell from $616,702 to $441,080. Mr. Carson blames these drops on Mr. Biggar. I caution that these figures are a snapshot of a period of time and are for illustration only unless I draw specific inferences from them in conjunction with other evidence.

Mr. Biggar 13 Mr. Biggar has a grade 10 education and was working part-time at another recreational vehicle dealer when he was hired by Mr. Carson in 1984 as a service technician. Boasting that he could perform better than existing salespeople, he was allowed to try that role in about 1986 and flourished. He was usually the only salesman at the Winnipeg location from the late 1980s until about late 2004 or early 2005 when the other two salespeople were hired. Mr. Biggar did not have a written employment contract and was not bound by restrictive covenants such as non-competition or non-solicitation agreements. 14 As the company, and specifically the Winnipeg location, had been a “mom- and-pop” operation, Mr. Biggar had a fairly wide scope of general involvement in sales and operations, but not in finance or accounting. He did not have the power to hire or fire anyone. Whatever he did was always overseen by Mr. Car- son until 1997. Then, with the hiring of the director of operations, Mr. Biggar’s responsibilities were reduced (specifically ordering and advertising) and he reported to that person rather than to Mr. Carson. 15 To the end of about 2004, Mr. Biggar continued to have primary, but not exclusive, contact with customers’ buying recreational motor vehicles and related rentals, including the rentals to movie production companies, all at the Winnipeg location only. It was the largest and most important dealership within the Can Am group. 16 While Mr. Biggar’s salary varied greatly over the years, from 2003 to 2005 he was consistently the highest paid employee, in large measure due to commissions, yet his compensation plan and role varied over the years. For example, Mr. Carson wrote Mr. Biggar on February 15, 2001 to clarify that Mr. Biggar would continue to receive rental and sales commissions as in the past, to participate in certain rebates as in the past, and to receive an additional salary of $2,000 per month unless the RVMP sales fell below monthly budgets for such sales for a period of two or three months (at management’s discretion), in which case the salary would cease and change to the former draw system. Within four months, Mr. Zinko revised this plan. 17 Due to further compensation misunderstandings in 2002, Mr. Zinko wrote Mr. Biggar on January 23, 2003 to confirm his pay structure for what was described in the memo as being “the position of Manager”. 18 With the pending move in 2005, Mr. Zinko wrote Mr. Biggar on February 28, 2005 to confirm changes to the company and roles to accommodate a different type of clientele. The memo subject was “New Responsibilities”. Mr. Big- 92 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

gar’s “Actual Job” was detailed as follows: “Retail Sales”, “RVMP”, and “P/T Business Manager ??? (depends partially on availability for the role).” His responsibilities were listed as follows: “Sell Retail Customers and deliver vehicles to ... customers”, “Majority of capped RVMP deals (2/3)”, “Training of other sales people in RVMP sales”, “Training of other sales people in Rentals”, “Deal with Rental Customers as needed for arrivals, departures and complaint resolu- tions”, “Give quotes, take reservations, complete paperwork for Rentals”, etc. He was specifically not responsible for “Service, warranty or Autopac”, “Manu- facturer’s Delivered Vehicles”, “Shop Staff”, “Rentals refunds”, and “Advertis- ing”. His pay structure included a “Salary of $2,000/month”, certain “RVMP Commissions”, “Sales Commissions”, and “Rental Commissions”. Mr. Zinko concluded, “Given the reduced responsibilities, the $2,000/month salary is more than fair.” Mr. Carson considered Mr. Biggar to be a salesman and did not want him to manage other salespeople. 19 Much of the background to this point is uncontroversial. However, with the changes to the company, perceptions of events in 2005 and after varied significantly.

Into 2005 20 Mr. Carson thought Mr. Biggar’s “nose was out of joint” in 2005 particularly because of the new salespeople and other specialists in the expanded business who Mr. Carson described as very capable people. He was dissatisfied with Mr. Biggar’s performance in 2005. Mr. Biggar’s RVMP sales were historically low, he had the lowest retail sales and Mr. Carson thought he did not seem to care about rental business. 21 Both Mr. Carson and Mr. Zinko spoke to Mr. Biggar about his performance several times in 2005. During the last “formal” discussion in November 2005, Mr. Carson told Mr. Biggar he was fed up with his sales, particularly regarding recreational motor vehicles. Mr. Biggar committed to trying harder. In all he sold nine class C recreational motor vehicles in 2005. 22 Mr. Biggar did not believe the complaints were well founded. He was trying his best, after all his income depended on sales. Generally he found the expansion and move a disruption in that for example, without being requested, he frequently went to the new site to make sure the construction met practical needs. Recreational vehicle product was scattered in various locations. More specifically, Mr. Biggar said Mr. Zinko neglected to submit purchase orders for three recreational motor vehicles in the spring that were then delivered late (Septem- ber instead of June) and those customers did not wait because they missed the summer rental revenue. Mr. Zinko begrudgingly conceded that this scenario was “possible”. Finally, he said there had been an internal dispute as to how strong a pitch or commitment could be given to potential new RVMP customers about the opportunity to rent recreational motor vehicles for an extended period to vic- Carson International Inc. v. Biggar Martin J. 93

tims of Hurricane Katrina. Mr. Zinko said in a television interview that they would send 50 units when in fact only about four were ultimately contracted. Overall, Mr. Biggar says he might usually sell up to seven units in a summer but did not in 2005 for these reasons and, further, as he was not working after mid November he missed year-end sales that were usually motivated by tax deduction reasons. 23 The November meeting was a culminating event for Mr. Biggar. He felt that Mr. Zinko had displaced his personal relationship with Mr. Carson and that he had not been valued as an employee for some time. Mr. Zinko acknowledged their relationship was “strained at the best of times”. With his role diminishing over previous years and continuing through 2005, Mr. Biggar felt that he was being “weeded out” from Can Am. After this meeting, he called his wife to tell her he could not take it anymore. 24 Within days Mr. Biggar broke his leg and was off work. He delayed quitting until he returned to work and on December 2, 2005, Mr. Biggar handed Mr. Carson a written resignation. In it he spoke of becoming more and more depressed, needing to make decisions for his future, feeling stressed and having high blood pressure, not enjoying work and feeling he could not perform for Can Am and its customers as they deserved. He wanted out of the grind. He observed: I truly want you to know that you have been much more to me than my boss. Maybe that is one of my problems. I have always considered you my friend first. 25 Mr. Carson’s reaction to the resignation was curt. Either he simply said “you must be depressed” or he simply asked Mr. Biggar what he was going to do. Mr. Carson conceded in cross-examination that Mr. Biggar said he may sell used recreational vehicles. Mr. Zinko simply offered congratulations. Neither Mr. Carson nor Mr. Zinko made any attempt to change Mr. Biggar’s mind, or otherwise have Mr. Biggar remain employed at Can Am. On December 8th Mr. Car- son terminated Mr. Biggar’s employment effective the next day, December 9, 2005. 26 After Mr. Biggar left, Mr. Carson checked his office and could not find any documents or information on the computer such as customer contact lists. Mr. Biggar testified that he left computer floppy disks with this information in a plastic container on his desk. There was no evidence that anyone from Can Am asked or spoke to Mr. Biggar about this either before or after December 9th. 27 To fast forward on this point, during subsequent examinations for discovery, Mr. Biggar produced lists of names, addresses and telephone numbers of customers or customer leads. He said they were old lists that he found in his base- ment after the litigation started and he revealed them contemporaneously. While Mr. Carson believes these are some of the missing customer lists, it was brought out in cross-examination that for those sections that had dates on them, they 94 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

were old (August 1997, February 2000, and March 2000). It became clear that Can Am was unable to say with any reliability how old these lists are or even what their specific purposes were. It is also clear, however, that certain people on these lists became customers of Big Country, although Mr. Biggar says they were not through his solicitations and provided specific explanations as asked on cross-examination. 28 On December 12, 2005, Mr. Biggar e-mailed one of the movie production company representatives (John Mysyk) to let him know he had left Can Am and suggested they get together for a Christmas drink, consistent with their tradition. Mr. Mysyk replied by asking if Mr. Biggar was starting his own company. 29 Around December 16, 2005, Mr. Biggar called a contact at Georgie Boy in part to inquire whether he might be able to obtain a line of class C recreational motor vehicles to sell. He submitted a dealer application in January 2006. 30 On December 31, 2005, Can Am sent a letter to all owners of class C recreational motor vehicles to advise them that Mr. Biggar was no longer an employee, that “no one person is solely responsible for our rental business” and generally that Can Am would still be there for them, particularly by strong advertising of the rental business and access to thousands of potential renters. 31 A similar letter was sent to owners of class A recreational motor vehicles. It noted that the past year was a difficult one for those who depended on movie rental income, and that with the strong Canadian dollar some of the incentive of doing movie business in Canada had been lost. It described these factors as “beyond any one person’s control”. In a note of optimism, it said Can Am had already been contracted to rent vehicles to two different movie shoots in January 2006. 32 Except for the comment on December 2, 2005, about potentially selling used recreational vehicles, Mr. Biggar did not tell Mr. Carson about what he was thinking or planning for the future.

2006 and Onward 33 As a matter of convenience, I will make some observations along with some of the background that follows. 34 On January 13, 2006, Mr. Biggar reserved the name “Big Country RV” for his holding company which he had established years earlier to facilitate business such as occasional used car sales. 35 Mr. Carson testified that he next spoke to Mr. Biggar in mid or late January 2006. He called him to discuss a lawsuit in which Can Am and Mr. Biggar personally were defendants. He also wanted to know what Mr. Biggar was “really doing”. He testified that he offered to have Can Am continue to pay all the legal bills as long as Mr. Biggar did not compete with him. He said Mr. Biggar as- Carson International Inc. v. Biggar Martin J. 95

sured him he would not compete to which Mr. Carson testified that he expressed surprise because Mr. Biggar had “ins” with the movie people. 36 Mr. Biggar has a different perspective of this event. While not denying that the lawsuit was discussed, he says he met with Mr. Carson around January 14, 2006 because a Can Am customer, who he specifically named, was at Can Am and upset that Mr. Biggar was no longer employed there. Mr. Biggar asked Mr. Carson whether he could offer to sell Can Am’s customers’ used class C recreational motor vehicles that were off contract. Specifically, there were customers whose RVMP contracts expired in late 2004 and whose recreational motor vehicles had not been sold. He says Mr. Carson agreed. Mr. Carson does not deny this but does not have a recollection of it. I accept this occurred. Mr. Carson testified in cross-examination that “the majority of the time” Can Am did not make a profit selling used class C recreational motor vehicles for its RVMP customers. He also complained that Mr. Biggar set customer re-sale value ex- pectations too high and believed that some went to him to sell their used recreational motor vehicles. 37 On February 1, 2006, Mr. Biggar took possession of a small business location to operate Big Country. During February he also contracted to provide class A recreational motor vehicles (bus-style motor homes) for a movie production and also sold a recreational motor vehicle. 38 Big Country business documents were modeled on the ones Mr. Biggar made up or adjusted and used for years at Can Am and that he possessed, without Can Am’s consent, after leaving Can Am. These included quote sheets, RVMP promotional material, RVMP contracts, etc. Mr. Biggar had them slightly modified by his lawyers to, in his mind, avoid any problems either legally or otherwise with Mr. Carson. He says he learned this from Mr. Carson when Can Am did the same thing with the Go Camping documents, although Mr. Carson testified that the franchisor expressly allowed him to use the program and documents when Mr. Carson did not renew his Go Camping franchise. 39 Mr. Carson testified that in April 2006 he saw a generic letter dated February 22, 2006 from Mr. Biggar and that he knew then that Mr. Biggar was competing with Can Am. Mr. Biggar’s letter states he had been discreet with his plans and it is aimed at Mr. Biggar’s helping former customers sell their used recreational motor vehicles. In part it states: If your vehicle is still under contract with Can Am RV please forgive me and disregard this letter. My intention is not [to] conflict with any previous arrangements that might have been made. Mr. Biggar says this letter was an outcome of the January 14th meeting and Mr. Carson’s permission to Mr. Biggar to sell Can Am’s customers’ off contract used recreational motor vehicles. 40 After seeing the letter in April, Mr. Carson testified that he did two things. First, he called his lawyers. Second, Mr. Zinko and another salesperson con- 96 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tacted a few of the movie production company representatives to ensure Mr. Biggar did not go after that business. While somewhat uncertain about the chro- nology of events, he says he then contacted his recreational vehicle suppliers when he found out through a newspaper advertisement that Mr. Biggar was the “exclusive dealer” for Georgie Boy class A recreational motor vehicles in Mani- toba. Further, more generally in response to all of this, Can Am increased its advertising in 2006. One advertisement for the RVMP stated, “Due to the best rental year ever, we need 8 new owners immediately!” 41 Upset with Georgie Boy, on April 21, 2006, Mr. Carson authored a letter to Coachmen, Georgie Boy’s owner. Depending on one’s viewpoint, it either sup- plements or contradicts some of Mr. Carson’s testimony. Regardless, it is re- vealing. In it Mr. Carson outlines: • how, in December 2005, he contacted Can Am’s Georgie Boy representative, Marty Kumle, to tell of Mr. Biggar’s departure and inquired whether Georgie Boy had been in discussions with anyone regarding its motorized product. Mr. Kumle said he was in respect of Maverick class C recreational motor vehicles but refused to say with whom. Can Am explained its position in the letter: “Since we were never a Maverick dealer we had no real cause to interrupt Mr. Kumle’s attempt to establish one in our area.” • that later Can Am heard rumblings that Mr. Biggar was starting a Maver- ick dealership in Can Am’s area. Can Am called again and Mr. Kumle confirmed this was correct. • that in February 2006, when Can Am “started to hear more about Mr. Biggar’s true aspirations”, he called Mr. Kumle again. The representative assured Mr. Carson that no deal had been struck with Mr. Biggar regarding class A recreational motor vehicles (which, by the tenor of the letter as a whole, was Can Am’s main concern). • how, on April 16, 2006, he saw Big Country advertise for the first time in a local newspaper (the advertisement was not an exhibit) announcing it was “Manitoba’s newest Georgie Boy dealer” (which is a subtle yet important distinction from Mr. Carson’s testimony that Big Country was the “exclusive” Georgie Boy dealer). Mr. Carson wrote that this was dis- appointing on many levels particularly as Can Am was a very established business with far greater scale, investment, resources and sophistication than Big Country. These highlights are quite remarkable, indicating that Mr. Carson did little, if anything, before then to address any potential competition by Mr. Biggar despite his knowledge, by at the latest February 2006, that Mr. Biggar was going to compete not only in used but also in new recreational motor vehicle sales. 42 In direct examination Mr. Carson said, as a result of Big Country’s becoming a dealer, Can Am was not able to sell class A recreational motor vehicles Carson International Inc. v. Biggar Martin J. 97

“for a while”. I sought clarification and he replied that Can Am did not have Georgie Boy class A recreational motor vehicles but acquired other class A sales capability later in 2006. On cross-examination he went further, confirming Can Am could have continued to sell Georgie Boy class A recreational motor vehicles but he decided not to because Coachmen wanted Can Am to carry some inventory. Frankly, I was unimpressed with Mr. Carson’s testimony in this respect as I felt he was not being fully candid until specifically pressed. Mr. Big- gar denied obtaining a Georgie Boy exclusive agreement for class A recreational motor vehicles but rather says it was for Maverick class C recreational motor vehicles. He sold class A vehicles as requested. 43 Mr. Carson testified that the impact of Mr. Biggar’s activities on Can Am’s business was significant. He said new customers would come and ask about the RVMP but Can Am did not make many sales. He assumed the customers went to Mr. Biggar as Can Am would not hear from them again. It “made us wonder what he told them.” 44 Other letters are also of interest, particularly, for illustration, a series that involve Mrs. S., a Can Am customer. In her letter dated March 9, 2006 , Mrs. S. complains about certain matters relating to her “rental vehicle” under contract with Can Am. In her letter dated March 18, 2006 to Big Country, Mrs. S. asks Mr. Biggar if he can take over the contract from Can Am. Finally, there is an undated reply from Mr. Biggar in which he says he cannot and would not sell used recreational motor vehicles that are under contract with Can Am. Mr. Car- son’s interpretation of this final letter was that it was a “wink wink, nudge nudge” solicitation of Can Am customers. Remarkably, he casually added in his testimony that he believed so because it was “the same thing I would do”. 45 From about February onward, there is no question that Big Country competed with Can Am, and others in the industry, in used recreational motor vehicle sales, in new class C sales, and in some limited class A sales and rentals. It also competed with Can Am in the RVMP market while no other competitor did although one attempted to do so years before. Mr. Biggar asserts that former customers contacted him and they signed acknowledgments to that effect. The February 22, 2006 letter was a solicitation to sell their used recreational motor vehicles as long as they were not contracted to Can Am.

Positions of the Parties 46 Succinctly, Mr. Carson says Mr. Biggar was a key or fiduciary employee and as such owed duties to Can Am both before and after his resignation. He says Mr. Biggar breached those duties, stole documents, unlawfully set up a business in direct competition, solicited customers and suppliers, and used confidential proprietary information to do so, which devastated Can Am’s business. Alternately, if Mr. Biggar was an ordinary employee, he says Mr. Biggar nonetheless breached certain duties owed to Can Am and used confidential proprie- 98 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tary information to unfairly compete. In either situation, he says Big Country’s 2006 and 2007 profits should be disgorged to Can Am. Further, he asserts that Mr. Biggar planned and set this up through 2005 and did not do the RVMP sales in 2005 that he could have, rather leaving that for himself in 2006. In effect, he appropriated Can Am’s business opportunities. Thus, Can Am claims for lost profits in 2005 while Mr. Biggar was still an employee. Aggregated, Can Am claims about $1,100,000. 47 Mr. Biggar’s position is that he was no more than an ordinary employee, particularly by the time he resigned, and he fulfilled all legal duties to Can Am. The Can Am documents from which he modeled part of his documents were not secret, confidential or proprietary; his lawyer reviewed and amended them; and what Mr. Biggar did was legal. By law, he was allowed to compete as he did with his former employer and he owes Can Am nothing. As to 2005, Mr. Biggar says he did his best and did not delay in making sales for Can Am so that Big Country could make those sales in 2006. Further, his counsel challenges Can Am that it switched focus in 2005 from recreational motor vehicle sales and rentals to retail recreational vehicle products and related programs.

Analysis General Assessment and Comments 48 While there were a number of witnesses in this trial, ultimately to the extent there is a dispute regarding most material facts, it boils down to consideration of the evidence of Mr. Carson and Mr. Biggar, both of whom at times were testy during cross-examination and resisted agreeing to statements that each may have thought harmful to his position. Further, while Mr. Carson displayed animus toward Mr. Biggar, Mr. Biggar oddly enough, despite the litigation, did not appear to be holding any ill will but rather indirectly demonstrated respect for Mr. Car- son. Neither Mr. Carson’s nor Mr. Biggar’s actions or testimony are beyond reproach. 49 Generally, I prefer Mr. Biggar’s evidence as it was more specific and relia- ble on most critical points. He has a grade 10 education and, aside from his natural skills as a salesman, would have learned how to do business, effectively, from Mr. Carson. He is not a sophisticated man and that showed, particularly under cross-examination. Although not without its blemishes or inconsistencies, his recollection and version of events generally align with the evidence as a whole. 50 Conversely, overall, I found Mr. Carson’s testimony to lack reliability and, in some respects, credibility. In critical areas it did not “hang together”. As a witness, Mr. Carson wanted to convey the impression of specific knowledge, concern and harm, yet on the facts he was not vigilant about protecting his business and exaggerated the importance of various favourable factors while mini- mizing those that were not. For example, Mr. Carson says Mr. Biggar was a Carson International Inc. v. Biggar Martin J. 99

fiduciary or key employee yet did nothing to attempt to retain him. He says Can Am lost the Georgie Boy class A recreational motor vehicle line when in fact it was offered back to him and he declined it. He says Mr. Biggar covertly solicited Can Am’s customers but says he would have done the same thing. Mr. Car- son was aware of Mr. Biggar’s “true aspirations” by at the latest February 2006, and specifically that Mr. Biggar acquired the Maverick line, yet did not react until late April 2006. Further, by his April 21st letter, he appeared in reality to that point to have acquiesced to this. Ultimately, I am not impressed with Mr. Carson as a witness.

Onus 51 As usual, the onus is on the plaintiff to establish the assertions in its claim on a balance of probabilities. I recognize that if a prima facie case has been made out by the plaintiff that Mr. Biggar was a fiduciary or key employee, then the evidentiary onus regarding certain alleged breaches of duties may shift.

Fiduciary or Key Employee, or Ordinary Employee 52 A seminal determination is whether Mr. Biggar was a fiduciary or key employee, or an ordinary employee. From this will then flow the duties that he owed to Can Am. As Abella J. said in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2008 SCC 54, [2008] 3 S.C.R. 79 (S.C.C.) at para. 35: “These are narrow issues with wide implications.” 53 Precedents and texts demonstrate that mobility of employment, freedom to compete and other policies underlying the imposing of fiduciary duties upon employees are important considerations to the general approach to this issue. 54 A number of cases I was referred to adopt the policy approach of the New Brunswick Court of Appeal in Imperial Sheet Metal Ltd. v. Landry, 2007 NBCA 51, [2007] N.B.J. No. 226 (N.B. C.A.): [36] Understandably, courts are hesitant to impose onerous duties upon former employees who are not restrained by restrictive covenants and the same should hold true when it comes to classifying employees as fiduciaries. With the mobility of the workforce in the 21st century, most workers will eventually find themselves being classified as “a former employee” and on more than one occasion. The one constant in their lives is that they will still need to earn a livelihood. It is simply a fact of modern working life that the skills and general knowledge an individual gains during employment with one employer will be marketed to another in the hope of securing meaningful employment. ... 55 Referring to the obligations of ordinary employees, Abella J. put it this way in RBC Dominion Securities Inc., supra: [37] It is an implied term of every employment contract that employees owe a duty of “good faith” to their employers. This is a duty with 100 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

imprecise contours, but traditionally the duty has only been used to find a non-fiduciary employee liable for damages (as opposed to being subject to dismissal) if he or she has competed with the employer during the currency of the employment relationship, or has made improper use of confidential information...... [39] The employment contract is one of personal service. That means that subject to the discussion that follows about non-competition clauses and fiduciary duties, employees are generally free to leave their employment and, on leaving, to compete with their former employer. This is understandably a painful reality for an employer to accept, but it is, nonetheless, a lawful one. (Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592, at p. 606, distinguishing fiduciary employees; CRC-Evans Canada Ltd. v. Pettifer (1997), 26 C.C.E.L. (2d) 294 (Alta. Q.B.), at para. 54; Alnor Services Ltd. v. Sawyer (1990), 31 C.C.E.L. 34 (B.C.S.C.); Faccenda Chicken Ltd. v. Fowler, [1986] 1 All E.R. 617 (C.A.); Geoffrey England, Employ- ment Law in Canada (4th ed. (loose-leaf)), vol. 2, at § 11-141). [40] As Hall J.A. stated in Barton Insurance Brokers Ltd. v. Irwin (1999), 170 D.L.R. (4th) 69 (B.C.C.A.), at para. 39: ... the general interest of the public in free competition and the consideration that in general citizens should be free to pursue new opportunities, in my opinion, require courts to exercise caution in imposing restrictive duties on former employees in less than clear circumstances. Generally speaking ... the law favours the granting of freedom to individuals to pursue economic advantage through mobility in employment. And in Imperial Sheet Metal Ltd. v. Landry (2007), 315 N.B.R. (2d) 328, 2007 NBCA 51, Robertson J.A. similarly observed, at para. 37, that ... if there is a clash between the interests of former employers in protecting their business interests and the interests of former employees in earning a livelihood, coupled with the public interest in free competition for goods and services, it is the interests of the former employee that generally prevail. In other words, an employee is generally free to enter into competition with a former employer as soon as the employment ends. [41] The parties to an employment contract can, of course, contractually modify these principles by negotiating a reasonable restrictive covenant ...... [57] ... It seems to me that a necessary corollary to an employee’s undis- puted right to compete following the termination of the employment Carson International Inc. v. Biggar Martin J. 101

relationship is the right to plan for future employment opportunities while still employed. This is subject, of course, to the duty not to breach an employer’s confidentiality. But it is not, in my view, a breach of an employee’s implied duty of good faith to search for alternative job opportunities, to negotiate with a competitor, or to talk to co-workers about his or her intentions. (See Stacey R. Ball, Canadian Employment Law (loose-leaf), vol. 1, at p. 15-2, footnote 9.) I agree with Macklin J.’s observation in Westcan Bulk Transport Ltd. v. Stewart (2005), 373 A.R. 236, 2005 ABQB 97, that: Every individual has the fundamental right to earn a livelihood. ... Reasonable restrictions [on that right] do not include those reasonable steps the employee must take to prepare to earn a livelihood as soon as possible following the termination of employment with the employer. [para. 83] 56 While the majority of the Court of Appeal in RBC Dominion Securities Inc. did not engage in as detailed a discussion, they nonetheless articulated a similar view of the post-employment duties of an ordinary employee (see paragraphs 18 and 19 of the Supreme Court of Canada decision). 57 The texts and cases also highlight that there is no precise filter uniformly applied to determine whether an employee is an ordinary or a fiduciary employee. 58 Returning to Imperial Sheet Metal Ltd., supra, the New Brunswick Court of Appeal said it this way: [5] The jurisprudence is also divided when it comes to the third issue. We are asked to decide whether this Court should adopt the so- called narrow or broad approach or test for classifying employees as fiduciaries. The narrow approach is tied to the “key” employee test, first articulated in Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592, [1973] S.C.J. No. 97 (QL) (hereafter “Canaero”). The broad approach resorts to the “vulnerability” test, which has two distinct origins. The decision of the Ontario High Court in Alberts et al. v. Mountjoy et al. (1977), 16 O.R. (2d) 682 (H.C.), [1977] O.J. No. 2334 (QL) is said to be one. That case is often cited for the proposition that even “low-level” employees may be classified as fiduciaries. The other source of the broad approach is a trilogy of Supreme Court cases decided long after Canaero and Alberts. While the trilogy outlines the analytical framework for identifying fiduciary relationships, it does so outside the employment context: Frame v. Smith, [1987] 2 S.C.R. 99, [1987] S.C.J. No. 49 (QL), Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83 (QL) and Hodgkinson v. Simms, [1994] 3 S.C.R. 377, [1994] S.C.J. No. 84 (QL). 59 In this case, Mr. Carson urges, in effect, that I adopt the broad approach and apply the test set out in Frame v. Smith, [1987] 2 S.C.R. 99 (S.C.C.). Mr. Biggar 102 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

urges, in effect, that I use the narrow approach set out in Canadian Aero Service Ltd. v. O’Malley (1973), [1974] S.C.R. 592 (S.C.C.). Regardless, caution must be exercised in reviewing precedents to avoid unintended implications when the phrase “key employee” is used. 60 I note that the New Brunswick Court of Appeal specifically rejected the reasoning in Hudson’s Bay Co. v. McClocklin (1986), 42 Man. R. (2d) 283 (Man. Q.B.), in determining that Mr. McClocklin held a “key position”. After a thor- ough analysis, the New Brunswick Court of Appeal also rejected the “broad” approach and concluded that the test, to determine whether an employee is a fiduciary employee, is as follows: [63] While I make no attempt to set out a comprehensive code as to how one goes about deciding who is a fiduciary or key employee, the following provides some specificity. A “key” employee is: (1) an integral and indispensable component of the management team that is responsible for guiding the business affairs of the employer; (2) necessarily involved in the decision-making process; and (3), therefore, has broad access to confidential information that if disclosed would significantly impair the competitive advantages that the former employer enjoyed. These employees fall within the categories: “top management”, “senior management” or “key management”. 61 The Manitoba Court of Appeal, in W.J. Christie & Co. v. Greer (1981), 9 Man. R. (2d) 269 (Man. C.A.), spoke of the different obligations between an ordinary employee and “a director/officer/key management person who occupies a fiduciary position [underlining mine]”: [17] There is nothing to prevent an ordinary employee from terminating his employment, and normally that employee is free to compete with his former employer. The right to compete freely may be constrained by contract. It would be improper, too, for an employee to purloin trade secrets or confidential information, including customer lists. But it is different from a director/officer/key management person who occupies a fiduciary position. Upon his resignation and departure, that person is entitled to accept business from former clients, but direct solicitation of that business is not permissible. Having accepted a position of trust, the individual is not entitled to allow his own self-interest to collide and conflict with fiduciary responsibilities. The direct solicitation of former clients traverses the boundary of acceptable conduct. ... The policy approach implicit in these comments is consistent with that of the New Brunswick Court of Appeal in Imperial Sheet Metal Ltd. 62 Can Am’s counsel referred me to Sanford Evans List Brokerage v. Trauzzi (2000), 50 C.C.E.L. (2d) 105 (Ont. S.C.J.), where the court, while relying on the broad approach set out in Frame, supra, noted, at paragraph 39, that the law does not lightly impose the mantle of a fiduciary on an employee, that an employee’s title is not determinative of a fiduciary status, and that the employee Carson International Inc. v. Biggar Martin J. 103

must have power to “guide and direct” the affairs of the company. The court also noted: [40] Varying degrees of trust, reliance and dependency can suffice to establish a fiduciary duty in an employer/employee relationship, depending upon the situation. The issue is one of ultimate power and responsibility: Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain, supra at 455. 63 Further, the court summarized a fiduciary employee’s duties: [49] As an overriding proposition, departing employees have an absolute right to go into direct competition with their former employer and make use of the skills and general knowledge they accumulated during their period of employment: Edgar T. Alberts Ltd. v. Mountjoy, supra at 686. Competition per se by a departing fiduciary is not prohibited; only unfair competition is precluded. Thus, a departing fiduciary may advertise to the general public. If the form[er] employer’s customer[s] are notified during the course of the general advertisement campaign, there is no breach, provided there is no misuse of confidential information such as trade secrets or customer lists. ... [50] There are, however, parameters which must not be crossed, dictated by the circumstances of the employee’s departure and the manner in which he or she engaged in the new enterprise. An employee who is a fiduciary is precluded from directly and actively soliciting the employer’s customers, for a reasonable period of time after termination of the employment. This places a limit on the fiduciary’s post-employment enticement of customers ... . Similarly, the courts will not condone a situation in which a fiduciary seizes a corporate opportunity of the employer, or induces others to leave the employer, or conducts new business while on the employer’s premises, or takes the employer’s files or other confidential information of the employer ... . In the end, each case must be determined on its own merits. 64 What is the application of this law to the facts in this case? Was Mr. Biggar a fiduciary? 65 Mr. Biggar was not in a management position at Can Am but his role as a salesman was a long serving one. No one reported to him; he had no authority to direct or manage any employees including other salespeople; he could not hire or fire anyone; he could not bind the company in any respect even to order vehicles he had sold or to place advertisements; he had no access to company financial statements; and he was not involved in planning except as may be on an ad hoc basis. He was not a shareholder or director. Mr. Carson ran the company on a full-time, hands-on basis and below him was a director of operations. As such, Mr. Biggar’s position was not one where he ran a small company on behalf of an owner, which owner would then be severely disadvantaged if Mr. Biggar left his employment. 104 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

