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WESTERN WEEKLYREPORTSReports of Cases Decided in

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2016-VOLUME 5(Cited [2016] 5 W.W.R.)

All cases of value from the courts ofWestern Canada and appeals therefrom

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Michael Hanuschuk Drugs Ltd. v. Keith 417

[Indexed as: Michael Hanuschuk Drugs Ltd. v. Keith]

Michael Hanuschuk Drugs Ltd., Dan Frederick Seibel, ChristineMary Seibel, Craig M. Dickenson, La Terra Ventures Inc., DonDown and David Wilson (Respondents / Plaintiffs) and PatrickKeith, Patricia Levasseur and 2256384 Ontario Inc. (Appellants

/ Defendants)

Alberta Court of Appeal

Docket: Calgary Appeal 1501-0230-AC

2016 ABCA 13

Marina Paperny, J.D. Bruce McDonald, Frederica Schutz JJ.A.

Heard: January 14, 2016

Judgment: January 18, 2016

Contracts –––– Performance or breach — Terms — Conditions prece-dent — Miscellaneous.

Contracts –––– Formation of contract — Miscellaneous –––– Fraud — Plain-tiffs were granted summary judgment, holding various agreements made be-tween parties were valid and enforceable, including land mortgages, and grant-ing foreclosure in favour of plaintiffs respecting land mortgages — Defendantsappealed — Appeal dismissed — There was no error in law or in principle, orerror of fact or mixed fact and law — Specifically, review of record disclosed nobasis for intervention regarding enforceability of purchase agreements and mort-gage documentation in question — Given conclusion that purchase agreementswere enforceable, there was no basis for claim of fraud being advanced bydefendants.

Civil practice and procedure –––– Summary judgment — General princi-ples –––– Plaintiffs were granted summary judgment, holding various agree-ments made between parties were valid and enforceable, including land mort-gages, and granting foreclosure in favour of plaintiffs respecting landmortgages — Defendants appealed — Appeal dismissed — There was no errorin law or in principle or error of fact or mixed fact and law — Specifically, re-view of record disclosed no basis for intervention regarding enforceability ofpurchase agreements and mortgage documentation in question — Given conclu-sion that purchase agreements were enforceable, there was no basis for claim offraud being advanced by defendants.

APPEAL by defendants from judgment reported at Michael Hanuschuk DrugsLtd. v. Keith (2015), 2015 ABQB 537, 2015 CarswellAlta 1569, 57 R.P.R. (5th)171, [2015] 11 W.W.R. 403, 21 Alta. L.R. (6th) 27 (Alta. Q.B.), granting plain-

WESTERN WEEKLY REPORTS [2016] 5 W.W.R.418

tiffs summary judgment, holding various agreements between parties were validand enforceable, and granting foreclosure in favour of plaintiffs.

K. Zhang, for RespondentsR. Pelletier, for Appellants

Frederica Schutz J.A. (for the Court):

1 The appellants appeal the decision of the Honourable Mr. JusticeD.B. Nixon which granted the respondents summary judgment, holdingthat various agreements made between the parties were valid and en-forceable, including land mortgages, and granting foreclosure in favourof the respondents in respect of those land mortgages.

2 We have reviewed the record before us, the facta and the authoritiesprovided and have listened carefully to the very able oral submissions ofcounsel for the appellants.

3 We wish to make clear that the record before Mr. Justice Nixon wasnot exactly the same as the record that was before the learned Master inChambers. Both sides appealed the dismissal by the Master in Chambersof their respective summary judgment motions, but further evidence wasacquired by both sides of this litigation before the appeals of the Master’sorder came before Justice Nixon. Justice Nixon heard argument duringtwo special oral hearings and had the benefit of written briefs. Thesehearings occurred on September 12, 2014 and November 6, 2014.

4 After the two hearings, Mr. Justice Nixon reserved his decision andissued written reasons on August 28, 2015, which can be found at 2015ABQB 537 (Alta. Q.B.).

5 Having reviewed the record, the submissions, the law and the writtenreasons of the hearing court, we discern no errors in law or in principle,and find no errors of fact or mixed fact and law.

6 Specifically, our review of the record in the court below discloses nobasis for appellate intervention with respect to the chambers judge’s dis-position regarding the enforceability of the purchase agreements andmortgage documentation in question.

7 Furthermore, given the finding of the chambers judge that thepurchase agreements are enforceable, we see no basis for the claim offraud being advanced by the appellants.

8 Accordingly, the appeal is dismissed.

Appeal dismissed.

R. v. Kovich 419

[Indexed as: R. v. Kovich]

Her Majesty the Queen, Appellant and Gordon William Kovich,(Accused) Respondent and The Attorney General of Canada,

Intervener

Her Majesty the Queen, Appellant and Courtney Nadine Bittern,(Accused) Respondent and The Attorney General of Canada,

Intervener

Manitoba Court of Appeal

Docket: AR 14-30-08116, AR 14-30-08270

2016 MBCA 19

Richard J. Chartier C.J.M., Freda M. Steel, Marc M. MonninJJ.A.

Heard: May 25, 2015

Judgment: February 9, 2016

Criminal law –––– Sentencing — Types of sentence — Credit for time incustody — Pre-sentence custody –––– Accused B was released on bail, but thenhad her bail revoked pursuant to s. 524(4) or (8) of Criminal Code of Canadabecause of alleged misconduct while out on bail — Accused K was denied bail,primarily because of his prior criminal record — B’s sentencing judge found ex-emption in s. 719(3.1) of Code relating to s. 524 was unconstitutional, as it vio-lated ss. 7 and 15 of Canadian Charter of Rights and Freedoms — As result, sheheld that s. 719(3.1) did not prevent her from considering enhanced credit forpre-sentence custody (PSC), and awarded credit on 1.5:1 basis — K’s sentenc-ing judge held that s. 719(3.1) violated s. 7 of Charter because it interfered withfundamental principle of proportionality, as it resulted in principle of parity be-ing violated and did not permit consideration of Gladue and created grossly dis-proportionate situations between offenders — Crown appealed sentences —Both exemptions challenged related to B and K, so appeals were hear to-gether — Leave to appeal allowed; appeals dismissed — Parliament passed leg-islation limiting award of enhanced credit for PSC generally, and prohibiting itcompletely for offenders who were denied bail pursuant to s. 515(9.1) or s. 524of Code — Parliament’s stated objective for these prohibitions was to enhancepublic safety, to provide these offenders with longer-term programming while incustody and to prevent some offenders from “gaming the system” — Obviousconsequence of bail decision is to limit amount of PSC credit that could begranted by sentencing judge — Parliament is entitled to limit discretion of sen-tencing judge except where such limitation constitutes Charter violation — Dif-ferent courts across country have reviewed constitutionality of these two exemp-


tions — Result varies depending on whether one views exemptions as relating topunishment to process of sentencing itself — Supreme Court of Canada heldthat when true nature of Charter challenge relates to punishment, validity of im-pugned legislation is more appropriately measured against standard of gross dis-proportionality as has evolved under s. 12 of Charter — If considered as punish-ment, sentences in this case could not be considered to be grosslydisproportionate — However, true nature of this challenge relates to sentencingprocess, as opposed to punishment.

Criminal law –––– Charter of Rights and Freedoms — Life, liberty and se-curity of person [s. 7] — Principles of fundamental justice — Over-breadth –––– Accused B was released on bail, but then had her bail revokedpursuant to s. 524(4) or (8) of Criminal Code of Canada because of alleged mis-conduct while out on bail — Accused K was denied bail, primarily because ofhis prior criminal record — B’s sentencing judge found exemption in s. 719(3.1)of Code relating to s. 524 was unconstitutional, as it violated ss. 7 and 15 ofCanadian Charter of Rights and Freedoms — As result, she held that s. 719(3.1)did not prevent her from considering enhanced credit for pre-sentence custody(PSC), and awarded credit on 1.5:1 basis — K’s sentencing judge held that s.719(3.1) violated s. 7 of Charter because it interfered with fundamental principleof proportionality, as it resulted in principle of parity being violated and did notpermit consideration of Gladue and created grossly disproportionate situationsbetween offenders — Crown appealed sentences — Both exemptions challengedrelated to B and K, so appeals were hear together — Leave to appeal allowed;appeals dismissed — Two exemptions constitute unjustifiable infringement of s.7 of Charter for two reasons — First, exemptions subject identically-placed of-fenders to different periods of imprisonment, depending on whether they areable to obtain bail, for reasons that are not relevant to determination of propor-tionate sentence, thereby interfering with principle of proportionality in sentenc-ing process, which is principle of fundamental justice — Second, exemptions gotoo far in that they overreach in their effect; they target those who commitcrimes while out on bail or violent offenders but in reality, they capture offend-ers who are unable to get bail because of socio-economic reasons, not because oftheir conduct — Words “unless the reason for detaining the person in custodywas stated in the record under subsection 515(9.1) or the person was detained incustody under subsection 524(4) or (8)” in s. 719(3.1) of Code violate s. 7 ofCharter and are not saved by s. 1 — Those words are declared to be of no forceor effect pursuant to s. 52(1) of Constitution Act, 1982.

Criminal law –––– Sentencing — Principles — Proportionality –––– AccusedB was released on bail, but then had her bail revoked pursuant to s. 524(4) or (8)of Criminal Code of Canada because of alleged misconduct while out on bail —Accused K was denied bail, primarily because of his prior criminal record —B’s sentencing judge found exemption in s. 719(3.1) of Code relating to s. 524

R. v. Kovich 421

was unconstitutional, as it violated ss. 7 and 15 of Canadian Charter of Rightsand Freedoms — As result, she held that s. 719(3.1) did not prevent her fromconsidering enhanced credit for pre-sentence custody (PSC), and awarded crediton 1.5:1 basis — K’s sentencing judge held that s. 719(3.1) violated s. 7 ofCharter because it interfered with fundamental principle of proportionality, as itresulted in principle of parity being violated and did not permit consideration ofGladue and created grossly disproportionate situations between offenders —Crown appealed sentences — Both exemptions challenged related to B and K,so appeals were hear together — Leave to appeal allowed; appeals dismissed —Variation in time in custody is not attributable to any factor related to determina-tion of fit sentence — It has nothing to do with offender’s degree of responsibil-ity or gravity of offence — It is attributable solely to statutory prohibition onenhanced credit as result of offender’s inability to obtain bail — Consequently,ability to obtain bail may turn on factors that have nothing to do with determina-tion of fit sentence, such as access to good sureties, bail monies, stable familialsetting, residences or work — Principle of proportionality of sentencing process,as opposed to sentence itself, is at play here and that principle is one of funda-mental justice — Impugned provisions of s. 719(3.1) of Code skew sentencingprocess by creating structural differences in sentencing based on irrelevant crite-ria, which is violation of principle of proportionality.

Criminal law –––– Sentencing — Principles — Restorative justice — Ab-original offenders –––– Aboriginal accused B entered guilty plea to robbery, as-sault, and breaches of recognizance — Section 719(3.1) of Criminal Code ofCanada precluded consideration by sentencing judge of enhanced credit for timespent by offender in pre-sentence custody when that offender has had her judi-cial interim release revoked and was detained in custody under subsection524(8) of Code — B brought successful motion challenging constitutional valid-ity of exemption in s. 719(3.1) of Code — Sentencing judge found that im-pugned section breached s. 15 of Canadian Charter of Rights and Freedoms andcould not be saved by s. 1 — Sentencing judge found that functional effect ofexemption was that Aboriginal offenders were treated differently from other of-fenders — In separate proceedings regarding accused K, different sentencingjudge held that s. 719(3.1) violated s. 7 of Charter because it interfered withfundamental principle of proportionality, did not permit consideration of Gladueand created grossly disproportionate situations between offenders — Crown ap-pealed sentences — Both exemptions challenged related to B and K, so appealswere hear together — Leave to appeal allowed; appeals dismissed — Two ex-emptions constitute unjustifiable infringement of s. 7 of Charter — It was notnecessary to determined whether or not s. 15 was also infringed.

Aboriginal law –––– Constitutional issues — Canadian Charter of Rightsand Freedoms –––– Aboriginal accused B entered guilty plea to robbery, as-sault, and breaches of recognizance — Section 719(3.1) of Criminal Code of


Canada precluded consideration by sentencing judge of enhanced credit for timespent by offender in pre-sentence custody when that offender has had her judi-cial interim release revoked and was detained in custody under subsection524(8) of Code — B brought successful motion challenging constitutional valid-ity of exemption in s. 719(3.1) of Code — Sentencing judge found that im-pugned section breached s. 15 of Canadian Charter of Rights and Freedoms andcould not be saved by s. 1 — Sentencing judge held that Aboriginal offenderswere more likely to be denied bail due to their backgrounds and that operation ofimpugned exemption resulted in Aboriginal offenders becoming liable, morethan non-Aboriginal offenders, to longer periods of time in custody — Sentenc-ing judge found that functional effect of exemption was that Aboriginal offend-ers were treated differently from other offenders — In separate proceedings re-garding accused K, different sentencing judge held that s. 719(3.1) violated s. 7of Charter because it interfered with fundamental principle of proportionality, asit resulted in principle of parity being violated and did not permit considerationof Gladue and created grossly disproportionate situations between offenders —Crown appealed sentences — Both exemptions challenged related to B and K,so appeals were hear together — Leave to appeal allowed; appeals dismissed —Two exemptions constitute unjustifiable infringement of s. 7 of Charter — Itwas not necessary to determined whether or not s. 15 was also infringed —Words “unless the reason for detaining the person in custody was stated in therecord under subsection 515(9.1) or the person was detained in custody undersubsection 524(4) or (8)” in s. 719(3.1) of Code violate s. 7 of Charter and arenot saved by s. 1 — Those words are declared to be of no force or effect pursu-ant to s. 52(1) of Constitution Act, 1982.

Cases considered by Freda M. Steel J.A.:

Bedford v. Canada (Attorney General) (2013), 2013 SCC 72, 2013 CarswellOnt17681, 2013 CarswellOnt 17682, [2013] S.C.J. No. 72, 303 C.C.C. (3d) 146,366 D.L.R. (4th) 237, 7 C.R. (7th) 1, 312 O.A.C. 53, 452 N.R. 1, (sub nom.Canada (Attorney General) v. Bedford) [2013] 3 S.C.R. 1101, (sub nom.Canada (Attorney General) v. Bedford) 297 C.R.R. (2d) 334 (S.C.C.) —followed

Canadian Foundation for Children, Youth & the Law v. Canada (Attorney Gen-eral) (2004), 2004 SCC 4, 2004 CarswellOnt 252, 2004 CarswellOnt 253, 16C.R. (6th) 203, 234 D.L.R. (4th) 257, 180 C.C.C. (3d) 353, 46 R.F.L. (5th)1, 315 N.R. 201, [2004] S.C.J. No. 6, 183 O.A.C. 1, (sub nom. CanadianFoundation for Children v. Canada) [2004] 1 S.C.R. 76, 70 O.R. (3d) 94(note), 115 C.R.R. (2d) 88, REJB 2004-53164 (S.C.C.) — referred to

Carter v. Canada (Attorney General) (2015), 2015 SCC 5, 2015 CSC 5, 2015CarswellBC 227, 2015 CarswellBC 228, [2015] S.C.J. No. 5, [2015] A.C.S.No. 5, 66 B.C.L.R. (5th) 215, [2015] 3 W.W.R. 425, 17 C.R. (7th) 1, 320C.C.C. (3d) 1, 468 N.R. 1, 384 D.L.R. (4th) 14, 366 B.C.A.C. 1, 629 W.A.C.1, [2015] 1 S.C.R. 331, 327 C.R.R. (2d) 334 (S.C.C.) — considered

R. v. Kovich 423

Chaoulli c. Quebec (Procureur general) (2005), 2005 SCC 35, 2005 Carswell-Que 3276, 2005 CarswellQue 3277, [2005] S.C.J. No. 33, 254 D.L.R. (4th)577, EYB 2005-91328, (sub nom. Chaoulli v. Quebec (Attorney General))335 N.R. 25, 130 C.R.R. (2d) 99, (sub nom. Chaoulli v. Canada (AttorneyGeneral)) [2005] 1 S.C.R. 791, (sub nom. Chaoulli v. Canada (AttorneyGeneral)) 53 C.H.R.R. D/1, 2005 CSC 35 (S.C.C.) — referred to

Federation of Law Societies of Canada v. Canada (Attorney General) (2015),2015 SCC 7, 2015 CSC 7, 2015 CarswellBC 295, 2015 CarswellBC 296, 78Admin. L.R. (5th) 1, 67 B.C.L.R. (5th) 1, [2015] 3 W.W.R. 637, 17 C.R.(7th) 57, [2015] S.C.J. No. 7, 467 N.R. 243, 365 B.C.A.C. 3, 627 W.A.C. 3,(sub nom. Canada (Attorney General) v. Federation of Law Societies ofCanada) [2015] 1 S.C.R. 401, 322 C.C.C. (3d) 1, 385 D.L.R. (4th) 67, (subnom. Canada (Attorney General) v. Federation of Law Societies of Canada)327 C.R.R. (2d) 284 (S.C.C.) — referred to

Guindon v. R. (2015), 2015 SCC 41, 2015 CSC 41, 2015 CarswellNat 3231,2015 CarswellNat 3232, [2015] S.C.J. No. 41, [2015] A.C.S. No. 41, 21C.R. (7th) 23, [2015] 6 C.T.C. 1, 387 D.L.R. (4th) 228, (sub nom. Guindonv. Minister of National Revenue) 473 N.R. 120, 2015 D.T.C. 5086, 327C.C.C. (3d) 308 (S.C.C.) — considered

Hutterian Brethren of Wilson Colony v. Alberta (2009), 2009 SCC 37, 2009CarswellAlta 1094, 2009 CarswellAlta 1095, [2009] 9 W.W.R. 189, 81M.V.R. (5th) 1, 9 Alta. L.R. (5th) 1, [2009] S.C.J. No. 37, 390 N.R. 202, 310D.L.R. (4th) 193, 460 A.R. 1, 462 W.A.C. 1, (sub nom. Alberta v. HutterianBrethren of Wilson Colony) 194 C.R.R. (2d) 12, (sub nom. Alberta v.Hutterian Brethren of Wilson County) [2009] 2 S.C.R. 567 (S.C.C.) — re-ferred to

Newfoundland (Treasury Board) v. N.A.P.E. (2004), 2004 SCC 66, 2004 Car-swellNfld 322, 2004 CarswellNfld 323, (sub nom. NAPE v. Newfoundland)2004 C.L.L.C. 230-035, 244 D.L.R. (4th) 294, (sub nom. Newfoundland(Treasury Board) v. Newfoundland Association of Public Employees) 326N.R. 25 (Eng.), (sub nom. Newfoundland (Treasury Board) v. NewfoundlandAssociation of Public Employees) 326 N.R. 25 (Fr.), (sub nom.Newfoundland (Treasury Board) v. Newfoundland Association of Public Em-ployees) 242 Nfld. & P.E.I.R. 113, (sub nom. Newfoundland (TreasuryBoard) v. Newfoundland Association of Public Employees) 719 A.P.R. 113,[2004] 3 S.C.R. 381, 24 Admin. L.R. (4th) 201, 125 C.R.R. (2d) 4, REJB2004-72119, [2004] S.C.J. No. 61, 2004 CSC 66 (S.C.C.) — considered

R. c. Demers (2004), 2004 SCC 46, 2004 CarswellQue 1547, 2004 CarswellQue1548, 20 C.R. (6th) 241, [2004] S.C.J. No. 43, (sub nom. R. v. Demers) 185C.C.C. (3d) 257, (sub nom. R. v. Demers) 240 D.L.R. (4th) 629, (sub nom.R. v. Demers) 323 N.R. 201, 120 C.R.R. (2d) 327, [2004] 2 S.C.R. 489,REJB 2004-66512 (S.C.C.) — considered


R. v. Anderson (2014), 2014 SCC 41, 2014 CSC 41, 2014 CarswellNfld 166,2014 CarswellNfld 167, [2014] S.C.J. No. 41, 60 M.V.R. (6th) 1, 11 C.R.(7th) 1, 458 N.R. 1, 373 D.L.R. (4th) 577, 1088 A.P.R. 289, 350 Nfld. &P.E.I.R. 289, 311 C.C.C. (3d) 1, [2014] 3 C.N.L.R. 267, 310 C.R.R. (2d)197, [2014] 2 S.C.R. 167 (S.C.C.) — considered

R. v. Appulonappa (2015), 2015 SCC 59, 2015 CarswellBC 3427, 2015 Car-swellBC 3428, [2015] S.C.J. No. 59, [2015] A.C.S. No. 59, 390 D.L.R. (4th)425, 35 Imm. L.R. (4th) 171, 24 C.R. (7th) 385, 478 N.R. 3 (S.C.C.) —considered

R. v. Arcand (2010), 2010 ABCA 363, 2010 CarswellAlta 2364, [2010] A.J. No.1383, 264 C.C.C. (3d) 134, 40 Alta. L.R. (5th) 199, [2011] 7 W.W.R. 209,83 C.R. (6th) 199, (sub nom. R. v. A. (J.L.M.)) 499 A.R. 1, (sub nom. R. v. A.(J.L.M.)) 514 W.A.C. 1 (Alta. C.A.) — considered

R. v. Chambers (2014), 2014 YKCA 13, 2014 CarswellYukon 85, [2014] Y.J.No. 70, 316 C.C.C. (3d) 44, 362 B.C.A.C. 22, 622 W.A.C. 22, 320 C.R.R.(2d) 344 (Y.T. C.A.) — followed

R. v. Chambers (2014), 2014 CarswellYukon 125, [2014] S.C.C.A. No. 534(S.C.C.) — referred to

R. v. Cook (2015), 2015 MBCA 63, 2015 CarswellMan 318, [2015] M.J. No.171, 319 Man. R. (2d) 217, 638 W.A.C. 217 (Man. C.A.) — referred to

R. v. Dinardo (2015), 2015 ONSC 1804, 2015 CarswellOnt 3954, [2015] O.J.No. 1387, 321 C.C.C. (3d) 525, 331 C.R.R. (2d) 243 (Ont. S.C.J.) —followed

R. v. Farrah (2011), 2011 MBCA 49, 2011 CarswellMan 285, [2011] M.J. No.200, 87 C.R. (6th) 93, [2011] 12 W.W.R. 694, 274 C.C.C. (3d) 54, 241C.R.R. (2d) 200, 268 Man. R. (2d) 112, 520 W.A.C. 112 (Man. C.A.) —referred to

R. v. Ferguson (2008), 2008 SCC 6, 2008 CarswellAlta 228, 2008 CarswellAlta229, [2008] S.C.J. No. 6, 228 C.C.C. (3d) 385, 54 C.R. (6th) 197, 371 N.R.231, 87 Alta. L.R. (4th) 203, [2008] 5 W.W.R. 387, 290 D.L.R. (4th) 17, 425A.R. 79, 418 W.A.C. 79, [2008] 1 S.C.R. 96, 168 C.R.R. (2d) 34 (S.C.C.) —referred to

R. v. Gladue (1999), [1999] S.C.J. No. 19, 1999 CarswellBC 778, 1999 Car-swellBC 779, 133 C.C.C. (3d) 385, 171 D.L.R. (4th) 385, [1999] 2 C.N.L.R.252, 23 C.R. (5th) 197, 238 N.R. 1, [1999] 1 S.C.R. 688, 121 B.C.A.C. 161,198 W.A.C. 161, [1999] A.C.S. No. 19 (S.C.C.) — followed

R. v. Heywood (1994), 34 C.R. (4th) 133, 174 N.R. 81, 50 B.C.A.C. 161, 82W.A.C. 161, 24 C.R.R. (2d) 189, 120 D.L.R. (4th) 348, 94 C.C.C. (3d) 481,[1994] 3 S.C.R. 761, 1994 CarswellBC 592, 1994 CarswellBC 1247, [1994]S.C.J. No. 101, EYB 1994-67091 (S.C.C.) — referred to

R. v. Ibrahim (2015), 2015 MBCA 62, 2015 CarswellMan 319, [2015] M.J. No.172, [2015] 8 W.W.R. 681, 319 Man. R. (2d) 200, 638 W.A.C. 200, 327C.C.C. (3d) 86 (Man. C.A.) — referred to

R. v. Kovich 425

R. v. Ipeelee (2012), 2012 SCC 13, 2012 CarswellOnt 4375, 2012 CarswellOnt4376, 91 C.R. (6th) 1, 280 C.C.C. (3d) 265, [2012] 2 C.N.L.R. 218, 428N.R. 1, 288 O.A.C. 224, [2012] S.C.J. No. 13, 318 B.C.A.C. 1, [2012] 1S.C.R. 433, 541 W.A.C. 1, 113 O.R. (3d) 320 (note) (S.C.C.) — followed

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

R. v. Malmo-Levine (2003), 2003 SCC 74, 2003 CarswellBC 3133, 2003 Car-swellBC 3134, [2003] S.C.J. No. 79, 16 C.R. (6th) 1, 179 C.C.C. (3d) 417,233 D.L.R. (4th) 415, 314 N.R. 1, 23 B.C.L.R. (4th) 1, 191 B.C.A.C. 1, 314W.A.C. 1, [2004] 4 W.W.R. 407, [2003] 3 S.C.R. 571, 114 C.R.R. (2d) 189,REJB 2003-51751 (S.C.C.) — considered

R. v. Michaud (2015), 2015 ONCA 585, 2015 CarswellOnt 13209, [2015] O.J.No. 4540, 82 M.V.R. (6th) 171, 22 C.R. (7th) 246, 127 O.R. (3d) 81, 328C.C.C. (3d) 228, 339 O.A.C. 41 (Ont. C.A.) — distinguished

R. v. Michaud (2015), 2015 CarswellOnt 17258, [2015] S.C.C.A. No. 450(S.C.C.) — referred to

R. v. Moriarity (2015), 2015 SCC 55, 2015 CSC 55, 2015 CarswellNat 5852,2015 CarswellNat 5853, [2015] S.C.J. No. 55, [2015] A.C.S. No. 55, 477N.R. 356, 24 C.R. (7th) 357 (S.C.C.) — referred to

R. v. Nur (2013), 2013 ONCA 677, 2013 CarswellOnt 15898, [2013] O.J. No.5120, 5 C.R. (7th) 292, 117 O.R. (3d) 401, 311 O.A.C. 244, 303 C.C.C. (3d)474, 296 C.R.R. (2d) 21 (Ont. C.A.) — referred to

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

R. v. Safarzadeh-Markhali (2014), 2014 ONCA 627, 2014 CarswellOnt 12258,[2014] O.J. No. 4194, 13 C.R. (7th) 30, 122 O.R. (3d) 97, 316 C.C.C. (3d)87, 325 O.A.C. 17, 319 C.R.R. (2d) 36 (Ont. C.A.) — followed

R. v. Safarzadeh-Markhali (2014), 2014 CarswellOnt 16780, [2014] S.C.C.A.No. 489 (S.C.C.) — referred to

R. v. Smith (2015), 2015 SCC 34, 2015 CSC 34, 2015 CarswellBC 1587, 2015CarswellBC 1588, [2015] S.C.J. No. 34, [2015] A.C.S. No. 34, 20 C.R. (7th)246, 472 N.R. 1, 386 D.L.R. (4th) 583, 323 C.C.C. (3d) 461, [2015] 10W.W.R. 1, 74 B.C.L.R. (5th) 1, 372 B.C.A.C. 1, 640 W.A.C. 1, [2015] 2S.C.R. 602 (S.C.C.) — considered

R. v. Stonefish (2012), 2012 MBCA 116, 2012 CarswellMan 740, [2012] M.J.No. 420, 99 C.R. (6th) 41, [2013] 4 W.W.R. 28, 288 Man. R. (2d) 103, 564W.A.C. 103, 295 C.C.C. (3d) 52 (Man. C.A.) — followed

R. v. Summers (2014), 2014 SCC 26, 2014 CSC 26, 2014 CarswellOnt 4479,2014 CarswellOnt 4480, [2014] S.C.J. No. 26, 9 C.R. (7th) 223, 456 N.R. 1,


308 C.C.C. (3d) 471, 316 O.A.C. 349, 371 D.L.R. (4th) 581, [2014] 1 S.C.R.575, 307 C.R.R. (2d) 96 (S.C.C.) — followed

R. v. Vermette (2001), 2001 MBCA 64, 2001 CarswellMan 213, (sub nom. R. v.Pangman) 154 C.C.C. (3d) 193, 156 Man. R. (2d) 120, 246 W.A.C. 120,[2001] 8 W.W.R. 10, [2001] M.J. No. 217 (Man. C.A.) — considered

RJR-Macdonald Inc. c. Canada (Procureur general) (1995), 127 D.L.R. (4th) 1,(sub nom. RJR-MacDonald Inc. v. Canada (Attorney General)) [1995] 3S.C.R. 199, (sub nom. RJR-MacDonald Inc. v. Canada (Attorney General))100 C.C.C. (3d) 449, (sub nom. RJR-MacDonald Inc. v. Canada (AttorneyGeneral)) 62 C.P.R. (3d) 417, (sub nom. RJR-MacDonald Inc. v. Canada(Attorney General)) 31 C.R.R. (2d) 189, (sub nom. RJR-MacDonald Inc. c.Canada (Procureur general)) 187 N.R. 1, 1995 CarswellQue 119, 1995 Car-swellQue 119F, [1995] S.C.J. No. 68, EYB 1995-67815 (S.C.C.) —considered

Suresh v. Canada (Minister of Citizenship & Immigration) (2002), 2002 SCC 1,2002 CarswellNat 7, 2002 CarswellNat 8, 18 Imm. L.R. (3d) 1, 208 D.L.R.(4th) 1, 281 N.R. 1, [2002] S.C.J. No. 3, 90 C.R.R. (2d) 1, 37 Admin. L.R.(3d) 159, [2002] 1 S.C.R. 3, REJB 2002-27423, 2002 CSC 1 (S.C.C.) —considered

United States v. Burns (2001), 2001 SCC 7, 2001 CarswellBC 272, 2001 Car-swellBC 273, [2001] S.C.J. No. 8, 85 B.C.L.R. (3d) 1, 151 C.C.C. (3d) 97,195 D.L.R. (4th) 1, 39 C.R. (5th) 205, [2001] 3 W.W.R. 193, 265 N.R. 212,148 B.C.A.C. 1, 243 W.A.C. 1, 81 C.R.R. (2d) 1, [2001] 1 S.C.R. 283, REJB2001-22580 (S.C.C.) — referred to

Statutes considered:

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

Generally — referred tos. 1 — considereds. 7 — considereds. 11(e) — considereds. 12 — considereds. 15 — considered

Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982,c. 11, reprinted R.S.C. 1985, App. II, No. 44

s. 35(2) — considereds. 52(1) — considered

Constitutional Questions Act, S.M. 1986-87, c. 31s. 7(7) — considered

Criminal Code, R.S.C. 1985, c. C-46Generally — referred tos. 515 — considereds. 515(9.1) [en. 2009, c. 29, s. 2] — considered

R. v. Kovich 427

s. 524 — considereds. 524(1) — considereds. 524(2) — considereds. 524(3) — considereds. 524(4) — considereds. 524(8) — considereds. 718 — considereds. 718.1 [en. R.S.C. 1985, c. 27 (1st Supp.), s. 156] — considereds. 718.2(b) [en. 1995, c. 22, s. 6] — considereds. 719 — considereds. 719(3) — considereds. 719(3.1) [en. 2009, c. 29, s. 3] — considereds. 719(3.2) [en. 2009, c. 29, s. 3] — considereds. 719(3.3) [en. 2009, c. 29, s. 3] — considered

Highway Traffic Act, R.S.O. 1990, c. H.8Generally — referred to

Truth in Sentencing Act, S.C. 2009, c. 29Generally — referred to

Words and phrases considered:

arbitrariness

The recent case of Bedford v. Canada (Attorney General) [2013] 3 S.C.R. 1101(S.C.C.), has clarified the tests for arbitrariness, overbreadth and gross dispro-portionality. While each is a distinct principle, the Supreme Court noted “signif-icant overlap” between arbitrariness and overbreadth (at para 107). Both addressthe same evil, the “absence of connection between the law’s purpose and the s. 7deprivation” (at para 108). It is simply the degree of absence of connection thatdifferentiates between the two.

The tests laid out in Bedford may be summarized as follows:

A law is arbitrary when it limits section 7 Charter rights in a way that bears noconnection to its objective. It is used to describe the situation where there is noconnection between the effect and the object of the law.

A law is overbroad when some, but not all, of the limits it places on section 7bear no connection to its objective. The law goes too far and interferes withsome conduct that bears no connection to its objective.

A law is grossly disproportionate in extreme cases where the law’s impact onsection 7 rights is so serious as to be totally out of sync with its objective.

See Lisa Dufraimont, “Bedford v. Canada (Attorney General) and the Limits onSubstantive Criminal Law under Section 7” (2014) 67 SCLR (2d) 483 at 491.

principle of fundamental justice

A principle of fundamental justice must be a legal principle; there must be suffi-cient consensus that the principle is vital or fundamental to our societal notion of


justice; and the principle must be capable of being identified with precision andapplied to situations in a manner that yields predictable results.

APPEALS brought by Crown from R. v. Kovich (2014), 2014 MBPC 15, 2014CarswellMan 836, [2014] M.J. No. 379, 314 Man. R. (2d) 45 (Man. Prov. Ct.)and R. v. Bittern (2014), 2014 MBPC 51, 2014 CarswellMan 816, [2014] M.J.No. 365, 313 Man. R. (2d) 221 (Man. Prov. Ct.), sentencing two accused.

D.L. Carlson, for AppellantA.K. Gowenlock, for Respondent, G.W. KovichB.S. Newman, for Respondent, C.N. BitternJ.I. Katz, S.M. Telles-Langdon, for Intervener

Freda M. Steel J.A.:

1 These sentence appeals challenge the constitutionality of two of theexemptions to enhanced credit for pre-sentence custody (PSC) in section719(3.1) of the Criminal Code (the Code). The two exemptions chal-lenged relate to two accused — Ms Bittern, who was released on bail,but then had her bail revoked pursuant to subsection 524(4) or (8) of theCode because of alleged misconduct while out on bail; and Mr. Kovich,who was denied bail primarily because of his prior criminal record.