66 Further, I find the conduct of Can Am, and particularly of its owner Mr. Carson, sheds light on the true nature of the employment relationship: • Mr. Biggar did not have a written employment contract and was not bound by restrictive covenants such as non-competition or non-solicitation agreements that normally, although not always, may be in effect for senior or critical employees. • Mr. Biggar’s reporting changed in 1997 from Mr. Carson to the director of operations. Commensurate with this, Mr. Biggar’s responsibilities continually diminished including to February 2005 at which point Mr. Zinko wrote of his new compensation structure as being fair considering his “reduced responsibilities” and Mr. Carson did not want him to manage other salespeople. • There was a major shift in the Winnipeg dealership, planned and executed in 2004 and 2005, that involved hiring other salespeople and major new initiatives in retail recreational vehicles and other related product offerings so the company was less reliant on the RVMP or rentals to succeed. • There was absolutely no attempt to have Mr. Biggar change his mind when he resigned. While I understand Mr. Carson’s frustration about Mr. Biggar’s 2005 performance, I nonetheless find it telling that Mr. Carson dealt with this 22-year senior employee, who was also at one time a close friend, in such an arbitrary and casual fashion. This is inconsistent with Can Am’s assertion that Mr. Biggar was an important or a key employee, practically or in law, to existing or future business. Mr. Carson’s actions belie his words. • Mr. Carson did not do anything that may be reasonably expected of a prudent businessman who felt vulnerable to a former employee. There is no evidence that he attempted to restrict Mr. Biggar’s post-employment activities even, for example, by warning Mr. Biggar that he could not compete with Can Am. This would have been logical to do around the time Mr. Biggar resigned in December 2005 and said he may sell used recreational vehicles, or in January 2006 when Can Am suspected Mr. Biggar would do so, or by February 2006 when Georgie Boy confirmed he would be a Maverick dealer, or in April 2006 when Mr. Carson saw Big Country’s advertisement. Instead of attempting to stop any potential damage or loss by, for example, trying to obtain an interim injunction or otherwise, Mr. Carson rather gambled on the success of this lawsuit, not to stop Mr. Biggar, but to compensate Can Am. Further, to reiterate, I have found that in fact Mr. Carson agreed to let Mr. Biggar sell off contract used recreational motor vehicles. 67 I find neither Mr. Carson nor Mr. Zinko truly considered Mr. Biggar to be a key employee, at least after hiring the other two salespeople in early 2005. Ac- Carson International Inc. v. Biggar Martin J. 105

tions taken by Can Am leading up to and including 2005 are consistent with Mr. Biggar’s fear that he was being “weeded out” and implicitly that he was not critical or even important to Can Am’s success. 68 In summary, using the narrow test as set out in Imperial Sheet Metal Ltd., I find Mr. Biggar was not a fiduciary or key employee. He was not an integral or indispensable component of the management team responsible for guiding the business, was not involved in decision-making processes, and did not have broad access to confidential information that, if disclosed, would significantly impair the competitive advantage of Can Am. 69 Adopting the broad approach and applying the test set out in Frame, I find (1) that Mr. Biggar, in reality, did not have scope for the exercise of some discretion or power, (2) that Mr. Biggar could not unilaterally exercise discretion or power so as to affect Can Am’s legal or practical interests, and (3) despite able argument to the contrary, that Can Am was not peculiarly vulnerable to or at the mercy of Mr. Biggar’s holding such discretion or power. The force of Can Am’s claim of vulnerability surprises me. 70 As a point of clarification, Wilson J., in Frame, referred to the above three hallmarks as a “three-fold formulation” (see page 138) and stated that relationships in which a fiduciary obligation has been imposed “seem to possess three general characteristics” (see page 136). Regarding the vulnerability criteria, she explained, at page 137: ... This vulnerability arises from the inability of the beneficiary (despite his or her best efforts) to prevent the injurious exercise of the power or discretion combined with the grave inadequacy or absence of other legal or practical remedies to redress the wrongful exercise of the discretion or power. 71 There is no doubt that Mr. Biggar was the only salesman until early 2005 and the only person who sold the RVMP or had primary contact with representatives regarding rentals to movie production companies. He knew the customers and treated them like friends. But does this elevate his status to a key or fiduciary employee in these unique circumstances? I think not. 72 At the very least, Mr. Carson had the legal, financial, tax, operational and technical know-how of the RVMP. He obtained the program from Go Camping over 20 years earlier. No doubt after 10 years as director of operations Mr. Zinko had this know-how as well. Mr. Carson and Mr. Zinko may not have possessed the disposition or skill to easily sell recreational motor vehicles or the RVMP, but certainly they should have been able to impress that know-how on the other salespeople, professionals who were acknowledged to have the skill and ability to sell. By Mr. Carson’s testimony, potential RVMP customers came to the dealership but they could not consummate a sale. In other words, Can Am possessed the know-how, and had skilled salespeople and customers already in place. Any disadvantage suffered by Mr. Biggar’s departure should have been very short lived. 106 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

73 Further, Can Am had significant depth and dominance in the rental business, from both the owner-customer and the rental-customer sides. The history and existing pool of rental vehicles should have given Can Am a significant leg up at least through 2006. In fact, leaving aside revenues from Hurricane Katrina rentals, total rental revenues fell only moderately from $557,943 in 2005 to $523,127 in 2006. Can Am intimately understood the movie production component although the relationship aspect of that business was more challenging. Not addressing this for months after Mr. Biggar left compromised the opportunity to re-set the relationships between Can Am, as the established supplier, and the movie rental contacts. Overall, as Mr. Carson wrote Coachmen on April 21, 2006, Can Am had a substantial history and an impressive infrastructure that was a material competitive advantage over anyone who might try to compete, including Mr. Biggar. Finally, I accept Mr. Biggar’s evidence that it was Mr. Mysyk who initially came to Mr. Biggar and not Mr. Biggar who solicited Mr. Mysyk. 74 I am satisfied this situation is truly one of Mr. Biggar’s personal skill and ability as opposed to a fiduciary ex-employee’s unfair exploitation of his former employer. 75 Further, I have already found that Mr. Carson allowed Mr. Biggar to solicit Can Am customers of class C recreational motor vehicles whose contracts were expired and who wanted to sell their used vehicles. This is consistent with Mr. Carson’s conceding he had been told on December 2, 2005 of Mr. Biggar’s possible plan to sell used recreational vehicles, with the lack of profit and the frustration Can Am most often experienced in trying to sell these recreational motor vehicles such that there was little incentive to do so, and with Mr. Carson’s acquiescing to Mr. Biggar’s selling the Maverick class C recreational motor vehicles after having this confirmed by February 2006 by the Georgie Boy representative. Mr. Biggar conceded in cross-examination that he intended to lever- age that business into new sales. While he could have been forthright with Mr. Carson about this, given my finding that he was not a fiduciary, this omission does not amount to breaching a duty.

Key Employee 76 To be clear, on the facts as I have found them, and consistent with the analysis regarding whether he was a fiduciary employee, I am also satisfied that Mr. Biggar was not a “key employee” as that term has been used to impose post- employment fiduciary obligations on employees who do not otherwise possess the attributes of a fiduciary. Mr. Carson’s counsel particularly referred to GasTOPS Ltd. v. Forsyth, [2009] O.J. No. 3969 (Ont. S.C.J.), a decision of Granger J., issued in September 2009. Granger J. said: [82] Although in most cases fiduciary duties or obligations have been limited to senior officials or management of a company, on occasion, the Courts have extended fiduciary obligations to lower level Carson International Inc. v. Biggar Martin J. 107

employees, including those with technical rather than administrative duties, when an individual is found to be a key employee (Wilcox v. G.W.G. Ltd. (1984), 4 C.C.E.L. 125 (Alta. Q.B.)). A key employee is one whose position and responsibilities are essential to the employer’s business, making the employer particularly vulnerable to competition upon that employee’s departure. [83] M.E.P. Environmental Products Ltd. v. Hi Performance Coatings Co., [2006] M.J. No. 211 [Q.B.], aff’d 2007 [MBCA] 71 ..., enumer- ates more specific indicia that can be used to determine whether a former employee could be classified as “key”: The indicia to be considered on the issue of whether a former employee was a “key employee”, such that he or she owed a fiduciary duty to their former employer and not to solicit former employer’s customers may be summarized as follows: i. What were the employee’s job duties with the former employer? ii. What was the extent or frequency of the contact between the employee and the former employer’s customers and/or suppliers? iii. Was the employee the primary contact with the customers and (or) suppliers? iv. To what extent was the employee responsible for sales or revenue? v. To what extent did the employee have access to and make use of, or otherwise have knowledge of, the former employer’s customers, their accounts, the former employer’s pricing practices, and the pricing of products and services? vi. To what extent was the former employee’s information as regards customers, suppliers, pricing, etc., confidential? While using different language, Granger J.’s definition of a “key employee” in paragraph 82 of his decision bears similarity to the Imperial Sheet Metal Ltd. criteria for the narrow test. 77 Nevertheless, relying on M.E.P. Environmental Products Ltd. v. Hi Performance Coatings Co., 2006 MBQB 119, 204 Man. R. (2d) 40 (Man. Q.B.), aff’d 2007 MBCA 71, 214 Man. R. (2d) 212 (Man. C.A.), Can Am asserts that if I find Mr. Biggar was not a fiduciary, then I should find he was a “key employee” in accordance with the criteria set out therein and clothe him with or ascribe to him the same obligations as though I had found him a fiduciary. Can Am also relies on some injunctive relief cases in Manitoba where employees have preliminarily been held to be “key employees” and thus fiduciaries. 108 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

78 It is questionable whether M.E.P. Environmental Products Ltd., supra stands for the proposition that all employees who possess the articulated indicia are in fact key employees who possess fiduciary post-employment obligations. It and other injunction cases are fairly distinguishable. First, most involve applications for an interim injunctive relief prohibiting solicitation of a former employer’s customers and suppliers. Implicit by their very nature, the ultimate test in these types of cases, and the thresholds for standard of proof, is markedly different than the one at trial. In this respect the Manitoba Court of Appeal in Steinbach Credit Union Ltd. v. Hardman, 2007 MBCA 25, 212 Man. R. (2d) 283 (Man. C.A.), noted: [20] ... The question to be answered was whether there is a serious question to be tried, which is a low threshold to meet (see pp. 337-338, in RJR). It is not a final determination, nor is it even an opinion about the likelihood of success at trial. ... 79 Second, in M.E.P. Environmental Products Ltd., the two employees were bound by written employment agreements including covenants regarding confidential information and non-competition. These agreements in turn became the focus underlying the indicia. 80 Third, as noted earlier, in W.J. Christie & Co. Ltd., supra, Huband J.A. spoke of the difference between an ordinary employee and “a director/officer/key management person who occupies a fiduciary position” in terms of their post-employment obligations. The court did not set out a separate category of “key employee”. Mr. Greer was concurrently a director, officer, and senior manager at the time he left employment so those descriptions were not meant to differentiate so much as to explain the extent of his roles. 81 Finally, I have reviewed all the cases that were provided by counsel and others, along with certain texts. It is critical to recognize, as most state, that the findings are very fact-specific in the unique circumstances of a given situation. Kent Drugs Ltd. v. Kronson (1983), 23 Man. R. (2d) 161 (Man. C.A.), also written by Huband J.A., is illustrative of the peculiar nature of the circumstances of the case being determinative of these issues and other types of factors that may distinguish one case from another. Another example is Hudson’s Bay Co., supra, where the employee was “the whole show”, similar to those cases of a senior critical employee who operates a business in the place of a hands-on owner. As noted by Jewers J., at paragraph 12, relative to the department for which the employee was responsible, “... In that limited sphere, Mr. McClocklin was supreme. He managed, and controlled the department.”

Mr. Biggar’s Duties as an Ordinary Employee 82 Having determined that Mr. Biggar was an ordinary employee at least through 2005 until his termination, I am left to consider what duties owed to Can Am he may have breached. I will not repeat the law that I have commented Carson International Inc. v. Biggar Martin J. 109

on earlier in this judgment. There are essentially three issues, which would also have applied had I found him to be a fiduciary or key employee. 83 First, generally, did Mr. Biggar breach his duty of fidelity as an employee of Can Am by preparing for his future while still employed by Can Am? Despite vigorous cross-examination about his intentions and actions before he resigned on December 2, 2005, I am not satisfied that he did anything improper. Mr. Biggar’s holding company was set up years before and his personal refinancing was not done to facilitate Big Country. I am also satisfied that he advised Mr. Carson on December 2, 2005 that he was contemplating selling used recreational vehicles. Even if he had done what is alleged by Can Am as outlined above, in law I am not satisfied that the allegations amounted to a breach of his duty of fidelity as an ordinary employee. 84 As a corollary to this, and perhaps more importantly, I am not satisfied that Mr. Biggar intentionally performed poorly during 2005 or that he had the intent to benefit from that in 2006 in his own business. While this is Mr. Carson’s suspicion, it is not borne out with any credible evidence. Frankly, this is an over- reach and an unjustified rationalization. Rather, I accept Mr. Biggar’s explanations for his performance and that he did not decide to resign until after the November 2005 meeting. Further, unlike other cases, this is not that type of situation involving potential contracts or sales where it is clear and rational to assume that, for example, a potential sale of a recreational motor vehicle to a retail consumer could be deferred for the better part of a year so that Mr. Biggar could take advantage of it personally. This is not a case of appropriating a corporate opportunity of the employer. I find that Mr. Biggar remained committed to the business in 2005 although he struggled emotionally until his resignation. Frankly, I see his poor performance in 2005 as a failure of proper management by his superiors. 85 Second, did Mr. Biggar purloin or take Can Am customer lists and use those to his personal benefit? I find he did not. As indicated, I accept that Mr. Biggar found old customer and prospect lists in his home during the course of litigation and contemporaneously turned those over to counsel. These were lists Mr. Big- gar compiled and I do not find it unusual that an employee would have old business records at home. Mr. Carson wrongly believed that some of the markings on the lists (i.e. “203”) indicated they were from 2003 when in fact they were not. The dates on some lists show that they are relatively old. There is no evidence to suggest that Mr. Biggar used them to solicit clients. Trial exhibits (see, for example, Exhibit 1, tab 61) set out how he came to deal with certain customers in 2006 and 2007. To reiterate, I have found that Mr. Carson allowed Mr. Biggar to attempt to sell used class C recreational motor vehicles of Can Am customers whose vehicles were no longer under contract. Ultimately, I do not find that Mr. Biggar directly and actively solicited Can Am customers in any event. Finally, while not strenuously argued, Can Am pleads that Mr. Biggar 110 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

solicited suppliers in order that they leave Can Am and do business with Big Country. The facts simply do not support this. 86 Third, did Mr. Biggar use confidential proprietary information of Can Am? It is clear that Mr. Biggar kept and modified Can Am business documents for his own use as Big Country. For the most part, these documents were relatively benign forms such as quote sheets, etc. More critical, however, was the RVMP contract and brochure. I accept that Mr. Biggar took and used these documents in his business. Essentially he copied these documents with minor modifications. This was Can Am’s property with which Mr. Biggar was intimately familiar throughout his 22 years of employment with Can Am. The legal issue, however, as pled, boils down to whether or not these documents were confidential or secret proprietary documents. 87 In GasTOPS Ltd., supra, Granger J. summarized the indicia of trade secrets or confidential information as follows: [124] Whether or not a particular subject matter is a trade secret is a question of fact. The onus is on the plaintiff to demonstrate that the information alleged to have been misappropriated was at all material times confidential. To determine whether information has the necessary “quality of confidence”, courts have considered: (a) The extent to which the information is known outside the business; (b) The extent to which it is known by employees and others involved in the business; (c) Measures taken to guard the secrecy of the information; (d) The value of the information to the holder of the secret and to its competitors; (e) The effort or money expended in developing the information; (f) The ease or difficulty with which the information can be properly acquired or duplicated by others; and (g) Whether the holder and taker of the secret treat the information as secret. [125] In employment-related cases, the courts also consider whether: (a) the employer possesses a trade secret; (b) the employee knew it was secret; (c) the employee acquired knowledge [of] it during his/her employment; (d) the employee has, after termination of his/her employment, used of [sic] this knowledge improperly. 88 I recognize the authorities that Mr. Carson’s counsel relied upon in dealing with this issue. The common theme of these cases is the use and the confidential Carson International Inc. v. Biggar Martin J. 111

nature of documents including, in many of those precedents, customer lists which were also presumed to be confidential (even in this respect though there is some ambiguity as to the extent of solicitation permitted by a departed ordinary employee where he relies on memory of customers’ names). 89 In Monarch Messenger Services Ltd. v. Houlding (1984), 56 A.R. 147 (Alta. Q.B.), the judge was of the view that the specific and intimate knowledge acquired with respect to two customers was of a confidential nature and must be considered as “special or peculiar”. In Gemstar Investments Ltd. v. Lavallee (1998), 133 Man. R. (2d) 10 (Man. Q.B.), while finding the employee was not a fiduciary or key employee at the time of termination, the court commented on an ex-employee’s use of customer lists. The case of Glacier National Life Assurance Co. v. Pro Western Corporate Group Ltd. (1988), 34 C.C.L.I. 32 (B.C. S.C.), was an interim injunction application seeking to restrain the agent from using the insurer’s confidential information. The case of Gottcon Contractors Ltd. v. Manzo (1992), 40 C.P.R. (3d) 498 (Ont. Gen. Div.)), involved invitations to tender on a project which, within the industry, was considered to be of “utmost secrecy”. And finally, in Barton Insurance Brokers Ltd. v. Irwin, 1999 BCCA 73, 63 B.C.L.R. (3d) 215 (B.C. C.A.), the British Columbia Court of Appeal engaged in an extensive analysis, covering many issues that relate to this case. The court upheld the trial judgment that Mr. Irwin was an ordinary employee who was thus not entitled to take or use confidential documents, including customer lists, but who could solicit former customers whose names he recollected with the aid of a directory. 90 Here, the RVMP contract and brochure, their contents and the concept contained therein, were not in the strict sense secret or confidential. They had been in use by all Go Camping franchisees, by Mr. Carson as such a franchisee since at least 1983 and more so since 1988 by Can Am. It would be fair to say, over that time, hundreds of these documents would have been distributed to customers or prospective customers. These documents and the concept contained therein were in the general domain of the recreational vehicle industry. Neither Mr. Carson nor Mr. Zinko disputed that these documents were not secret. Can Am did not develop the concept but acquired it from Go Camping and thereafter expended relatively small sums of money for legal fees to address some specific concerns. Can Am clearly did not want these documents to be copied or used by competitors and Mr. Biggar was aware of that, but that does not make them confidential or secret. I do not consider the concept or the contents of the RVMP contract and brochure to be accurately cloaked as confidential information or trade secrets. 91 However, Mr. Biggar essentially copied the documents rather than using his skill, knowledge, and know-how to develop his own original documents for use in his business. Given the totality of my findings, I would prefer counsel to address this issue in terms of the nature of any breach and/or any damages that may flow from this finding. 112 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

92 Finally, I need express that I have also reviewed the facts and the law in this case in their entirety, or in other words, I have assessed all the requisite components not only individually but as a whole. That exercise does not alter my conclusions.

Conclusions 93 On the unique facts of this situation, I find that Mr. Biggar was not a key or fiduciary employee but rather was an ordinary employee of Can Am. 94 In any event, I find that Mr. Biggar did not appropriate business opportunities of his employer from 2005 for himself in 2006; did not purloin or use his former employer’s customer lists; did not directly or unlawfully solicit customers or suppliers of his former employer; and, used his former employer’s documents but that these documents and the concept contained therein were neither secret nor confidential. 95 In finding that Mr. Biggar possessed and used non-confidential documents of his former employer in competition with that employer, I am seeking further argument from counsel regarding the nature of any breach and/or any damages that may flow from this finding. Counsel are to arrange for a short hearing to address this matter. Action dismissed. Moffat v. Royal Bank 113

[Indexed as: Moffat v. Royal Bank] Shirley Milligan Moffat (Plaintiff) and Royal Bank of Canada (Defendant) Saskatchewan Court of Queen’s Bench R.C. Mills J. Judgment: May 28, 2010 Docket: Saskatoon Q.B.G. 1295/2007, 2010 SKQB 191 Michel G. Thibault for Plaintiff James A. Morrison for Defendant Financial institutions –––– Tortious liability of banks — Nature of bank’s duty to customer –––– Plaintiff met with bank officer to determine how to improve her cash flow problems — Plaintiff intended to take out reverse mortgage of $140,000 from mortgage company and use $60,000 to pay down her $200,000 line of credit with bank — Bank officer misunderstood, and instructed plaintiff’s solicitor to pay entire amount to line of credit and postpone line of credit to second charge on plaintiff’s property — Plaintiff and bank became aware of misunderstanding, and bank offered to reverse transaction and absorb costs — Plaintiff refused bank’s offer, insisting that transaction go through as she had wanted, with $80,000 refunded to her account, and reverse mortgage in effect — Plaintiff brought action against bank for damages for breach of fiduciary duty, breach of contract and conversion — Action dismissed — Plaintiff was elderly, but was practising lawyer experienced in real estate and mortgages — No fiduciary duty arose in this case. Financial institutions –––– Tortious liability of banks — Conversion of funds by employees –––– Plaintiff met with bank officer to determine how to improve her cash flow problems — Plaintiff intended to take out reverse mortgage of $140,000 from mortgage company and use $60,000 to pay down her $200,000 line of credit with bank — Bank officer misunderstood, and instructed plaintiff’s solicitor to pay entire amount to line of credit and postpone line of credit to second charge on plaintiff’s property — Plaintiff and bank became aware of misunderstanding, and bank offered to reverse transaction and absorb costs — Plaintiff refused bank’s offer, insisting that transaction go through as she had wanted, with $80,000 refunded to her account, and reverse mortgage in effect — Plaintiff brought action against bank for damages for breach of fiduciary duty, breach of contract and conversion — Action dismissed — Bank did not convert plaintiff’s money to itself — Bank applied money to plaintiff’s loan in manner that it and mortgage company thought it had authority to do. Contracts –––– Mistake — Distinction between mutual mistake and unilateral mistake –––– Plaintiff met with bank officer to determine how to improve her cash flow problems — Plaintiff intended to take out reverse mortgage of $140,000 and use $60,000 to pay down her $200,000 line of credit with bank — Bank officer misunderstood, and instructed plaintiff’s solicitor to pay entire amount to line of credit and postpone line of credit to second charge on plaintiff’s property — Plaintiff and bank became aware of misunderstanding, and bank offered to reverse transaction and absorb costs — Plaintiff 114 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

refused bank’s offer, insisting that transaction go through as she had wanted, with $80,000 refunded to her account, and reverse mortgage in effect — Plaintiff brought action against bank for damages for breach of fiduciary duty, breach of contract and conversion — Action dismissed — Mutual mistake occurred — No consensus ad idem existed between parties, although they acted jointly in their mistaken assumption that agreement had taken place — Plaintiff could have been restored to her previous position, if she had accepted bank’s offer — Costs which plaintiff would now incur to get out of mortgage were of her own making — Plaintiff did not prove entitlement to any damages. Cases considered by R.C. Mills J.: Cozart v. Cozart (2007), [2007] 10 W.W.R. 743, 2007 CarswellSask 214, 2007 SKQB 160, 296 Sask. R. 183 (Sask. Q.B.) — followed Hodgkinson v. Simms (1994), 57 C.P.R. (3d) 1, 5 E.T.R. (2d) 1, [1994] 3 S.C.R. 377, 95 D.T.C. 5135, 97 B.C.L.R. (2d) 1, 117 D.L.R. (4th) 161, 171 N.R. 245, 1994 Car- swellBC 438, 1994 CarswellBC 1245, [1994] 9 W.W.R. 609, 49 B.C.A.C. 1, 80 W.A.C. 1, 22 C.C.L.T. (2d) 1, 16 B.L.R. (2d) 1, 6 C.C.L.S. 1, [1994] S.C.J. No. 84, EYB 1994-67089 (S.C.C.) — followed Scavarelli v. Bank of Montreal (2004), 2004 CarswellOnt 115, 21 C.C.L.T. (3d) 153, 46 B.L.R. (3d) 322, 69 O.R. (3d) 295, [2004] O.J. No. 109 (Ont. S.C.J.) — followed Staiman Steel Ltd. v. Commercial & Home Builders Ltd. (1976), 13 O.R. (2d) 315, 71 D.L.R. (3d) 17, 1976 CarswellOnt 770 (Ont. H.C.) — considered

ACTION by mortgagor against bank for damages for breach of fiduciary duty, breach of contract and conversion.

R.C. Mills J.:

1 The plaintiff, Shirley Moffat, seeks damages from the defendant, Royal Bank of Canada (the “Bank”), for breach of fiduciary duty, breach of contract and conversion involving a reverse mortgage agreement and banking relationship. The facts display what can happen when two well-intentioned parties fail to understand the needs of the other.