2 The limitation in section 719(3) of credit for PSC at the rate of 1:1 isnot challenged, nor is the limitation in section 719(3.1) of 1.5:1, “if thecircumstances justify it” (enhanced credit).

3 All parties in both appeals requested that the two appeals be heardtogether, given the similarity of the issues.

4 For the reasons given below, I conclude that the two impugned ex-emptions are an unjustifiable infringement of section 7 of the CanadianCharter of Rights and Freedoms (the Charter), both because they inter-fere with the fundamental principle of proportionality in the sentencingprocess, and because the linkage of the granting or refusal of bail to theissue of enhanced credit in the sentencing process is both arbitrary andoverbroad.

5 Having so found, it is unnecessary for me to determine whether thetwo impugned exemptions also infringe section 15 of the Charter.

6 In the Kovich trial, the sentencing judge was also asked to considerthe validity of section 719(3.1) of the Code under sections 7 and 11(e) ofthe Charter. She rejected Kovich’s assertion that section 719(3.1) vio-lates the right to reasonable bail. She found that he had an opportunity to

R. v. Kovich Freda M. Steel J.A. 429

apply for bail, and held that the implications of the impugned sectionupon an accused’s decision-making regarding bail does not trigger such abreach of the Charter.

7 Kovich was successful in the result at trial. Nevertheless, on appealhe has re-argued this question, both in his factum and at the hearing. Ifind it unnecessary to decide whether there is a breach of section 11(e) ofthe Charter, given my decision with respect to section 7.

8 Given my decision, both individuals would have been eligible forconsideration of enhanced credit. Whether or not the sentencing judgeshould have given them enhanced credit is a discretionary decision withwhich this Court sees no reason to intervene.

9 While Bittern challenged the exemption that relates to the revocationof bail, and Kovich challenged the exemption that relates to denial ofenhanced credit because of a previous criminal record, I have consideredboth exemptions together because, for the reasons given below, I see nodistinction between them for the purposes of the constitutional analysis.Both cases deal with the issue of allowing the outcome of a bail decisionto dictate the length of the custodial portion of an offender’s sentence.

10 I would grant leave to appeal the sentences, but dismiss the appeals.

Facts

R. v. Bittern11 Bittern was charged with robbery in February 2012 and released on a

promise to appear. In April 2012, she was arrested for two breaches anddetained in custody. She was released two days later on a recognizance,with the consent of the Crown. She was arrested for a curfew breach inDecember 2012 and again, released shortly thereafter with the consent ofthe Crown. She was arrested and charged with assault in May 2013 andwas detained in custody. In July 2013, her application for bail was deniedand her previous bail was revoked.

12 In February 2014, she pleaded guilty to all five offences. The sentenc-ing judge evaluated the specific circumstances of the offender and hervarious offences and, before taking into account PSC, determined that atotal sentence of approximately 2.5 years was a fit and proper sentence.Bittern was sentenced to 30 days for each breach and 2 years for therobbery. She received a 90-day consecutive sentence for the assault. Shewas also sentenced to 2 years of probation. No appeal is taken from thatpart of the sentencing judge’s assessment.


13 The sentencing judge found the exemption in section 719(3.1) of theCode relating to section 524 unconstitutional, as it violated sections 7and 15 of the Charter. As a result, she held that section 719(3.1) did notprevent her from considering enhanced credit for PSC, and awardedcredit on a 1.5:1 basis. Of the accused’s 500 days in PSC, 486 were at-tributed to the robbery charge and 20 days were attributed to one of thebreaches. Her total remaining sentence was therefore 150 days. She wasentitled to, and earned, the maximum amount of remission, and she wasreleased from custody on January 7, 2015.

14 It is from the sentencing judge’s findings as to PSC that Manitobaappeals. Canada has intervened in support of the legislation. R. v. Kovich

15 Kovich was arrested in June 2012 for a number of offences, including11 counts of break, enter and theft. He did not apply for bail. In October2012, he was re-arrested while in custody and charged with a number offurther offences, including 10 counts of breaking and entering. He was22 years of age at the time of his arrest and 23 years of age at the time ofsentencing.

16 After being provisionally admitted to the Behavioural Health Founda-tion’s residential treatment facility, Kovich made an application for bail,seeking to be released into that facility. His bail application was deniedprimarily due to his lengthy criminal record (section 515(9.1)).

17 Kovich has an offence history dating back to 2005. He demonstrates apattern of property-related and weapons-related offences. He also has anextensive history of failing to comply with court-ordered conditions in-cluding curfew violations. His motivation for all of these offences was anaddiction to OxyContin.

18 In September 2013, Kovich pleaded guilty to a number of offenceswhile some others were stayed. He received a 48-month sentence. Mani-toba and Canada do not take issue with this determination. However, thesentencing judge found that section 719(3.1) violated section 7 of theCharter because it was grossly disproportionate.

19 Kovich had a history of institutional incident reports while in custody,although he had demonstrated an interest in accessing programming. Atsentencing, his counsel acknowledged that he was not entitled to the full1.5:1 credit. Taking into account his uneven institutional behaviour, butalso the delays in proceeding with the case, the judge credited his 19months of PSC at a rate of 1.25:1, or 23.75 months. Kovich ultimatelyreceived a 24-month sentence going forward, along with 3 years ofprobation.


20 In a letter to this Court dated May 14, 2015, Kovich’s counsel ad-vised that his client was entering the statutory release portion of his sen-tence and would be on parole by the scheduled hearing date of theappeal.

The Decisions Below

R. v. Bittern21 Section 719(3.1) allows a PSC credit of 1.5:1 to be granted if the

circumstances justify it, unless the person was detained in custody undersubsection 524(4) or (8). When a justice finds that an accused has contra-vened, or was about to contravene, her terms of release, or that there arereasonable grounds to believe that she has committed an indictable of-fence while on release, section 524(8) of the Code requires a justice tocancel the release and order the accused detained, subject to a reasonableopportunity to show cause for further release.

22 The sentencing judge in R. v. Bittern ruled that the impugned exemp-tion was an unjustifiable infringement of section 7 of the Charter. Thejudge found that the impugned exemption interferes with the fundamen-tal principle of proportionality, as it results in the principle of parity be-ing violated and does not permit the consideration of Gladue factors (R.v. Gladue, [1999] 1 S.C.R. 688 (S.C.C.)). She determined that the im-pugned exemption created grossly disproportionate situations betweenoffenders.

23 She also found a breach of section 15 of the Charter, in that the func-tional effect of the impugned exemption is that Aboriginal offenders aretreated differently from other offenders.

24 Consequently, she held that the accused was eligible to apply for en-hanced credit, and that Bittern was entitled to receive enhanced credit ata rate of 1.5:1.

25 Manitoba has appealed, arguing that the sentencing judge erred:

1. in finding that the impugned exemption contravenes section 7 ofthe Charter;

2. in finding that the impugned exemption contravenes section 15 ofthe Charter; and


3. in finding that the accused was not precluded from applying forenhanced credit for her PSC and in awarding her enhanced creditat a rate of 1.5:1.

26 Canada adopts Manitoba’s submission on the constitutionality of sec-tion 719(3.1) of the Code in respect to sections 7 and 15 of the Charter,and adds the following argument:

If this Court finds that section 719(3.1) of the Code violates eithersections 7 or 15 of the Charter, the limit on the accused’s rights canbe demonstrably justified in a free and democratic society pursuant tosection 1 of the Charter.

R. v. Kovich27 Section 719(3.1) also denies enhanced credit to someone who has

been denied judicial interim release primarily because of their previousconvictions pursuant to section 515(9.1). This was the case with Kovich,however, as indicated, the sentencing judge held that the impugned sec-tion violated section 7 of the Charter because it was grosslydisproportionate.

28 Both Manitoba and Canada have appealed, arguing that the sentenc-ing judge erred in her application of the test of gross disproportionality.Canada argues further that if the impugned exemption violates section 7of the Charter on the basis of gross disproportionality, then the breach isa justifiable limit under section 1 of the Charter.

29 It is noteworthy that at trial level, both counsel agreed that the testunder section 7 of the Charter was the same as a section 12 Charterchallenge, that being whether the impugned legislation created a circum-stance of “gross disproportionality” between offenders.

Standard of Review30 Whether each of the sentencing judges erred in finding that the im-

pugned exemptions in section 719(3.1) contravened sections 7 and 15 ofthe Charter are questions of law to which a standard of correctness ap-plies. See R. v. Farrah, 2011 MBCA 49 (Man. C.A.) at paras 7-8, (2011),268 Man. R. (2d) 112 (Man. C.A.). However, the amount of PSC creditgranted is discretionary and entitled to deference. See R. v. Stonefish,2012 MBCA 116 (Man. C.A.) at paras 29-30, (2012), 288 Man. R. (2d)103 (Man. C.A.).


Legislation31 The constitutionality of section 719(3.1) of the Code is at issue in this

case. Subsections 719(3) and (3.1) read as follows: Determination of sentence

719(3) In determining the sentence to be imposed on a person con-victed of an offence, a court may take into account any time spent incustody by the person as a result of the offence but the court shalllimit any credit for that time to a maximum of one day for each dayspent in custody.

Exception

719(3.1) Despite subsection (3), if the circumstances justify it, themaximum is one and one-half days for each day spent in custodyunless the reason for detaining the person in custody was stated in therecord under subsection 515(9.1) or the person was detained in cus-tody under subsection 524(4) or (8).

32 Section 515 of the Code relates to judicial interim release. Subsection515(9.1) provides as follows:

Written reasons

515(9.1) Despite subsection (9), if the justice orders that the accusedbe detained in custody primarily because of a previous conviction ofthe accused, the justice shall state that reason, in writing, in therecord.

33 Section 524 of the Code relates to the arrest of an accused already onjudicial interim release. The pertinent portions of section 524 provide asfollows:

Issue of warrant for arrest of accused

524(1) Where a justice is satisfied that there are reasonable groundsto believe that an accused

(a) has contravened or is about to contravene any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance that was issued or given to him or entered into by him,or

(b) has committed an indictable offence after any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance was issued or given to him or entered into by him,

he may issue a warrant for the arrest of the accused.


Arrest of accused without warrant

524(2) Notwithstanding anything in this Act, a peace officer who be-lieves on reasonable grounds that an accused

(a) has contravened or is about to contravene any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance that was issued or given to him or entered into by him,or

(b) has committed an indictable offence after any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance was issued or given to him or entered into by him,

may arrest the accused without warrant.

Hearing

524(3) Where an accused who has been arrested with a warrant is-sued under subsection (1), or who has been arrested under subsection(2), is taken before a justice, the justice shall

(a) where the accused was released from custody pursuant to anorder made under subsection 522(3) by a judge of the supe-rior court of criminal jurisdiction of any province, order thatthe accused be taken before a judge of that court; or

(b) in any other case, hear the prosecutor and his witnesses, ifany, and the accused and his witnesses, if any.

Retention of accused

524(4) Where an accused described in paragraph (3)(a) is takenbefore a judge and the judge finds

(a) that the accused has contravened or had been about to contra-vene his summons, appearance notice, promise to appear, un-dertaking or recognizance, or

(b) that there are reasonable grounds to believe that the accusedhas committed an indictable offence after any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance was issued or given to him or entered into by him,

he shall cancel the summons, appearance notice, promise to appear,undertaking or recognizance and order that the accused be detainedin custody unless the accused, having been given a reasonable oppor-tunity to do so, shows cause why his detention in custody is not justi-fied within the meaning of subsection 515(10).


Powers of justice after hearing

524(8) Where an accused described in subsection (3), other than anaccused to whom paragraph (a) of that subsection applies, is takenbefore the justice and the justice finds

(a) that the accused has contravened or had been about to contra-vene his summons, appearance notice, promise to appear, un-dertaking or recognizance, or

(b) that there are reasonable grounds to believe that the accusedhas committed an indictable offence after any summons, ap-pearance notice, promise to appear, undertaking or recogni-zance was issued or given to him or entered into by him,

he shall cancel the summons, appearance notice, promise to appear,undertaking or recognizance and order that the accused be detainedin custody unless the accused, having been given a reasonable oppor-tunity to do so, shows cause why his detention in custody is not justi-fied within the meaning of subsection 515(10).

Analysis

History and Legislative Objectives34 It is unnecessary for me to review in any detail the scheme in place

for the awarding of credit for PSC before the passage of the Truth inSentencing Act, SC 2009, c 29 (the Act) or the changes brought about asa result of that legislation or its subsequent interpretation by the court.That has been done both by the Supreme Court of Canada and this Court.See R. v. Summers, 2014 SCC 26, [2014] 1 S.C.R. 575 (S.C.C.); andStonefish.

35 Suffice it to say that the enactment of the Act in 2009 significantlychanged the regime governing credit for PSC under section 719 of theCode, setting out a considerably more detailed structure to guide thegranting of enhanced credit. The new cap of 1.5:1 on enhanced credit hasbeen described as “a substantial and clear departure from the [previous]practice” (Summers at para 57). The clear intent and obvious effect of theAct is to limit the amount of credit granted to an offender for PSC.

36 In so doing, Parliament is restricting judicial discretion, something itis entirely entitled to do. See R. v. Nur, 2013 ONCA 677 (Ont. C.A.) atpara 69, (2013), 311 O.A.C. 244 (Ont. C.A.); and Summers at para 56.Parliament’s authority and responsibility for setting penal policy includesthe authority to limit judicial discretion. Once Parliament has legislated,


the law must be enforced unless and until litigation establishes that thelaw is unconstitutional.

37 Although the amount of enhanced credit has been limited, the ratio-nale behind the awarding of any credit remains the same. In Summers,Karakatsanis J, speaking for the Court, described as follows the analyti-cal approach to be adopted in determining PSC credit (at paras 70-71,75):

In determining credit for pre-sentence custody, judges may credit atmost 1.5 days for every day served where circumstances warrant....Judges should continue to assign credit on the basis of the quantita-tive rationale, to account for lost eligibility for early release and pa-role during pre-sentence custody, and the qualitative rationale, to ac-count for the relative harshness of the conditions in detention centres.

The loss of early release [loss of remission and/or early parole], takenalone, will generally be a sufficient basis to award credit at the rate of1.5 to 1, even if the conditions of detention are not particularly harsh,and parole is unlikely. Of course, a lower rate may be appropriatewhen detention was a result of the offender’s bad conduct, or theoffender is likely to obtain neither early release nor parole.

For many offenders, the loss of eligibility for early release and parolewill justify credit at a rate of 1.5:1. However, as Beveridge J.A. con-cluded, it is not an “automatic or a foregone conclusion that a judgemust grant credit at more than 1:1 based on a loss of remission orparole”.... If it appears to a sentencing judge that an offender will bedenied early release, there is no reason to assign enhanced credit forthe meaningless lost opportunity.

38 When introducing Bill C-25 in the House of Commons, the Ministerof Justice, Hon Rob Nicholson, noted that the purpose of the amend-ments was to “limit the credit that a court may grant a convicted criminalfor time served in pre-sentence custody”, (“Bill C-25, an Act to amendthe Criminal Code (limiting credit for time spent in pre-sentence cus-tody)”, 2nd reading, House of Commons Debates, 40th Parl, 2nd Sess,vol 144, No 041 (20 April 2009) at 1205 (Hon Peter Milliken)). TheCode provided judges with no formula to calculate this credit and no ex-planation for these decisions was required. This, he said, “erodes publicconfidence in the integrity of the justice system” (at 1205). The Bill wasalso intended to provide greater certainty and clarity in sentencing byrequiring “the courts to provide written justification for any creditgranted beyond the one to one ratio” (at 1210). As mentioned, it is Par-


liament’s role to set policy for the criminal law and it may limit judicialdiscretion in so doing. That is not the issue here.

39 However, Parliament went further. Even if the circumstances justifiedenhanced credit, the legislation identified two groups of offenders thatare specifically barred from applying for enhanced credit. Those are:

1. offenders who have been denied bail due to their criminal records;and

2. offenders who have had bail revoked (either because they are al-leged to have breached their bail, or because there are reasonablegrounds to believe they have committed an indictable offencewhile on bail), and are then denied bail (subsections 524(4) and(8) of the Code).

40 The Minister indicated that the reason for choosing these two groupswas that “allowing them enhanced credit undermines the commitment ofthe government to enhance the safety and security of Canadians by keep-ing violent or repeat offenders in custody for longer periods” (at 1205)and it would give these offenders “the opportunity for longer-term pro-gramming that may have a positive effect on the offender” (House ofCommons Standing Committee on Justice and Human Rights, “Evi-dence” 40th Parl, 2nd Sess, vol 144, No 020 (6 May 2009) at 1630).Another objective was to address perceptions that accused persons incustody were manipulating enhanced credit to achieve shorter sentencesthan might otherwise be imposed. In effect, there was a perception thatsome people were “gaming the system” (R. v. Safarzadeh-Markhali,2014 ONCA 627 (Ont. C.A.) at para 54, (2014), 325 O.A.C. 17 (Ont.C.A.), leave to appeal to SCC granted, [2014] S.C.C.A. No. 489 (S.C.C.)(QL)).