Issues 2 The issues are: 1. Was a contract between the parties formed and what were the terms? 2. Did the defendant Bank owe and breach a fiduciary duty to the plaintiff, Shirley Moffat? 3. Is the Bank liable in conversion to the plaintiff? 4. What damages were sustained by the plaintiff and what remedy is available to her? Moffat v. Royal Bank R.C. Mills J. 115

1. Was a contract between the parties formed and what were the terms? • Facts 3 The plaintiff and her husband, James Moffat, were the owners of 1331 Elli- ott Street in Saskatoon, Saskatchewan. Mr. Moffat died in 2007, and Shirley Moffat commenced this action on her own behalf shortly after his death. The factual issues giving rise to this action occurred before his death. Mrs. Moffat was the primary party involved in the negotiations and decisions respecting the case. The evidence focussed entirely upon Mrs. Moffat’s discussions and activities, and there was nothing forthcoming in the evidence that involved Mr. Mof- fat independently of his wife. 4 In 2004 the plaintiff owned 1331 Elliott Street as their principal residence. They owned 1301 Elliott Street as a future retirement residence and current rental investment. They were experiencing cashflow difficulties and, being a longtime customer of the defendant, approached the Bank about refinancing to overcome some of the cashflow problems. The plaintiff dealt with a customer service representative named Diane Seymour (“Ms. Seymour”). She was the one primarily responsible for the face-to-face dealings with the plaintiff. 5 At Ms. Seymour’s suggestion, a common residential mortgage over 1331 Elliott Street, consisting of principal and interest payments, was converted to a Royal Bank credit line, which required interest only payments and would only have to be paid off when the property was sold or the parties passed away. The Royal Bank credit line (“RCL”) was for $200,000.00. It served to pay out the residential mortgage, a small student loan and some credit card and miscellaneous debt. 6 Although the RCL saved approximately $386 per month in cash flow to the plaintiffs, they were still experiencing a tight money situation and were concerned for their future in the event that their income was reduced. 7 Mrs. Moffat was practising part-time as a lawyer and was then 75 years of age. She continued to investigate methods of relieving their cashflow issues and obtained from Ms. Seymour a Canada Home Income Plan (“CHIP”) pamphlet. The pamphlet had a Royal Bank logo on it. CHIP was a corporation that specialized in reverse mortgages. The company administering CHIP was not apparently legally associated with the Royal Bank and worked with the other major chartered banks and other financial institutions in obtaining customers for its program. CHIP operated a reverse mortgage scheme. This type of mortgage provided for advancement of funds on the equity of a principle residence. The program terms required it to be a first charge on the residence. The owners of the home were not required to make principal or interest payments on the mortgage funds received. Instead, the principal and interest would normally accrue, and it was only after the property was sold or the parties died that the mortgage would have to be repaid. The homeowner was entitled to pay the interest accruing every year if they so desired. It appeared that the real benefit of the program was 116 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

the freeing up of any payment required on the mortgage by the homeowner. In exchange for this arrangement, the interest rate associated with the CHIP mortgage was higher than that of a regular mortgage. Once the homeowner obtained the mortgage proceeds, they were free to spend the funds as they desired. In August 2004, the plaintiff filled out an internet application for a CHIP mortgage. Her home had been valued at $310,000 and, on that basis, CHIP declined her application because the outstanding debt to the Royal Bank of approximately $200,000 exceeded the amount that CHIP was prepared to advance. This application was done without the involvement or assistance of the Bank. 8 In September 2004 the plaintiff talked to Ms. Seymour again about the cashflow problems and discussed alternatives with her. It was contemplated that 1301 Elliott Street may have to be sold. The plaintiff might have discussed her CHIP rejection, but it is not certain. 9 Real estate values in Saskatoon were going up rapidly at this time. In Janu- ary 2005, the plaintiff phoned the CHIP office and determined that a new appraisal should be obtained. She contacted the appraiser who had done her previous bank appraisal, and he came back in February 2005 with an appraisal of $323,000. The plaintiff contacted the CHIP representative, Andrew Hylton (“Mr. Hylton”). He indicated she was eligible for a mortgage of approximately $140,000. Her existing RCL continued to be $200,000. However, she realized that if she could reduce the RCL by approximately $60,000, she would qualify for a $140,000 mortgage from CHIP. 10 Mr. Hylton proceeded to process the plaintiff’s CHIP application. This procedure was to arrange for the signing of the mortgage application documents with the homeowner’s bank, in this case, the defendant. Mr. Hylton arranged for an appointment between Ms. Seymour and the plaintiff on February 18, 2005. He intended to participate in the discussion by telephone conference call. Ms. Seymour had never been involved in a CHIP mortgage before and would have been unable to explain its operation without the involvement of Mr. Hylton. 11 On the morning of February 18, 2005, Mr. Hylton faxed to Ms. Seymour the CHIP mortgage application form in advance of the meeting. 12 On February 18 Ms. Seymour and the plaintiff met at the Royal Bank with Mr. Hylton present by phone. The plaintiff recalls advising Ms. Seymour that she only had to pay down the RCL loan by $61,403 in order to qualify for a CHIP mortgage. She looked at this payment as a voluntary act by herself, not a requirement of the mortgage process. CHIP was only interested in obtaining a first charge against the property. At that time, the RCL loan was the first charge, and as such, CHIP needed that mortgage paid out in full or postponed in favour of CHIP. 13 This is where the confusion started. The plaintiff was properly of the opinion that CHIP needed a first charge on the property to advance the $140,000 to her. She believed that if she applied $60,000 to the RCL, then it would be postponed Moffat v. Royal Bank R.C. Mills J. 117

in favour of CHIP. Mr. Hylton and Ms. Seymour did not view the matter in the same fashion. Both of them raised the issue with her of secondary financing. They believed that the mortgage application would only succeed in only one of two scenarios: 1. The plaintiff would pay out the RCL in its entirety from secondary financing sources, i.e. remortgage or sale of 1301 Elliott Street or other resources independent of the Bank. This would allow Mrs. Moffat to obtain the entire $140,000.00 for her own use as there would be no other charge on the title; or 2. The plaintiff would obtain a postponement of the RCL by paying down that mortgage by amount agreed to by the Bank putting CHIP in the first position and the Bank in the second position. Mr. Hylton and Ms. Seymour were left with a general impression from the conversation that the $140,000 received from CHIP would all be applied against the RCL mortgage, leaving its balance at $60,000. In other words, the RCL loan would be paid down to $60,000, CHIP would have a first mortgage on 1331 Elliott for $140,000, and the Bank would have second mortgage of $60,000. The advantage that Ms. Seymour saw for the plaintiff was that her interest payment on the $140,000 associated with the RCL loan would be eliminated and instead interest would accrue unpaid on the CHIP loan. This would increase her cashflow position. 14 The plaintiff was left with the impression from the meeting that she would receive a CHIP mortgage of $140,000 and, with it, would pay down the RCL loan by $60,000, thus leaving CHIP as a first charge for $140,000 and the Bank as a second charge for $140,000. She would have $80,000 in her pocket to spend as she wished. The plaintiff acknowledges that Mr. Hylton and Ms. Seymour talked about secondary financing, being a bridge loan or secondary loan on 1301 Elliott, in order to pay down the RCL. The plaintiff says she was surprised about the discussion because she was of the opinion that the only place to pay down the RCL loan would be from the CHIP mortgage proceeds. She did not know why there was a discussion of secondary financing because she knew that the money had to come from CHIP and not from the secondary financing. The plaintiff left the meeting with the only issue in her mind being whether the Bank would agree to the postponement on the basis that she thought she had put forward. She was prepared for the Bank to say no to her proposal. 15 Ms. Seymour went up the chain of command with the proposal for the RCL postponement in favour of CHIP. Her proposal, however, was that the entire CHIP proceeds of $140,000 be utilized to pay the RCL loan down. 16 Senior management of the Bank eventually approved a postponement on the basis presented by Ms. Seymour. Ms. Seymour sent a letter to Mr. Hylton on March 4, 2005, stating they were prepared to postpone the RCL loan in favour of CHIP in exchange for receipt of the full CHIP proceeds of $140,000. Mr. 118 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Hylton received the letter, and since it was in accord with his understanding of the discussion of February 28, 2005, proceeded to arrange for the signing of mortgage documents. 17 The Bank never forwarded to the plaintiff copies of the correspondence to Mr. Hylton or internal documentation reflecting their understanding of the agreement for postponement. 18 CHIP followed its normal procedures and arranged for mortgage documentation to be drawn and forwarded to a lawyer of the plaintiff’s choosing for the purposes of signing and obtaining independent legal advice. The plaintiff attended upon Bruce McDonald (“Mr. McDonald”), a member of the Law Society of Saskatchewan familiar with CHIP mortgages and the real estate process in general. The plaintiff, as a practising lawyer, had done real estate in the past and was familiar with mortgage concepts and general terms and conditions. She understood the fashion in which the land titles system worked. The plaintiff had signed all the CHIP application forms on February 24, 2005, at Ms. Seymour’s office. When the plaintiff attended at Mr. McDonald’s office on March 28, 2005, he went through the CHIP mortgage documents with her and signed them all. As well as the mortgage, there was independent legal advice and a direction to pay. This would be the last opportunity for the parties to understand the fundamental difference in their approaches. In exchange for their postponement of the mortgage, the Bank wanted the RCL loan paid down to $60,000; the plaintiff wanted the RCL loan paid down by $60,000. 19 Unfortunately, none of the CHIP mortgage documents dealt with the amount of the paydown of the RCL loan because the arrangement for the postponement was negotiated between the plaintiff and the defendant, and not between the plaintiff or the defendant and CHIP. 20 The direction to pay signed by the plaintiff indicated that from the CHIP proceeds, monies would be paid to the Bank to obtain a first charge. Unfortu- nately, there was no specific number indicated in the direction to pay and in consequence of signing it, it was not brought to the plaintiff’s attention that the full mortgage proceeds from CHIP would be applied on the RCL loan. The plaintiff believed that she would personally receive the mortgage proceeds of $140,000 and would arrange for the payment of the RCL loan by $60,000, leaving cash in her pocket of $80,000. The Bank believed that the $140,000 mortgage proceeds would be paid directly to it in exchange for its postponement. 21 Unfortunately, the Bank’s solicitor provided the postponement of mortgage to Mr. McDonald without imposing any trust conditions upon its use. According to Mr. McDonald’s notes and testimony, part of the conversation with the plaintiff was that she had specifically asked him about the paydown of the RCL loan and that he indicated the loan would be paid down to $60,000, in accordance with his understanding of the Bank’s instructions. He had received a copy of the March 4, 2005, letter from the Bank to Mr. Hylton, which was not in the hands Moffat v. Royal Bank R.C. Mills J. 119

of the plaintiff. The plaintiff denies having any recollection of a such a conversation with Mr. McDonald. I believe she is honestly mistaken. She attended at Mr. McDonald’s office fully believing that she had obtained a good deal that was going to solve her financial problems. What she heard from Mr. McDonald confirmed her belief, but in my opinion she did not hear accurately what Mr. McDonald told her. The plaintiff left Mr. McDonald’s office, expecting that the funds would be deposited into her account, at which time she would arrange for the paydown of the RCL loan. 22 Mr. McDonald, upon registration of the mortgage and receipt of the CHIP funds, forwarded them directly to the Bank, payable to the plaintiff. The Bank, acting on what they believe were verbal instructions based on their agreement with the plaintiff, deposited the money to her account and then took the entire proceeds and applied it against the RCL loan. Ms. Seymour had even backdated the receipt of the funds by one day in order to save the plaintiff an interest ex- pense. Ms. Seymour was pleased with the result of her efforts and contacted the plaintiff to advise her of the application of the funds. This phone call on April 1, 2005, was received by the plaintiff with some surprise. She had expected to be applying the funds on her own and that she would have had cash of approximately $80,000 to apply in the fashion she had planned to do so. Both parties immediately realized that their understanding of the arrangement was in error. 23 Ms. Seymour and the plaintiff contacted the superiors at the Bank and discussions ensued with respect to what should occur. The plaintiff insisted that the original transaction proceed on the basis she had understood it to be and that the Bank simply deposit into her account the $80,000 she was to receive for her own use from the CHIP mortgage. She had in her mind a particular use of those funds, some of which was immediate and some of which was long-term. The Bank became aware of Ms. Moffat’s plan for use of the funds through her phone calls and correspondence subsequent to April 1, 2005. The Bank did not believe her financial plan made much sense. So be it. The issue is not whether the Bank thought her financial plan was a good one but, rather, what the agreement between her and the Bank was respecting her financial plan. In any event, within 10 days the Bank offered to the plaintiff that the entire transaction be undone. There would be a pre-payment penalty to pay out the CHIP mortgage; the Bank was prepared to absorb it. There would be an interest charge on the money advanced by CHIP; the Bank was prepared to absorb it. The plaintiff understood the Bank’s proposal; she rejected it. She had a firm belief that her financial position would continue to deteriorate unless she had the arrangement she thought she had originally agreed to. She was not prepared to start over from scratch. She felt that she had complied with the CHIP requirement for advancement of funds and wanted that to continue. She was correct. She had complied with the CHIP requirement and met the terms of that program. Unfortunately, she had not come to an agreement with the Bank regarding the postponement of the first mortgage. She appears to have confused the two issues in her continued negotia- 120 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

tions with the Bank. At the end of June 2005, she had a personal meeting with the regional vice-president of the Bank. He once again offered to undo the transaction and tried to explain to her the folly of her financial plan. She was not interested in hearing about either. 24 The Bank stuck to its guns, as did the plaintiff. In 2007, after continued negotiations and discussions with CHIP and Bank representatives, the plaintiff came to the realization that the Bank was not going to change their position. Unfortunately, her focus during this entire time was to get the Bank to accept that the CHIP program would allow her to have the $140,000 first charge mortgage outstanding as well as the $140,000 RCL loan outstanding. The Bank’s position continued to be that their loan would not be postponed unless it had been reduced to $60,000. 25 At that stage, this action was commenced. 26 The plaintiff alleges that a contract existed in the terms as understood by her and that the Bank must be held to the terms of the bargain. The Bank argues that on a factual basis, I am free to find that the contract as understood by the Bank was in existence and therefore no breach occurred. If not successful, the Bank then falls back on the concept of mistake defining the then-existing legal relationship between the parties. The issues of mistake, including the type of mistake, the factual consequences flowing therefrom and the remedies available to the parties, serve to complicate, sometimes unnecessarily, the basic contractual concept of the necessity of consensus ad idem. Nevertheless, a useful analysis of the concept of mistake is found in the decision of Smith J. in Cozart v. Cozart, 2007 SKQB 160, [2007] 10 W.W.R. 743 (Sask. Q.B.), starting at paragraph 38: Common mistake 38 Fridman, The Law Of Contract in Canada, 5th ed. (Toronto: Cars- well, 2006), comments at page 251-252: In common mistake cases, the issue would seem to be whether the existence of such shared mistake destroyed the basis of the contract. In these instances there is no question of a lack of consensus ad idem. The parties have clearly agreed on the contract and its terms. How- ever, there may be no contract, or the contract may be affected by some equitable remedy such as rectification, because the real, underlying intentions of the parties have been foiled. 39 Common mistake arises in circumstances where there is common ground between the parties concerning the contractual landscape. Although common ground exists, the parties share a common mistake about a critical fact. 40 An example is where a vendor intends to sell a one carat diamond to a purchaser who intends to buy a one carat diamond. Unbeknownst to either party, the item in question is not a diamond but a zircon. Moffat v. Royal Bank R.C. Mills J. 121

..... Unilateral mistake 42 Where one party to a contract is in error on a critical issue, the matter is governed by the principles relating to the law of unilateral mistake. The Saskatchewan Court of Appeal reviewed the doctrine of unilateral mistake in Montreal Trust Co. v. Maley (1992), 105 Sask. R. 195 (Sask. C.A.). In Montreal Trust v. Maley, Justice Wakeling cited with favour the test employed by the Ontario Court of Appeal in Alampi v. Swartz (1964), 43 D.L.R. (2d) 11 (Ont. C.A.) at para. 16. That test is: To succeed on a plea of unilateral mistake the defendant must establish: (1) that a mistake occurred; (2) that there was fraud or the equivalent of fraud on the plaintiff’s part in that she knew or must be taken to have known when the agreement was executed that the defendant misunderstood its significance and that she did nothing to en- lighten the defendant: Blay v. Pollard & Mor- ris, [1930] 1 K.B. 628; Farah v. Barki, [1955] 2 D.L.R. 657, [1955] S.C.R. 107. 43 The approach in Montreal Trust v. Maley was reiterated by Justice Laing in Garrett Estate v. Cameco Corp., 2001 SKQB 564, 214 Sask. R. 161 (Sask. Q.B.), where he opined at para. 30: [30] With respect to unilateral mistake, on the part of the respondents, the evidence is clear that neither P.T.I. nor its agents were aware of the alleged mistake. As noted in Fridman, The Law of Contract, 4th ed. (Toronto: Carswell, 1999) at 274, “... if the unmistaken party is ignorant of the other’s mistake the contract will be valid and neither rescission nor rectification will be possible.” 44 In this instance, there is no evidence that would lead to a conclusion that the respondent’s side was aware that the petitioner and her counsel were operating under any misapprehension as to what was called for in the Contract. The parties were negotiating at cross purposes but they were mutually blind to that circumstance...... Mutual mistake - consensus ad idem 48 In mutual mistake, both parties are mistaken, but do not share their mistake. In that sense, it is quite different from common mistake. It arises in situations where the parties are operating at cross purposes and the question is whether they have, in fact, reached an agreement. 122 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

In other words, has there been a consensus ad idem? Fridman, The Law of Contract in Canada, supra, comments at page 250-251: In mutual mistake the issue would seem to be: what would a reasonable person infer from the words and conduct of the parties? If, despite their different mistakes, it would appear to the outside world that the parties were in agreement as to a contract and its terms, then a contract would exist at common law. As it was put in one Canadian case, “mutual assent is not required for the formation of a valid contract, only a manifesta- tion of mutual assent. ... Whether or not there is a mani- festation of mutual assent is to be determined from the overt acts of the parties.” [Walton v. Landstock Invts. Ltd. (1976), 72 D.L.R. (3d) 195 at 198] The source of this approach to cases of this kind is the language of Blackburn J. in the English case of Smith v. Hughes [(1871) L.R. 6 Q.B. 597 at 607], which has frequently been cited and followed in Canadian courts: If whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was as- senting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms. Such instances of mistake may be regarded in two ways. In the first place, it could be said that as long as there was an apparent correspondence of offer and acceptance, the inward, secret beliefs of one or both parties were irrelevant. Objectively speaking, the parties have arrived at a consensus ad idem, which is the foundation of contract at common law. Hence, even if parties have been mistaken, a court may be able to find that they have in effect validly contracted, either by the appearance of agreement, or by some kind of estoppel, arising from the belief that was induced in one party by the language or acts of the other party. However, if no such consensus can be discovered, for example, where there is an obvious ambiguity about the terms of the purported contract, no objectively ascertained agreement can be inferred or concluded. Second, it could be said that, as long as the parties intended to contract in the manner and on the terms indicated by their acts or language, the fact that both had different motives for con- Moffat v. Royal Bank R.C. Mills J. 123

tracting, based on their mistaken beliefs, albeit that their mistakes were different ones, would have no effect upon the validity of the apparent contract. The first approach emphasizes the connection between mistake and correspondence of offer and acceptance. The second approach underlines what has been said earlier as to the distinction between intention and motive. With regard to both, the impact of equitable developments has been to give greater flexibility to the courts to uphold, modify or set aside contracts where there has been a mutual mistake. ... [Emphasis added] 27 Although not applied, Smith J. also referred to Staiman Steel Ltd. v. Commercial & Home Builders Ltd. (1976), 71 D.L.R. (3d) 17 (Ont. H.C.), in which Southey J. stated: 28 If, as appears to have been the case, the plaintiff thought the bulk lot he was purchasing included the building steel and the defendants thought that the bulk lot they were selling did not include the building steel, then the case was one of mutual mistake, as that expression is used in Cheshire and Fifoot’s Law of Contract, 8th ed. (1972), p. 221. In such a case, the Court must decide what reasonable third parties would infer to be the contract from the words and conduct of the parties who entered into it. It is only in a case where the circumstances are so ambiguous that a reasonable bystander could not infer a common intention that the Court will hold that no contract was created. As pointed out in Cheshire and Fifoot at p. 212: If the evidence is so conflicting that there is nothing sufficiently solid from which to infer a contract in any final form without indulging in mere speculation, the court must of necessity declare that no contract whatsoever has been created. 29 In this case, in my judgment, a reasonable man would infer the existence of a contract to buy and sell the bulk lot without the building steel and therefore I have held that there was a contract to that effect binding on both parties, notwithstanding such mutual mistake. 28 The Bank urges that a reasonable person looking at the situation existing between the Bank and the plaintiff would infer that the contract is as described by the Bank. I am not prepared to accept the Bank’s approach. On the explanation of mistake as identified by Smith J. in Cozart, this case is one of mutual mistake. It is not accurate to identify the position of the parties and their understanding of the contract to have any ambiguity. Each party is certain in their interpretation. However, that does not mean that a contract was created as described by the Bank. There clearly is no consensus ad idem between the parties on the facts as previously described. 124 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

29 It is clear from the above, there was never an agreement between the Royal Bank of Canada and Shirley Moffat that the RCL loan would be paid down by $60,000 from the proceeds of the CHIP mortgage in exchange for a postponement of the RCL loan to a second charge. The mistake was mutual. Was one party fully at fault for the mistake to have occurred? I think not. It would have been preferable for the Bank to provide written confirmation of the basis on which it was prepared to postpone its claim to Mrs. Moffat. They thought they had done that verbally. Mrs. Moffat did not understand that that had occurred. It would have been preferable for her to have articulated clearly exactly what her plan was with respect to the CHIP proceeds. She knew what she wanted to ac- complish but did not explain it to the Bank. Neither party’s understanding was agreed to by the other. In retrospect, the plaintiff had the last opportunity to correct the misunderstanding following her discussion with Mr. McDonald. She failed to do so. 30 This is not a case of unilateral mistake and viewing the remedies that would flow from such mistake. This is a mutual mistake. There was no agreement between the parties, although they acted jointly in their mistaken assumption that an agreement had taken place.

2. Did the defendant Bank owe and breach a fiduciary duty to the plaintiff, Shirley Moffat? 31 Both plaintiff and defendant rely on the decision of Scavarelli v. Bank of Montreal (2004), 69 O.R. (3d) 295 (Ont. S.C.J.) for the proposition that unless there are special circumstances, the relationship of a bank to its customer does not give rise to a fiduciary relationship. The relationship is normally one of con- ventional debtor/creditor. The cases referred to in Scavarelli suggest that the plaintiff has the onus of demonstrating the existence of a fiduciary relationship. The plaintiff describes the factual situation that should give rise to a fiduciary relationship in the following terms.: 34. These facts align with the present situation: Mrs. Moffat is an elderly woman, and was concerned about her financial security at the time the transaction was entered; she had previously relied upon the advice of Diane Seymour, and expected that Ms. Seymour would provide sound financial advice in this matter, by recommending the CHIP mortgage; prior to Mrs. Moffat’s receipt of the RBC-CHIP brochure, she was unsure of whether she should apply for a CHIP mortgage; Ms. Seymour provided information respecting CHIP, and was enthusiastic about its application to Mrs. Moffat’s situation; Mrs. Moffat was at an unequal bargaining position, as she was subject to the bank’s discretion as to whether a postponement would be provided; and, Mrs. Moffat accepted Ms. Seymour’s advice in going ahead with the transaction. Moffat v. Royal Bank R.C. Mills J. 125

32 Good legal counsel always put their clients’ factual situations in the best light. The above is a good example of this. What is left out, of course, is that the plaintiff, at the time of entering into the CHIP mortgage, was a practising lawyer experienced in real estate and mortgages. Although she may have been elderly, she was not frail. She was determined, intelligent and, in her financial situation, singularly focused on the notion that a CHIP mortgage would solve her financial problems. The plaintiff was not in an unequal bargaining position. She dealt with the notion of whether the Bank would provide a postponement of its RCL in favour of the CHIP mortgage and on what terms. If the terms proved to be unsatisfactory to Mrs. Moffat, she could refuse, and her existing banking situation would remain in place. The existing loan arrangements were acceptable to the Bank. Mrs. Moffat was the one seeking change. The plaintiff was not relying on the Bank to provide her with financial advice or protect her interests in the CHIP mortgage transaction. Mrs. Moffat also had the benefit of independent legal advice with respect to the entire transaction. 33 A useful discussion of fiduciary duty is found in Hodgkinson v. Simms, [1994] 3 S.C.R. 377 (S.C.C.). In Scavarelli v. Bank of Montreal, supra, Smith J. summarizes the requirements for the creation of a fiduciary duty as follows: [37] To do so a plaintiff must demonstrate that the following four conditions exist: firstly, that advice was provided and that the advice was relied upon; second, that the defendant was aware of this reliance; third, that the defendant derived a benefit from the transaction; and fourth, that the relationship was one of a confidential nature. [Cites omitted.] 34 It is not every relationship that gives rise to a fiduciary duty. Although in previous court cases, a fiduciary duty has been found to arise between a bank and its customer, one must examine the particular circumstances of the transaction involved in order to determine if such a duty arose in this case. 35 On the facts that I have found, no fiduciary duty arises. The plaintiff is an intelligent trained lawyer with experience in personal financial matters and mortgages. It was not alleged that the Bank was acting as agent or on behalf of CHIP, and so its relationship with the plaintiff is based on the issues surrounding the postponement of its RCL. It would have been preferable for the Bank in hindsight to make its understanding of the arrangement more clearly known to the plaintiff, the same could be said of the plaintiff’s position. The reliance placed on the Bank was for an agreement to postpone its mortgage in a certain fashion. The reliance from the plaintiff’s standpoint was on the Bank to fulfill what she perceived to be its contractual obligations, not its obligations as a fiduciary. This cause of action therefore fails.

3. Is the Bank liable in conversion to the plaintiff? 36 The plaintiff argues that when the CHIP mortgage funds in the form of a cheque payable to Mrs. Moffat was received by the Bank and applied against the 126 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

RCL, the tort of conversion occurred. The plaintiff maintains that the Bank had no lawful authority to apply the funds in that fashion. The plaintiff points to the fact that there is no specific document which allowed the plaintiff to debit the plaintiff’s account and apply the funds in the fashion they had. As such, the Bank has unlawfully converted the plaintiff’s funds to their own use. 37 The Bank asserts that the tort of conversion does not apply to the factual circumstances and that the matter is to be decided on the issue of contract. I agree with the Bank’s approach. The argument by the plaintiff for conversion is extremely technical. It ignores the larger picture of the entire transaction that was occurring between the plaintiff, the Bank and CHIP. The plaintiff cannot factually translate one transaction in a series of related transactions to create the fact scenario that may allow them to advance the argument. 38 When viewing the entire transaction, it is clear that the Bank did not convert the plaintiff’s money to itself. It applied it on the plaintiff’s loan in a fashion that it and CHIP thought it had the authority to do so. It was applied in a fashion that was explained to her by the plaintiff’s independent solicitor. The tort of conversion involves the wrongful taking of someone else’s property. The factual circumstances I have found cannot in any way be considered wrongful.

4. What damages were sustained by the plaintiff and what remedy is available to her? 39 One remedy for a mutual mistake in contract is a declaration there was no contract, no consensus ad idem, then putting the parties in the same position they were before entering into the contract. The Bank was prepared to undo the entire transaction. Within ten days of discovering the lack of agreement in the contractual arrangements that she thought existed, she would have been put back in the position she had previously been. Her effort in obtaining the CHIP mortgage would have been wasted, but no expenses would have been incurred. The Bank would have been worse off financially, but it was prepared to do so in order to maintain good relations with the plaintiff. Whether it is framed in terms of failure to mitigate if, in fact, there had been a breach of contract or in terms of putting the parties back to the same position because of the mutual mistake and the remedy of rescission, the result is the same. The plaintiff should have accepted the Bank’s offer. The plaintiff had an understandable reason for not proceeding with the Bank’s proposal; however, that related to her own personal financial circumstances, and the belief that the arrangement she had with CHIP and the Bank was the only method of solving her problem. In reality, it was not, but unfortunately, she was not dissuaded from that approach for at least two years after the transaction had gone awry. 40 The plaintiff sold 1301 Elliott Street in an effort to deal with her cash flow and personal financial problems. She felt she had no alternative. From an evidentiary standpoint, I was unable to determine from her the necessity of the sale Moffat v. Royal Bank R.C. Mills J. 127

of 1301 Elliott Street and, in particular, the use for which the proceeds were made. She did not pay down the RCL loan or the CHIP loan from the sale of that property. She has not satisfactorily explained the necessity for such sale and its connection to the failure of the CHIP mortgage. There have not been any particulars of other financial considerations that would have entered into the decision to sell. 41 Clearly now if she wishes to get out of the CHIP mortgage, there would be a significant penalty and interest costs that have accrued as a result of the increased interest rate on the CHIP mortgage as compared to the RCL. That damage, though, is of her own making and not the fault of the Bank. The plaintiff further claims punitive damages and general damages associated with the addressing two years of financial insecurity and emotional distress. The plaintiff has testified that this has caused her great consternation. I accept her testimony. However, I am unable to determine from that evidence alone how to quantify any claim for emotional stress, even if it were available. 42 If the tort of conversion had been proven, the statement in S.M. Waddams, The Law of Damages, 2nd ed., looseleaf (Toronto: Canada Law Book, 2008) is a complete answer to the claims. It provides at paragraph 1.1750: 1.1750 An offer of redelivery of the goods to the plaintiff will affect the measure of damages and, in some circumstances, will remove the right to maintain the action. When the plaintiff refuses to accept the redelivery, her action for the value of the goods will be stayed provided the court is convinced that the same goods in the same condition as they were in at the time of conversion have been tendered, and that it is not for any other reason unreasonable to expect the plaintiff to accept redelivery. Damages for loss of use of the goods may still be claimed. Similarly an action in detinue when the gist of the complaint is that the goods are wrongfully detained cannot proceed after a tender of the goods except in respect of damages for loss of use of the goods during the period of wrongful detention. It is up to the plaintiff to prove the entitlement to and nature of and extent of the damages sustained. She has failed to do so on both counts. Her claim for special damages associated with the sale of 1301 Elliott Street are based on the position that the property, when sold, did not fetch a price as high as would have been available today. Her long-term goal was to move into the property as her residence and, until then, enjoy investment income. There is no evidence of the nature of any loss of investment income nor the investment of the proceeds of the sale and what kind of return she had achieved in relation to that. She continues to reside at 1331 Elliott Street, and although she claims loss of future residence on the 1301 Elliott Street property, I find it impossible to determine a process which would lead to a quantification of any such loss. 43 In the event that the plaintiff had proven a breach of contract, she has failed to prove any damages. What essentially she has lost in the whole process is the 128 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

ability to obtain $80,000 in cash from the CHIP mortgage to spend in any fashion she desired. It was not free money; she was required to pay interest on it, and she has not identified any investment that would have been utilized to create further income from that $80,000. She is not claiming for a lost opportunity of use of that money, other than it was to provide her with a sense of mental well being. That is what she has lost. I am unable to quantify that even if she were entitled to compensation. 44 The action is dismissed. Costs to be spoken to at the request of either party. Action dismissed.

[Indexed as: Alberta (Attorney General) v. U.F.C.W., Local 401] The Attorney General of Alberta (Applicant) and United Food and Commercial Workers Union, Local No. 401, Old Dutch Foods Ltd., and the Alberta Labour Relations Board (Respondents) and Merit Contractors Association of Canada, the Alberta Federation of labour and Raymond Berry, Colleen Duttenhoffer, Donna Seamans, Aruna Sen, Jos´e San Juan, Maria Gonzalez, Blair Francis, Ky Tran, Maria Messier, Kuluir Sahota, Blanca Mansilla, Eddy Kwan, Anh Nguyen, Kevin Larson, Trang Hoang, Paramjit Bhinsa, Robert Simmonds, Jasmine Dhaliwal, Nguyen Bang, Larry Manser, Scott Estabrooks, Ian Gregory, Georges Matta, Carlos Gonzalez, Rebeca Gamdarillas, Trevor Elms, Gerardo Siguera, Rasinder Khra and Les Csyz (Applicants for Intervener Status) Alberta Court of Queen’s Bench Donald Lee J. Heard: June 3, 2010 Judgment: July 7, 2010 Docket: Edmonton 0903-19396, 2010 ABQB 455 Craig Neuman, Q.C., Dwayne Chomyn for Certain Old Dutch Food Employees Rod Wiltshire for Applicant John Carpenter, Vanessa Cosco for United Food Commercial Workers Union, Local No. 401 Shawn McLeod for Labour Relations Board Civil practice and procedure –––– Parties — Adding or substituting parties — Ap- plication — General principles –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of La- bour Relations Code (Code) to include union security clause violated freedom of Alberta (Attorney General) v. U.F.C.W., Local 401 129 association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Employer included union security clause in collective agreement — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Employees were affected party as their Charter-protected freedom of association rights were directly affected by outcome of dispute — Employees’ interests were sufficiently affected to be made party as it was board that ordered union security clause be included in collective agreement, clause was not freely bargained, and employer did not make it requirement of employees’ employment — Employees had ongoing interest in judicial review of board’s decision such that future collective agreements could return to prior arrangements. Civil practice and procedure –––– Parties — Intervenors — As party –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of Labour Relations Code (Code) to include union security clause violated freedom of association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Employer included union security clause in collective agreement — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Employees were affected party as their Charter-protected freedom of association rights were directly affected by outcome of dispute — Employ- ees’ interests were sufficiently affected to be made party as it was board that ordered union security clause be included in collective agreement, clause was not freely bargained, and employer did not make it requirement of employees’ employment — Em- ployees had ongoing interest in judicial review of board’s decision such that future collective agreements could return to prior arrangements. Labour and employment law –––– Labour law — Labour relations boards — Juris- diction — Jurisdiction under Charter of Rights and Freedoms –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of Labour Relations Code (Code) to include union security clause violated freedom of association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — AG and union presented court with consent order granting application for judicial review on ground that board lacked jurisdiction to make general declaration of constitutional invalidity — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Supreme Court of Canada, in R. v. Conway (Conway) seemed to endorse expansive view of remedial authority of tribunals such that tribunal may be able to make declaration of invalidity under s. 52(1) of 130 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Constitution Act, 1982 — Conway raised serious question about legal foundation of consent order sought by AG and union. Civil practice and procedure –––– Judgments and orders — Consent judgments or orders — Miscellaneous –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of Labour Re- lations Code (Code) to include union security clause violated freedom of association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — AG and union presented court with consent order granting application for judicial review on ground that board lacked jurisdiction to make general declaration of constitutional invalidity — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Supreme Court of Canada, in R. v. Conway (Conway) seemed to endorse expansive view of remedial authority of tribunals such that tribunal may be able to make declaration of invalidity under s. 52(1) of Constitution Act, 1982 — Con- way raised serious question about legal foundation of consent order sought by AG and union. Labour and employment law –––– Labour law — Labour relations boards — Pow- ers — Reconsideration –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of Labour Rela- tions Code (Code) to include union security clause violated freedom of association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Reconsid- eration was one option for employees to seek redress — Employees would have been granted status as affected party in board hearing, had they been given notice of nature of proceeding and constitutional question — Since employees did not receive notice, they did not participate in board hearing — Reconsideration was not adequate remedy for employees as board had discretion to refuse to reconsider decision. Civil practice and procedure –––– Limitation of actions — Principles — Practice and procedure — Adding or substituting parties — Miscellaneous –––– Issue before labour relations board (board) was inclusion of union security clause in collective agreement — Board held that failure of Labour Relations Code (Code) to include union security clause violated freedom of association in s. 2(d) of Canadian Charter of Rights and Freedoms (Charter) — Employer did not apply for judicial review, reconsideration or stay of board’s decision — Attorney General of Alberta (AG) brought application for judicial review of board’s decision — Twenty-nine of employer’s employees (employees) brought application to be added as affected party, or alternatively as intervenors in application for judicial review — Application granted — Employees were added as applicants and were to be treated as single party — Employees’ application for party standing did not circumvent applicable statutory limitation period because application for judicial re- Alberta (Attorney General) v. U.F.C.W., Local 401 131 view was timely — Employees did not bring separate or different application or argue new grounds not contained in initial application — Employees’ participation in application would not expose union to potential prejudice of having to deal with new claim. Labour and employment law –––– Labour law — Collective agreement — Union dues — Effect of Charter of Rights and Freedoms. Constitutional law –––– Charter of Rights and Freedoms — Nature of rights and freedoms — Freedom of association. Cases considered by Donald Lee J.: A.U.P.E. v. Alberta (2001), 2001 ABCA 309, 2001 CarswellAlta 1530, (sub nom. Alberta Union of Provincial Employees v. Alberta) 303 A.R. 1, (sub nom. Alberta Union of Provincial Employees v. Alberta) 273 W.A.C. 1, [2001] A.J. No. 1569 (Alta. C.A.) — referred to Alberta Liquor Store Assn. v. Alberta (Gaming & Liquor Commission) (2006), 2006 CarswellAlta 1690, 69 Alta. L.R. (4th) 98, [2007] 4 W.W.R. 131, 406 A.R. 104, 2006 ABQB 904, 58 Admin. L.R. (4th) 22, [2006] A.J. No. 1597 (Alta. Q.B.) — followed Athabasca Tribal Council v. Alberta (Minister of Environmental Protection) (1998), 67 Alta. L.R. (3d) 232, 26 C.P.C. (4th) 98, 1998 CarswellAlta 980, (sub nom. Ahyasou v. Alberta (Minister of Environmental Protection)) 235 A.R. 387, [1999] 6 W.W.R. 20, 1998 ABQB 875, 13 Admin. L.R. (3d) 254, [1998] A.J. No. 1154 (Alta. Q.B.) — referred to Borowski v. Canada (Attorney General) (1989), [1989] 3 W.W.R. 97, [1989] 1 S.C.R. 342, 57 D.L.R. (4th) 231, 92 N.R. 110, 75 Sask. R. 82, 47 C.C.C. (3d) 1, 33 C.P.C. (2d) 105, 38 C.R.R. 232, 1989 CarswellSask 241, 1989 CarswellSask 465, [1989] S.C.J. No. 14 (S.C.C.) — followed Boyd v. Alberta (Public Service Commissioner) (2000), 2000 ABQB 840, (sub nom. Boyd v. Alberta) 278 A.R. 341, 2000 CarswellAlta 1281, [2000] A.J. No. 1380 (Alta. Q.B.) — referred to Boyd v. Alberta (Public Service Commissioner) (2002), 2002 CarswellAlta 195, 2002 ABCA 34, (sub nom. Boyd v. Alberta) 299 A.R. 198, (sub nom. Boyd v. Alberta) 266 W.A.C. 198, [2002] A.J. No. 189 (Alta. C.A.) — referred to Chiasson v. Kellogg Brown & Root (Canada) Co. (2007), 2007 CarswellAlta 1396, 2007 ABCA 175 (Alta. C.A.) — considered Cuddy Chicks Ltd. v. Ontario (Labour Relations Board) (1991), 91 C.L.L.C. 14,024, 3 O.R. (3d) 128 (note), 50 Admin. L.R. 44, 122 N.R. 361, 81 D.L.R. (4th) 121, [1991] O.L.R.B. Rep. 790, 47 O.A.C. 271, 4 C.R.R. (2d) 1, [1991] 2 S.C.R. 5, 1991 Cars- wellOnt 976, 1991 CarswellOnt 3004, [1991] S.C.J. No. 42, EYB 1991-67701 (S.C.C.) — considered Deloitte & Touche LLP v. Ontario (Securities Commission) (2003), 232 D.L.R. (4th) 1, 310 N.R. 376, 37 B.L.R. (3d) 161, 13 Admin. L.R. (4th) 1, 2003 SCC 61, 2003 CarswellOnt 4121, 2003 CarswellOnt 4122, 179 O.A.C. 1, [2003] 2 S.C.R. 713, REJB 2003-49212, [2003] S.C.J. No. 62 (S.C.C.) — referred to Edmonton Friends of the North Environmental Society v. Canada (Minister of Western Economic Diversification) (1990), 38 F.T.R. 240 (note), 78 Alta. L.R. (2d) 97, [1991] 2 W.W.R. 577, 47 Admin. L.R. 265, [1991] 1 F.C. 416, 114 N.R. 153, 1990 Car- swellNat 4, 1990 CarswellNat 719, 73 D.L.R. (4th) 653 (Fed. C.A.) — referred to 132 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Goudreau v. Falher Consolidated School District No. 69 (1993), (sub nom. Goudreau v. Board of Education of the Falher Consolidated School District No. 69) 46 W.A.C. 21, 8 Alta. L.R. (3d) 205, (sub nom. Goudreau v. Board of Education of the Falher Consolidated School District No. 69) 141 A.R. 21, 16 C.P.C. (3d) 295, [1993] 4 W.W.R. 434, 1993 CarswellAlta 296, [1993] A.J. No. 182 (Alta. C.A.) — followed Health Services & Support-Facilities Subsector Bargaining Assn. v. British Columbia (2007), 2007 C.L.L.C. 220-035, 363 N.R. 226, 400 W.A.C. 1, [2007] 7 W.W.R. 191, D.T.E. 2007T-507, 65 B.C.L.R. (4th) 201, 283 D.L.R. (4th) 40, 137 C.L.R.B.R. (2d) 166, 242 B.C.A.C. 1, 164 L.A.C. (4th) 1, 157 C.R.R. 21, 2007 SCC 27, 2007 Car- swellBC 1289, 2007 CarswellBC 1290, [2007] 2 S.C.R. 391, [2007] S.C.J. No. 27 (S.C.C.) — considered Indian Residential Schools, Re (2000), 2000 ABCA 217, 2000 CarswellAlta 780, 2 C.P.C. (5th) 243, [2000] A.J. No. 901 (Alta. C.A.) — referred to Johannesson v. Alberta (Workers’ Compensation Board Appeals Commission) (1995), 32 Alta. L.R. (3d) 373, 34 Admin. L.R. (2d) 64, (sub nom. Johannesson v. Workers’ Compensation Appeals Commission (Alta.)) 175 A.R. 34, 1995 CarswellAlta 371, [1995] A.J. No. 791 (Alta. Q.B.) — referred to Lavigne v. O.P.S.E.U. (1991), 91 C.L.L.C. 14,029, 48 O.A.C. 241, 4 C.R.R. (2d) 193, 126 N.R. 161, 81 D.L.R. (4th) 545, [1991] 2 S.C.R. 211, 1991 CarswellOnt 1038F, 1991 CarswellOnt 1038, 3 O.R. (3d) 511 (note), [1991] S.C.J. No. 52, EYB 1991- 67641 (S.C.C.) — followed Marshall v. Canada (1999), (sub nom. R. v. Marshall) 179 D.L.R. (4th) 193, 1999 Car- swellNS 349, 1999 CarswellNS 350, (sub nom. R. v. Marshall) [1999] 4 C.N.L.R. 301, (sub nom. R. v. Marshall) 139 C.C.C. (3d) 391, (sub nom. R. v. Marshall) 247 N.R. 306, (sub nom. R. v. Marshall) [1999] 3 S.C.R. 533, (sub nom. R. v. Marshall) 179 N.S.R. (2d) 1, (sub nom. R. v. Marshall) 553 A.P.R. 1, [1999] S.C.J. No. 66 (S.C.C.) — referred to Martin v. Nova Scotia (Workers’ Compensation Board) (2003), 2003 CarswellNS 360, 2003 CarswellNS 361, 2003 SCC 54, (sub nom. Workers’ Compensation Board (N.S.) v. Martin) 217 N.S.R. (2d) 301, (sub nom. Workers’ Compensation Board (N.S.) v. Martin) 683 A.P.R. 301, 310 N.R. 22, (sub nom. Nova Scotia (Workers’ Compensation Board) v. Martin) [2003] 2 S.C.R. 504, 110 C.R.R. (2d) 233, (sub nom. Nova Scotia (Workers’ Compensation Board) v. Martin) 231 D.L.R. (4th) 385, 28 C.C.E.L. (3d) 1, 4 Admin. L.R. (4th) 1, REJB 2003-48214, [2003] S.C.J. No. 54 (S.C.C.) — considered Papaschase Indian Band No. 136 v. Canada (Attorney General) (2005), 2005 ABCA 320, 2005 CarswellAlta 1407, (sub nom. Lameman v. Canada (Attorney General)) 380 A.R. 301, (sub nom. Lameman v. Canada (Attorney General)) 363 W.A.C. 301, [2005] A.J. No. 1273 (Alta. C.A.) — considered Paul v. British Columbia (Forest Appeals Commission) (2003), 2003 CarswellBC 2432, 2003 CarswellBC 2433, 2003 SCC 55, 5 Admin. L.R. (4th) 161, 111 C.R.R. (2d) 292, 18 B.C.L.R. (4th) 207, [2003] 2 S.C.R. 585, 231 D.L.R. (4th) 449, [2003] 11 W.W.R. 1, [2003] 4 C.N.L.R. 25, 3 C.E.L.R. (3d) 161, [2003] S.C.J. No. 34, REJB 2003-48213 (S.C.C.) — considered Peavine M´etis Settlement v. Alberta (Minister of Aboriginal Affairs & Northern Develop- ment) (2008), 2008 ABCA 83, (sub nom. Peavine M´etis Settlement v. Alberta (Minister of Aboriginal Affairs & Northern Development)) 425 A.R. 1, 2008 Alberta (Attorney General) v. U.F.C.W., Local 401 133

CarswellAlta 253, (sub nom. Peavine M´etis Settlement v. Alberta (Minister of Aboriginal Affairs & Northern Development)) 418 W.A.C. 1, [2008] A.J. No. 199 (Alta. C.A.) — considered Private Copying 2008-2009, Re (2007), 62 C.P.R. (4th) 241, (sub nom. Apple Canada Inc. v. Canadian Private Copying Collective) 371 N.R. 60, 2007 FCA 338, 2007 CarswellNat 3604, [2007] F.C.J. No. 1441 (F.C.A.) — referred to R. v. Conway (2010), 1 Admin. L.R. (5th) 163, 2010 CarswellOnt 3847, 2010 Carswell- Ont 3848, 2010 SCC 22 (S.C.C.) — followed R. v. Morgentaler (1993), 1993 CarswellNS 429, 1993 CarswellNS 429F, [1993] 1 S.C.R. 462, EYB 1993-67405, [1993] S.C.J. No. 48 (S.C.C.) — referred to Real Estate Council of Alberta v. Henderson (2007), 2007 ABCA 303, 2007 Carswell- Alta 1288, [2007] 12 W.W.R. 601, 286 D.L.R. (4th) 110, 410 W.A.C. 39, 67 Admin. L.R. (4th) 45, 417 A.R. 39, 80 Alta. L.R. (4th) 1, [2007] A.J. No. 1068 (Alta. C.A.) — referred to Simlote v. Alberta (1989), 1989 CarswellAlta 716, 69 Alta. L.R. (2d) 401, [1989] A.U.D. 673, [1989] A.J. No. 818 (Alta. C.A.) — referred to Simlote v. Alberta (1990), 103 A.R. 240 (note), [1989] S.C.C.A. No. 407 (S.C.C.) — referred to Skyline Roofing Ltd. v. Alberta (Workers’ Compensation Board) (1996), 186 A.R. 69, 1996 CarswellAlta 407, [1996] A.J. No. 690 (Alta. Q.B.) — referred to Smyth v. Edmonton (City) Police Service (2005), 2005 ABQB 652, 2005 CarswellAlta 1208, 385 A.R. 100, [2005] A.J. No. 1099 (Alta. Q.B.) — followed Telus Communications Inc. v. Opportunity (Municipal District) No. 17 (1998), 235 A.R. 258, 1998 CarswellAlta 976, 49 M.P.L.R. (2d) 16, [1998] A.J. No. 1182 (Alta. Q.B.) — followed U.F.C.W., Local 401 v. Old Dutch Foods Ltd. (2009), [2009] Alta. L.R.B.R. 368, [2009] L.V.I. 3869-3, (sub nom. Old Dutch Foods Ltd. v. U.F.C.W., Local 401) 171 C.L.R.B.R. (2d) 1, 188 L.A.C. (4th) 289, 2009 CarswellAlta 1807, [2009] A.L.R.B.D. No. 56 (Alta. L.R.B.) — referred to Vancouver Rape Relief Society v. Nixon (2004), 26 Admin. L.R. (4th) 75, 2004 BCCA 516, 2004 CarswellBC 2323, 204 B.C.A.C. 315, 333 W.A.C. 315, [2004] B.C.J. No. 2059 (B.C. C.A. [In Chambers]) — referred to Vong v. Wong (2004), 354 A.R. 342, 329 W.A.C. 342, 2004 ABCA 216, 2004 Carswell- Alta 931, 31 Alta. L.R. (4th) 235, [2004] A.J. No. 824 (Alta. C.A.) — distinguished W. (B.D.) v. R. (G.B.G.) (1989), 1989 CarswellAlta 126, 68 Alta. L.R. (2d) 377, 22 R.F.L. (3d) 199, [1989] A.J. No. 662 (Alta. C.A.) — 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 Generally — referred to s. 1 — referred to s. 2(d) — considered s. 15 — referred to s. 23 — referred to s. 24 — referred to s. 24(1) — referred to 134 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Constitution Act, 1867, (U.K.), 30 & 31 Vict., c. 3, reprinted R.S.C. 1985, App. II, No. 5 s. 96 — referred to Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), c. 11, reprinted R.S.C. 1985, App. II, No. 44 s. 52 — referred to s. 52(1) — referred to Labour Relations Act, S.A. 1980, c. 72 Generally — referred to Labour Relations Code, R.S.A. 2000, c. L-1 Generally — referred to s. 12(4) — referred to s. 19(2) — considered s. 40 — referred to s. 60 — considered s. 60(1) — considered s. 148 — considered Rules considered: Alberta Rules of Court, Alta. Reg. 390/68 R. 38 — pursuant to R. 38(3) — considered R. 753.09(1)(c) [en. Alta. Reg. 457/87] — considered R. 753.1 [en. Alta. Reg. 457/87] — pursuant to R. 753.1(1) [en. Alta. Reg. 457/87] — considered R. 753.1(3) [en. Alta. Reg. 457/87] — considered R. 753.11 [en. Alta. Reg. 457/87] — referred to R. 753.16(2) [en. Alta. Reg. 457/87] — referred to

APPLICATION by employees to be added as affected party, or alternatively as intervenors, in application for judicial review of labour review board’s decision.

Donald Lee J.: Introduction 1 The Attorney General of Alberta originally asked this Court to judicial review a decision of the Alberta Labour Relations Board (the “Board”). The Board found that the Labour Relations Code, R.S.A. 2000, c. L-1, violates the freedom of association the Charter protects because, unlike similar legislation in most other provinces, it omits a key component of the Canadian model of labour relations regarding union security. The employer who was the subject of the application before the Labour Relations Board, Old Dutch Foods Ltd., is not a party to the judicial review; having chosen not to challenge the Board’s decision and it has settled the matters that formed the basis for the applications before the Board. 2 The Board’s Decision at issue here is an important constitutional ruling in the field of labour law, invoking freedom of association under s. 2(d) of the Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 135

Canadian Charter of Rights and Freedoms, Constitution Act, 1982, C. 11, Schedule B (U.K.). It reverses an earlier Board decision and declares that provincial labour legislation must now include a requirement that all collective agreements between employers and unions contain, at a minimum, a union security provision that forces all employees in a bargaining unit represented by a union to pay dues to the union, even if they do not join the union (the Rand Formula). Counsel advises that it is to date the only decision on this point in Canada. 3 The Attorney General filed an Originating Notice of Motion on December 8, 2009 seeking judicial review of the Decision. The application was returnable January 19, 2010, but has been adjourned to await the outcome of intervener applications. 4 In advance of the judicial review, twenty nine Old Dutch Foods employees (the “Employees”) sought status as affected parties or as interveners. A Notice of Motion was filed on behalf of the Employees on February 17, 2010 seeking Party or Intervener status in the judicial review application. These Reasons deal with the Party or Intervener status application of the Employees. 5 Just prior to the Employees’ Application being heard, the Attorney General and the Union presented the Court with the following Consent Order which reads:– Order UPON THE APPLICATION of the Attorney General; AND UPON HEAR- ING counsel for the Applicant; AND UPON NOTING the consent of counsel for the Respondents the United Food and Commercial Workers Union, Local No. 401, counsel for the Respondent the Alberta Labour Relations Board neither consenting to nor opposing this order; AND UPON NOTING that Old Dutch Foods Ltd. is not participating in these proceedings and that the Applicant Attorney General reserves its right to re-assert grounds raised in this application in future cases, IT IS HEREBY ORDERED THAT: 1. This application for judicial review is granted, on the sole ground that the Alberta Labour Relations Board lacks jurisdiction to make a general declaration of constitutional invalidity, and without consideration of other grounds asserted in support of the application. 2. Paragraph 58 of the Board’s decision dated November 9, 2009 is set aside, to the extent (and only to the extent) that it includes or constitutes a declaration of general constitutional invalidity. 3. The declaration referred to in paragraph 69 of the Board’s decision is set aside. 4. For greater certainty, the relief granted by the Board at Paragraphs 73 and 74 of its decision dated November 9, 2009 is unaffected by this order. 5. The parties will bear their own costs in this matter. 136 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

6 The Employees continue to maintain their Affected Party Status Application in the face of the Consent Order. These Reasons deal with the Employees’ Af- fected Party Status Application only as that was originally the scheduled matter before.