41 The question then becomes, by linking individuals denied bail forspecific reasons to the granting of PSC credit, have the boundaries ofconstitutionality been breached.

The Charter - Section 7 Breach - Proportionality in the SentencingProcess

42 Section 7 of the Charter provides that, “Everyone has the right to life,liberty and security of the person and the right not to be deprived thereofexcept in accordance with the principles of fundamental justice.”

43 In order to establish a breach of section 7 of the Charter, the accusedbears the onus of establishing, on a balance of probabilities, that:


1. the impugned exemption results in a deprivation of life, liberty orsecurity of the person; and

2. the deprivation does not accord with the principles of fundamentaljustice.

See Federation of Law Societies of Canada v. Canada (Attorney Gen-eral), 2015 SCC 7 (S.C.C.) at para 69, per Cromwell J.

44 There is an acknowledgment by both Canada and Manitoba that theliberty interests of the accused are engaged by section 719(3.1) of theCode, an acknowledgment which was most appropriate, since the caselaw is clear that imprisonment, or the possibility of imprisonment, en-gages liberty interests protected by section 7. See, for example,Safarzadeh-Markhali at para 66, which held that this same provision af-fected an individual’s liberty interest, since it had the effect of increasingthe proportion of his or her sentence to be served in jail.

45 The more difficult question is whether that deprivation accords withthe principles of fundamental justice. Both of the accused argue that theimpugned exemptions offend section 718.1 of the Code, which providesthat a fundamental principle of the sentencing process is that the sentencemust be proportionate to the gravity of the offence and the degree ofresponsibility of the offender. This principle of proportionality, it is sub-mitted, is a principle of fundamental justice.

46 Both Manitoba and Canada argue that, while the constitutional chal-lenge in this case is framed under section 7 of the Charter, what is atissue here is a punishment. The courts have held that when dealing withthe constitutional dimensions of a punishment, it is more appropriatelymeasured against the standard of gross disproportionality as it hasevolved under section 12 of the Charter. Furthermore, it is submitted thateven if considered under section 7, the standard should be consistent —that is, gross disproportionality.

47 The Supreme Court of Canada made this clear in R. v. Malmo-Levine,2003 SCC 74, [2003] 3 S.C.R. 571 (S.C.C.), when they stated (at para160):

Is there then a principle of fundamental justice embedded in s. 7 thatwould give rise to a constitutional remedy against a punishment thatdoes not infringe s. 12? We do not think so. To find that gross andexcessive disproportionality of punishment is required under s. 12but a lesser degree of proportionality suffices under s. 7 would renderincoherent the scheme of interconnected “legal rights” set out in ss. 7to 14 of the Charter by attributing contradictory standards to ss. 12


and 7 in relation to the same subject matter. Such a result, in ourview, would be unacceptable.

48 At the present time, while there are a number of lower court deci-sions, the two appellate authorities on the constitutionality of the im-pugned exemptions are R. v. Chambers, 2014 YKCA 13, 362 B.C.A.C.22 (Y.T. C.A.), dealing with subsections 524(4) and (8) and section719(3.1) of the Code; and Safarzadeh-Markhali dealing with sections515(9.1) and 719(3.1). An appeal from the decision of the Ontario Courtof Appeal was heard in the Supreme Court of Canada in November 2015and is presently on reserve. An application for leave to appeal Chamberswas dismissed by the Supreme Court (see [2014] S.C.C.A. No. 534(S.C.C.) (QL)).

49 The Court in Chambers rejected the argument that the standard ofgross disproportionality for evaluating the constitutionality of sentenceshas been replaced with the lesser standard of proportionality, whether thecase was framed under section 7 or section 12 of the Charter. Manitobaand Canada in this appeal and the Yukon Court of Appeal in the Cham-bers case, equate the impugned limitations on enhanced credit with apunishment, hence the requirement that the result be grosslydisproportionate.

50 If one views the limitations as a punishment, then determiningwhether a measure is grossly disproportionate involves assessing whetherit is so far beyond the pale that it “shocks the conscience of the commu-nity”, R. v. Bittern at para 68, or “outrage standards of decency”, a verystringent test (R. v. Ferguson, 2008 SCC 6 (S.C.C.) at para 14, [2008] 1S.C.R. 96 (S.C.C.)). Parliament has broad discretion in determiningproper punishment and a court should be reluctant to interfere except inthe clearest of cases. Courts should defer to Parliament and its role indetermining how to address social problems such as crime and the pun-ishment for that crime.

51 As is well known, there are two steps in assessing gross dispropor-tionality, the first being to assess whether the sentence is grossly dispro-portionate in the circumstances of the individual offender.

52 The second step in assessing gross disproportionality is to move be-yond the circumstances of the individual offender to consider reasonablehypotheticals. In Nur, Doherty JA has recently summarized the test to beapplied (at para 142):

[A]fter Morrisey [2000 SCC 39, [2000] 2 SCR 90] and Goltz [[1991]3 SCR 485], a reasonable hypothetical is one that operates at a gen-


eral level to capture conduct that includes all the essential elementsof the offence that trigger the mandatory minimum, but no more.Characteristics of individual offenders ... are not part of the reasona-ble hypothetical analysis.

53 If the appropriate test is one that is so grossly disproportionate that it“shocks the conscience of the community”, then I would agree withManitoba and Canada, and the Court in Chambers, that the sentencescannot be said to be grossly disproportionate. In R. v. Kovich, for exam-ple, what the sentencing judge found to be “grossly disproportionate”would have amounted to a difference of less than five months’ credit ona four-year sentence.

54 However, the Ontario Court of Appeal in Safarzadeh-Markhali heldthat there was a difference between a punishment, or a sentence imposedas a result of a conviction, and the process of sentencing itself.

55 In Safarzadeh-Markhali, the accused was charged with several drugand firearms offences. His application for judicial interim release wasdenied on the basis of his previous convictions. The accused was there-fore detained pursuant to section 515(9.1) of the Code. As a result, theaccused was precluded from obtaining enhanced credit for PSC. The On-tario Court of Appeal upheld the trial judge’s decision declaring that por-tion of section 719(3.1) of the Code, which prevented him from ob-taining enhanced credit, unconstitutional.

56 In so doing, the Court made a number of findings. First, the Courtheld that the principle of proportionality in sentencing is a principle offundamental justice. The proportionality principle was also said to be in-formed by the principle of parity, set out in section 718.2(b) of the Code,which requires that “a sentence should be similar to sentences imposedon similar offenders for similar offences committed in similar circum-stances” (Safarzadeh-Markhali at paras 77-78). Next, it found that whatwas at issue here was the sentencing process, not the punishment im-posed or the result achieved. An offender was entitled to a process di-rected at crafting a just sentence.

57 The Court in Safarzadeh-Markhali distinguished Malmo-Levine onthe basis that it dealt with the constitutionality of a punishment, ratherthan the process, holding that gross disproportionality applies to the re-sult, and proportionality to the process (see para 82). The use of the term“proportionality” in this context was different than the term “gross dis-proportionality” as used in reference to a punishment imposed as a resultof a conviction for an offence. The former refers to the constitutionality


of the sentencing process, while gross disproportionality applies to theresult.

58 I agree with the Ontario Court of Appeal that there is a distinctionbetween the sentencing process and a punishment for the purposes ofsections 7 and 12 of the Charter.

59 Is proportionality a principle of sentencing and, if so, is this sentenc-ing principle of proportionality a fundamental principle of justice for thepurposes of section 7 of the Charter?

60 Section 718.1 of the Code states that, “A sentence must be propor-tionate to the gravity of the offence and the degree of responsibility ofthe offender.” In R. v. Ipeelee, 2012 SCC 13 (S.C.C.) at para 36, [2012] 1S.C.R. 433 (S.C.C.), six judges stated that “proportionality in sentencingcould aptly be described as a principle of fundamental justice under s. 7of the Charter.” In R. v. Anderson, 2014 SCC 41, [2014] 2 S.C.R. 167(S.C.C.), when discussing Ipeelee, the Court referred to the principle offundamental justice that sentences be proportionate. Moldaver J com-ments (at para 21):

As LeBel J., for the majority of this Court, stated in Ipeelee,“[p]roportionality is the sine qua non of a just sanction” and a princi-ple of fundamental justice.

61 A thorough description of the proportionality principle may be foundin the Alberta Court of Appeal’s decision in R. v. Arcand, 2010 ABCA363, 499 A.R. 1 (Alta. C.A.). As explained in the majority’s judgment (atparas 46-47, 52):

The roots of proportionality in sentencing run deep, dating back twocenturies to the days of Blackstone.... Its status as a guiding principleof long-standing in the common law is well recognized. ... Nonethe-less, it was not until the latter part of the 20th century that legislatorsstatutorily embraced the concept of a proportionate or “deserved”sentence as the governing sentencing principle.

When Parliament reformed sentencing in Canada in 1996, it deliber-ately chose to make the proportionality principle - otherwise knownas the “just deserts” principle - the only governing sentencing princi-ple under the Code. The proportionality principle in s. 718.1 requiresthat a sentence must be proportionate to the gravity of the offenceand the degree of responsibility of the offender. This principle is fun-damental to the integrity of the sentencing regime that Parliament hasprescribed. Therefore, these are not just words to be uttered and thenignored in the sentencing process.


Why did Parliament choose proportionality as the governing princi-ple? One answer is that it accords with principles of fundamental jus-tice and with the purpose of sentencing - to maintain respect for thelaw and a safe society by imposing just sanctions. Further, just sanc-tions being the goal of sentencing, proportionality must be the over-arching principle since a disproportionate sanction can never be a justsanction.

62 Thus, it is clear that proportionality is a principle of sentencing. How-ever, is it a principle of fundamental justice under section 7 of theCharter?

63 The principles of fundamental justice set out the minimum require-ments that a law that negatively impacts on a person’s life, liberty orsecurity of the person must meet. Over the years, the jurisprudence hasgiven shape to the content of these basic requirements.

64 A principle of fundamental justice must be a legal principle; theremust be sufficient consensus that the principle is vital or fundamental toour societal notion of justice; and the principle must be capable of beingidentified with precision and applied to situations in a manner that yieldspredictable results. See Canadian Foundation for Children, Youth & theLaw v. Canada (Attorney General), 2004 SCC 4 (S.C.C.) at para 8,[2004] 1 S.C.R. 76 (S.C.C.); and Malmo-Levine at para 113; and Caris-sima Mathen, “Section 7 and the Criminal Law” (2013) 62 SCLR (2d) 49at 60.

65 Proportionality in sentencing fulfills all three requirements set out inthe jurisprudence for a principle of fundamental justice. It is clearly alegal principle and the comments of the Alberta Court of Appeal inJLMA confirm that it is a principle fundamental to our societal notion ofjustice. With respect to the third requirement, Strathy JA (as he then was)in Safarzadeh-Markhali explained (at para 80):

Indeed, the proportionality principle is routinely applied in sentenc-ing for the very purpose of obtaining just and predictable results. It isintegral to a just sentence and to public confidence in the sentencingprocess.

66 It may also be helpful to employ the approach taken by Cromwell J inFederation of Law Societies. Cromwell J notes that, “An important indi-cator that a proposed rule or principle is a legal principle is that it is usedas a rule or test in common law, statutory law or international law” (atpara 91). Given that proportionality in sentencing is featured in the Codeas the fundamental principle of sentencing, and the Supreme Court has


previously recognized that, “The notion of proportionality is fundamentalto our constitutional system” (Suresh v. Canada (Minister of Citizenship& Immigration), 2002 SCC 1 (S.C.C.) at para 47, [2002] 1 S.C.R. 3(S.C.C.); see also R. v. M. (C.A.), [1996] 1 S.C.R. 500 (S.C.C.) at para40), I conclude that proportionality should be recognized as a principle offundamental justice for the purposes of section 7 of the Charter.

67 Recognizing proportionality in sentencing as a principle of funda-mental justice does not mean that every disproportionate sentence istherefore unconstitutional. The constitutional requirement is a sentencingprocess that mandates proportionate sentences. Whether or not that ob-jective is met in any given case may be determined through the use of theusual sentence appeal process and the fitness tests normally applied byappellate courts.

68 So the question becomes whether the denial of judicial interim release(whether because of the breach of conditions of release, reasonable sus-picion of the commission of an offence, or a previous criminal record) isrelated to the determination of a proportionate sentence or, in this case,that part of a proportionate sentence that relates to PSC.

69 Although Summers addressed the interpretation of section 719(3.1) ofthe Code and not its constitutionality, the Court did make some com-ments on the relationship of judicial interim release to the determinationof a proportionate sentence. The Court highlighted the fact that decisionson sentencing and decisions on bail are conceptually and functionallydifferent with different considerations. Karakatsanis J stated (at paras 65-67):

However, it is difficult to see how sentences can reliably be “propor-tionate to the gravity of the offence and the degree of responsibilityof the offender” (s. 718.1) when the length of incarceration is also aproduct of the offender’s ability to obtain bail, which is frequentlydependent on totally different criteria.

Judicial interim release requires the judge to be confident that,amongst other things, the accused will neither flee nor reoffend whileon bail. When an accused is able to deposit money, or be released tofamily and friends acting as sureties (who often pledge money them-selves), this can help provide the court with such assurance. Unfortu-nately, those without either a support network of family and friendsor financial means cannot provide these assurances. Consequently, asthe intervener the John Howard Society submitted, this means thatvulnerable and impoverished offenders are less able to access bail.


For example, Aboriginal people are more likely to be denied bail,and make up a disproportionate share of the population in remandcustody. A system that results in consistently longer, harshersentences for vulnerable members of society, not based on thewrongfulness of their conduct but because of their isolation and in-ability to pay, can hardly be said to be assigning sentences in linewith the principles of parity and proportionality. Accounting for lossof early release eligibility through enhanced credit responds to thisconcern.

70 The Crown argued on appeal that the offenders in these cases weredenied enhanced credit by reason of their own conduct, and not by rea-son of an arbitrary or unrelated distinction. I disagree.

71 In the case of both impugned exemptions, similarly situated offendersmay have different results, not as a result of their own actions while inthe community, or their records, but as a result of other factors.

72 With respect to section 524(4) of the Code, the important distinctioncreated by the impugned exemption is not between those who have beendenied bail or had it revoked by reason of subsection 524(4) or (8), andthose who have been denied bail for reasons unrelated to their conductafter the offence. Rather, “the problematic distinction is between thosewho succeed and those who fail to show cause following a s. 524 deten-tion” (R. v. Dinardo, 2015 ONSC 1804 (Ont. S.C.J.) at para 86, (2015),321 C.C.C. (3d) 525 (Ont. S.C.J.) (QL)).

73 So, with respect to an offender on release who commits other of-fences, they may convince a bail judge at a show cause hearing to releasethem due to the minimal nature of the subsequent offence, their sureties,their work or place of residence, the support of family or any number ofother factors. Another offender in the same situation will be denied bailbecause they do not have similar resources. In such cases, it is clear theimpugned exemption does not deny enhanced credit because of bad con-duct, but rather because of the inability to obtain bail, which is entirelyirrelevant to the determination of a proportionate sentence. As men-tioned, Bittern was released several times subsequent to breaching condi-tions before being detained. As the Supreme Court of Canada recognizedin Summers, generally speaking, this means that vulnerable and impover-ished offenders, like Bittern, will be less likely to obtain bail (see para66).

74 In addition, the factors taken into account on a bail decision are notproven beyond a reasonable doubt, yet they will result in a lengtheningof the offender’s period of incarceration. The impugned exemption will


apply to prevent enhanced credit, even if the breach charge that triggeredthe revocation is ultimately not proven, or is stayed by the Crown. Theoffender is being punished for charges, not necessarily for convictions.Worse, a subsection 524(4) or (8) detention will continue to be operativefor the purposes of section 719(3.1) of the Code even where the offenderpursues a trial on the breach charge — whether breach of recognizance,anticipated breach of recognizance, or the commission of an indictableoffence — and is subsequently acquitted of that charge.

75 Again, the length of time spent in PSC itself may vary without anyregard to the actions of the offender. Where the time between the breachand the trial is short, the difference between regular and enhanced creditmay be minimal, but the difference may be much larger if the time totrial is lengthy. This can occur simply because of large amounts of dis-closure, or because the caseload in the particular jurisdiction results in alonger wait for trial. Therefore, factors completely outside the control ofthe offender may, in this way, impact directly upon the time spent incustody, irrespective of the factors relevant on sentencing (see Dinardoat para 101).

76 The same is true of offenders detained primarily because of their re-cord pursuant to section 515(9.1) of the Code. In Safarzadeh-Markhali,the Court goes through a number of examples of similarly situated of-fenders, some of whom could serve up to an additional 12 months incustody, not because of their criminal records, but due to their inability toobtain bail. “The greater the time spent in pre-sentence custody, thegreater the disparity will be. These examples refute the Crown’s submis-sion that the impugned provision does not distinguish between equallyplaced offenders” (at para 94).

77 In addition, the impugned exception with respect to section 515(9.1)of the Code would result in doubly penalizing a person for his previousconvictions. It is true that a criminal record is one of the factors that isrelevant to the individualized sentencing process, and that it is proper totake it into account in deciding what a fit sentence is. However, to havethe criminal record automatically result in the further term of imprison-ment imposed on an offender, longer than it would have been but for thatcriminal record, is different. It results in the offender being punishedtwice for his previous criminal convictions.

78 Both Manitoba and Canada argue that section 515(9.1) of the Code issimply a codification of the principle that a judge could decline to awardenhanced credit for PSC if an offender was otherwise unlikely to have


received early release. That position represents too narrow an interpreta-tion of R. v. Vermette, 2001 MBCA 64, 156 Man. R. (2d) 120 (Man.C.A.); Stonefish; and Summers at para 31. While these authorities recog-nize that enhanced PSC credit may not be granted in part because of anoffender’s record or conduct while on bail, they do not suggest that anoffender should be prohibited from applying. Moreover, those cases werebased on the presumption that their conduct should be considered be-cause, absent evidence to the contrary, these individuals were unlikely toreceive early release. The jurisprudence indicates that was one factor,amongst many others which are taken into account, to assess eligibilityfor early remission and, by extension, eligibility for enhanced PSCcredit. It was not a blanket prohibition, as is presently the case. This leg-islation has exactly that result, effectively ruling on a matter before anoffender has had an opportunity to present evidence as to whether in facthe or she is likely to receive remission.

79 The presumption could be rebutted by evidence to the contrary, whichwas exactly the evidence adduced with respect to these two accused.Manitoba argues that one of the rationales for enhanced credit, the loss ofearned remission, is not present in the cases under appeal, since an indi-vidual with a serious prior criminal record, or one who had been deniedbail, would not reasonably be expected to receive early release once con-victed. However, the evidence with respect to both accused establishedthe contrary.

80 As the policy from the Women’s Correctional Centre in R. v. Bitternshowed, earned remission depends entirely on conduct in the institution.Thus, the fact that the individual was denied bail prior to sentencing, forwhatever reason, has no effect on earned remission. The same evidencewas presented in the R. v. Kovich sentencing. A witness from the correc-tional institution testified that Kovich’s criminal record was not relevantin assessing earned remission. It was only his institutional behaviour thatwas relevant.

81 Again, unlike a trial judge at a sentencing hearing, the bail judgewould have no information about the offender’s diligence in achieving aspeedy passage through the criminal justice system. So, for Kovich, thejudge at sentencing took into account the systemic delay that occurredthrough no fault of the accused when considering PSC credit.

82 Thus, the impugned provision subjects identically placed offenders todifferent periods of incarceration, depending on whether they are able toobtain bail, for reasons that are irrelevant to sentencing. Consideration as


to whether credit will be given to an offender for PSC — and if so, howmuch — is part of the sentencing process. Parliament may of course leg-islate factors that a sentencing judge must consider in order to determinea proportionate sentence and has done so in section 718 of the Code.However, I agree with the sentencing judge that the principle of propor-tionality prevents Parliament from making the sentencing process contin-gent on factors unrelated to the determination of a fit sentence, becausethe principle of proportionality in the sentencing process is a fundamen-tal principle of justice.

83 The variation in time in custody is not attributable to any factor re-lated to the determination of a fit sentence. It has nothing to do with theoffender’s degree of responsibility or the gravity of the offence. It is at-tributable solely to the statutory prohibition on enhanced credit as a re-sult of the offender’s inability to obtain bail. Consequently, the ability toobtain bail may turn on factors that have nothing to do with the determi-nation of a fit sentence, such as access to good sureties, bail monies,stable familial setting, residences or work.

84 Those that fall within the scope of the exemption will potentiallyserve a longer period of incarceration than those who do not. Yet whatplaces an offender within the scope of the exemption is not the circum-stances of her offence, nor is it her personal circumstances, or even theparticulars of her criminal record. It is the outcome of a bail hearing — ahearing whose only purpose is to assess the risk of releasing an accusedinto the community.

85 The Ontario Court of Appeal in the case of Safarzadeh-Markhalireached a similar conclusion. In that case, the accused’s application forjudicial interim release was denied on the basis of his previous convic-tions and he was, therefore, detained pursuant to section 515(9.1) of theCode. As indicated previously, the Court held that the principle of pro-portionality in sentencing is a principle of fundamental justice and theeffect of the proportionality principle on the sentencing process is thatParliament is precluded from making sentencing contingent upon factorsunrelated to the determination of a fit sentence.

86 The analysis in Safarzadeh-Markhali dealt only with section 515(9.1)of the Code. In the case of Chambers, the Yukon Court of Appeal cameto a different conclusion concerning the constitutional validity of thatpart of section 719(3.1) operating in conjunction with subsections 524(4)and (8). It will be remembered that both exemptions are challenged inthese appeals.


87 In Chambers, the accused was an Aboriginal person who pled guiltyto several offences, including breaking and entering. One offence — ut-tering threats — was committed while the accused was on judicial in-terim release and, therefore, the accused was detained under section524(4) of the Code. The Yukon Court of Appeal rejected the argumentmade by the offender that “the fundamental principle of proportionalityin sentencing is breached if a sentence is merely disproportionate” (atpara 111). The Court found that, pursuant to section 12 of the Charter,the constitutionality of a punishment is breached only if the punishmentis grossly disproportionate; and the standard is the same, regardless ofwhether the applicant is proceeding under section 7 or 12.

88 As indicated, I prefer the view of the Ontario Court of Appeal that theprinciple of proportionality of the sentencing process, as opposed to thesentence itself, is at play here and that principle is one of fundamentaljustice. Moreover, I agree that the impugned provisions of section719(3.1) of the Code skew the sentencing process by creating structuraldifferences in sentencing based on irrelevant criteria, which is a violationof the principle of proportionality.

89 I agree with Wein J in Dinardo, who took the analysis that the On-tario Court of Appeal adopted with respect to section 515(9.1) inSafarzadeh-Markhali, applied it to subsections 584(4) and (8) and cameto an opposite conclusion than Chambers. She concluded (at para 77):

The impugned provision offends the principle of proportionality, in-cluding the concept of parity, because it makes the determination of afit sentence dependent upon an irrelevant factor - the ability of theoffender to get bail. As a result, offenders caught by this provision(i.e., those arrested for reasons listed in s. 524(4) or (8), and whohave a bail hearing and are unable to show cause) will ultimatelyserve a longer sentence than identical offenders in identical circum-stances in the situations where the similarly situated offender is ableto show cause and secure his/her release.

Section 7 Breach - Arbitrary and Overbreadth90 Of late, the Supreme Court of Canada has evinced a preference for

invalidating laws under section 7 of the Charter with reference to theconcepts of arbitrariness, overbreadth and gross disproportionality, ratherthan identifying new principles of fundamental justice that satisfy theMalmo-Levine test. As the Supreme Court explained in Carter v. Canada


(Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331 (S.C.C.) (at para72):

While the Court has recognized a number of principles of fundamen-tal justice, three have merged as central in the recent s. 7 jurispru-dence: laws that impinge on life, liberty or security of the personmust not be arbitrary, overbroad, or have consequences that aregrossly disproportionate to their object.

91 The recent case of Bedford v. Canada (Attorney General), 2013 SCC72, [2013] 3 S.C.R. 1101 (S.C.C.), has clarified the tests for arbitrariness,overbreadth and gross disproportionality. While each is a distinct princi-ple, the Supreme Court noted “significant overlap” between arbitrarinessand overbreadth (at para 107). Both address the same evil, the “absenceof connection between the law’s purpose and the s. 7 deprivation” (atpara 108). It is simply the degree of absence of connection that differen-tiates between the two.

92 The tests laid out in Bedford may be summarized as follows:

• A law is arbitrary when it limits section 7 Charter rights in a waythat bears no connection to its objective. It is used to describe thesituation where there is no connection between the effect and theobject of the law.

• A law is overbroad when some, but not all, of the limits it placeson section 7 bear no connection to its objective. The law goes toofar and interferes with some conduct that bears no connection toits objective.

• A law is grossly disproportionate in extreme cases where the law’simpact on section 7 rights is so serious as to be totally out of syncwith its objective.

See Lisa Dufraimont, “Bedford v. Canada (Attorney General) and theLimits on Substantive Criminal Law under Section 7” (2014) 67 SCLR(2d) 483 at 491.

93 The Court in Safarzadeh-Markhali held that the provisions are arbi-trary because they insert irrelevant factors into a sentencing analysiswhich bears no relationship to the principle of proportionality. As statedby Strathy JA (at para 85):

However, the principle of proportionality prevents Parliament frommaking sentencing contingent on factors unrelated to the determina-tion of a fit sentence. In this sense, the principle of proportionality isclosely associated with the established principle that a law that vio-lates life, liberty or security of the person cannot be arbitrary.


94 Yet the effect of the law may occasion results that are entirely arbi-trary. That is because those who breach their recognizance or commitindictable offences while on release may still be able to secure their re-lease if they are able to present a suitable plan of release, and to thereforeshow cause for release. The ability to do so may be related to factorsentirely beyond the offender’s control, such as whether she has friends orfamily willing to act as a surety, or whether she is able to obtain suffi-cient bail monies to secure her release.

95 It may also be argued that the law is arbitrary because its precise ef-fect on a particular offender (in terms of increased time served in cus-tody) has no relation to the offender’s personal circumstances, the crimeshe has committed, or the particulars of her criminal record.

96 I prefer to rest my analysis on the overbreadth inquiry. As indicated,the overbreadth analysis turns on whether the reach of the law exceeds itsobjective. McLachlin CJC recently summarized the concept in R. v. Ap-pulonappa, 2015 SCC 59 (S.C.C.) (at para 26):

A law is said to violate our basic values by being overbroad when“the law goes too far and interferes with some conduct that bears noconnection to its objective”: Canada (Attorney General) v. Bedford,2013 SCC 72, [2013] 3 S.C.R. 1101, at para. 101. As stated in Bed-ford, “[o]verbreadth allows courts to recognize that the law is ra-tional in some cases, but that it overreaches in its effect in others”: atpara. 113; see also Carter v. Canada (Attorney General), 2015 SCC5, [2015] 1 S.C.R. 331, at para. 85.

97 The first question in the overbreadth inquiry is what is the purpose ofthe legislation? The overbreadth analysis does not evaluate the appropri-ateness of the objective. Rather, it assumes a legislative objective that isappropriate and lawful (see R. v. Moriarity, 2015 SCC 55 (S.C.C.)).

98 What then are the objectives of this legislation?99 The Supreme Court of Canada in Summers (see paras 51-58) consid-

ered the intent of Parliament in enacting the Act, and concluded suchintent was to restrict the amount of credit given for PSC, and, in particu-lar, to do away with the routine practice of granting 2:1 credit for PSC.The stated goal of ending the practice of awarding 2:1 credit is addressedby subsections 719(3) and (3.1) of the Code, which limit credit for PSCto 1:1, and if the circumstances justify it, to 1.5:1.

100 A further intent was to make the process of granting PSC credit moretransparent and easily understood by the public so that the public wouldknow what the fit sentence was, how much credit had been given and


why (see Summers at paras 4, 53). This goal of transparency is addressedby subsections 719(3.2) and (3.3) of the Code, which require the court toprovide reasons for credit given for PSC beyond 1:1.

101 The third stated goal of restricting the awarding of credit for PSC isfurther addressed by barring consideration for credit between 1:1 and1.5:1 to offenders of specified types (those who are denied bail based ontheir criminal records, and those who are detained because of misconductwhile out on bail) (see Summers at para 39).

102 The Justice Minister indicated that not only does the current practicedeprive offenders of the prison programs that might help to keep themout of jail in the future, it also fails to punish them adequately for theactions that led to their convictions in the first place. This is especiallythe case for those offenders who have been denied bail and sent to aremand centre because of their past criminal records or because theyhave violated their bail conditions (see Minister of Justice and AttorneyGeneral of Canada, House of Commons Debates, 40th Parl, 2nd Sess, vol144, No 41 (20 April 2009) at 1210.

103 The question is whether the impugned exemption that provides thatbar goes further than is necessary to achieve that goal. I believe it does.

104 Manitoba argues that, when correctly interpreted and applied, section719(3.1) of the Code will only capture a limited subgroup of personsdenied bail; namely, those whose prior records were sufficiently exten-sive or serious as to form the overriding basis for refusing bail. This isbecause a judge hearing the bail application must deny judicial interimrelease under this exception only where it is primarily because of theaccused’s record of previous convictions that bail is denied. In otherwords, a judge who determines that an accused’s record of prior convic-tions is only one factor in refusing bail, but not the primary reason, willnot make a note in the record accordingly, and the accused will not bedenied access to enhanced credit by operation of section 719(3.1). This,it is submitted, ensures that judges retain the ultimate discretion with re-spect to the availability of any enhanced credit for PSC except in limitedcircumstances, and ensures that the provision does not operate in anoverly broad manner.

105 Canada argues that, unlike the other branch of section 719(3.1) of theCode (where the decision as to credit is effectively in the hands of thebail judge, who decides if an endorsement under section 515(9.1) shouldbe made because of the accused’s prior record), in R. v. Bittern, the deci-


sion as to credit is effectively in the hands of the offender, who decidesto breach a term of her previously granted release.

106 As I have indicated, this is not correct on either count. The effect ofthe legislation does not further its stated objective. It does not targetwrongful conduct or violent offenders. It targets the inability to get bail.It targets people who breach their bail or have lengthy criminal records,but are then unable to show cause why they should nonetheless be re-leased. So, a homeless individual on release who breaches his bail condi-tion may be retained in custody, while another individual on release whobreaches his bail conditions, may be released because he has employ-ment, a secure residence and multiple sureties. As a result of these provi-sions, the two will serve different amounts of time in a correctional insti-tution, even though convicted of the same crime and given the samesentence.

107 In addition, the conduct targeted by these provisions does not, in real-ity, affect the awarding of early remission. An offender who seeks en-hanced credit must show on a balance of probabilities that he or shewould likely have received remission or parole in order for a court tofind the circumstances justify enhanced credit under section 719(3.1) ofthe Code. The facts relevant to such a determination generally will dealwith an offender’s behaviour, attitude and circumstances while in remandcustody. In fact, the evidence adduced in these two cases indicated thatonly an offender’s conduct while in custody is taken into account interms of early remission. An offender’s behaviour while on bail has notbeen referred to in the evidence as a factor for consideration relative towhether an offender would likely have received remission or parole.

108 At present, section 719(3.1) of the Code contemplates that the findingof a judge at a bail hearing could bind a judge at the time of sentencing,yet the two hearings are of a very different nature. Because a bail hearingfocusses more on the management of the accused while awaiting disposi-tion of the charges, the criminal record of an offender plays a very spe-cific role, and is to be considered in determining whether the accusedwill attend future court hearings, or is a risk to the community by way ofreinvolvement in other criminal activity.

109 At a sentencing hearing where the rules of evidence are more strin-gent, an accused only faces those facts which he is prepared to admit, orwhich are proven beyond a reasonable doubt, the onus for which restswith the Crown. There are a number of procedural and evidentiary pro-tections in place which do not exist for a bail hearing.


110 The use of a criminal record as a factor in sentencing is accepted,however, its use is related to the sentencing principle of proportionality.A criminal record which results in a person having his bail denied doesnot necessarily mean that his sentence should be increased, yet that is theeffect of the impugned portion of section 719(3.1) of the Code. Such ablanket use of a criminal record is overbroad.

Section 7 Breach - Not Justified Under Section 1111 At sentencing in both of these matters, Manitoba conceded that if the

sentencing judge held that there was an infringement under sections 7 or15 of the Charter, such infringement could not be justified under section1 and Canada had not intervened at that stage. Manitoba continued thatposition on the appeal.

112 Canada has now intervened pursuant to The Constitutional QuestionsAct, CCSM c C180, subsection 7(7), to argue that if there is a breach ofsection 7 of the Charter, it is justified under section 1.

113 Even though it is preferable for section 1 issues to be addressed ini-tially at trial, appellate courts have indicated many times that they may,in appropriate circumstances, allow parties to raise on appeal an argu-ment, even a new constitutional argument, that was not raised, or was notproperly raised in the courts below, so long as a proper evidentiary basishas been laid in the court below.

114 The concern for me is one of prejudice to the other party. Can theissue be raised without procedural prejudice to the opposing party andwill the refusal to do so risk an injustice? This is particularly true ofconstitutional issues which “engage additional concerns beyond thosethat are considered in relation to new issues generally” (Guindon v. R.,2015 SCC 41 (S.C.C.) at para 23; see also paras 21-22).

115 In this case, counsel for Bittern and Kovich did not object at the ap-peal hearing to the introduction of arguments with respect to section 1 ofthe Charter, and counsel for Bittern included material in relation to sec-tion 1 in his materials.