Background 7 In 1945 the workers at Ford Motor Company of Canada Ltd. and the Inter- national Union of United Automobile, Aircraft and Agricultural Implement Workers of America C.L.L.R. 18,001 (Special Awards) in Windsor, Ontario, were on strike for 99 days over union security. In resolving the Ford Strike, Justice Rand of the Supreme Court of Canada imposed a compromise: voluntary union membership combined with mandatory union dues payments. This formula came to be known as a “Rand formula” type of union security provision. Justice Rand described any argument against such a formula as simply an argument for a weak union. Most Canadian jurisdictions subsequently incorporated his formula into labour legislation; Alberta did not. 8 Today every Canadian jurisdiction regulates the way in which individuals and collectives exercise their constitutionally protected right to bargain collectively. Such legislation recognizes this right while respecting the interests of others, promoting democracy within unions, ensuring all employees at a unionized workplace are fairly represented, and encouraging industrial peace and stability. In striking this balance, Canadian jurisdictions require collective agreements to include certain provisions. In most Canadian jurisdictions, one of these provisions provides for union security – a provision providing that all members of the bargaining unit will provide union dues to the union they have democrati- cally chosen to be their exclusive representative. However Alberta’s labour legislation does not include, such a provision and thus, prior to the Board’s decision, Unions had to bargain with employers over their own viability in addition to bargaining over workplace conditions. 9 In 2009 the workers at Old Dutch Ltd. in Calgary, Alberta, were locked-out over union security. This was the contentious issue between Old Dutch Foods Ltd. and the United Food and Commercial Workers, Local 401. Before the La- bour Relations Board, the issue was whether the Collective Agreement would contain a Rand formula form of union security, otherwise known as a “check- off’ or “agency” union security clause. Old Dutch refused to include a union security provision akin to a Rand formula in the Collective Agreement. 10 Local 401 and the individual complainants – Clayton Herriot, Theda O’Brien, and Phoebe Julian – brought an application asserting that Old Dutch committed an unfair labour practice by violating section 60(1) of the Code when it bargained union security to impasse during the course of their bargaining for a new Collective Agreement. They also asserted that Alberta’s failure to include a Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 137

union security provision as one of the provisions which all collective agreements must include was unconstitutional. 11 This argument was based on the Supreme Court of Canada’s decision in Health Services & Support-Facilities Subsector Bargaining Assn. v. British Co- lumbia, [2007] S.C.J. No. 27 (S.C.C.). In that case, the Court found that the right to freedom of association protected in s. 2(d) of the Charter encompasses a right to collective bargaining and outlined the nature of that right. Thus employees have a right to unite, to present demands to employers collectively, and to engage in meaningful discussions in an attempt to achieve workplace-related goals (para. 89). The Court explained that this constitutional right protects “the ability of workers to engage in associational activities, and their capacity to act in common to reach shared goals related to workplace issues and terms of employment” (para. 89). It enhances workers’ human dignity, liberty and autonomy by giving them the opportunity to influence workplace rules and thereby “gain some control over a major aspect of their lives, namely their work” (para. 82). It also enhances workplace democracy and enhances the equality of workers by palliating the historical inequality between employers and employees (paras. 84, 85). 12 The Board agreed with the Union that the freedom of association protections within 2(d) to engage in the process of collective bargaining include a Rand formula type of union security and so declared. The Board also accepted that, the failure to include a union security provision in Alberta’s Labour Relations Code interferes with the constitutional right to bargain collectively. That is, declared the Board, the omission from the Code of a minimum union security provision akin to a Rand formula violates section 2(d) of the Charter. The Attorney General of Alberta made no arguments asserting that the continued absence of a statutory Rand formula in Alberta was justified by section 1 of the Charter. The Board suspended its declaration of constitutional invalidity for one year (U.F.C.W., Local 401 v. Old Dutch Foods Ltd., [2009] A.L.R.B.D. No. 56 (Alta. L.R.B.) at paras. 58, 66-69 (the “Decision”)). 13 In respect to the section 60 and 148 complaints of bad faith bargaining and interfering with the Union’s representational rights, the Board first found that given its view that the Rand formula forms part of the constitutional protection provided by 2(d), the matter was no longer capable of being the subject of collective bargaining and refusing such a provision to impasse would constitute a failure to bargain in good faith. The Board went on to state that even if it was wrong in that respect, the refusal to agree to a Rand Formula in the circumstances was a violation of section 60. The Board ordered that the existing lockout/strike be suspended and that the parties meet and resume collective bargaining with the Rand formula as an agreed term of the collective agreement. Should the parties be unable to conclude a collective agreement within 30 days, the suspension of the lockout/strike would be lifted (paras. 70, 73-74). The section 148 complaint was dismissed. (para. 75). 138 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

14 Old Dutch did not apply for judicial review of the Board’s decision, did not apply under the Code for reconsideration of that decision by the Board, and did not seek a stay of the Board’s decision. Instead, Old Dutch chose to accept the Board’s decision and to conclude a Collective Agreement with the Union which included a Rand style union security provision.

The Test for Affected Party Status 15 The Employees seek to be added to this judicial review as an Affected Party. The Union submits that they are not an affected party and have no direct interest in the outcome of the judicial review. 16 Rule 753.1(1) allows the Court to add a person as a party to a judicial review, and Rule 753.1(3) allows the Court to allow a person “affected by the proceedings” to take part. To be a party, a person rights must be directly affected by the outcome of the dispute; they must have more than a mere interest in the development of the law (See: Edmonton Friends of the North Environmental Society v. Canada (Minister of Western Economic Diversification) (1990), 73 D.L.R. (4th) 653 (Fed. C.A.) at 660). As this Court explained in Smyth v. Edmonton (City) Police Service, [2005] A.J. No. 1099 (Alta. Q.B.), a person will have a direct interest when their “substantive rights ... will be directly affected in the matter before the Court and ... it is a party adverse in interest to one of the parties” (para. 8) citing Goudreau v. Falher Consolidated School District No. 69 (1993), 8 Alta. L.R. (3d) 205 (Alta. C.A.). On a similar note, in Alberta Liquor Store Assn. v. Alberta (Gaming & Liquor Commission), [2006] A.J. No. 1597 (Alta. Q.B.) the Court described a person “aggrieved” by an administrative decision as one whose property, economic, legal, business, professional or employment interests will be affected (paras. 8-9) cited with approval in Real Estate Council of Alberta v. Henderson, [2007] A.J. No. 1068 (Alta. C.A.) at para. 16. 17 This same test applies in Charter cases. In Goudreau the Alberta Court of Appeal considered whether certain parties should be added to a judicial review as a party. One of the issues in the judicial review was the interpretation and application of s. 23 of the Charter. When determining whether the applicants were Affected Parties, the Court asked whether they had a direct interest in the outcome of the judicial review and whether the Court’s decision would bind them (paras. 10-11). 18 It is submitted that the fact that a person was, or could have been, an Af- fected Party or intervener before the Court or tribunal below does not relieve that person from demonstrating that interest at the next level of review or appeal (Alberta Liquor Store Assn., para. 12); See also Peavine M´etis Settlement v. Alberta (Minister of Aboriginal Affairs & Northern Development), [2008] A.J. No. 199 (Alta. C.A.) in which a group that had been an intervener before the Court of Queen’s Bench had to apply afresh to be an intervener before the Court Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 139

of Appeal. Indeed it is submitted that the issues that were before the lower Court or tribunal and the interests at stake may differ from the ones on appeal. 19 While it is true that the Employees’ interests were affected by the Board’s decision, the Union submits that is not the test they must meet as the relevant question is whether they will be directly affected by this Court’s decision. 20 It is submitted that the Employees’ allegation of a lack of formal notice of the Board’s hearing does not give them a right to be a party before the Court. The Employees do not argue that the lack of notice is a basis for quashing the Board’s decision. They assert that because they could have participated in the Board hearing if they had wanted to, they have a right to be a party before the Court. 21 In an Affidavit filed on February 17, 2010 in support of the Employees’ request party or intervener status one of the Employees, Raymond Berry, described his employment circumstances and how the Decision has impacted him:– Employment with Old Dutch Foods ..... 2. I have been an employee of the [Employer] at its plant in Calgary, Alberta since September 7, 1983. 3. I presently work as a Head Receiver. In this position, the terms of my employment are set by the collective agreement that has, most recently, been renegotiated between [the Employer] and the [Union]. Past Choice to Refuse Union Membership and Payment of Dues 4. When I commenced employment at [the Employer] there was already a union present at this workplace: the United Food and Com- mercial Workers’ Union, Local No. 373A (“the UFCW, Local 373A”). 5. I never voted for, or otherwise supported the UFCW, Local 373A being my bargaining agent at [the Employer]. 6. The collective agreement that was in place between [the Employer] and the UFCW, Local 373A when I started working at [the Em- ployer] did not require me to join the UFCW, Local 373A or to pay union dues to the UFCW, Local 373A. 7. I made a deliberate choice when I started working at [the Employer] not to join the union or to pay union dues to the UFCW, Local 373A. I had previous experience working in a unionized workplace, where the collective agreement in place forced me both to become a union member and to pay dues to the union by payroll deduction administered by the employer. Based on that previous experience, and on my own personal views, I did not feel that becoming a union member or paying union dues was in my best interests. I did not wish to associate with others in a union and support their union activities 140 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

through the payment of union dues. I remain of this same view today...... 9. When the [Union] took over from the UFCW, Local 373A as the union at [the Employer] in 2007 I maintained my previous choice not to join the [U]nion or to pay union dues to the [Union]...... 11. Until December, 2009, I had never authorized the [Employer] to deduct union dues from my pay to remit to the UFCW, Local 373A or to the [Union], nor had I otherwise chosen or been required to pay union dues to either union. If the choice remained available for me today to continue to work at [the Employer] and not pay dues to the [Union] this is the choice that I would continue to make. Past Refusal of Union Representation 12. Throughout my employment with [the Employer] I have never asked the UFCW, Local 373A or the [Union] to represent me in any dealings with my employer. I have never asked either union to pursue a grievance or any other issue on my behalf under a collective agreement at [the Employer]. I have never participated in collective bargaining, or on any other union committee related to my workplace. 13. I have never asked for, or received, financial or other support from the UFCW, Local 373A or the [Union]...... 16. I do not wish to associate with members of the [Union]. I do not wish to provide financial support to the [Union], whether it be for activities related to my employment with [the Employer], or for other activities of the [U]nion that are not connected with my employment. 2009 Labour Dispute 17. Collective bargaining for the latest renewal of a collective agreement began between [the Employer] and the [Union] in 2008. 18. By the spring of 2009 a renewed collective agreement had still not been agreed upon between the company and the union. A strike by the [Union] and a lockout by [the Employer] began at the end of March, 2009. 19. I chose to cross the picket line to continue working.. . after the strike and lockout began, on terms of employment set by the company. I did not receive any strike pay from the [Union]. No Notice of 2009 Board Application 20. I did not receive any notice from [the Employer], the [Union], the. . . Board, or from anyone else about a hearing of a complaint that I Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 141

later found out had been filed with the Board by the [Union] against [the Employer] in April, 2009, and that I later found out had been heard by the Board in May, June and July, 2009. 21. I continued to work at [the Employer] throughout the labour dispute in 2009. At no time did I see a notice posted at the workplace. . . about the hearing of the [U]nion’s complaint. 22. I did not know that I could have tried to participate in the hearing before the Board as an affected employee of [the Employer]. 23. I did not attend the Board hearings held in May, June and July, 2009.... 24. I did not know that during the hearing held in 2009 the Board was considering a claim by the [Union] that it was unconstitutional, and otherwise unlawful, for [the Employer] not to agree to include a clause in the collective agreement at my workplace that would force me, if I wanted to keep my job, to pay union dues to the [Union]. 2009 Board Decision and New Collective Agreement 25. The [D]ecision . . . was referenced by Members of the [Union] on the picket line at [the Employer] in November, 2009 saying that the Board had made a decision that would force me, if I wanted to keep my job, to pay union dues to the [Union]. 26. I learned that the Board had, in [the D]ecision, ordered that the strike and lockout be suspended while [the Employer] and the [Union] were required to resume collective bargaining, and that a clause requiring all bargaining unit employees, including me, to pay union dues to the [Union] had to be considered as an already agreed to item in the resumed collective bargaining. 27. After the Board’s decision was made [the Employer] and the [Union] concluded a collective agreement that included the forego- ing provision requiring all bargaining unit employees to pay the same level of union dues whether or not they were actual union members. I did not participate in a ratification vote of employees pertaining to this collective agreement. Forced Union Dues 28. After the new collective agreement was concluded a representative of [the Employer] presented me with a [dues remittance] form at work . . . . 29. I did not want to sign this form or authorize the deduction or remittance of union dues from my pay to the [Union]. However, I was told by a representative of [the Employer] that because of the Board’s decision, and the new collective agreement that followed from that decision, it was now a requirement that I pay union dues to the [Union] if I wanted to keep my job. 30. In these circumstances I felt that I had no choice. I wanted to keep working at [the Employer] to support myself and my family. I did 142 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

not have other employment readily available to me. As a result, I signed the form that was presented to me. 31. Beginning in December, 2009, and continuing to this day, union dues have been deducted from my pay at [the Employer] and I assume that these dues have been remitted to the [Union]. 22 A review of Raymond Berry’s Affidavit makes clear that the Employees are upset that they now have to pay union dues. The Employees’ counsel similarly asserts that the Employees financial interests are at stake because union dues are being deducted from their pay cheques. 23 However the Union argues that this Court’s decision will not change that as their employer Old Dutch has settled it’s dispute with the Union and concluded a Collective Agreement with the Union. That Collective Agreement establishes the terms and conditions of the Employees’ employment at Old Dutch and includes a Rand-style union security provision that will continue to affect the Em- ployees irrespective of this Court’s decision. As such it is submitted that the Employees have no direct, personal interest at stake and will neither benefit nor suffer adversely from the Court’s decision; their interest is no greater than that of any other Albertan. 24 The Employees argue that the Union invoked their freedom of association before the Board when asserting the need for a statutory Rand formula. The Employees assert that they have a constitutional right at stake “to be free from forced association”. 25 The Union argues that as this argument was not raised before the Board, the evidentiary record is insufficient for this Court to address it. More importantly it is submitted that the Supreme Court of Canada has already found that a statutory requirement to pay union dues does not violate the Charter. In Lavigne v. O.P.S.E.U. (1991), 81 D.L.R. (4th) 545 (S.C.C.), the Supreme Court of Canada considered the argument that the Employees of Canada seek to advance: that a requirement that dissenting employees pay union dues to the union democrati- cally chosen to represent them violates a right not to associate. It is submitted that the Court explicitly rejected this argument and there is nothing in the Health Services case that suggests that the Court would decide that issue differently today. 26 Lavigne concerned a college professor who was required to pay dues to his union under a mandatory check-off clause (Rand formula) in the collective agreement between his union and his employer. The Ontario legislation requires such a provision to be in collective agreements. The professor argued that the requirement to pay union dues violated his rights under s. 2(d) of the Charter. While there were four concurring judgments, it is submitted that the entire Court affirmed the importance of a Rand formula to collective bargaining and agreed that a requirement to pay union dues does not violate the Charter. Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 143

The Test for Obtaining Intervener Status 27 The Employees ask this Court to add them as interveners. When considering an application for intervention, the Court first considers the subject matter of the proceeding and then determines the proposed intervener’s interest in that subject matter (Papaschase Indian Band No. 136 v. Canada (Attorney General), [2005] A.J. No. 1273 (Alta. C.A.) at para. 5). A proposed intervener must have a direct interest in the case before the Court or have some special expertise or insight to bring to bear on the issues facing the Court (R. v. Morgentaler, [1993] S.C.J. No. 48 (S.C.C.) at para. 1); Indian Residential Schools, Re, [2000] A.J. No. 901 (Alta. C.A.) [hereinafter Doe] at para. 10 citing Athabasca Tribal Council v. Alberta (Minister of Environmental Protection), 1998 ABQB 875 (Alta. Q.B.)). For instance, in Goudreau, which concerned s. 23 of the Charter, the Court added as interveners two associations that promoted French interests in Alberta and could “bring into play their respective knowledge and expertise in dealing with section 23 Charter problems throughout the Province, including the Peace River area” (at para. 17). 28 In considering an application to intervene, the Courts are also concerned with the legal arguments the proposed intervener intends to make. An intervener cannot widen or add to the legal points in issue (Deloitte & Touche LLP v. Ontario (Securities Commission), [2003] S.C.J. No. 62 (S.C.C.) at para. 31; R. v. Morgentaler at para. 2). 29 In order to preserve the intent of allowing interventions, courts commonly put restrictions on an intervener’s participation by doing such things as:– • limiting the length of the intervener’s submissions (Private Copying 2008-2009, Re, [2007] F.C.J. No. 1441 (F.C.A.) [hereinafter Apple Can- ada] at para. 14; Vancouver Rape Relief Society v. Nixon, [2004] B.C.J. No. 2059 (B.C. C.A. [In Chambers]) at para. 20; Doe at para. 13; • requiring the intervener to accept the evidentiary record as is (Apple Canada, para. 14; see also: Marshall v. Canada, [1999] S.C.J. No. 66 (S.C.C.) at para. 9 and Edmonton Friends of the North, at 658); and • prohibiting the intervener from raising new issues (Apple Canada, para. 13; Doe, para. 13; Nixon, para. 19). 30 These proceedings concern whether the right to freedom of association, which the Labour Relations Code protects, is not fully protected in Alberta given the lack of a union security provision in the Code. 31 The Union argues that the Employees have no special expertise or insight to bring to the issues facing the Court as they have no expertise about the constitutional issues before the Court, and unlike the French associations that were added as interveners in the Goudreau case, they have no history of advocacy in relation to s. 2(d) of the Charter and do not collectively represent a public interest. 144 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

32 Moreover it is submitted that the Employees fail to indicate what arguments they intend to advance if added as interveners. Raymond Berry’s cross-examination on his Affidavit indicates that he does not know what legal challenge he is making (p. 88, 1. 10), he has not seen the Attorney General’s judicial review application and does not know what is in it (p. 93, 1. 17), and he has not read the Board’s decision (p. 95, 1. 25), does not know what the Board determined (p. 96, 1. 1), and does not know how the judicial review could affect him (p. 94, 1. 14). Indeed, it appears that three organizations, including LabourWatch and the National Citizens Coalition, are assisting the Employees rather than seeking intervener status themselves (Berry Cross-Examination, p. 74, 1. 24 top. 87,1. 18 and p,92,11. 15 to 25). 33 As was set out above, if the Employees seek to argue that they have a constitutional right not to associate by paying union dues, this is contrary to the Su- preme Court of Canada’s decision in Lavigne. If the Employees want the Su- preme Court to overturn the Lavigne decision, it may be appropriate for them to seek intervener status before the Supreme Court. As this Court is bound by La- vigne, allowing them intervener status at this stage would unnecessarily expand the issues. 34 In sum, the Union submits that the Employees have failed to meet the test necessary for them to be added as interveners. They will not be directly affected by this Court’s decision, they have no special expertise to bring to the constitutional issues facing the Court, and their arguments would unnecessarily expand the issues before the Court. 35 Furthermore the Employees interest in having the Board’s declaration set aside for more than one reason was somewhat remote: if, when Old Dutch Foods again bargains collectively with UFCW Local 401, it might resist a Rand Formula if this Court disagrees with the Board’s constitutional reasoning. The Employees might avoid paying union dues under the next collective agreement if the Court expresses their (and our) favoured view on the constitutional issue.

The Result of the Attorney General’s Application is Already Known 36 It is further submitted that the result of the Attorney General’s application is known. The Attorney General and the UFCW have drafted an order that sets aside the declaration and makes the order’s legal implications clear to their satis- faction. To continue the litigation to find out whether there are other sufficient grounds to set aside the declaration pretends that it is the Board’s reasons rather than its actions that are the subject of a judicial review. The Attorney General is satisfied to have the order that she asked for, and to re-litigate the constitutional issue when and if it arises. 37 The Order proposed by the Attorney General and the UFCW does dispose of this application: the Attorney General asked for a declaration to be set aside, and the proposed order sets the declaration aside. Although the Employees do not Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 145

wish to “expand the scope of this application” in the sense that they do not wish to expand the grounds for relief set out in the Originating Notice, they wish to be made parties to the application for judicial review in order to seek relief that is not in the Originating Notice. 38 The Attorney General believes that the Employees’ adjustment of their position shows that their remedy is not available in this application. The Employees wish to attack the Board’s specific directions to Old Dutch Foods, which had an immediate effect on their obligation to pay dues. They wish to attack the express and implied constitutional reasons for those directions. Since this is their project, their remedy must be found in proceedings where the Board’s directions to Old Dutch Foods are in issue. 39 Although certain Employees of Old Dutch Foods Ltd. disagree with a decision of the Alberta Labour Relations Board, they did not file an Originating Notice seeking judicial review of the Board’s decision. Instead, well after expiry of the limitation period, they ask this Court to make them a “co-applicant” in the judicial review the Attorney General filed within the limitation period. They also ask this Court to allow them to proceed with that judicial review on their own when the Attorney General chooses not to proceed, and to prevent the Attorney General from settling its judicial review despite the fact that the proposed Con- sent Order gives the Attorney General all of the remedies it asked for in its Originating Notice. 40 With respect to the Employees’ proposed order, the Union submits that to grant that order the Court would have to deny the Attorney General’s application for a Consent Order and that should have been reflected in the Employees’ draft order. As well, it would be inappropriate to allow the Employees to be an applicant and yet make them immune from paying costs. The Employees have not cited any precedent suggesting they could be entitled to such immunity. 41 The Board found that the Code violates the freedom of association the Char- ter protects because, unlike similar legislation in most other provinces, it omits a key component of the Canadian model of labour relations regarding union security (U.F.C.W., Local 401 v. Old Dutch Foods Ltd. at paras. 58,66 - 69). 42 The Board also found that even if it was wrong on the constitutional question, the Employer’s refusal to agree to union security in the circumstances constituted bad faith bargaining and was thus a violation of section 60 of the Code. The Board ordered that the existing lockout/strike be suspended and that the parties meet and resume collective bargaining with union security as an agreed term of the collective agreement (paras. 70, 73-74). The Attorney General’s judicial review application does not challenge this aspect of the Board’s decision. Thus, this portion of the Board’s decision, which requires the Employer to agree to a term requiring its employees to pay union dues, stands irrespective of whether the Attorney General’s judicial review continues. 146 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

43 Only the Attorney General applied for judicial review of the Board’s decision. The parties to that judicial review, the Attorney General and the Union, settled the judicial review and drafted a Consent Order reflecting this settlement. The Board does not object to the Consent Order. The Consent Order gives the Attorney General all of the remedies sought in its Originating Notice. 44 Despite never having filed their own Originating Notice, the Employees ask this Court to allow them to be added as a “co-applicant” to the Attorney Gen- eral’s judicial review and to continue that application without the Attorney Gen- eral if need be. The Employees ask to be added as an applicant so they can “pursue available redress, even in the absence of ongoing participation by the Attorney-General”. The Union submits that allowing the Employees’ application would allow them to circumvent the limitation period for seeking judicial review. 45 A claimant cannot be added to an action outside of the applicable limitation period unless there is a statutue or Rule allowing for the addition or allowing the Court to extend that limitation period (see: Vong v. Wong, [2004] A.J. No. 824 (Alta. C.A.)). In this case, s. 19(2) of the Code establishes a 30 day time limit for seeking judicial review of a decision of the Board:– 19(2) A decision, order, directive, declaration, ruling or proceeding of the Board may be questioned or reviewed by way of an application for judicial review seeking an order in the nature of certiorari or mandamus if the originating notice is filed with the Court and served on the Board no later than 30 days after the date of the decision, order, directive, declaration, ruling or proceeding, or reasons in respect of it, whichever is later. There is no provision in the Code giving the Court jurisdiction to extend the limitation period. 46 The Alberta Court of Appeal has held that courts have no jurisdiction to extend such limitation periods where the time limit is set by statute and does not contain an express extension provision (W. (B.D.) v. R. (G.B.G.) (1989), 68 Alta. L.R. (2d) 377 (Alta. C.A.) at 380). 47 The Courts have made similar observations regarding the six month time limit for seeking judicial review stipulated by Rule 753.11 (Boyd v. Alberta (Public Service Commissioner), [2000] A.J. No. 1380 (Alta. Q.B.) at para. 9 affd: [2002] A.J. No. 189 (Alta. C.A.); Skyline Roofing Ltd. v. Alberta (Workers’ Compensation Board), [1996] A.J. No. 690 (Alta. Q.B.) at para. 11; Johannesson v. Alberta (Workers’ Compensation Board Appeals Commission), [1995] A.J. No. 791 (Alta. Q.B.) at para. 34; Stevenson, J. and Cˆot´e J.A, eds., Alberta Civil Procedure Handbook (Edmonton: Juriliber, 2009) at p. 799). 48 Alberta Courts have held that where an applicant seeks relief that would have the effect of setting aside an administrative decision or act, that application is subject to the time limitation applicable to judicial review. That is, a party Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 147

cannot avoid the limitation period by disguising their application as something other than an application to set aside a tribunal’s decision (Boyd, paras. 17, 24; A.U.P.E. v. Alberta, [2001] A.J. No. 1569 (Alta. C.A.) at para. 3; Simlote v. Alberta, [1989] A.J. No. 818 (Alta. C.A.) (leave to appeal denied: (1990), [1989] S.C.C.A. No. 407 (S.C.C.)). 49 This Court addressed this point in Telus Communications Inc. v. Opportunity (Municipal District) No. 17, [1998] A.J. No. 1182 (Alta. Q.B.). In that case, the applicant had brought an application for a declaration instead of an application for judicial review. In finding that the judicial review time limitation barred the application, this Court commented on the purpose of such limitation periods at para. 66:– The Applicant has submitted that the enforcement of the limitation period would result in making valid an otherwise invalid act. This same argument could be raised in connection with respect to any action. It could be equally argued that the invalid actions of any Defendant are made valid by the expi- ration of the limitation period. The purpose of a limitation period is to preclude enforcement of a legal right through the passage of time. The Legisla- ture has concluded that the enforcement of legal rights cannot be open- ended, and that there must be some finality if action is not taken within a specified time. This is for policy reasons and there is not anything to suggest that such policy considerations should be different for judicial review applications as compared to other types of actions. 50 In this case, it is submitted that if the Employees wanted to challenge the Board’s decision, they should have filed an Originating Notice within the time period for doing so. An order refusing the Attorney General’s Consent Order resolving its judicial review and allowing the Employees to proceed with that judicial review, despite not having filed their own Originating Notice, would it is submitted allow them to circumvent the time limitation. 51 The Union has already argued that the Employees are not affected by the issues raised in the Attorney General’s application for judicial review. To be a party, a person’s rights must be directly affected by the outcome of the dispute; they must have more than a mere interest in the development of the law. A person will have a direct interest when their “substantive rights ... will be directly affected in the matter before the Court”. 52 The Employees’ submissions and Raymond Berry’s Affidavit make clear that the Employees are upset that they now have to pay union dues. However, the Attorney General’s judicial review does not challenge the requirement that the Employees pay union dues. Even if the judicial review proceeded and this Court quashed the Board’s decision and sent the matter back to the Board for a fresh determination, that determination would not concern the Employees’ interests as those interests are no longer at issue given the settlement between Old Dutch and the Union. As such, it is submitted that the Employees have no direct, personal interest at stake and would neither benefit nor suffer adversely from the 148 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Attorney General’s judicial review application; their interest is no greater than that of any other Albertan. 53 For these same reasons, the Employee’s argument that they should not have to pay union dues is moot. In Borowski v. Canada (Attorney General) (1989), 57 D.L.R. (4th) 231 (S.C.C.), the Supreme Court of Canada explained the doctrine of mootness at para. 15:– The general principle applies when the decision of the court will not have the effect of resolving some controversy which affects or may affect the rights of the parties. If the decision of the court will have no practical effect on such rights, the court will decline to decide the case. This essential ingredient must be present not only when the action or proceeding is commenced but at the time when the court is called upon to reach a decision. Accordingly if, subsequent to the initiation of the action or proceeding, events occur which affect the relationship of the parties so that no present live controversy exists which affects the rights of the parties, the case is said to be moot. 54 In this case, the Employees’ Employer has made the requirement to pay union dues a condition of their employment. Both the Employer and the Em- ployees had the option of challenging the Board’s decision through judicial review or a reconsideration application; they did neither. The settlement between Old Dutch and the Union renders the Employees’ arguments moot. There is no longer a live issue in dispute and such a live issue is necessary before the Courts can engage a constitutional analysis. 55 The Union submits that Goudreau does not assist the Employees. In that case, the Court added the parents as respondents in the action, not as applicants. Moreover, while the Court of Appeal agreed with the parents that the matter should proceed by Statement of Claim rather than by Originating Notice, they did so after citing Rule 753.16(2) which allows the Court to effectuate such a conversion on its own motion. Most importantly, in this case the Employees’ constitutional rights are not at issue as the requirement that they pay union dues derives from the Collective Agreement, not from the Board’s decision. 56 It is submitted that there is also nothing in the Attorney General’s Consent Order that binds the Employees or affects their interests or substantive rights. The Consent Order grants the Attorney General everything that is asked for in its Originating Notice, that is, it sets aside the Board’s decision to the extent that it constitutes a general declaration of constitutional invalidity. The Board does not oppose the Consent Order. 57 It is submitted that the Employees’ interest in this case is no different than that of any other employee in Alberta. Virtually any Alberta employee could be required to pay union dues pursuant to a collective agreement between their employer and their union. Likewise, virtually every employer in Alberta could one day be the subject of a Board order requiring them to agree to a union dues provision when negotiating a collective agreement. To allow the Employees to prevent the settlement of this case would mean that any group of employees in Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 149

Alberta and any employer could block that settlement. It is submitted that it would have a devastating effect on settlements in Alberta if any person with a tangential or indirect interest in the law could prevent parties from settling their disputes.