116 The evidence sought to be introduced at this stage is constitutional,social and economic facts, as opposed to adjudicative facts, as well asreported cases. None of those documents were referred to before thelower court judges. The same issue arose in Safarzadeh-Markhali. Sec-tion 1 was not addressed in the original ruling, but was fully canvassedby the Court of Appeal after receiving argument on that point from theparties.


117 I do not have any problem with relying on the excerpts filed fromHansard or Statistics Canada or reported cases. So, for example, inNewfoundland (Treasury Board) v. N.A.P.E., 2004 SCC 66, [2004] 3S.C.R. 381 (S.C.C.), the Court took judicial notice of Hansard and foundsame to be sufficient section 1 evidence.

118 I am more apprehensive about relying on the academic commentaryand international comparative materials that have been filed by both par-ties, without having been subjected to the evidentiary testing of the ad-versarial process and whose implications are contradictory. The concern,as always, with these types of materials is that they may be incomplete oropen to multiple interpretations, and have not been subject to commentor cross-examination by the opposing side. However, I believe that issuewill go to the weight to be accorded that particular evidence.

119 In R. v. Bittern, the sentencing judge stated the following with respectto section 1 (at para 116):

[A]lthough the impugned exemption in my view, passes the firststage of the Oakes [[1986] 1 SCR 103] analysis (that is, that themeans is rationally connected to the objective of the legislation), itdoes not meet the other two stages of the proportionality analysis.The impairment of the right is not minimal nor are the effects of theexemption proportionate to the objective.

120 Canada submits that the section 1 analysis is a contextual one thatmust take into account deference to Parliament. Parliament is constitu-tionally entitled to make policy choices where there are competing viewson the merits of those choices. Canada submits that the objective of BillC-25, aiming to address a broader set of practical problems including thecomplex issue of remand overcrowding, will promote the speedier reso-lution of matters and increase opportunities for rehabilitation (Testimonyof Jamie Chaffe, Proceedings of the Standing Senate Committee on Jus-tice and Human Rights, 40th Parl, 2nd Sess, No 013, (16 September2009) at 1337; Debates of the Senate (Hansard), 40th Parl, 2nd Sess, vol146, No 60, (20 October 2009) at 1535, 1537, (Hon Noel A Kinsella).

121 Canada also submits that the limit on the right is reasonably tailoredto the legislative objectives. If the legislation “falls within a range of rea-sonable alternatives” the court should not strike it down “merely becausethey can conceive of an alternative which might better tailor objective toinfringement” (RJR-Macdonald Inc. c. Canada (Procureur general),[1995] 3 S.C.R. 199 (S.C.C.) at para 160). Refusing enhanced credit forPSC to an accused who has breached a court order has a long history in


Canadian jurisprudence, and a survey of international sources reveals abroad adoption of 1:1 credit for PSC. Therefore Parliament’s codificationof that practice cannot be said to be disproportionate to its objectives.

122 The analysis under section 1 asks whether the Crown has establishedon a balance of probabilities three questions:

1. Is the limit prescribed by law?

2. Is the purpose for which the limit is imposed pressing and sub-stantial? and

3. Are the means by which the goal is furthered proportionate? (R. v.Oakes, [1986] 1 S.C.R. 103 (S.C.C.)).

123 It was once thought that section 1 of the Charter could not apply tosection 7 breaches, except perhaps in times of war or similar nationalemergency, since it would be unlikely that any section 7 deprivation (notnecessarily according with the principles of fundamental justice) wouldbe justifiable as a reasonable limit. See R. v. Heywood, [1994] 3 S.C.R.761 (S.C.C.), at 802. There are only two cases in which individual judgesof the Supreme Court of Canada have found clear violations of section 7,but would have upheld those violations under section 1 (see HamishStewart, “Bedford and the Structure of Section 7” (2015) 60:3 McGill LJ575 at 577).

124 For instance, in United States v. Burns, 2001 SCC 7, [2001] 1 S.C.R.283 (S.C.C.), the Court observed that, “it would be rare for a violation ofthe fundamental principles of justice to be justifiable under s.1” (at para133). In R. c. Demers, 2004 SCC 46 (S.C.C.) at para 46, [2004] 2 S.C.R.489 (S.C.C.); and Chaoulli c. Quebec (Procureur general), 2005 SCC 35(S.C.C.) at para 155, [2005] 1 S.C.R. 791 (S.C.C.), it was questionedwhether overbroad or arbitrary laws (respectively) could ever be savedunder section 1.

125 In Bedford, the Supreme Court of Canada refined its position and ex-plained that section 7 and section 1 ask different questions. While section7 focusses on the rights of individuals, section 1 focusses on whether thenegative impact on the individuals is nonetheless “proportionate to thepressing and substantial goal of the law in furthering the public interest”(at para 125).


126 Chief Justice McLachlin (writing for the Court) made the followingcomments regarding the interaction between sections 1 and 7 of theCharter (at paras 125-27, 129):

The question of justification on the basis of an overarching publicgoal is at the heart of s. 1, but it plays no part in the s. 7 analysis,which is concerned with the narrower question of whether the im-pugned law infringes individual rights.

As a consequence of the different questions they address, s. 7 and s. 1work in different ways. Under s. 1, the government bears the burdenof showing that a law that breaches an individual’s rights can be jus-tified having regard to the government’s goal. Because the questionis whether the broader public interest justifies the infringement of in-dividual rights, the law’s goal must be pressing and substantial. The“rational connection” branch of the s. 1 analysis asks whether the lawwas a rational means for the legislature to pursue its objective. “Min-imal impairment” asks whether the legislature could have designed alaw that infringes rights to a lesser extent; it considers the legisla-ture’s reasonable alternatives. At the final stage of the s. 1 analysis,the court is required to weigh the negative impact of the law on peo-ple’s rights against the beneficial impact of the law in terms ofachieving its goal for the greater public good. The impacts are judgedboth qualitatively and quantitatively. Unlike individual claimants, theCrown is well placed to call the social science and expert evidencerequired to justify the law’s impact in terms of society as a whole.

By contrast, under s. 7, the claimant bears the burden of establishingthat the law deprives her of life, liberty or security of the person, in amanner that is not connected to the law’s object or in a manner that isgrossly disproportionate to the law’s object. The inquiry into the pur-pose of the law focuses on the nature of the object, not on its effi-cacy. The inquiry into the impact on life, liberty or security of theperson is not quantitative — for example, how many people are neg-atively impacted — but qualitative. An arbitrary, overbroad, orgrossly disproportionate impact on one person suffices to establish abreach of s. 7. To require s. 7 claimants to establish the efficacy ofthe law versus its deleterious consequences on members of society asa whole, would impose the government’s s. 1 burden on claimantsunder s. 7. That cannot be right.

It has been said that a law that violates s. 7 is unlikely to be justifiedunder s. 1 of the Charter (Motor Vehicle Reference [[1985] 2 SCR486], at p. 518). The significance of the fundamental rights protectedby s. 7 supports this observation. Nevertheless, the jurisprudence hasalso recognized that there may be some cases where s. 1 has a role to


play (see, e.g., Malmo-Levine, at paras. 96-98). Depending on the im-portance of the legislative goal and the nature of the s. 7 infringementin a particular case, the possibility that the government could estab-lish that a s. 7 violation is justified under s. 1 of the Charter cannotbe discounted.

127 More recently, in Carter, the Court observed (at para 95): It is difficult to justify a s. 7 violation: see Motor Vehicle Reference,at p. 518; G. (J.) [[1999] 3 SCR 46], at para. 99. The rights protectedby s. 7 are fundamental, and “not easily overridden by competingsocial interests” (Charkaoui [2007 SCC 9, [2007] 1 SCR 350], atpara. 66). And it is hard to justify a law that runs afoul of the princi-ples of fundamental justice and is thus inherently flawed (Bedford, atpara. 96). However, in some situations the state may be able to showthat the public good — a matter not considered under s. 7, whichlooks only at the impact on the rights claimants — justifies deprivingan individual of life, liberty or security of the person under s. 1 of theCharter. More particularly, in cases such as this where the competingsocietal interests are themselves protected under the Charter, a re-striction on s. 7 rights may in the end be found to be proportionate toits objective.

128 In Bedford, only the three principles of fundamental justice relating tooverbreadth, arbitrariness and gross disproportionality were at issue. Thecase did not involve other recognized principles of fundamental justice,such as the right to procedural fairness or the principles relating to con-stitutionally-required proportionality in the sentencing process. Evendealing only with the principles of overbreadth, arbitrariness and grossdisproportionality, it is notable that in the subsequent case of R. v. Smith,2015 SCC 34, [2015] 2 S.C.R. 602 (S.C.C.), the Court found that “thesame disconnect between the prohibition and its object that renders itarbitrary under s. 7 frustrates the requirement under s. 1 that the limit onthe right be rationally connected to a pressing objective” (at para 29). Inthe result, the Court concluded that the infringement of section 7 was notjustified under section 1 of the Charter.

129 Applying the above principles to the case at hand, it is clear that as anenactment by Parliament, Bill C-25 is clearly a limit prescribed by law.

130 I also accept that the objectives are pressing and substantial. I accept,based on the materials filed, that the Act was enacted to address pressingand substantial concerns about the treatment of remand time. These con-cerns included, among other things, the substantial increase in the num-ber of accused held on remand, and of the time that accused persons


spend on remand in proportion to the total time they spend in custody.The objectives also include Parliament’s desire “to prevent manipulationof credit for pre-sentence custody and to enhance public safety by in-creasing the likelihood that repeat offenders, and those who breach theconditions of their bail, will serve part of their sentence in post-sentencecustody with access to the rehabilitative programs that would be unavail-able in remand centers” (Safarzadeh-Markhali at para 110) and increas-ing transparency in the sentencing process and the determination of en-hanced credit. These objectives were also recognized and approved inSummers.

131 The question is whether the government has demonstrated that theprohibition is proportionate. This last question requires a further three-point analysis:

1. Is the limit rationally connected to the purpose?

2. Does the limit minimally impair the right?

3. Is the law proportionate in its effects (Oakes)?132 To show a rational connection, the government must show a causal

connection between the infringement and the benefit sought on the basisof reason or logic (see Carter at para 99).

133 The Crown submits that the provision is rationally connected to itsobjectives because it is targeted against a subset of the population whofind themselves back in custody on account of their own misconduct onbail or their own previous criminal record. As well, it is argued that it isrationally connected to the goals of public safety and to ensuring thatsuch offenders benefit from rehabilitation programs.

134 However, as has been indicated, the impugned exemption does notautomatically deny enhanced credit to these persons. It denies credit onlyto those in these subgroups who were unable to show cause and obtainbail, or whose records were not endorsed. As was stated in Safarzadeh-Markhali, there is no rational connection between the objective and themeans chosen, because the section results in “an arbitrary distinction be-tween offenders with criminal records depending on whether they seekbail or not and whether, if denied bail, they receive an endorsementunder s. 515(9.1)” (at para 114). As a matter of fact, the impugned ex-emption could have the effect of increasing the number of people on re-mand, because fewer accused will seek bail in order to avoid the poten-tial consequence of a detention order based on their own record.


135 With respect to minimal impairment, legislation need only fall withina range of reasonable alternatives. The government is not judged on astandard of perfection and the court should accord the government somedeference with respect to its choices (see Carter at para 97).

136 This provision does not minimally impair an offender’s rights be-cause it bases the granting of enhanced credit on the outcome of a bailhearing, which itself is entirely irrelevant to the determination of a fitsentence. With respect to offenders who are alleged to have breached bailconditions, offenders are punished based on something that the Crown isnot required to prove beyond a reasonable doubt. It is possible that anoffender could conceivably have his bail cancelled, be charged with fail-ing to comply, be acquitted of that charge, and then still be punished forit by losing enhanced credit and remaining incarcerated for a longer pe-riod (see also Safarzadeh-Markhali at paras 115-20).

137 Finally, the court must determine whether the benefits of the im-pugned law outweigh the cost of the rights limitation. I agree withSafarzadeh-Markhali that the benefits “cannot justify the limitation” be-cause they are “at best unevenly distributed”(at para 122) — in light ofthe fact that similarly situated offenders may receive different sentencingoutcomes depending on whether they seek bail, whether they are grantedbail, and whether they receive an endorsement under section 519(9.1).

138 The Supreme Court of Canada’s clarification of the interaction be-tween sections 7 and 1 is relatively recent, however, the Ontario Court ofAppeal has dealt with it in the decision of R. v. Michaud, 2015 ONCA585, 339 O.A.C. 41 (Ont. C.A.), leave to appeal to the SCC requested([2015] S.C.C.A. No. 450 (S.C.C.) (QL)) (filed on October 28, 2015).This is the only case where a section 7 violation has been found to bejustified under section 1.

139 The case dealt with a commercial truck driver. By law, his truckneeded to have a functional speed limiter set to a maximum speed of 105km/hour. The speed limiter on Michaud’s truck was set to 109.4km/hour, which was in excess of the government-mandated maximum of105 km/h, and thus an offence under Ontario’s Highway Traffic Act,RSO 1990, c H8. At first instance, the justice of the peace found a sec-tion 7 violation and acquitted the accused. On appeal, the Ontario Courtof Justice admitted fresh evidence, found no Charter violation, and setaside the trial decision.

140 The Ontario Court of Appeal dismissed the appeal, finding that, al-though the highway speed regulation did infringe section 7 of the Char-


ter, the violation was justified under section 1. The Court held that thelegislation deprived Michaud of his right to security of the person on astrict and literal reading of Bedford (see Michaud at para 73). Becauseacceleration above the legislated limit is needed to avoid collisions inabout two per cent of traffic conflicts, this was enough to establish thefirst branch of the Bedford test. However, the Court concluded that, al-though for that individual truck driver in Michaud’s situation the depri-vation of safety is real, the public interest is more important, consideringthe balancing of risks and benefits across the population. Therefore thesection 7 violation was justified under section 1.

141 The Michaud case is different than the kinds of rights we are dealingwith here. Lauwers JA of the Ontario Court of Appeal emphasized thathe was dealing with safety regulations. Safety regulations will alwaysinvolve uncertain risk assessment that will implicate the safety of others.They involve drawing certain and knowable bright lines, like speed lim-its. There may not be a clear answer as to whether a particular bright linerule achieves the right balance. There are invariably trade-offs with theselimits and courts have indicated previously that they should act with def-erence to complex regulatory responses. See, for example, HutterianBrethren of Wilson Colony v. Alberta, 2009 SCC 37, [2009] 2 S.C.R. 567(S.C.C.).

142 However, Lauwers JA ended his analysis with some questioning ofthe Bedford framework. Bedford has softened the language of depriva-tion to lower the threshold of legislation that it limits or negatively im-pacts. There has been some speculation as to whether the softening orlowering of the test in section 7 will result in more justifications of sec-tion 1. See, for example, “Bedford and the Structure of Section 7”, at p577). That may be the case with such matters as safety regulations orsituations where the legislature must draw bright lines, such as the age ofconsent to sexual conduct, but I do not believe it is the case here, giventhe nature of the rights being dealt with. Fundamental rights are not eas-ily overridden by competing social interests. Liberty rights are obviouslyamong the most fundamental in a free society.

143 In summary, I find that the violation of section 7 is not justified undersection 1. The impugned provision fails to minimally impair the right toliberty and the effects are not proportionate to the objectives. The meanschosen here result in harsher sentences for offenders who spend exces-sive time in PSC due to circumstances unrelated to their moral blame-worthiness or criminal responsibility. Repeat offenders who would bene-


fit from rehabilitative programs but do not seek bail, or whose recordsare not endorsed, or who obtain bail may indeed receive either enhancedcredit or statutory remission. Consequently, there is an artificial distinc-tion drawn between similarly situated offenders that undermines the pub-lic confidence in a fair sentencing process.

Does the Safarzadeh-Markhali Analysis apply to Subsections 524(4)and (8) Offenders like Bittern?

144 The case of Safarzadeh-Markhali dealt with an individual who wasdenied enhanced credit because of section 515(9.1) of the Code. By wayof example, the Court explained that the complete prohibition on en-hanced credit potentially distinguished between at least three identicallyplaced accused who commit exactly the same offences and have thesame criminal record and thus, breached the principle of fundamentaljustice of proportionality in the sentencing process.

145 The Chambers case dealt with an accused who had breached his bailconditions and was held to be detained pursuant to subsections 524(4)and (8) of the Code, even though he had consented to his detention. TheCourt held that it was immaterial whether he had been ordered detainedafter an application for bail or was detained on a revocation process, andthereafter consented to remand without exercising his right to bail (seeparas 133-34). Our Court has come to the same conclusion. See R. v.Cook, 2015 MBCA 63, 319 Man. R. (2d) 217 (Man. C.A.); and R. v.Ibrahim, 2015 MBCA 62, 319 Man. R. (2d) 200 (Man. C.A.).

146 However, the Yukon Court of Appeal in Chambers discussedSafarzadeh-Markhali and came to the conclusion that it could be distin-guished because, unlike offenders under section 515(9.1), all subsection524(4) and (8) offenders are treated similarly (see para 134).