The Conway Decision 58 This Court also asked the Parties for their submissions on R. v. Conway, 2010 SCC 22 (S.C.C.), particularly as it relates to the parties’ Consent Order. In that case, the issue was whether the Ontario Review Board could provide a remedy under s. 24(1) of the Charter. In concluding that it could, the Supreme Court of Canada affirmed that administrative tribunals who have the power to decide questions of law can consider the Charter rights of the parties who appear before them. Such tribunals can also grant Charter remedies under s. 24 provided they have the jurisdiction to grant the type of remedy sought. 59 In Conway, the Supreme Court also affirmed the limited jurisdiction of administrative tribunals under s. 52 of the Constitution Act, 1982. That provision provides that any law that is contrary to the Charter is of no force and effect. The Supreme Court reiterated that administrative tribunals that have the jurisdiction to decide questions of law can decline to apply unconstitutional laws to the matters they are adjudicating. 60 While administrative tribunals have such jurisdiction, it is submitted that the Supreme Court has held that they do not have jurisdiction to make general declarations of invalidity. That is, while they can decline to enforce an unconstitutional provision when adjudicating a dispute before them, they cannot declare a statutory provision to be unconstitutional for all purposes, or order the government to amend unconstitutional legislation. 61 In Conway, the Supreme Court referred to the line of cases establishing this latter point as the “Cuddy Chicks trilogy”. In Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] S.C.J. No. 42 (S.C.C.), the respondent union had filed a certification application before the Ontario Labour Relations Board in relation to employees at a chicken hatchery. The Labour Relations Act provided that it did not apply to persons employed in agriculture, and thus the union sought to argue that that Act violated ss. 2(d) and 15 of the Charter. The Ontario Board convened a separate hearing to determine whether it had jurisdiction to consider the Charter arguments and the jurisdictional issue eventually made its way to the Supreme Court. 62 The Supreme Court concluded that tribunals such as the Ontario Labour Re- lations Board have an obligation to determine whether their enabling statute violates the Charter. However as the Court explained:– ... a formal declaration of invalidity is not a remedy which is available to the Board. Instead, the Board simply treats any impugned provision as invalid for the purposes of the matter before it. Given that this is not tantamount to a 150 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

formal declaration of invalidity, which is a remedy exercisable only by the superior courts, the ruling of the Board on a Charter issue does not constitute a binding legal precedent but is limited in its applicability to the matter in which it arises. 63 In Conway, the Supreme Court of Canada describes the Cuddy Chicks trilogy at paragraphs 49 to 77. It affirms that tribunals such as the Alberta Labour Relations Board have a duty to consider questions of constitutionality. However it is submitted that the Court did not overturn the determination in Cuddy Chicks that administrative tribunals do not have the jurisdiction to declare a statutory provision to be unconstitutional for all purposes. It is submitted that if the Court had intended to overturn the Cuddy Chicks trilogy, surely it would have said so. 64 In the case before the Court, the Union invoked the Charter rights of its members and asked the Board to consider the constitutionality of the Code. There is no dispute that the Board has jurisdiction to consider such questions and the Attorney General’s Consent Order is consistent with this point. It is submitted that the Consent Order reflects the law as outlined in Cuddy Chicks and affirmed by the Supreme Court of Canada in subsequent cases. 65 The premise of the order proposed by the UFCW Local 401 and the Attor- ney General is that a declaration of constitutional invalidity is as such beyond the jurisdiction of an inferior court or tribunal. It is submitted that Conway does not expand the ALRB’s jurisdiction in a way that undermines this premise. 66 The Supreme Court’s concern in Conway is to determine, as a matter of statutory interpretation, how the remedial powers of statutory decision-makers are to be understood in cases where they are called upon to decide issues of constitutional law. The Court’s conclusion is, where a tribunal has been given power to decide questions of law in the course of carrying out its statutory function, we should infer not only that it has been given power to determine the constitutionality of a provision it is asked to apply, but also that the tribunal is empowered to grant “Charter remedies” that are:– . . . the kind of remedy that the legislature intended would fit within the statutory framework of the particular tribunal. Relevant considerations in dis- cerning legislative intent will include those that have guided the courts in past cases, such as the tribunal’s statutory mandate, structure and function. 67 Not only can a legislature restrict a tribunal’s ability to decide questions of law, a tribunal’s ability to grant a particular Charter remedy depends on the consistency of the remedy with the legislature’s chosen statutory scheme. 68 It is submitted that a tribunal’s inability to determine the law in cases not before it is not rooted in legislative intent. Rather, as indicated in paragraph 31 of Martin v. Nova Scotia (Workers’ Compensation Board), [2003] 2 S.C.R. 504, 2003 SCC 54 (S.C.C.) an inferior tribunal’s inability to decide questions of law generally (rather for the purpose of deciding particular cases that come before it) has its source in s. 96 of the Constitution Act, 1867: under our constitution it is a Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 151

distinctive task of federally-appointed judges to tell other decision-makers what the law is. 69 Mr. Justice Bastarache, writing for the Court in Paul v. British Columbia (Forest Appeals Commission), [2003] 2 S.C.R. 585 (S.C.C.), a companion case to Martin, describes the essential particularity of a tribunal’s jurisdiction to apply the Constitution:– 31 Second, while both provincially constituted courts and provincially constituted tribunals may consider the Constitution and federal laws, there is nevertheless one important distinction between them that the respondent overlooked. Unlike the judgments of a court, the Com- mission’s decisions do not constitute legally binding precedents, nor will their collective weight over time amount to an authoritative body of common law. They could not be declaratory of the validity of any law. Moreover, as constitutional determinations respecting s. 91(24) or s. 35, the Commission’s rulings would be reviewable, on a correctness basis, in a superior court on judicial review: Westcoast Energy Inc. v. Canada (National Energy Board), [1998] 1 S.C.R. 322, at para. 40; Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1 S.C.R. 3, at [page 607] para. 23; Douglas/Kwantlen Faculty Assn. v. Douglas College, [1990] 3 S.C.R. 570. To avoid judicial review, the Commission would have to identify, interpret, and apply correctly the relevant constitutional and federal rules and judicial precedents. As a result of the contrast between the general application of a provincial law by a court and the specific, non-binding effect of a board’s particular decision, there is a substantial difference. 70 It is submitted that the true effect of Conway can be illustrated by elements of this Board decision that are not called into question by this application for judicial review. At paragraphs 73 and 74 of this Board decision, the Board gives direction to the employer Old Dutch Foods regarding its future conduct of collective bargaining. The Board gives two reasons for these directions, one based on its conclusion that our Labour Code’s omission of a mandatory Rand Formula is unconstitutional, and another based on its understanding and application of the Code’s requirement that Old Dutch bargain in good faith. 71 The Board’s description of the connection between its constitutional reasoning and the directions it gave to Old Dutch is brief:– 74. In light of Health Services & Support-Facilities Subsector Bargain- ing Assn., the refusal by ODF to agree to a Rand formula is now considered by the Board to be a failure to bargain in good faith .... 72 If one attempts to fill in the steps in the Board’s reasoning, this is not a case where a tribunal has refused to apply an unconstitutional provision of its governing statute but rather the Board sought to repair (what it believes is) an unconstitutional omission by reading a requirement into a statute that isn’t otherwise there: a failure to agree to a Rand formula is as such a failure bargain in good faith. 152 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

73 Conway implies that there is nothing wrong with that: although repairing a statutory omission by “reading in” something unintended by the legislature is a recognised constitutional remedy, one of the Board’s jobs is determining whether bargaining is unfair, and repairing the situation if it is. There is no inco- herence with the statutory scheme if the Board makes this constitutional repair for purposes of its decision. Even before Conway, no one questioned the Board’s jurisdiction to repair this omission in the way it did. 74 It is submitted that a different order of legal ambition is required to declare a law invalid, to determine a legal issue for future cases throughout Alberta, and to cast a burden on the Legislature to repair the law. The defect in the Board’s declaration isn’t merely that the statutory framework does not support an inference that our Legislature intends that the Board should be able to declare a statute invalid. The flaw runs deeper than that: while the Board has power to reach conclusions of constitutional law while deciding particular cases, the Legislature couldn’t grant a tribunal power to generally decide the validity of a statute even if it wanted to. 75 The Union and the Attorney General of Alberta argue that inferior tribunals therefore still cannot declare the law.

The Employees’ Argument Affected Party Status 76 Individuals “whose presence before the Court may be necessary in order to enable the Court to effectually and completely to adjudicate upon.. . a matter, or in order to protect the rights or interests of any person or class of persons” may be joined as parties to a proceeding; Alberta Rules of Court, supra, Rule 38(3). 77 “[E]very person directly affected by the proceedings” is to be served with notice of an application for judicial review. “The Court may direct any person to be added. as a party to proceedings for judicial review”; Alberta Rules of Court, supra, Rules 753.09(1)(c) and 753.1(1). 78 Individuals whose claimed constitutional rights are ‘directly engaged in [a] proceeding” are to be afforded party status: Goudreau. 79 The Employees are affected by the Decision as arguably it is their constitutionally protected freedom of association that the Union invoked before the Board to assert the requirement of a statutory compulsion to force the Employ- ees to pay union dues to the Union. 80 The Employees have a stake in the outcome of this proceeding as Union dues are being deducted from their pay cheques and their financial interests are affected. 81 The Employees assert a constitutional freedom under s. 2(d) of the Charter to be free from forced association therefore their constitutional rights are impacted by the Decision. Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 153

82 There is also a reasonable explanation for why the Employees did not seek party status before the Board and participate in the proceedings that led to the Decision. They did not receive effective notice of the nature of the proceeding before the Board. 83 The interests of the Employees are adverse to those of the Union in this proceeding, and are not necessarily the same as those being advanced by the Attorney General. The Employees understand that the Employer does not intend to participate in the application. As a result of the direct impact on them, it is submitted that the Employees should not have to rely on other parties to articu- late and advance their interests, and they should be afforded party status so that they can seek to protect their own interests in the litigation:Goudreau.

Intervener Status 84 In the alternative, the Employees argue they should be afforded intervener status. 85 “[A]n intervention may be allowed where the proposed intervener is specially affected by the decision facing the Court or the proposed intervener has some special expertise or insight to bring to bear on the issues facing the court”; Papaschase Indian Band at para. 2; Chiasson v. Kellogg Brown & Root (Canada) Co., 2007 ABCA 175 (Alta. C.A.) [hereinafter Alberta (Human Rights and Citizenship Commission)], at para. 2. 86 “In cases involving constitutional issues or which have a constitutional dimension to them, courts are generally more lenient in granting intervener status. . .. In constitutional cases, if an applicant can show its interests will be affected by the outcome of the litigation, intervener status should be granted”; Papaschase Indian Band at paras. 6 and 9; Alberta (Human Rights and Citizenship Commission) at para. 3. 87 It is submitted that the Employees are specially affected by the Decision, and that there is a significant constitutional dimension to the Decision. The Employ- ees, through legal counsel, can offer insight to the Court about the impact of the Decision on constitutional rights asserted by the Employees from the unique perspective of these affected individuals. 88 Under labour legislation a union that is certified as a bargaining agent has the exclusive authority to represent employees in the bargaining unit, and to speak on their behalf in dealings with their employer about terms and conditions of employment: Labour Relations Code, s. 40. 89 However it is submitted that this exclusive representative capacity enjoyed by the Union does not extend in these circumstances to preclude a group of employees with interests so obviously at odds with those of the Union from having their own say in court about the Decision. The Union cannot be expected to adequately represent the position of the Employees. 154 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

90 If granted party or intervener status by the Court, the Employees intend to participate in this proceeding as a single group through common legal representation, so that they can make common submissions to the Court in an efficient manner. The involvement of the Employees in this proceeding will not add ap- preciably to the time required to address the matter or the costs of so doing. Instead, their involvement will provide valuable assistance to the Court in considering the important and different constitutional interests at stake in this application. 91 The Employees ask to participate in this application without seeking costs from any party, and correspondingly, without obligation to pay costs to other parties in any event of the cause. This is a common direction when intervener status is granted: Papaschase Indian Band at para. 14; Alberta (Human Rights and Citizenship Commission) at para. 7.

Conclusion 92 Raymond Berry is joined by 28 other similarly situated employees of the Employer who had chosen not to join the Union, and who were forced to start paying dues to the Union under the collective agreement after the Decision was issued. 93 At the request of counsel for the Union, Raymond Berry was cross-examined on his Affidavit. 94 The Employees bring this application pursuant to Rules 38 and 753.1 of the Alberta Rules of Court, Alta. Reg. 390/68 on the following grounds:– (a) the interests of the Employees are directly affected by the Decision; (b) the Employees did not receive effective notice of the nature of the proceedings before the Board that resulted in the Decision, and accordingly did not participate in the proceeding before the Board; (c) the Employees claim a constitutional freedom that has been infringed by the Decision; and, (d) the Employees will be able to offer the parties and the Court assistance, including a different perspective from other parties, concerning matters at issue in this application, and their participation in the application will not unduly delay, increase the costs to, or otherwise inconvenience the parties. 95 The Employees seek an Order of this Court:– (a) Affording them standing in this judicial review application as parties, or alternatively as interveners; (b) Directing that parties bear their own costs of this application, and that costs not be awarded to or against the Employees with respect to their future participation in the proceeding. Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 155

Impact On Relief Sought by the Attorney-General 96 If the Court grants the Order sought to add the Employees as applicants the Order sought by the Attorney-General in Chambers on June 3, 2010, with the consent of the Union, will have to be revisited. 97 The Employees, if given a say as parties, oppose the granting of the Order sought by the Attorney-General, at least in its current form. 98 The Employees do not oppose per se an order setting aside parts of the Board’s impugned decision that amount to a general declaration of invalidity of legislation, but not on the basis that this would be dispositive of the application and leave undisturbed other parts of the Board’s decision that comprise the finding of a constitutional guarantee of a Rand Formula, or that are inextricably tied to this constitutional finding. The Employees, if made co-applicants, seek the opportunity, at an appropriate time when the merits of the judicial review application can be fully argued, to convince the Court that the substantive ground raised in the Originating Notice of Motion provides a sound basis upon which to set aside additional parts or the whole of the Board’s decision.

Statutory Reconsideration by the Board of It’s Prior Decision 99 In Chambers on June 3rd I raised the matter of the Board’s ability, under section 12(4) of the Code, to reconsider it’s own decisions. Subsequently counsel for the Union provided me with a copy of Board Information Bulletin #6, which describes the Board’s general policies with respect to exercising its reconsideration power. 100 Reconsideration is recognized by the Employees as one option available to them to attempt to obtain redress in this situation. The Board did not give notice to employees of Old Dutch Foods Ltd. about the nature of the proceeding that was before it, including the constitutional question that had been formally framed by the Union. Employees did not participate in the Board hearing as affected parties. It is conceded that if employees had presented at the Board hearing and sought standing as affected parties this status would have been afforded to them. However the Employees cannot be certain at this stage that if a reconsideration application is made by them it will be entertained by the Board. 101 The Employees maintain that the possibility of a reconsideration process being undertaken before the Board ought not to influence the Court to decline to grant party status to the Employees in this judicial review proceeding. The will- ingness of the Board to entertain a reconsideration application is a matter within the tribunal’s discretion, and is outside the control of the Court. Regardless of whether or not reconsideration might be sought and granted, the Employees ask for a say in the Court’s disposition of this judicial review application. Whatever that disposition, it will have a meaningful impact on the individual constitutional rights of the Employees and their future exercise of those rights. 156 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

102 The Employees submit that their participation in this judicial review proceeding is critical to the Court’s evaluation of the constitutional ruling of the Board. Fundamentally affected employees whose constitutional rights are the ones at issue should have a say, as affected parties, in the disposition of this application. This should be so whether the application is to be disposed of on some narrow point worked out between some of the parties, or upon broader grounds raised and available for the Court to address. 103 The developments on the eve of the appearance in Chambers on June 3, 2010 make it even more evident that no other party, not the Union, not the Re- spondent Employer, and not the Applicant Attorney-General, can be said to speak for the Employees and how their individual constitutional rights have been interpreted and applied. 104 The Employees seek relief from the Court in the form of their proposed Or- der, adding them as applicant parties in this judicial review proceeding. The Em- ployees also ask the Court to refuse the Order sought by the Attorney General on the basis that it is premature, incomplete and not agreed to by all affected parties. The Employees ask that the balance of the judicial review application be put over to be heard on it’s merits in Special Chambers, with the prospect that adjourned intervener motions brought by other entities may also be renewed in the meantime. 105 The proposed form of Order sought by the Employees would make the Em- ployees parties in this proceeding, and more particularly, given the nature of their interests, style them as Applicants along with the Attorney General of Alberta. 106 Making the Employees co-applicants would permit them to pursue available redress, even in the absence of ongoing participation by the Attorney General. The Employees could then rely upon one or more of the grounds for relief expressed in the Attorney General’s Originating Notice of Motion of December 8, 2009 (without asking to expand the scope of the application). Most notably, the Employees seek to advance the assertion made by the Attorney General on page 2, in paragraph 2(d) of the Motion, that “the Rand Formula form a union security clause is not constitutionally guaranteed, in any event.” 107 There is precedent for the Court to grant party status to individuals whose constitutional rights are affected by an application initiated by the Crown, and to effectively allow them a full say in the future prosecution of the action: Goudreau. This procedural approach has parallels to the case at hand. 108 Both counsel for the Attorney General and for the Union indicate that the decision does not alter their shared view that the Respondent ALRB lacked jurisdiction to make a declaration in its impugned decision that the Labour Rela- tions Code contravened s. 2(d) of the Canadian Charter of Rights and Freedoms by omitting a requirement that all collective agreements in Alberta contain, at least, a Rand formula form of union security provision. Both of these parties Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 157

assert that Conway should not be understood to recognize an ability for administrative tribunals to make declarations of invalidity as remedies when they find that legislation infringes constitutional freedoms. 109 However I conclude that the reasoning in Conway does not readily admit of this constraint on the intended scope of the decision. Rather the judgment seems to endorse an expansive view of the remedial authority of tribunals otherwise empowered to interpret and apply the Charter in the course of their decision- making, which at least arguably, might allow a tribunal to go on to remedy a violation of the Charter in any manner available to a “court of competent jurisdiction”, including making a declaration of invalidity pursuant to a. 52(1) of the Constitution Act in addition to, or instead of, remedies under s. 24 of the Charter. 110 The following passages from Conway seem significant:– 1. The specific issue in this appeal is the remedial jurisdiction of the Ontario Review Board under 5. 24(1) of the Canadian Charter of Rights and Freedoms. The wider issue is the relationship between the Charter, its remedial provisions and administrative tribunals generally. 2. There are two provisions in the Charter dealing with remedies: s. 24(1) and s. 24(2). Section 24(1) states that anyone whose Charter rights or freedoms have been infringed or denied may apply to a “court of competent jurisdiction” to obtain a remedy that is “appropriate and just in the circumstances” Section 24(2) states that in those proceedings, a court can exclude evidence obtained in violation of the Charter if its admission would bring the administration of justice into disrepute. A constitutional remedy is also available under s. 52(1) of the Constitution Act, 1982, which states that the Constitu- tion is the supreme law of Canada, and that any law inconsistent with its provisions is, to the extent of the inconsistency, of no force or effect...... 20. We do not have one Charter for the courts and another for administrative tribunals (Cooper v. Canada (Human Rights Commission), [1996] 3 S.C.R. 854, per McLachlin J. (in dissent), at para. 70; Dun- edin; Douglas College; Martin) This truism is reflected in this Court’s recognition that the principles governing remedial jurisdiction under the Charter apply to both courts and administrative tribunals. It is also reflected in the jurisprudence flowing from Mills and the Cuddy Chicks Ltd. trilogy according to which, with rare exceptions, administrative tribunals with the authority to apply the law have the jurisdiction to apply the Charter to the issues that arise in the proper exercise of their statutory functions. 158 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

..... 22 All of these developments serve to cement the direct relationship between the Charter, its remedial provisions and administrative tribunals. In light of this evolution, it seems to me to be no longer helpful to limit the inquiry to whether a court or tribunal is a court of competent jurisdiction only for the purposes of a particular remedy. The question instead should be institutional: does this particular tribunal have the jurisdiction to grant Charter remedies generally? The result of this question will flow from whether the tribunal has the power to decide questions of law. If it and if Charter jurisdiction has not been excluded by statute, the tribunal will have the jurisdiction to grant Charter remedies in relation to Charter issues arising in the course of carrying out its statutory mandate (Cuddy Chicks Ltd. trilogy; Martin). A tribunal which has the jurisdiction to grant Charter remedies is a court of competent jurisdiction. The tribunal must then decide, given this jurisdiction, whether it can grant the particular remedy sought based on its statutory mandate. The answer to this question will depend on legislative intent, as discerned from the tribunal’s statutory mandate (the Mills cases)...... 52. In 1991, Cuddy Chicks Ltd. established that the Ontario Labour Re- lations Board could determine the constitutionality of a provision which excluded agricultural workers from the protections of On- tario’s Labour Relations Act, R.S.O. 1980, c. 228. The issue arose out of an application by the union for the certification of Cuddy Chicks Ltd.’ hatchery employees. The union challenged the constitutional validity of this exclusion, arguing that it violated ss. 2(d) and 15 of the Charter, and sought to have it declared to be of no force and effect pursuant to s. 52(1)...... 78 The jurisprudential evolution leads to the following two observations: first, that administrative tribunals with the power to decide questions of law, and from whom constitutional jurisdiction has not been clearly withdrawn, have the authority to resolve constitutional questions that are linked to matters properly before them. And sec- ondly, they must act consistently with the Charter and its values when exercising their statutory functions. It strikes me as somewhat unhelpful, therefore, to subject every such tribunal from which a Charter remedy is sought to an inquiry asking whether it is “competent” to grant a particular remedy within the meaning of s. 24(1)...... 80 If, as in the Cuddy Chicks Ltd. trilogy, expert and specialized tribunals with the authority to decide questions of law are in the best position to decide constitutional questions when, a remedy is sought under a. 52 of the Constitution Act, 1982, there is no reason why Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 159

such tribunals are not also in the best position to assess constitutional questions when a remedy is sought under s. 24(1) of the Char- ter. . . . . 81 Building on the jurisprudence, therefore, when a remedy is sought from an administrative tribunal under s. 24(1), the proper initial inquiry is whether the tribunal can grant Charter remedies generally. To make this determination, the first question is whether the administrative tribunal has jurisdiction, explicit or implied, to decide questions of law. If it does, and unless it is clearly demonstrated that the legislature intended to exclude the Charter from the tribunal’s jurisdiction, the tribunal is a court of competent jurisdiction and can consider and apply the Charter — and Charter remedies — when resolving the matters properly before it [emphasis added]. 111 As Counsel for the Union noted, the Court in Conway built upon its prior jurisprudence in cases like Cuddy Chicks Ltd. v. Ontario (Labour Relations Board), [1991] 2 S.C.R. 5 (S.C.C.). However, it did so without commenting one way or the other on the passage in Cuddy Chicks relied upon by the Union to the effect that “a formal declaration of invalidity is not a remedy which is available to the Board”. Instead, Justice Abella, for he unanimous Court in Conway, explained Cuddy Chicks as a case where a labour relations board was able to deal with a Charter challenge to its constituent legislation and a union’s request for a “declaration pursuant to s. 52(1) of the Constitution Act that the impugned statutory provision was of “no force and effect” (Conway, supra, para. 52). These comments comport with the notion of an administrative tribunal (a labour relations board in particular) being able to grant declaratory relief as a Charter remedy. 112 While Conway does not undermine the legal basis for the Order sought by the Attorney General in this proceeding, this recent jurisprudential development at least raises a serious question about the legal foundation for the Order. Pru- dence alone dictates that the Court at least evaluate other available grounds for the relief being sought in a full hearing of the motion.

The Limitation Argument 113 The Union also argues that party standing should be denied to the Employ- ees because doing so would circumvent the applicable statutory limitation period for commencing an application for judicial review of a Board decision. 114 There is a timely application for judicial review presently before the Court. The Employees seek standing in that timely application to be heard before the matter is disposed of. They do not seek to bring a separate or different application. They do not seek to argue new grounds that are not contained within the application as initially framed. They do not ask for a remedy that goes beyond what was sought in the Attorney General’s Originating Notice of Motion. 160 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

115 This is not a case like Vong v. Wong, 2004 ABCA 216 (Alta. C.A.) relied upon by the Union, where a party came forward in a personal injury proceeding arising out of a motor vehicle accident seeking to assert a new, separate claim for damages for a different individual after the expiry of a limitation period. The Employees in this case do not seek to assert a new cause of action or to claim different relief. They ask for a say in the outcome of an application commenced in time. Their participation in this application would not have the effect of ex- posing the Union to the potential prejudice of having to deal with a new claim that was not initiated within the permitted time frame. 116 None of the authorities relied upon by the Union that address the inability of the Court to relieve against the expiry of a statutory limitation period has any direct application in the present circumstances. However the Employees do not seek such relief. The real issue at hand is whether or not the Employees should be recognized as affected parties with standing to participate in the application that was properly commenced, and which remains before the Court to be disposed of in an appropriate manner. Even if the Employees had brought their own application for judicial review of the Board decision, they could well have faced the same argument from the Union about whether or not they have a sufficient interest to be granted standing as parties. This issue of standing is what the Court needs to decide.

Affected Party Status 117 Both the Attorney General and the Union argue that the Employees’ interests are not sufficiently affected by this application to warrant making them parties to this proceeding. 118 The Union says the Employees lack sufficient standing because the obligation they now face to pay dues is not the result of the Board decision, but rather is because “the Employees’ Employer has made the requirement to pay union dues a condition of their employment” in a negotiated collective agreement that cannot be altered by the outcome of application. 119 However the Board’s constitutional ruling provided the impetus for the dues check-off provision that found it’s way into the collective agreement. The Board did not merely mandate in its decision that a Rand formula be negotiated. It ordered that a Union proposal for a union security clause be included in a collective agreement as an item deemed to have been agreed to in bargaining [Novem- ber 9, 2009 Board Decision at para 74(b)]. Ultimately the clause was not freely bargained, nor was it the employer who made it a “requirement” of the Employ- ees’ employment. It was the Union that proposed the provision and the Board that imposed it. 120 The finding of a Charter violation is the relevant feature that can explain the different outcomes on this issue between the 1990 and 2009 Board decisions affecting Old Dutch Foods The Board’s conclusion that the company engaged in Alberta (Attorney General) v. U.F.C.W., Local 401 Donald Lee J. 161

bad faith bargaining on the union security issue in 2009, when the identical employer bargaining position was endorsed by the Board as legitimate in 1990, can only be understood as the direct consequence of the Board’s constitutional analysis, an analysis that the Employees seek to demonstrate is flawed. 121 Further the Employees have an ongoing interest in the Board’s decision so that the next round of bargaining between the company and the Union might see a return to the prior arrangements surrounding the payment of dues at Old Dutch Foods that the Employees maintain are lawful, and that would afford recognition to their constitutionally protected freedom of association. 122 The Attorney General labels this interest of the Employees in retaining an opportunity for a reversion from forced dues to voluntary dues in the future as too “remote” to justify an audience before the Court. The Union argues that this interest is “no different than that of any other employee in Alberta”. 123 However the history at Old Dutch Foods that is recounted in the Board’s decision makes the interest of these Employees in a future ability for collective agreements to be lawfully negotiated in this Province that do not require workers to pay dues to a union a matter of real, rather than “remote” concern, and a matter of particular interest to these Employees. For the Employees, the Board’s constitutional ruling remains a very live issue” in their work lives. 124 The claims of the Attorney General and the Union that the Employees lack a real interest in this application mirror what the Board said in it’s impugned decision when it rejected as insufficient one of the employer’s reasons for opposing a Rand formula in bargaining, referring to it as the “simple philosophical concern over employees having a freedom of choice” [November 9, 2009 Board Decision at para. 73]. The Employees see their concern with preserving their freedom of choice as much more than a “simple philosophical concern”. They see this concern engaging fundamental constitutional precepts. They perceive their Charter protected freedom of association to be at stake in this proceeding, and assert that this represents a more than adequate basis to afford them standing before the Court. 125 The Employees further maintain that this is an appropriate case to grant the Employees standing without the ability to claim costs or to have them awarded against them. There is precedent for interveners to be dealt with in this manner. Even though the arrangements worked out between the Attorney General and the Union on the eve of the June 3rd Chambers appearance have obliged the Employees to pursue their request for party status in preference to their request for intervener status, this fact alone need not alter the typical approach of the Court to costs involving interveners, when that reasonably equates with the status of the Employees in the context of this application. The Court is asked to consider the fairness of the Union asserting that these Employees, if made parties, should face exposure to an award of costs in this mailer, when the Union’s costs are being paid in part by the fruits of the impugned Board decision in the 162 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

form of the forced dues payments that it now receives from the very Employees that it seeks to exclude from this proceeding. 126 However I conclude that party status in this application can only come with exposure to a claim for costs, and the corresponding opportunity to seek them from other parties depending on the outcome of this application. 127 In the end result, the following Order shall issue herein:– Order UPON THE application of certain named employees of the Respondent Old Dutch Foods Ltd. (the “Employees”); AND UPON HEARING read the submissions of the Employees, the Applicant and the Respondent United Food and Commercial Workers Union, Local No. 401 (the “Union”); AND UPON NOTING that the other Respondents chose not to participate in the hearing of this motion; AND UPON HEARING from counsel for the Employees, the Applicant and the Union in Cham- bers on June 3, 2010; AND UPON THE COURT reserving to consider additional written submissions from these parties, and to consider its decision; IT IS HEREBY ORDERED THAT: 1. The individuals named in a Notice of Motion made on behalf of the Employees, dated and filed in this proceeding on February 17, 2010, are added as Applicants in this proceeding, and the style of cause is amended accordingly. 2. The Employees will participate as Applicants through common legal counsel, and will be treated as a single party for purposes of making written and oral argument in respect of the hearing of the merits of this application. Application granted. Rep. for Children & Youth v. B.C. (Office of the Premier) 163

[Indexed as: Representative for Children & Youth v. British Columbia (Office of the Premier)] Representative for Children and Youth (Petitioner) And Office of the Premier, Ministry of Children and Family Development, Gordon Campbell, Premier of British Columbia, and Mary Polak, Minister of Children and Family Development (Respondents) British Columbia Supreme Court S. Griffin J. Heard: May 13, 2010 Judgment: May 14, 2010 Docket: Victoria 10-1956, 2010 BCSC 697 Frank Falzon, Q.C. for Petitioner G. Copley, Q.C. for Respondents Privacy and freedom of information –––– Freedom of information — Federal legislation — General principles –––– Cabinet privilege — Petitioner, Representative for Chil- dren and Youth, was independent officer of Legislature appointed pursuant to Represen- tative for Children and Youth Act (Act) with mandate to audit and make recommendations on effectiveness of government services for children — Petitioner requested information from Ministry of Children and Family Development (MCFD) in relation to proposed changes to provincial government program for purposes of audit — MCFD provided information but did not provide Cabinet submissions, it took position that petitioner had to first sign agreement relating to potential uses of information before submissions would be disclosed — Representative brought petition to enforce her right to information under s. 10 of Act — Petition granted — Respondent failed to comply with statutory duty to provide petitioner with Cabinet submissions associated with impugned program, mandamus ordered compelling MCFD to comply with legal duty — Respon- dent argued that right was non-justiciable and that only forum available for resolving dispute was Legislature — Subsection 20(2)(b) of Act did not provide statutory legislative remedy, it related to non-compliance with recommendations and not right to obtain information — Subsection 23(5) of Act was strong evidence of Legislature’s intention to not preclude petitioner’s access to court to obtain remedy — Purpose of petitioner’s audit was to determine effectiveness of impugned program, information requested fell within her mandate and therefore she had right to information pursuant to s. 10(2) of Act — Act did not exclude documents covered by Cabinet privilege from mandatory obligation to produce information to petitioner under s. 10, key impetus for Act was desire to increase public accountability. Administrative law –––– Prerogative remedies — Mandamus — Performance of public duty — General principles –––– Petitioner, Representative for Children and Youth, was independent officer of Legislature appointed pursuant to Representative for Children and Youth Act (Act) with mandate to audit and make recommendations on effectiveness of government services for children — Petitioner requested information from 164 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Ministry of Children and Family Development (MCFD) in relation to proposed changes to provincial government program for purposes of audit — MCFD provided information but did not provide Cabinet submissions, it took position that petitioner had to first sign agreement relating to potential uses of information before submissions would be disclosed — Representative brought petition to enforce her right to information under s. 10 of Act — Petition granted — Respondent failed to comply with statutory duty to provide petitioner with Cabinet submissions associated with impugned program, mandamus ordered compelling MCFD to comply with legal duty — Respondent argued that right was non-justiciable and that only forum available for resolving dispute was Legislature — Subsection 20(2)(b) of Act did not provide statutory legislative remedy, it related to non- compliance with recommendations and not right to obtain information — Subsection 23(5) of Act was strong evidence of Legislature’s intention to not preclude petitioner’s access to court to obtain remedy — Purpose of petitioner’s audit was to determine effectiveness of impugned program, information requested fell within her mandate and therefore she had right to information pursuant to s. 10(2) of Act — Act did not exclude documents covered by Cabinet privilege from mandatory obligation to produce information to petitioner under s. 10, key impetus for Act was desire to increase public accountability. Administrative law –––– Prerogative remedies — Mandamus — Discretion of court to refuse mandamus — Availability of other remedy –––– Petitioner, Representative for Children and Youth, was independent officer of Legislature appointed pursuant to Representative for Children and Youth Act (Act) with mandate to audit and make recommendations on effectiveness of government services for children — Petitioner requested information from Ministry of Children and Family Development (MCFD) in relation to proposed changes to provincial government program for purposes of audit — MCFD provided information but did not provide Cabinet submissions, it took position that petitioner had to first sign agreement relating to potential uses of information before submissions would be disclosed — Representative brought petition to enforce her right to information under s. 10 of Act — Petition granted — Respondent failed to comply with statutory duty to provide petitioner with Cabinet submissions associated with impugned program, mandamus ordered compelling MCFD to comply with legal duty — Respondent argued that right was non-justiciable and that only forum available for resolving dispute was Legisla- ture — Subsection 20(2)(b) of Act did not provide statutory legislative remedy, it related to non-compliance with recommendations and not right to obtain information — Subsec- tion 23(5) of Act was strong evidence of Legislature’s intention to not preclude petitioner’s access to court to obtain remedy — Purpose of petitioner’s audit was to determine effectiveness of impugned program, information requested fell within her mandate and therefore she had right to information pursuant to s. 10(2) of Act — Act did not exclude documents covered by Cabinet privilege from mandatory obligation to produce information to petitioner under s. 10, key impetus for Act was desire to increase public accountability. Civil practice and procedure –––– Judgments and orders — Declaratory judgments or orders — Availability — Where other remedy available –––– Petitioner, Represen- tative for Children and Youth, was independent officer of Legislature appointed pursuant to Representative for Children and Youth Act (Act) with mandate to audit and make recommendations on effectiveness of government services for children — Petitioner requested information from Ministry of Children and Family Development (MCFD) in re- Rep. for Children & Youth v. B.C. (Office of the Premier) 165 lation to proposed changes to provincial government program for purposes of audit — MCFD provided information but did not provide Cabinet submissions, it took position that petitioner had to first sign agreement relating to potential uses of information before submissions would be disclosed — Representative brought petition to enforce her right to information under s. 10 of Act — Petition granted — Respondent failed to comply with statutory duty to provide petitioner with Cabinet submissions associated with impugned program, mandamus ordered compelling MCFD to comply with legal duty — Respon- dent argued that right was non-justiciable and that only forum available for resolving dispute was Legislature — Subsection 20(2)(b) of Act did not provide statutory legislative remedy, it related to non-compliance with recommendations and not right to obtain information — Subsection 23(5) of Act was strong evidence of Legislature’s intention to not preclude petitioner’s access to court to obtain remedy — Purpose of petitioner’s audit was to determine effectiveness of impugned program, information requested fell within her mandate and therefore she had right to information pursuant to s. 10(2) of Act — Act did not exclude documents covered by Cabinet privilege from mandatory obligation to produce information to petitioner under s. 10, key impetus for Act was desire to increase public accountability. Cases considered by S. Griffin J.: Apotex Inc. v. Canada (Attorney General) (1993), 1993 CarswellNat 820, 1993 Car- swellNat 1357, (sub nom. Apotex Inc. v. Merck & Co.) 69 F.T.R. 152 (note), 51 C.P.R. (3d) 339, 162 N.R. 177, [1994] 1 F.C. 742, 18 Admin. L.R. (2d) 122, [1993] F.C.J. No. 1098 (Fed. C.A.) — referred to Canada (Auditor General) v. Canada (Minister of Energy, Mines & Resources) (1989), 97 N.R. 241, 61 D.L.R. (4th) 604, 1989 CarswellNat 593, 40 Admin. L.R. 1, 1989 CarswellNat 698, [1989] 2 S.C.R. 49, EYB 1989-67231, [1989] S.C.J. No. 80 (S.C.C.) — considered Reference re Secession of Quebec (1998), 228 N.R. 203, 1998 CarswellNat 1300, 161 D.L.R. (4th) 385, 1998 CarswellNat 1299, 55 C.R.R. (2d) 1, [1998] 2 S.C.R. 217, [1998] S.C.J. No. 61 (S.C.C.) — considered Statutes considered: Administrative Tribunals Act, S.B.C. 2004, c. 45 s. 34 — referred to s. 49 — referred to Adoption Act, R.S.B.C. 1996, c. 5 Generally — referred to Auditor General Act, S.C. 1976-77, c. 34 Generally — referred to s. 7(1)(b) — considered s. 13(1) — considered s. 14 — considered s. 14(3) — referred to Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996, c. 165 s. 12 — considered Sched. 1 “local public body” — considered Sched. 1 “public body” — considered Sched. 2 — referred to 166 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Sched. 3 — referred to Inquiry Act, R.S.B.C. 1996, c. 224 Generally — referred to s. 12 — referred to s. 15 — referred to s. 16 — referred to Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 s. 2 — considered Legislative Assembly Privilege Act, R.S.B.C. 1996, c. 259 s. 2 — referred to s. 3 — referred to s. 5 — referred to Ombudsperson Act, R.S.B.C. 1996, c. 340 s. 18(1) — considered Representative for Children and Youth Act, S.B.C. 2006, c. 29 Generally — referred to s. 1 “designated services” — referred to s. 1 “public body” — referred to s. 2 — referred to s. 6 — considered s. 6(b) — considered s. 10 — considered s. 10(2) — considered s. 10(2)(a) — considered s. 10(3) — considered s. 10(4) — considered s. 14 — considered s. 14.1 [en. 2007, c. 9, s. 105] — considered s. 20 — considered s. 20(2)(b) — considered s. 20(2)(c) — considered s. 20(3) — considered s. 23 — referred to s. 23(4) — considered s. 23(5) — considered s. 23(5)(a) — considered s. 23(5)(b) — considered Rules considered: Rules of Court, 1990, B.C. Reg. 221/90 R. 10(1)(b) — referred to Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 167

Regulations considered: Representative for Children and Youth Act, S.B.C. 2006, c. 29 Representative for Children and Youth Regulation, B.C. Reg. 103/2007 Generally — referred to

PETITION by public representative seeking to enforce right to information from public body.

S. Griffin J.: Introduction 1 This is a petition brought by the Representative for Children and Youth (the “petitioner”) seeking to enforce her right to information under s. 10 of the Rep- resentative for Children and Youth Act, S.B.C. 2006, c. 29 (“RCYA”). The respondents, the Office of the Premier and the Ministry of Children and Family Development (“MCFD”), oppose the petition proceeding. At the commencement of the hearing of this petition, the Hon. Gordon Campbell, Premier of British Columbia, and the Hon. Mary Polak, Minister of Children and Family Develop- ment, were added as respondents by consent. The style of proceeding has been amended accordingly. All respondents (the “respondents”) advance the same positions.

Background to the Office of the Petitioner 2 The petitioner is an independent officer of the Legislature, appointed pursuant to s. 2 of the RCYA. 3 The petitioner’s statutory mandate has three aspects: advocate for children; monitor and audit and make recommendations on the effectiveness and responsiveness of government services for children; and investigate and report on critical injuries and death of children. This mandate is set out in s. 6 of the RCYA: 6 The representative is responsible for performing the following functions in accordance with this Act: (a) support, assist, inform and advise children and their families respecting designated services, which activities include, without limitation, (i) providing information and advice to children and their families about how to effectively access designated services and how to become effective self-ad- vocates with respect to those services, (ii) advocating on behalf of a child receiving or eligible to receive a designated service, and (iii) supporting, promoting in communities and commenting publicly on advocacy services for children 168 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

and their families with respect to designated services; (b) monitor, review, audit and conduct research on the provision of a designated service by a public body or director for the purpose of making recommendations to improve the effectiveness and responsiveness of that service, and comment publicly on any of these functions; (c) review, investigate and report on the critical injuries and deaths of children as set out in Part 4; (d) perform any other prescribed functions. 4 The RCYA was enacted following the April 7, 2006 Report of the Honourable E.N. (Ted) Hughes, Q.C., entitled the BC Children and Youth Re- view (the “Hughes Report”). The objective and provisions of the RCYA closely followed recommendations made in the Hughes Report.

Background to the Petitioner’s Information Request 5 The petitioner requested information from the MCFD on March 5, 2010. 6 The information requested was in relation to proposed changes to a provincial government program, “Child in the Home of a Relative” Program (the “CIHR Program”), and its replacement by a new program, the Extended Family Program. The CIHR Program had provided income assistance to a child’s relative where that child was being cared for by the relative instead of the child’s parent. 7 The provincial government in a February 9, 2010 Throne Speech announced that it intended to “modernize and improve upon” the CIHR Program. The MCFD announced the changes in a March 1, 2010 “Information Bulletin”, with the changes to take effect on April 1, 2010. 8 The petitioner requested the information for the purposes of conducting a formal audit of the CIHR Program pursuant to s. 6(b) of the RCYA. The information she requested included any Cabinet submissions the MCFD may have prepared to support the proposed legislative changes. 9 The MCFD provided information that related to the subject matter of the petitioner’s request, but not any such Cabinet submissions. It took the position that before it would provide the Cabinet submissions, the petitioner must first sign an agreement relating to any potential use of the information. 10 The petitioner repeated her request for the Cabinet submissions on April 15 and 20, 2010. She took the position that she could not agree to any conditions of receipt of the information. Through her representative, she advised that: Should the [petitioner] propose to make reference to the Cabinet materials, you will of course be provided an opportunity (within the bounds of the current administrative fairness timeframe for the CIHR Audit Report) to raise any concerns or comments. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 169

11 The MCFD then directed the petitioner to make her request to Cabinet Oper- ations. By letter dated April 22, 2010, the petitioner made the request for this information to the Hon. Gordon Campbell, Premier, as head of the public body responsible for Cabinet Operations, the Office of the Premier. 12 By letter dated April 29, 2010, Allan Seckel Q.C., Deputy Minister to the Premier and Cabinet Secretary, replied to the petitioner’s request. He suggested that the provision of the information first requires that “assurances...be given...that the information will be used specifically for the purpose intended and not disclosed other than when directed by Cabinet itself”. 13 On the same day, April 29, 2010, the Attorney General, introduced Bill 20, the Miscellaneous Statutes Amendment Act (3), 2010 (“Bill 20”). Section 36 of Bill 20 would, if enacted, amend s. 10 of the RCYA and would attempt to do so retroactively, commencing March 30, 2007. 14 In summary, the proposed amendment seeks to limit the petitioner’s right to information that she says currently exists under the RCYA. Specifically, it would limit her access to information to the documents which the respondents have yet to produce to her pursuant to her first request in March, 2010. She says the current law requires the respondents to produce the information to her regardless of any proposed amendments to the RCYA. 15 Bill 20 has progressed past first reading. The Legislature is scheduled to sit again for three consecutive weeks starting Monday, May 17, 2010. This petition proceeding was heard on the Thursday before the Monday sitting of the Legisla- ture, with this judgment rendered the next day. 16 The petitioner says that the information she has requested is necessary for her to perform her mandate and that she has a statutory right to obtain the information pursuant to s. 10 of the RCYA. 17 The respondents say that they have offered to provide the information but only on certain terms that they consider reasonable. These terms relate to the respondents’ desire to control the petitioner’s use of the information and include terms of confidentiality. The petitioner finds the terms unacceptable and contrary to her mandate.

Section 10 of the RCYA 18 The provision of the RCYA which the petitioner relies on is s. 10. It provides: 10(1) In this section, “officer of the Legislature” has the same meaning as in the Freedom of Information and Protection of Privacy Act, but does not include the representative. (2) The representative has the right to any information that (a) is in the custody or control of (i) a public body other than an officer of the Legisla- ture, or 170 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

(ii) a director, and (b) is necessary to enable the representative to exercise his or her powers or perform his or her functions or duties under this Act. (3) The public body or director must disclose to the representative the information to which the representative is entitled under subsection (2). (4) This section applies despite (a) any claim of confidentiality or privilege, other than a claim based on solicitor-client privilege, and (b) any other enactment, other than a restriction in section 51 of the Evidence Act. 19 “Public body” has the same meaning as in the Freedom of Information and Privacy Act, R.S.B.C., 1996, c.165 [FOIPPA]: RCYA, s. 1. This definition includes a ministry of the government of British Columbia, a “local public body”, and a long list of bodies set out in Schedule 2 to FOIPPA. A “local public body” is defined as a local government body, a health care body, a social services body, an educational body, or a governing body of certain professions or occu- pations set out in Schedule 3. The list of public bodies included in Schedule 2 of FOIPPA is even more extensive and numbers in the hundreds. Included in this list is the Office of the Premier and Executive Council Operations. Also included are such diverse public bodies as an Adoption Agency licensed under the Adoption Act, BC Film, BC Transplant Society, British Columbia Arts Council, British Columbia Housing Management Commission, First People’s Advisory Committee, Health Facilities Association of British Columbia, Office of the Public Guardian and Trustee, and Youth Program Committee, to name a small few. 20 The petitioner submits that in s. 10(4) the Legislature has clearly identified the only privileges with respect to information that can be asserted by a public body or director as against the petitioner. The common law privilege known as “public interest immunity” or “Cabinet privilege” is not among them. 21 Bill 20 proposes to amend s. 10 of the RCYA as follows: 36 Section 10 of the Representative for Children and Youth Act, S.B.C. 2006, c. 29, is amended (a) by repealing subsection (1) and substituting the following: (1) In this section: “committee” includes a committee designated under section 12 (5) of the Freedom of Information and Protection of Privacy Act; “officer of the Legislature” has the same meaning as in the Freedom of Information and Protection of Privacy Act, but does not include the representative., and Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 171

(b) by adding the following subsection: (2.1) Subsection (2) does not apply with respect to information that would reveal the substance of deliberations of the Executive Council or any of its committees, including any advice, recommendations, policy considerations or draft legislation or regulations submitted or prepared for submission to the Executive Council or any of its committees.

Issues 22 The crux of the respondents’ position is that the petitioner’s right to information in s. 10 of the RCYA is not a right that can be enforced by a court. In other words, they say that the right is non-justiciable. The respondents assert that the only forum available for resolving any dispute with respect to the petitioner’s right to information is the Legislature. 23 If I accept the respondents’ argument that the petitioner does not have a justiciable remedy, the petition must be dismissed. 24 However, if I conclude that the petitioner does have an enforceable remedy in court, there are a number of other issues that arise. In general, these issues are whether the petitioner has a right to the requested information; whether the respondents have refused to produce that information; and if the answers to these questions are both affirmative, what remedy is available to the petitioner. On this latter point, the petitioner is seeking declaratory relief and a mandatory order that the respondents produce the information (an order for “mandamus”). 25 In summary, the issues are as follows: 1. Does the petitioner have an enforceable remedy in court, or is she limited to a legislative remedy if a party does not comply with s. 10 of the RCYA? 2. Does the petitioner have a right to the requested information? (a) Is the information necessary to allow her to perform her functions under the RCYA? (b) Do the respondents have control or custody of the document? (c) Is there any privilege from production? 3. Did the respondents refuse to produce the information? 4. What sort of remedy is appropriate? 172 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

Issue #1 - Does the Petitioner Have an Enforceable Remedy in Court, or Is She Limited to a Legislative Remedy If a Party Does Not Comply with s. 10 of the RCYA? 26 The respondents argue that the petitioner does not have an enforceable remedy in court and that she is limited to a legislative remedy if a party does not comply with s. 10 of the RCYA. The petitioner argues that she does have a justiciable remedy. 27 Both parties agree that this issue is one of statutory interpretation. The question is whether the Legislature intended that the petitioner would be precluded from invoking the aid of the court to enforce her right to documents under s. 10 of the RCYA.

The Auditor General Case 28 In support of their argument the respondents rely on principles set out by the Supreme Court of Canada in Canada (Auditor General) v. Canada (Minister of Energy, Mines & Resources), [1989] 2 S.C.R. 49 (S.C.C.) [Auditor General]. In that case, the federal Auditor General indicated his request to a Crown corporation, Petro-Canada, for certain documents relevant to its audit of the purchase of Petro-Fina by Petro-Canada to ascertain whether that purchase represented “value for money”. The Auditor General was of the view that it was entitled to the information pursuant to its right of access to documents in s. 13(1) of the Auditor General Act, S.C. 1976-77, c. 34. Petro-Canada refused this request. As a result, the Auditor General advised the Governor General in Council to direct the officers of Petro-Canada to furnish the information, but the Governor Gen- eral in Council declined to exercise its power to do so under s. 14(3) of the Auditor General Act. The Auditor General then sought to obtain the information through the judicial process. 29 The Supreme Court of Canada denied the application of the Auditor General for an order of mandamus. The order would have required the respondents (named Ministers of the Crown including the Minister of Energy, Mines and Resources) to provide certain documentation required for the Auditor General’s audit of the proposed Petro-Canada purchase. 30 The Court stated the issue at the outset of its judgment at page 55: What is really at issue in this case is the appropriateness of the Court assuming the role of arbiter in resolving a dispute between Parliament and a parliamentary servant, albeit of high rank. Can, or should, the courts give the Au- ditor General access to (and therefore disclosure of) documents, including Cabinet documents, which the Governor in Council has denied him? Are the Auditor General’s demands ones which ought properly to be determined by the courts or by the House of Commons? In other words, are the claims which the Auditor General seeks to invoke legally enforceable? Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 173

31 The Court’s analysis involved statutory interpretation of the Auditor General Act. The Court approached the issue in three stages: first, whether there was in fact a remedial provision in the Auditor General Act; second, whether it was Parliament’s intention for the statutory remedy to be the exclusive remedy; and third, if the remedy was intended to be exclusive, whether this remedy was an adequate alternative to a justiciable remedy. 32 In Canada (Auditor General), the asserted right at issue — access to information — was set out in section 13(1) of the Auditor General Act: Except as provided by any other Act of Parliament that expressly refers to this subsection, the Auditor General is entitled to free access at all conve- nient times to information that relates to the fulfilment of his responsibilities and he is also entitled to require and receive from members of the public service of Canada such information, reports and explanations as he deems necessary for that purpose. 33 Although not explicitly in remedial terms, the Court found that section 7(1)(b) of the Auditor General Act could be characterized as a remedy for the right of access to information. That section read as follows: The Auditor General shall report annually to the House of Commons ..... (b) on whether, in carrying on the work of his office, he received all the information and explanations he required. 34 The Court found the wording in s. 7(1)(b) “almost exactly paralleled” the wording in s. 13(1) with reference to “information and explanations”. The Court noted that s. 7(1)(b) envisaged that the entitlement of access might not be given, and obligated the Auditor General to report on such an eventuality. The Court concluded that there was a clear linkage between the entitlement of access to information in s. 13(1) and its corresponding remedy in s. 7(1)(b). 35 At the second stage of the analysis, the Court in Canada (Auditor General) critically examined the entire statute. It found that s. 7(1)(b) reflected Parlia- ment’s intent that Parliament itself would be “the final arbiter of any disputes over the Auditor General’s access to information” (at 100). 36 This intent was reflected in (a) “The clarity of the linkage between the statutory right [to information] and the statutory remedy [for failing to provide it]” (at 99); and (b) “The extent to which the remedy is part of a comprehensive remedial code”, which in this case, demonstrated that s. 7(1)(b) is part of “a set of interlocking remedies” (at 100), including s. 14(3), which is a “persuasive indication that Parliament could not have intended s. 13(1) entitlements to be enforceable in the courts” (at 102): 14 (3) If, in the opinion of the Auditor General, a Crown corporation, in response to a request 174 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

made under subsection (2), fails to provide any or sufficient information or explanations, he may so advise the Governor in Council, who may thereupon direct the officers of the corporation to furnish the Auditor General with such information and explanations and to give him access to those records, documents, books, accounts and vouchers of the corporation or any of its subsidiaries access to which is, in the opinion of the Auditor General, necessary for him to fulfil his responsibilities as the auditor of the accounts of Canada. 37 Section 14 of the Auditor General Act provided that the Auditor General may request to obtain documents from a Crown corporation and that if it refused to comply, the Auditor General could advise the Governor in Council of the Crown corporation’s failure to respond to its request for information. In neither s. 13(1) nor s. 14 of the Auditor General Act was there a corresponding duty upon the Crown corporation to provide this information. 38 Finding that Parliament did intend s. 7(1)(b) to be an exclusive remedy, the Court in Canada (Auditor General) then inquired into the adequacy of the remedy, and therefore, the appropriateness of finding that the right in s.13(1) was non-justiciable. The Court found that a political remedy was the most appropriate in that case because of the very nature of the Auditor General’s function, “a quintessentially Parliamentary function, namely, the oversight of executive spending pursuant to Parliamentary appropriations” (at 103): In this case, it is reasonable to interpret s. 7(1)(b) as the Auditor General’s only remedy for claimed denials of s. 13(1) entitlements not only because the text is conducive to such an interpretation but also because, in the circumstances, a political remedy of this nature is an adequate alternative remedy. The Auditor General is acting on Parliament’s behalf carrying out a quintessentially Parliamentary function, namely, oversight of executive spending pursuant to Parliamentary appropriations. Where the exercise of this auditing function involves the Auditor General in a dispute with the Crown, this is in essence a dispute between the legislative and executive branches of the federal government. Section 7(1)(b) would seem to be the means by which Par- liament itself retains control over the position it wishes to take in such a dispute.