147 While the analysis in Safarzadeh-Markhali is related to the applica-tion of section 719(3.1) of the Code in conjunction with section 515(9.1),I believe the analysis applies with equal force when the provision is con-sidered in conjunction with subsections 524(4) and (8). Both cases allowthe outcome of a bail decision to dictate the length of the custodial por-tion of an offender’s sentence.

148 Pursuant to either one of the impugned exemptions, the allocation ofcredit versus enhanced credit will have the exact same impact; similarlysituated offenders (i.e., offenders with similar records, or offenders whohave breached their bail conditions but who not have not had theirrecords endorsed, or who have shown cause why they should be re-


leased) may spend a different amount of time in custody — perhaps asignificantly different amount of time — because of considerations thathave nothing to do with the sentencing process (see examples of calcula-tions of the different amounts of custodial time that would be served bysimilarly situated offenders under section 515(9.1) of the Code inSafarzadeh-Markhali at paras 92-94; and with respect to similar exam-ples but under sections 524(4) and (8) (see Dinardo at paras 79-83)).

149 Under either impugned exemption, the ability to obtain bail and thus,escape the denial of enhanced credit may turn on such factors as accessto good sureties, bail monies, residence, employment and a variety ofother factors not tied to conduct, but rather to luck and one’s socio-eco-nomic status.

Are Bittern and Kovich Entitled to Enhanced Credit?150 Having found that the impugned exemption was of no force or effect

in the proceedings, the sentencing judge went on to consider whether itwas appropriate to give enhanced credit to Bittern. She concluded it wasfor the following reasons:

In this particular case, when I look at what brought Ms. Bittern backinto custody, there was, there were two curfew breaches, a failure tonotify of an address change, and then ultimately an assault. In myview, these are not the sorts of things that should disentitle her toapply for enhanced credit, or to be eligible for enhanced credit. Inparticular, the assault was clearly driven by a requirement to getmoney for drugs. Given Ms. Bittern’s addiction, I agree with defencecounsel that this should not preclude her receiving enhanced credit.

151 Manitoba argues that the above passage demonstrates a clear error inlaw. It is submitted that where continued detention is a result of the of-fender’s bad conduct, enhanced credit should not be given. In fact, Mani-toba submits, “refusing to grant enhanced credit for pre-sentence custodywhere an accused has breached a court order has a long history in Cana-dian jurisprudence that has continued following the introduction of s.719(3.1).” In addition, it is submitted, factors such as the reduced moralculpability of the offender are generally only relevant to the determina-tion of a fit sentence and not to assigning pre-sentence credit.

152 However, the sentencing judge specifically looked to the circum-stances of the accused while she was in custody. Taken into considera-tion was the behaviour of the accused in custody, her pro-social goalsand insight, her participation in programming and her lack of a discipli-nary record while in custody. The sentencing judge also had evidence


regarding the earned remission program from the Women’s CorrectionalCentre, which stated that an offender can earn remission, or early release,at a credit of 1.5:1 by doing three things while in custody — participatingin programming, completing work assignments and general conduct andco-operation.

153 Thus, the sentencing judge had positive evidence before her that theaccused met all three criteria as set out in the earned remission programand, in fact, would earn remission and early release. This complies withthe rationale set out in Summers for enhanced credit. Moreover, the evi-dence and analysis by the sentencing judge complies with the criteria setout in Stonefish at paras 82-83.

154 The reference by the sentencing judge to moral culpability relied onby Manitoba on the appeal as evidence of “double dipping” is no suchthing. On sentencing, Manitoba argued that the bad behaviour of the ac-cused would disentitle her to early release. The sentencing judge simplylooked to the circumstances of the bad behaviour as alleged by Manitoba,and found the behaviour of the accused and the reason for the breacheswould not disentitle her to early remission by the correctional authorities.Consequently, it was not behaviour that should disentitle her to enhancedcredit.

155 It is correct that Bittern had access to all programming that was avail-able to sentenced inmates in her unit, with the exception of programmingoffered to federal offenders who are also housed at the Women’s Correc-tional Centre and offence-specific programming. As a matter of fact, sheparticipated in some of that programming. Lack of access to program-ming during remand is one of the rationales for enhanced credit. How-ever, as was confirmed in Summers, “The loss of early release, takenalone, will generally be a sufficient basis” for the awarding of enhancedcredit (at para 71).

156 Having established that the accused would have been likely to obtainearly release, the sentencing judge in this case examined the offender’s“bad conduct” and exercised her discretion to determine it was not ofsuch a nature as to deny her enhanced credit. She stated that, “I’m satis-fied that if Ms. Bittern had been a sentenced prisoner and serving hersentence while in custody, instead of on remand, she would likely havebeen entitled to early release, or remission.”


157 With respect to Kovich, a letter was filed from the assistant superin-tendent of operations at the Headingley Correctional Centre explainingearned remission. It stated that:

With regards to earned remission, it is not an automatic process. Asentenced inmate has to earn the remission based on a 30 day con-tract established by his case manager. Essentially if he meets the ex-pectations set upon him, he may be credited for up to 1/3 of his sen-tence as an early release. Earned remission contracts are written tosuit the individual needs of each inmate and may relate to behavioralexpectations, involvement in case management, and programmingexpectations (or any combination thereof). It is impossible to guesswhat amount of remission an inmate may have earned if he was infact sentenced.

All units of adult correctional facilities may house both sentencedand remanded prisoners, with no distinction between the two regard-ing basic living conditions. Any restrictions with regards to accessand privileges are based on assessed risk and behavior, not legal sta-tus. Inmate Gordon KOVICH had the same access to health care,counseling, programming, spiritual care, recreation, visiting, and psy-chological services as any other inmates housed in the locations hewas in.

158 That witness was then called to give viva voce evidence at the sen-tencing hearing. He testified that he was not aware of Kovich’s criminalrecord and, for him and for those individuals he personally had been acase worker for and assessed in the past, his view was that the criminalrecord really has little or no impact at all. The central focus, in terms ofwhether or not an accused earns any remission, is his institutional beha-viour. Thus, the sentencing judge concluded that:

[I]t appears from the evidence of [the superintendent] that the ac-cused would have been assessed on a monthly basis and it appearsthat he would have been entitled to some earned remission had hegone through a monthly assessment and had he been a sentencedprisoner.

159 The award of enhanced credit is a discretionary decision. I find thatneither sentencing judge erred in the exercise of their discretion to grantthese accused enhanced credit.

Conclusion160 Parliament passed legislation limiting the award of enhanced credit

for PSC generally, and prohibiting it completely for offenders who were


denied bail pursuant to sections 515(9.1) or 524 of the Code. Parlia-ment’s stated objective for these prohibitions was to enhance publicsafety, to provide these offenders with longer-term programming whilein custody and to prevent some offenders from “gaming the system”.While any decision relating to these exemptions is made by the bailjudge, the obvious consequence of the bail decision is to limit the amountof PSC credit that could be granted by the sentencing judge. Parliamentis entitled to limit the discretion of the sentencing judge except wheresuch limitation constitutes a violation of the Charter.

161 Different courts across the country have reviewed the constitutional-ity of these two exemptions. The result varies depending on whether oneviews the exemptions as relating to a punishment (the Chambers view)or to the process of sentencing itself (the Safarzadeh-Markhali view).The difference between the two views is important because the SupremeCourt of Canada held in Malmo-Levine that when the true nature of aCharter challenge relates to a punishment, the validity of the impugnedlegislation is more appropriately measured against the standard of grossdisproportionality as it has evolved under section 12 of the Charter. Iagree that if considered as a punishment, the sentences in this case can-not be considered to be grossly disproportionate. However, I have beenpersuaded that the true nature of this challenge relates to the sentencingprocess, as opposed to the punishment.

162 Viewed in that manner, I have concluded that the two exemptionsconstitute an unjustifiable infringement of section 7 of the Charter fortwo reasons. First, the exemptions subject identically-placed offenders todifferent periods of imprisonment (depending on whether they are able toobtain bail) for reasons that are not relevant to the determination of aproportionate sentence, thereby interfering with the principle of propor-tionality in the sentencing process, which is a principle of fundamentaljustice. Second, the exemptions go too far in that they overreach in theireffect; they target those who commit crimes while out on bail or violentoffenders but in reality, they capture offenders who are unable to get bailbecause of socio-economic reasons, not because of their conduct.

163 As a result, leave is granted, but the appeals are dismissed. The words“unless the reason for detaining the person in custody was stated in therecord under subsection 515(9.1) or the person was detained in custodyunder subsection 524(4) or (8)” in section 719(3.1) of the Code violatesection 7 of the Charter and are not saved by section 1. Those words aredeclared to be of no force or effect pursuant to section 52(1) of the Con-


stitution Act, 1982, being Schedule B to the Canada Act 1982 (UK),1982, c 11, section 35(2).

164 The operative portion of the section shall now read: 719(3.1) Despite subsection (3), if the circumstances justify it, themaximum is one and one-half days for each day spent in custody.

Richard J. Chartier C.J.M.:

I agree:

Marc M. Monnin J.A.:

I agree:

Appeals dismissed.

R. v. Sword 467

[Indexed as: R. v. Sword]

Joe Sword, Appellant and Her Majesty the Queen, Respondent

Saskatchewan Court of Appeal

Docket: CACR2582

2015 SKCA 116

Jackson, Herauf, Whitmore JJ.A.

Heard: September 11, 2015

Judgment: November 13, 2015

Criminal law –––– Offences — Driving/care and control with excessive alco-hol — Presumption of alcoholic content at time of offence — Reasonableand probable grounds –––– Accused was acquitted in provincial court oncharge of care and control of vehicle with excessive alcohol — Upon appeal byCrown, summary conviction appeal court judge overturned acquittal and enteredconviction — Summary conviction appeal court judge found that trial judgeerred in using wrong test to determine whether constable had right to demandsample of accused’s breath — He found trial judge applied test that requiredconstable to believe accused actually had alcohol in his body, when trial judgeshould have made determination on basis of whether police officer had reasona-ble grounds to suspect accused had consumed alcohol — Accused sought leaveto appeal conviction and, if granted, appealed his conviction — Leave to appealgranted; appeal dismissed — While trial judge did refer to belief by officer thataccused had alcohol in his body, trial judge nevertheless articulated test properlyin stating “constable must still have reasonable grounds to suspect that the ac-cused has alcohol in his body while operating the vehicle before he is entitled tomake the demand” — Therefore, trial judge did not err in identifying proper testfor making approved screening device (“ASD”) demand — Trial judge did errwhen he found that Crown was unable to prove constable had any basis for be-lieving accused had any alcohol in his body at time of ASD demand, and againwhen he concluded that constable did not have any evidence that accused hadalcohol in his body at the time he made ASD demand and accused was thereforearbitrarily detained — Trial judge had already found as fact that accused hadconsumed alcohol; to then follow up that there was no evidence that accused hadalcohol in his body at time of ASD demand was made was clearly error — Trialjudge appeared to have mistaken evidence of accused’s admission that he hadconsumed alcohol with evidence as to when accused had consumed his lastdrink — There clearly was evidence accused had consumed alcohol when ASDdemand was made and trial judge had already concluded that there was evi-dence — Thus, his conclusion clearly amounted to palpable and overriding er-


ror — Summary conviction appeal court judge correctly identified and appliedproper test when he stated that s. 254(2) of Criminal Code required that investi-gating officer has reasonable grounds to suspect person has alcohol in their bodyand has operated vehicle within preceding three hours — Summary convictionappeal court judge found there were reasonable grounds to suspect accused hadconsumed alcohol — ASD demand was properly made — Summary convictionappeal court judge’s findings were ultimately correct in result.

Criminal law –––– Offences — Driving/care and control with excessive alco-hol — Presumption of alcoholic content at time of offence — Sample takenas soon as practicable –––– Accused was acquitted in provincial court oncharge of care and control of vehicle with excessive alcohol — Upon appeal byCrown, summary conviction appeal court judge overturned acquittal and enteredconviction — Summary conviction appeal court judge found that trial judgeerred in using wrong test to determine whether constable had right to demandsample of accused’s breath — Accused sought leave to appeal conviction and, ifgranted, appealed his conviction — Leave to appeal granted; appeal dis-missed — Summary conviction appeal court judge erred by determining require-ment to take tests as soon as practicable in s. 258(1)(c) of Criminal Code runsfrom time of arrest until time samples were taken, not from “when the offencewas alleged to have been committed,” which was time of driving — In presentcase, because time of driving was merely seven minutes prior to time of arrest,summary conviction appeal court judge’s analysis was correct, notwithstandinghis error in finding timeframe commenced at time of arrest, not time of driving,because error had no ultimate bearing on his findings that tests were taken assoon as practicable.

Cases considered by Whitmore J.A.:

R. v. Yates (2014), 2014 SKCA 52, 2014 CarswellSask 248, [2014] S.J. No. 233,[2014] 8 W.W.R. 489, 65 M.V.R. (6th) 196, 311 C.C.C. (3d) 437, 438 Sask.R. 78, 608 W.A.C. 78, 309 C.R.R. (2d) 170 (Sask. C.A.) — followed


Criminal Code, R.S.C. 1985, c. C-46s. 254(2) — considereds. 258(1)(c) — considereds. 258(1)(c)(ii) — considered

LEAVE TO APPEAL and APPEAL from judgment reported at R. v. Sword(2015), 2015 SKQB 9, 2015 CarswellSask 22, [2015] S.J. No. 18, 73 M.V.R.(6th) 246, 466 Sask. R. 108 (Sask. Q.B.), allowing appeal brought by Crownfrom acquittal of accused on charge of having care and control of motor vehiclewith excessive alcohol.

R. v. Sword Whitmore J.A. 469

Joe Sword, for himselfBeverly Klatt, for Respondent

Whitmore J.A.:

1 The appellant, Joseph Sword, was acquitted in Provincial Court on acharge of driving while over .08 (R. v. Sword, 2013 SKPC 43 (Sask.Prov. Ct.)). Upon appeal by the Crown, the summary conviction appealcourt judge overturned the acquittal and entered a conviction (R. v.Sword, 2015 SKQB 9 (Sask. Q.B.) [QB Decision]). The appellant nowseeks leave to appeal the conviction and, if granted, appeals his convic-tion by the summary conviction appeal court judge.

2 Although I find the summary conviction appeal court judge made twoerrors in his analysis, these errors are of no consequence to his ultimatedecision. As a result, I would grant leave to appeal, but I would dismissthe appeal.

3 The summary conviction appeal court judge found that the trial judgeerred in using the wrong test to determine whether the police officer hadthe right to demand a sample of the appellant’s breath. He found the trialjudge applied a test that required the constable to believe the accusedactually had alcohol in his body and seemingly contemplated that suchbelief could only flow from some evidence in the circumstances that theaccused’s consumption of alcohol was recent, when the trial judgeshould have made the determination on the basis of whether the policeofficer had reasonable grounds to suspect the appellant had consumedalcohol.

4 The following was articulated in R. v. Yates, 2014 SKCA 52, 438Sask. R. 78 (Sask. C.A.) [Yates]:

[37] ... the standard of reasonable suspicion only requires the Crownto prove a reasonable suspicion that a driver possibly had alcohol inhis body. ...

[38] ... the requirement that an investigating officer must have directproof of a driver having alcohol in his or her body in order to found areasonable suspicion that the driver has alcohol in his or her body isinconsistent with the prescribed standard and the requirements of s.254(2)(b). As previously discussed, the applicable evidentiary stan-dard only requires the investigating officer to have a reasonable sus-picion that a driver has alcohol in his or her body, based on a constel-lation of objective events.

(Emphasis in original)


5 Section 254(2) of the Criminal Code reads as follows: Testing for presence of alcohol or a drug

254(2) If a police officer has reasonable grounds to suspect that aperson has alcohol or a drug in their body and that the person has,within the preceding three hours, operated a motor vehicle ... whetherit was in motion or not, the peace officer may, by demand, requirethe person to comply with paragraph (a), in the case of a drug, orwith either or both of paragraphs (a) and (b), in the case of alcohol....

(Emphasis added)

6 The trial judge observed the following: [13] Although the test for an ASD demand under the Code is quitelow, the constable must still have reasonable grounds to suspect thatthe accused has alcohol in his body while operating the vehiclebefore he is entitled to make the demand. The constable was unableto say at what point in their interaction the accused told him the tim-ing of his last drink; that is, the Crown is unable to prove that theconstable had any basis for believing that the accused had any alco-hol in his body at the time the ASD demand was made.

(Sword)

While the trial judge did refer to a belief by the constable that the appel-lant had alcohol in his body, the trial judge nevertheless articulated thetest properly in the first sentence of para. 13: “The constable must stillhave reasonable grounds to suspect that the accused has alcohol in hisbody while operating the vehicle before he is entitled to make thedemand.”

7 Therefore, I find the trial judge did not err in identifying the propertest for making the ASD demand.

8 However, I find the trial judge did make an error when he found atpara. 13 (quoted above) that the Crown is unable to prove the constablehad any basis for believing the appellant had any alcohol in his body atthe time of the ASD demand, and again at para. 16 when the trial judgeenunciated the following: “I therefore have to conclude that the constabledid not have any evidence, at the time he made the ASD demand, that theaccused had alcohol in his body. The accused was therefore arbitrarilydetained, in violation of s. 9 of the Charter” (para. 16).