Application of the Auditor General Case 39 According to the analysis in Canada (Auditor General), the first stage is to determine whether the RCYA provides for any statutory remedy for breach of the obligation to produce information to the petitioner pursuant to s.10. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 175

40 The respondents submit that s. 20(2)(b) of the RCYA provides a similar but “even more effective” reporting mechanism than existed in the Canada (Auditor General) case. Section 20 provides as follows: 20(1) The representative may make a special report to the Legislative As- sembly if the representative considers it necessary to do so. (2) A report made under subsection (1) may contain the following: (a) recommendations for (i) the public body, or the director, responsible for the provision of a designated service, or (ii) any other public body or director the representative considers appropriate; (b) a report on the level of compliance with previous recommendations made by the representative under this Act to (i) the public body, or the director, responsible for the provision of a designated service, or (ii) any other public body or director; (b.1) a report on the provision of a designated service for children in different geographic, racial, cultural or religious communities of British Columbia; (c) any other matter the representative considers necessary. (3) The representative must deliver the special report to the Speaker, and the Speaker must lay the report before the Legislative Assembly and the standing committee as soon as possible. 41 Section 20 makes reference to the petitioner’s express power to issue a special report addressing its power to make recommendations and report on the “the level of compliance with previous recommendations made by the representative”. The respondents assert that this section, together with section 20(2)(c), permits the petitioner to report on “any other matter the representative considers necessary”, and therefore gives the petitioner “almost limitless scope” for complaint to the Legislature. 42 The petitioner argues that s. 20(2)(b) is not an appropriate remedy because she is not in this court asserting a right to compel compliance with her recommendations; rather, she is here asserting the right to obtain the information necessary even to make those recommendations. Further, in contrast to the legislation at issue in the Canada (Auditor General) case, here the RCYA expressly states not only that the petitioner has the “right” to the information, but also that the public body “must disclose to the representative the information to which the 176 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

representative is entitled”: s. 10(2) and(3). In other words, here the RCYA expresses both a right and a separate duty. 43 Section 20 stands in sharp contrast to the remedy provided in s. 7(1)(b) in the Canada (Auditor General) case. The wording of s. 20 as a whole indicates that the special report power concerns reports on recommendations to the public body and on the level of compliance with those recommendations; it does not concern the right to obtain the information necessary to even make those recommendations. 44 I am not persuaded that s. 20 of the RCYA provides a statutory legislative remedy for the asserted right of access to information and breach of duty to provide the information under s. 10 of the RCYA. 45 In the event I am wrong on this point and the ability to make a special report under s. 20 of the RCYA is some type of remedy for a breach of s. 10 of the RCYA, I will go on to the second stage of the analysis to consider whether there is an intention in the RCYA for this remedy to be exclusive. 46 First, the linkage between the right of access to information under s. and its alleged remedy in s. 20 is far from clear. Unlike in Canada (Auditor General) there is no similarity in language between the two sections in the RCYA. Section 10 refers to the petitioner’s “right to information” and states that a public body or the director “must disclose” that information. Nowhere in s. 20 is this wording paralleled. 47 The respondents assert that the broad wording of s. 20(2)(c) should be read to include a remedy for failure to provide information. Even if this is so, the linkage between the two sections is not direct and requires an inference to be drawn that is not supported by wording of the RCYA as a whole. 48 The comprehensive remedial code in the RCYA is also distinguishable from that in Canada (Auditor General). In Canada (Auditor General), other provisions of the statute provided for remedies by the Governor in Council. Section 14 of the Auditor General Act envisaged that the Crown corporation may not provide the requested information, and in such a case, the Governor in Council may order the Crown corporation to comply with the Auditor General’s request. 49 By contrast, in the RCYA, s. 23(5) contemplates the end of the remedial ladder to be the court, not the Legislature (or Governor in Council). Although this section deals with the petitioner’s duty of confidentiality, it is evidence that it was never the intention of the Legislature to “oust the courts” in favour of a legislative remedy, if the petitioner was faced with a party refusing to comply with the RCYA. This section makes it clear that the Legislature intended that the petitioner would be able to enforce non-compliance with the RCYA in court. Section 23(5) reads as follows: 23(5) The representative and a person appointed, employed or retained by the representative under section 7 (1) or (4) or 15 must not give or be compelled to give evidence in a court or in proceedings of a judicial Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 177

nature in respect of any matter coming to their knowledge in the exercise of powers and the performance of functions and duties under this Act, except (a) to enforce the representative’s powers of review and investigation, (b) to enforce compliance with this Act, or (c) with respect to a trial of a person for perjury. 50 Subsection (a) of s. 23(5) of the RCYA contemplates a justiciable remedy for situations of non-compliance with the petitioner’s powers of review and investigation. One mechanism for this procedure is set out in sections 14 and 14.1 of the RCYA. As the respondents point out, ss. 14 and 14.1 only refer to the petitioner’s powers of investigation and review, not to the right of access to information or to breaches of s.10. 51 Section 14 reflects a new drafting convention – a convention associated with the repeal of the former Inquiry Act, R.S.B.C. 1996, c. 251 - whereby statutory tribunals given traditional summons powers are now required to go to court rather than enforcing the orders themselves pursuant to the old sections 12, 15 and 16 of the Inquiry Act formulation: see Administrative Tribunals Act, S.B.C. 2004, c. 45, ss. 34, 49. This drafting convention pertaining to summons powers does not support the inference that the Legislature intended to prevent the petitioner from relying on any other judicial remedy for non-compliance with the RCYA. 52 The inclusion of subsection (b) in s. 23(5) demonstrates that the Legislature contemplated the petitioner’s ability and need to access the court to enforce its powers and rights beyond its powers of investigation and review. This subsection goes beyond the petitioner’s powers of review and investigation described in s. 23(5)(a). The broad wording — “to enforce compliance with this Act” — includes the power to enforce compliance with s. 10 of the RCYA. I find that the inclusion of s. 23(5)(b) is strong evidence of the Legislature’s intention to not preclude the petitioner’s access to court to obtain a remedy for breaches of section 10 of the RCYA. 53 As held in Canada (Auditor General) at page 91: ... It is the prerogative of a sovereign Parliament to make its intention known as to the role the courts are to play in interpreting, applying and enforcing its statute. 54 In this case, I conclude that the Legislature clearly has expressed its intention. Its intention is not to make itself the exclusive forum for the resolution of disputes in the RCYA; its intention is quite the opposite. The weak linkage between the right and the asserted remedy, and the wording of other remedial provisions in the RCYA (s. 23(5)(b)) clearly demonstrate that it is the Legislature’s intention that the petitioner is entitled to a justiciable remedy. 178 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

55 Despite my conclusion on this point, I will still go on to consider the adequacy of the legislative remedy, if it exists as asserted by the respondents. 56 The respondents say that the way the legislative remedy would work, in the event that a party did not comply with the petitioner’s demand for documents pursuant to s. 10 of the RCYA, is that the petitioner would have to deliver a special report to the Speaker, who must then lay the special report before the Legislative Assembly and the Select Standing Committee on Children and Youth: s. 20(3) of the RCYA. Presumably this special report would be a complaint by the petitioner that a public body has not complied with the petitioner’s demand for information pursuant to s. 10 of the RCYA. While the RCYA does not say what would then happen, the respondents suggest that the next course of action would be up to the Legislative Assembly. If the Legislative Assembly wanted to, it could compel a person to attend before it and to produce documents: ss. 2, 3 and 5 of the Legislative Assembly Privilege Act, R.S.B.C.1996, c. 259. 57 The respondents submit that it would be up to the Legislative Assembly to determine whether the nature of the information falls within a proper s. 10 demand, and whether there has been non-compliance with that demand. Presuma- bly this would also mean that the Legislative Assembly would have to determine any claim for solicitor-client privilege that may be asserted as a basis for non- compliance with the petitioner’s demand for information. I must observe that these are tasks routinely undertaken by the courts, but seldom, if at all, undertaken by the Legislature. 58 In this case, the respondents argue that the legislation establishing the mandate and the role of the petitioner is analogous to the legislation which established the mandate and the role of the Auditor General in the Canada (Auditor General) case. For this reason they argue that the legislative remedy they outline is adequate. They say that the petitioner, like the Auditor General, is an officer of the Legislature. 59 The Canada (Auditor General) case did not turn on any rule that an officer of the Legislature can never assert the right to information in a court of law. It was a highly exceptional case – a departure from a “fundamental principle”. The Court made this abundantly clear at page 110 of its judgment: ...the holdings in this case should be viewed as limited to the interpretation of a unique statute as informed by the particular role played by the Auditor General. The above analysis shall not be taken to detract from the fundamental principle that the courts should not readily decline to grant remedies for rights recognized by the laws of Canada. 60 I am not persuaded that the legislative remedy described by the respondents is an adequate remedy. The respondents’ interpretation of the RCYA is not consistent with the legislative intention behind the creation of the office of the petitioner, as evidenced by the petitioner’s statutory functions and mandate. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 179

61 The text of the Hughes Report and the comments in the Legislature on introduction of the office of the petitioner emphasized the need to restore public confidence in the child welfare system. The creation of the office of the petitioner was intended to help achieve this through the petitioner’s independence, authority to collect information, and public reporting process. 62 For example, the following recommendations were contained in the Hughes Report. 63 Recommendation 1 proposed the creation of the Representative for Children and Youth (p. 21): I am proposing a new body — a Representative for Children and Youth — that will build on the strengths of its predecessors and on the lessons learned from their experience. It will resemble in significant respects the current Of- fice for Children and Youth, but it will have the independent status that was held by the Advocate, and will perform some of the functions that were car- ried out by the [Children’s] Commission. Further, its reporting process will be designed to help depoliticize the debate around child welfare issues. The current Office for Children and Youth has performed its duties independently, but if public confidence in the child welfare system is to be restored, the independent body that speaks for children and youth must have a status that puts that independence beyond question. That is why I am recommending that the new Representative for Children and Youth be an independent Officer of the Legislature, with the same standing as the Ombudsman and the Auditor General. [Emphasis added.] 64 Recommendation 4 described the function that would later be reflected in s. 6(b) of the RCYA (p. 35): That the Representative for Children and Youth be mandated to monitor, review, audit and investigate the performance and accountability of the child welfare system, but that this mandate be reviewed in five years and revised as appropriate at that time. 65 Recommendation 4 emphasized that this function requires the petitioner to report directly to the public regarding the Executive’s management of the child welfare system (p. 34): Monitoring the Child Welfare System Most government ministries are not subject to formal oversight by an external body and it may be that in the future, there will be no need of an independent office for children. The Ministry’s own performance measurement, quality assurance programs, and public reporting may in themselves be sufficient to assure British Columbians that vulnerable children and youth are being protected as they should be. But at this time, to meet public concerns, an external agency remains necessary as the Ministry continues to enhance its ability to measure, monitor and 180 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

report on its own performance. The public needs to know that the child welfare system is accountable for what it does and how it does it... 66 As was pointed out above, the role to be given to the petitioner was an exceptional role. 67 The RCYA received First Reading on May 4, 2006. In introducing the Bill, the Attorney General stated as follows: I am pleased to introduce Bill 34. The purpose of this bill is to establish authority for the Legislative Assembly to appoint the representative for children and youth as an independent officer of the Legislature to improve services for children, youth and families in British Columbia. This bill follows through on the recommendations provided by the Hon. Mr. Ted Hughes in his recent report to government. Consistent with those recommendations, this new office builds upon the strong foundation laid by the child and youth officer and other relevant offices by creating an expanded and improved framework that will provide better and expanded advocacy opportunities to foster improvements to our system of services for children, youth and their families. It will provide for the independent review and investigation of deaths and critical injuries that occur within the child welfare system, and it will provide for a strong system of accountability to the public through independent public reporting. Under this new model, the representative will have the full discretion to advocate for children and will be able to initiate reviews and inves- tigations and to release reports independent from government and uniquely focused on the child welfare system. [Emphasis added.] 68 The RCYA received Second Reading on May 17, 2006. On that occasion, the Attorney General stated as follows in Hansard (pp. 4960-61): The representative’s role covers three areas, as recommended in the Hughes review: (1) the advocacy role — to support, assist, inform and advise children and their families concerning designated services; (2) the monitoring role — to increase accountability by monitoring, reviewing and auditing the ministries and other public bodies responsible for designated services; and (3) the review and investigation role — to review, investigate and report on children’s critical injuries or deaths in circumstances as outlined in the bill...... The provisions described respond directly to Hughes’s recommendations...... They respond to recommendation four, which specifies that the representative’s mandate should include monitoring, reviewing, auditing and investi- gating performance and accountability within the child welfare system...... To enable the representative to carry out review and investigation responsibilities, the bill requires ministries and other entities to give the representa- Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 181

tive information about the critical injury or death of any child receiving designated services within the previous year. The representative also has a right to any information held by any public body or bodies that is necessary to carry out the office’s roles, functions and duties as Mr. Hughes advocated in recommendation 54. As emphasized in Mr. Hughes’s review, this bill gives the representative the power to recommend — rather than order — change. The reporting requirements outlined in the bill in the form of annual and special reports give the representative a mechanism to inform the children’s standing committee, the Legislature and the public of the recommendations made to the ministries or to other public bodies and their compliance with prior recommendations. This bill is a testament to this government’s commitment to make changes that serve the interests of British Columbia’s children. [Emphasis added.] 69 Reading the RCYA as a whole, it is clear that the Leglislative intention was to provide the petitioner with structural independence from the Executive Branch. In contrast to the officer in the Canada (Auditor General) case, the petitioner is not simply a “political servant of the [Legislature] who carries out [its] function on its behalf”. 70 The functions and mandate of the petitioner as set out in the RCYA are inextricably linked to restoring and maintaining confidence of the public in the func- tioning of the child welfare system. The RCYA grants the petitioner the powers and rights to access information necessary for the petitioner to perform her mandate. A “special report” to the Legislature that a public body has breached the statute by not providing the petitioner with information would not meaningfully enforce the petitioner’s right to access that information. The right in this case can only adequately be enforced by recourse to the courts. 71 It has to be kept in mind that the petitioner has the right to obtain information from all “public bodies”, which is broadly defined. It is of course fair to comment that many of the listed “public bodies” are unlikely to be approached by the petitioner for information. Nevertheless, many public bodies outside of ministries of the government could have information relevant to the petitioner’s role and be the subject of a s. 10 request for information. It cannot have been the intention that if any of these public bodies defied the petitioner’s request for information pursuant to s. 10, contrary to their duty to provide the information, that the remedy would be to have the petitioner report on this to the Legislative Assembly and leave it to the Legislative Assembly to determine whether or not the information should be provided. This would render the s. 10 right to obtain the information practically meaningless, and would detract from the important business of the Legislature. It would be such an ineffective remedy that it would seriously undermine the ability of the petitioner to perform her wide mandate. 72 Nor can it be contended that only in a situation where the s. 10 request is directed at a government ministry and Cabinet information falls within the scope 182 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

of the request, will the exclusive remedy for failure to produce the information be to report to the Legislature. The RCYA does not suggest there is one rule for those in high office, and another rule for everyone else. 73 The rule of law was discussed by the Supreme Court of Canada in Reference re Secession of Quebec, [1998] 2 S.C.R. 217 (S.C.C.) at para. 70, where the Court stated: ...The rule of law, as observed in Roncarelli v. Duplessis [1959] S.C.R. 121, at p. 142, is “a fundamental postulate of our constitutional structure”. As we noted in the Patriation Reference, supra, at pp. 805-6, “[t]he ‘rule of law’ is a highly textured expression, importing many things which are beyond the need of these reasons to explore but conveying, for example, a sense of or- derliness, of subjection to known legal rules and of executive accountability to legal authority”. At its most basic level, the rule of law vouchsafes to the citizens and residents of the country a stable, predictable and ordered society in which to conduct their affairs. It provides a shield for individuals from arbitrary state action. 74 In conclusion on this point, the general rule in Canada is that legal rights are enforceable by courts. The rule of law is a fundamental premise of our legal and democratic system. It means that no one is immune from the law or excluded from the benefit of the law. For this reason, the notion that anyone, especially persons holding high public office, can breach their statutory duties without being accountable to a court of law is a highly exceptional proposition. The RCYA does not bear an interpretation that ousts the court from its ordinary role in providing a remedy for breach of the law.

Issue #2 - Does the petitioner have a right to the requested information? (a) Is the Information Necessary to Allow Her to Perform Her Functions under the RCYA? 75 One of the mandates of the petitioner is to “monitor, review, audit and conduct research on the provision of a designated service by a public body or director for the purpose of making recommendations to improve the effectiveness and responsiveness of that service, and comment publicly on any of these functions”: s. 6(b) of the RCYA. 76 The petitioner’s mandate under s. 6(b) is exercised with reference to “designated services” as defined in the RCYA and the Representative for Children and Youth Regulation, B.C. Reg. 103/2007. 77 As noted above, in pursuit of this mandate, the petitioner has undertaken an audit of the CIHR Program. It is not contested that this is a “designated service” within the petitioner’s mandate. 78 Also as noted above, the CIHR Program provides income assistance to a child’s relative where that relative, instead of a child’s parent, is caring for the child. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 183

79 The CIHR Program has existed in British Columbia for several decades. Ap- proximately 4500 children, 40 to 50 percent of whom are aboriginal children, are being funded under the CIHR Program. 80 Until December 2007, the CIHR Program was funded and administered as an income assistance program by what is now the Ministry of Housing and So- cial Development (“MHSD”), and did not require any screening or assessment of whether the persons receiving funds would provide a safe and suitable home for the child in question. 81 The Government introduced a screening process in December 2007, to be administered by the MCFD. In August 2008, formal responsibility for the CIHR Program was shifted to MCFD, though MHSD continued to be payor. 82 The purpose of the petitioner’s audit is to determine the effectiveness and rigour of the CIHR Program screening process in view of concerns brought to the attention of the petitioner that the process and its administration have not been effective in reducing the risks to many vulnerable children and youth, and to make recommendations arising from the audit findings. 83 The information requested by the petitioner, from the MCFD, concerns the subject matter of the government’s decision to cancel the CIHR Program and replace it with another program, the Extended Family Program. In response to the petitioner’s request, the MCFD did produce some information on this subject matter. The only information it has not produced is that information which may fall into the category of submissions to Cabinet concerning this subject matter. The respondents say that the only reason this has not been produced is because the petitioner will not agree to their terms of production. 84 The respondents filed no evidence to suggest that the subject matter of the petitioner’s request is outside her mandate. I find that the requested information falls within the mandate of the petitioner. It is necessary information to enable her to exercise her powers and perform her functions or duties under the RCYA, and therefore she has a right to the information pursuant to s. 10(2) of the RCYA.

(b) Do the Respondents have control or custody of the document? 85 The letter from the Minister of the MCFD, the respondent Mary Polak, to the petitioner, dated April 22, 2010 stated: The Ministry has provided you the information that is within our authority to provide. [Emphasis added.] 86 The letter from the Minister went on to state that the release of Cabinet materials is a matter properly dealt with through Cabinet Operations. 87 This letter was an acknowledgment that the MCFD had custody of the requested Cabinet submission(s) but was an assertion that it did not have control 184 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

of it in the sense that it did not have authority to produce it without the approval of Cabinet Operations. 88 The respondents make this point at paragraph 37 in their submissions. They argue as follows: ...A public body may have a cabinet related document in its custody but it may not be under its control because of internal government controls over the use and disclosure of cabinet documents. Put another way, only Cabinet has the authority to waive privilege over Cabinet documents and so the public body may be under an obligation to refer the Representative to Cabinet Operations as in this case. This kind of internal government dispute again is highly appropriate for the Legislature to resolve and quite unsuitable for the court to resolve. 89 I am not persuaded by the respondents’ submissions. Section 10(2)(a) refers to information that is in the custody or control of a public body. It does not require the information to be in the custody and control of the public body. The respondents have never taken the position that they did not have custody of the requested information. As such, the MCFD has an obligation under s. 10(3) to disclose the information to the petitioner. No one has suggested that the Office of the Premier and Executive Council Operations did not have both custody and control of the requested information. In fact, the MCFD referred the petitioner to the Office of the Premier and Executive Council Operations in response to the petitioner’s further requests for access to the information. Clearly, this indicates that the Office of the Premier and Executive Council Operations had both custody and control of the requested information. The obligation on both of these public bodies is mandatory: the public body “must disclose to the representative the information”.

(c) Is there any privilege from production? 90 The respondents suggest that some or all of the information requested by the petitioner, namely the submissions to Cabinet, fall within a category of privilege known as “public interest immunity”, or Cabinet privilege. 91 The RCYA does not exclude documents covered by Cabinet privilege from the mandatory obligation of a public body to produce information to the petitioner, under s. 10. On the contrary, s. 10(4) makes it clear that the obligation to produce information to the petitioner applies despite any claim of confidentiality or privilege, other than a claim based on solicitor-client privilege. 92 This could not have been an oversight. As pointed out by the respondents, there have been extensive detailed internal Cabinet procedures and protocols in place amongst members of the provincial government and their staff, since at least 1996, which are designed to reinforce and to prevent waiver of Cabinet privilege. Members of government were well aware of the importance of Cabi- net privilege when the RCYA was enacted. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 185

93 The Legislature has created in other legislation express restrictions on production of information that may fall within Cabinet privilege. For example, s. 18(1) of the Ombudsperson Act, R.S.B.C. 1996, c. 340, states that the ombudsperson must not require any document to be produced if the Attorney General certifies that producing the document might “result in or involve the disclosure of deliberations of the Executive Council”. 94 Another example is s. 12 of the FOIPPA, which prohibits public bodies from releasing information that would “reveal the substance of deliberations of the Executive Council or any of its committees”, except in certain circumstances. 95 A key impetus for the RCYA was a stated desire to increase public accountability by giving powers to a person independent of government. While the petitioner has the right to obtain information under s. 10 of the RCYA, the RCYA also imposes confidentiality obligations on the petitioner, pursuant to s. 23. It can be deduced from the whole of the statute that the Legislature must have concluded that the mandate of the petitioner, including protection of children, was a higher public policy goal than protecting Cabinet privilege. At the same time, the Legislature must have considered at the time that the confidentiality provisions within the RCYA applicable to the petitioner were a sufficient safe- guard and balancing of the public interest. 96 The respondents have never suggested that the information requested by the petitioner, which is the subject of this proceeding, is subject to solicitor client privilege. As such, there is no privilege from production of the information to the petitioner.

Issue #3 - Did the respondents refuse to produce the information? 97 The respondents argue that this case is not about document disclosure at all. In fact they assert that they have always been willing to disclose the information and documents requested by the petitioner. The respondents argue that what this case is really about is the use of the disclosed information and documents by the petitioner once she receives the information. The respondents say that they take issue with the fact that the petitioner would not agree to the terms they wanted with respect to her subsequent use of the information. 98 I do not agree with the respondents that this case is not about document disclosure. To the contrary, this is exactly what this case is about. The petitioner seeks access to the documents. The petitioner asserts that the RCYA provides her with a right to this information, that it confers a corresponding duty on the respondents to provide this information, and that there has been a prior demand and refusal to provide it. 99 Certainly the petitioner does not request any order relating to the use or publication of these documents once she gets access to them. She takes the position that the RCYA already sets out the use she may make of the documents. She has not yet made a decision as to how she will use the documents, as obviously this 186 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

must await her receipt and review of them. She takes the position that the respondents are asking her to fetter her own discretion, in contravention of her statutory mandate. 100 However, the petitioner says that if the respondents are concerned that in the future, her interpretation of the RCYA will be different than their own, on the question of the use she can make of the information, then they have their own remedies that they can seek. What they cannot do is refuse to fulfil their obligation to produce the information, and withhold the information until the petitioner agrees to their terms of production. 101 I conclude that the petitioner’s position is legally correct. 102 The respondents have several other avenues of relief if they are not satisfied that in the future the petitioner will limit her use of the documents to what is permitted by the RCYA, or to a use that conforms with the respondents’ view of what is appropriate. 103 If the respondents are concerned that the petitioner will act beyond her statutory powers set out in the Act including with respect to maintaining confidentiality with respect to the Cabinet documents, then the more appropriate avenue to obtain the relief they seek is by way of petition under s. 2 of the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 [JRPA], requesting relief by way of prohibition. Section 2 of the JRPA provides that an application for judicial review may be made in any case where the applicant would be entitled to relief in the nature of mandamus, prohibition or certiorari or would be entitled to a declaration or injunction related to the exercise or purported exercise of a statutory power. The availability of the remedies of prohibition, certiorari and mandamus are determined by the common law, not the statute. Prerogative remedies are available to force a government delegate to conduct herself within the confines of a statutorily conferred power. 104 Further, as another alternative, the respondents could bring a petition pursuant to Rule 10(b) seeking a declaration as to the meaning of the confidentiality provisions of the RCYA as applied to information produced to the petitioner. 105 What the respondents cannot lawfully do is engage in a pre-emptive remedy by refusing to produce the requested information to the petitioner. 106 In short, I conclude that the public bodies, the MCFD and the Office of the Premier, have refused to produce the information requested by the petitioner.

Issue #4 - What sort of remedy is appropriate? 107 The petitioner seeks two forms of relief. 108 First, the petitioner seeks a declaration that the respondents have failed to comply with their statutory duty under s. 10(3) of the RCYA to provide her with the Cabinet submission(s) that she requires pursuant to her statutory right in s. Rep. for Children & Youth v. B.C. (Office of the Premier) S. Griffin J. 187

10 of the RCYA in order to complete an audit of the Child in the Home of a Relative Program. 109 It is clear from my analysis above that I have concluded that the petitioner had the right to request the information and that both the MCFD and the Office of the Premier have refused to produce that information. I therefore grant the declaratory relief, declaring that both the Ministry of Children and Family De- velopment and the Office of the Premier have failed to comply with the statutory duty pursuant to s. 10(3) of the RCYA to provide the petitioner with any and all Cabinet submissions associated with the CIHR Program and its replacement by the Extended Family Program. 110 Second, the petitioner requests an order in the nature of mandamus to compel the respondents to forthwith comply with their legal duty to provide the petitioner with the Cabinet submissions as set out in s. 10(3) of the RCYA. 111 The general requirements for an order of mandamus are that there is a clear public legal duty to act, the duty is owed to the applicant, there is a clear right to performance of that duty, there has been a prior demand to exercise the duty and reasonable time to comply, and a refusal to comply: Apotex Inc. v. Canada (Attorney General) (1993), [1994] 1 F.C. 742 (Fed. C.A.), at 766-769. 112 Mandamus is not generally available to compel the exercise of a discretionary duty, however, it may be used to force the decision maker to act in a way that is not unreasonable and which takes relevant factors into account: Apotex Inc., supra. 113 As is clear from my analysis above, there was a clear statutory duty on the part of the public bodies the MCFD and the Office of the Premier to produce the information requested by the petitioner pursuant to s. 10(3) of the RCYA. The petitioner also has a clear right to performance of that duty, pursuant to s. 10(2) of the RCYA. Pursuant to s. 10(4) of the RCYA, the petitioner’s right to that information and the respondents’ duty to provide that information applies despite any claim of confidentiality or privilege, including cabinet privilege. There was also reasonable time for the respondents to comply with their duty. 114 I find that the petitioner has made a clear demand for performance of the duty, and there has been a refusal to exercise the duty. The personal respondents have the authority to direct the public bodies in question to perform the duty to produce the information, and have refused to do so. 115 The RCYA does not provide any discretion to a public body in the fulfillment of the statutory duty to produce information to the petitioner. 116 In conclusion, I find that the requirements of an order for mandamus have been established by the petitioner in this case. Such an order will go against the personal respondents. 117 The respondents argue in the alternative that if this court finds that the requirements for mandamus are satisfied it should nevertheless impose conditions 188 WESTERN WEEKLY REPORTS [2011] 1 W.W.R.

on the award of mandamus with respect to the petitioner’s use of the Cabinet documents. They point to the provisions in s. 23 of the RCYA which deal with the petitioner’s duty of confidentiality, specifically s. 23 (4) which provides: The representative and a person appointed, employed or retained by the representative under section 7 (1) or (4) or 15 must, except as specifically authorized under this Act, maintain confidentiality in respect of all matters that come to their knowledge in the exercise of powers and the performance of functions and duties under this Act. 118 This brings us back full circle, to the main point of the respondents. I have already concluded that the respondents do not have the right to demand conditions of the use of the information that they are required to produce pursuant to s. 10 of the RCYA. This case is not about the petitioner’s future use of the information. The respondents are free to seek other remedies if they wish to determine the petitioner’s future use of the information. 119 The petitioner is already governed by the provisions of the RCYA with respect to the use of the information. The order in the nature of mandamus will be made without strings attached.

Conclusion 120 In conclusion, I make the following orders: 1. A declaration that that the respondents the MCFD and Office of the Pre- mier have failed to comply with their statutory duty under s. 10(3) of the RCYA to provide the petitioner with the Cabinet submission(s) associated with the CIHR program and its replacement by the Extended Family Pro- gram as announced by the MCFD on March 1, 2010 and as requested by the petitioner in her March 5, 2010 letter to the MCFD and in her April 22, 2010 letter to the Office of the Premier; 2. An order in the nature of mandamus compelling the personal respondents to direct the MCFD and the Office of the Premier to comply with the legal duty to provide to the petitioner the Cabinet submission(s) referred to in paragraph 1 forthwith. 121 I am advised that the requested information is in the possession of counsel for the respondents. I expect therefore that the information will be provided to the petitioner, through her counsel, immediately. 122 The petitioner is entitled to the costs of this proceeding, subject to further submissions if necessary. Petition granted.