9 The trial judge had already found as a fact that the appellant had con-sumed alcohol. The trial judge said, “With respect to the former issue,the grounds which the constable had for making the ASD demand were


the rapid exit from the parking lot, the small amount of swerving of thevehicle, an odour of alcohol from the vehicle, and the accused’s state-ment that he had consumed alcohol” (emphasis added, para. 12).

10 To then follow up at para. 13 that there was no evidence that the ap-pellant had alcohol in his body at the time of the ASD demand was madeis clearly an error.

11 In coming to this conclusion, the trial judge appears to have mistakenthe evidence of the appellant’s admission that he had consumed alcoholwith the evidence as to when the appellant had consumed his last drink.

12 The evidence of the police officer, the evidence of the appellant, andthe evidence at the voir dire were consistent and clear that the policeofficer asked the appellant if he had been drinking, which the appellant(while he was still in his own vehicle) admitted and this admission wasbefore the ASD demand was made. However, the police officer and theappellant were both unsure whether the police officer asked the appellantwhen he had consumed his last drink — before or after the ASD demandwas made, as stated by the trial judge at paras. 14-16:

[14] ... The evidence is uncertain, to put the best face on it, as towhen the accused made his statement of recent consumption to theconstable. It may have been made before the ASD demand; it mayhave been made before the ASD test; it may have been after the ASDtest. Not being able to determine this, I cannot include it in the of-ficer’s grounds.

[15] I note in passing that the accused, testifying on the voir dire,made reference to this conversation having occurred while he wasstill in his car. As I refer to in greater detail below, I did not find theaccused very convincing on the details of this conversation; I see noreason why I should give his recollection of the timing of it anygreater weight.

[16] I therefore have to conclude that the constable did not have anyevidence, at the time he made the ASD demand, that the accused hadalcohol in his body.

13 As shown above, there clearly was evidence the appellant had con-sumed alcohol when the ASD demand was made and the trial judge hadalready concluded that there was evidence. Thus, his conclusion at para.16 clearly amounts to a palpable and overriding error.


14 In addition, the summary conviction appeal court judge erred when hesaid the following:

[17] I am of the opinion that a reasonable person standing in theshoes of the police officer with knowledge of this constellation ofcircumstances would conclude that there were reasonable grounds tosuspect that the accused possibly had, at the time, alcohol in hisbody.

(Emphasis added, QB Decision)

15 In so saying, the summary conviction appeal court judge appears tohave regarded what Klebuc J.A., for the majority, said in Yates at para.37 quoted above as the test to be satisfied under s. 254(2) of the CriminalCode.

16 This is an error. Yates formally set out the proper test at para. 33: [33] Based on Chehil, MacKenzie, Jacques and Bernshaw, to the ex-tent the latter dealt with s. 254(2)(b), I conclude the requirements fora valid s. 254(2)(b) demand essentially are that:

(i) the police officer must subjectively (or honestly) suspect thedetained driver has alcohol in his or her body; and

(ii) the police officer’s subjective suspicion must be based on aconstellation of objectively verifiable circumstances, whichcollectively indicate that the suspicion that the detained driverhas alcohol in his or her body is reasonable.

17 The test makes no reference to a “reasonable suspicion” that thedriver “possibly had, at the time, alcohol in his body” (QB Decision,para. 17). Indeed, as I have indicated, s 254(2) of the Criminal Code usesthe phrase “if a police officer has reasonable grounds to suspect” (em-phasis added) not possibly suspect. The comment in para. 37 of Yatesadopted by the summary conviction appeal court judge was made in thecontext of explaining the difference between a probability and a possibil-ity. Klebuc J.A., in Yates, was not revising the test he had formally setout in para. 33 and which he states again at para 38: “the applicable evi-dentiary standard only requires the investigating officer to have a reason-able suspicion that a driver has alcohol in his or her body.”

18 However, notwithstanding that error, the summary conviction appealcourt judge correctly identified and applied the proper test at para. 13:

[13] What s. 254(2) of the Criminal Code requires is that the investi-gating officer has reasonable grounds to suspect a person has alcoholin their body and has within the preceding three hours operated avehicle. The trial judge said at para. 13 of Sword the Crown was una-


ble to prove the constable had any basis for believing the accused hadany alcohol in his body at the time of the ASD demand. Specificevidence that the accused had alcohol in his body is not required, normust the constable have believed the accused had alcohol in hisbody. What is required is reasonable grounds to suspect the accusedhad alcohol in his body. This is not a pedantic distinction.

(Underline emphasis in original, QB Decision)

19 In conducting his own analysis, the summary conviction appeal courtjudge found there were reasonable grounds to suspect the appellant hadconsumed alcohol. I would agree with this conclusion. The demand wasproperly made.

20 Secondly, the summary conviction appeal court judge found that thetrial judge had erred by finding that the appellant’s breath samples werenot taken “as soon as practicable” as required by s. 258(1)(c) of theCriminal Code:

Proceedings under section 255

258(1) In any proceedings under subsection 255(1) in respect of anoffence committed under section 253 or subsection 254(5) or in anyproceedings under any of subsections 255(2) to (3.2) ...

(c) where samples of the breath of the accused have beentaken pursuant to a demand made under subsection254(3), if ...

(ii) each sample was taken as soon as practi-cable after the time when the offence was al-leged to have been committed and, in the caseof the first sample, not later than two hours af-ter that time, with an interval of at least fifteenminutes between the times when the sampleswere taken ...

evidence of the results of the analyses so made is conclusive proofthat the concentration of alcohol in the accused’s blood both at thetime when the analyses were made and at the time when the offencewas alleged to have been committed was, if the results of the analy-ses are the same, the concentration determined by the analyses ....

(Emphasis added)

21 In his analysis, the summary conviction appeal court judge erred bydetermining the requirement to take the tests as soon as practicable in s.258(1)(c) runs from the time of arrest until the time the samples were


taken, not from the time “when the offence was alleged to have beencommitted” (the time of driving):

[22] The accused was arrested at 2:05 a.m. and both tests were com-pleted by 3:11 a.m., less than 1 hour 10 minutes from the time ofarrest, well within the overall 2-hour time limit. The trial judgefound no problem with the time that elapsed between arrest at 2:05a.m. and the arrival at the police station at 2:24 a.m.; but he heldbecause of the passage of 25 or 29 minutes between the time of arri-val at the police station and the completion of the first test was notexplained in the evidence, he had to conclude that Crown had notshown the tests were taken as soon as practicable.

[23] The evidence discloses that after arrival at the police station at2:24 a.m. the accused was booked into detention and following thisConstable Flogan assisted the accused to call his wife to arrange for aride home when the testing procedures were complete. This call oc-curred circa 2:29 a.m. By 2:39 a.m. the accused was in the presenceof the breath technician Constable Pozniak who explained the breathtesting procedure to the accused and conducted the tests. The firstbreath sample was taken at either 2:49 or 2:53 a.m. and the second at3:11 a.m. The legislation requires at least 15 minutes between the 2tests. Here an interval of at least 17 minutes was provided.

(Emphasis added, QB Decision)

22 The summary conviction appeal court judge then reviewed theelapsed time from the arrival at the police station until the tests weretaken:

[25] I see no factual basis on which to conclude that there was whatcan be categorized as delay in the administration of the tests. Themere passage of time is not delay if the time was occupied by otherreasonable activities in the circumstances of the case. As stated in R vVanderbruggen (2006), 206 CCC (3d) 489 (Ont CA), the touchstonefor determining whether the tests were taken as soon as practicable iswhether the police acted reasonably. It is reasonable to spend thetime required to permit an accused to telephone his wife to arrange aride, reasonable for the police to spend 10 to 15 minutes to questionthe accused and complete a standard investigation checklist, reasona-ble to permit the accused to go to the washroom, to have a drink ofwater and reasonable to take time to explain the testing procedure tothe subject.

23 In this case, because the time of driving was so close in time to thetime of arrest, merely seven minutes prior, I am of the view that the sum-mary conviction appeal court judge’s analysis was correct, notwithstand-

R. v. Sword Herauf J.A. 475

ing his error in finding the timeframe commenced at the time of arrest,not the time of driving, because the error had no ultimate bearing on hisfindings that the tests were taken as soon as practicable. The examinationonly pertained to the time between the appellant’s arrival at the policestation and the taking of the tests, as the trial judge found no issue withthe time prior to the arrival of the appellant at the police station.

24 The appellant also submits the summary conviction appeal courtjudge refused to hear him on certain factual matters. Specifically, the ap-pellant submits it would have been difficult for the police officer to seehim leave the parking lot of the bar; the police officer said the car kickedup dust, which is impossible because it was raining; and the police of-ficer could not see if the appellant’s car had only crossed the centre lineof the road by half an inch. The appellant also submits the police officersaid the appellant parked properly and was not slurring his words.

25 These submissions are without merit. There was no evidence that ithad been raining or that it was difficult to see the appellant’s car leavingthe bar or cross the centre line. The evidence as to whether the appellantparked his car properly or was not slurring his words is not relevant tothe summary conviction appeal court judge’s decision.

26 The summary conviction appeal court judge’s findings are ultimatelycorrect in the result. Therefore, while I would grant leave to appeal, Iwould dismiss the appeal. The matter is remitted to the trial judge forsentencing.

Jackson J.A.:

I concur.

Herauf J.A.:

I concur.

Leave to appeal granted; appeal dismissed.


[Indexed as: M.G. Logging & Sons Ltd. v. British Columbia]

M.G. Logging & Sons Ltd., Respondent/Appellant on CrossAppeal (Plaintiff) and Her Majesty The Queen in Right of the

Province of British Columbia and the Ministry of Forests,Lands and Natural Resource Operations, Appellant/Respondent

on Cross Appeal (Defendants)

British Columbia Court of Appeal

Docket: Vancouver CA42372

2015 BCCA 526

Bennett, Harris, Fenlon JJ.A.

Heard: October 19, 2015

Judgment: December 30, 2015

Natural resources –––– Timber — Timber licences — General princi-ples –––– Defendant Ministry issued call for tenders respecting timber licence;invitation provided that only registered BC Timber Sales Enterprise (BCTSE)was eligible to bid for licence — M was principal of two related companies,plaintiff S and E — Plaintiff was registered BCTSE but E was not — Principalcompleted required application and tender form and inserted E’s corporate namein space requiring applicant’s full legal name, and provided plaintiff’s registra-tion number but not its incorporation number — Ministry awarded licence toplaintiff, but later informed plaintiff it was unable to accept tender because Ewas company that made application and since it was not registered as BCTSE,tender was ineligible — Plaintiff commenced action seeking damages for breachof contract — Trial judge found that application was submitted in ambiguousmanner and that dispute was not suitable for resolution by way of summarytrial — Plaintiff and Ministry appealed order that dispute was not suitable forresolution by summary trial — Plaintiff’s appeal dismissed; Ministry’s appealallowed — Trial judge correctly identified analytical framework applicable totendering contracts, but erred because he focused on resolving ambiguity in ap-plication as necessary first step to determining compliance, rather than askingwhether bid was objectively compliant in form in which it was submitted —Applying Contract A/Contract B framework set out in previous case law, plain-tiff submitted non-compliant big and no Contract A was formed; in absence ofdiscretion clause in tender documents, strict compliance with terms of tenderdocuments was required in order to give rise to Contract A — In absence ofContract A, plaintiff could not succeed on any of its claims — Common law didnot support assertion that Ministry was obligated to take reasonable steps to en-sure applicant was eligible and to review bid to confirm identity of applicant.

M.G. Logging & Sons Ltd. v. British Columbia 477

Cases considered by Fenlon J.A.:

Bryan’s Transfer Ltd. v. Trail (City) (2010), 2010 BCCA 531, 2010 CarswellBC3209, 11 B.C.L.R. (5th) 289, 98 R.P.R. (4th) 186, 101 L.C.R. 161, [2011] 3W.W.R. 259, 296 B.C.A.C. 207, 503 W.A.C. 207 (B.C. C.A.) — referred to

Cambridge Plumbing Systems Ltd. v. Strata Plan VR 1632 (2009), 2009 BCSC605, 2009 CarswellBC 1152, 79 C.L.R. (3d) 190, [2009] 9 W.W.R. 486, 97B.C.L.R. (4th) 137, [2009] B.C.J. No. 892 (B.C. S.C.) — considered

Coco Paving (1990) Inc. v. Ontario (Minister of Transportation) (2009), 2009ONCA 503, 2009 CarswellOnt 3519, 79 C.L.R. (3d) 166, 252 O.A.C. 47,[2009] O.J. No. 2547 (Ont. C.A.) — referred to

Double N Earthmovers Ltd. v. Edmonton (City) (2007), 2007 SCC 3, 2007CarswellAlta 36, 2007 CarswellAlta 37, 29 M.P.L.R. (4th) 1, 58 C.L.R. (3d)4, [2007] 3 W.W.R. 1, 68 Alta. L.R. (4th) 1, [2007] S.C.J. No. 3, 275 D.L.R.(4th) 577, 356 N.R. 211, 391 W.A.C. 329, 401 A.R. 329, 28 B.L.R. (4th)169, [2007] 1 S.C.R. 116 (S.C.C.) — considered

Graham Industrial Services Ltd. v. Greater Vancouver Water District (2004),2004 BCCA 5, 2004 CarswellBC 5, 40 B.L.R. (3d) 168, 25 B.C.L.R. (4th)214, 194 B.C.A.C. 1, 317 W.A.C. 1, [2004] B.C.J. No. 5 (B.C. C.A.) —followed

Maple Reinders Inc. v. Cerco Developments Ltd. (2011), 2011 BCSC 924, 2011CarswellBC 1831, 3 C.L.R. (4th) 11, 89 B.L.R. (4th) 295 (B.C. S.C.) —considered

R. v. Ron Engineering & Construction (Eastern) Ltd. (1981), 13 B.L.R. 72, (subnom. Ron Engineering & Construction (Eastern) Ltd. v. Ontario) 35 N.R.40, 119 D.L.R. (3d) 267, [1981] 1 S.C.R. 111, 1981 CarswellOnt 109, 1981CarswellOnt 602, [1981] S.C.J. No. 13 (S.C.C.) — followed

Silex Restorations Ltd. v. Strata Plan VR 2096 (2004), 2004 BCCA 376, 2004CarswellBC 1497, 36 C.L.R. (3d) 73, 21 R.P.R. (4th) 180, 201 B.C.A.C.244, 328 W.A.C. 244, [2004] B.C.J. No. 1339, 35 B.C.L.R. (4th) 387 (B.C.C.A.) — followed

Tercon Contractors Ltd. v. British Columbia (Minister of Transportation &Highways) (2010), 2010 SCC 4, 2010 CarswellBC 296, 2010 CarswellBC297, 100 B.C.L.R. (4th) 201, [2010] 3 W.W.R. 387, 86 C.L.R. (3d) 163, 65B.L.R. (4th) 1, 397 N.R. 331, 315 D.L.R. (4th) 385, [2010] S.C.J. No. 4, 281B.C.A.C. 245, 475 W.A.C. 245, [2010] 1 S.C.R. 69 (S.C.C.) — considered

Vachon Construction Ltd. v. Cariboo (Regional District) (1996), 28 C.L.R. (2d)145, 136 D.L.R. (4th) 307, 78 B.C.A.C. 43, 128 W.A.C. 43, 24 B.C.L.R.(3d) 379, 1996 CarswellBC 1466, [1996] B.C.J. No. 1409 (B.C. C.A.) —considered


Forest Act, R.S.B.C. 1996, c. 157s. 20 — considered


s. 20(1) “eligible application” — considereds. 20(1) “eligible application” (a) — considereds. 20(1) “eligible application” (b) — considereds. 20(2) — considereds. 20(3)(a) — considereds. 20(4) — considereds. 20(6) — considereds. 78 — considered

APPEAL by Ministry and by plaintiff from decision reported at M.G. Logging &Sons Ltd. v. British Columbia (2014), 2014 BCSC 1995, 2014 CarswellBC 3149(B.C. S.C.), ordering that underlying timber licence dispute between parties wasnot suitable for resolution by way of summary trial.

J. Eades, J. Van Camp, for AppellantR.J. Stewart, Q.C., for Respondent

Fenlon J.A.:

1 The Province of British Columbia’s Ministry of Forests, Lands andNatural Resource Operations (the “Ministry”) and M.G. Logging & SonsLtd. (“Sons”) both appeal from an order that the dispute between them isnot suitable for resolution by summary trial.

2 The underlying dispute began when the principal of Sons bid on atimber licence auctioned by the Ministry. When the bids were opened,Sons was initially identified as the successful bidder. The next day theMinistry informed Sons that the contract would be awarded to the nexthighest bidder because Sons’ tender was ineligible. Sons sued for dam-ages for breach of contract.

3 The parties agreed to try the dispute by way of summary trial underRule 9-7; the Ministry also applied for summary judgment under Rule 9-6. Each party sought final judgment on the issue of liability, with theissue of damages, if any, to be addressed in a later hearing.

At Trial4 The trial judge began by outlining the history of the dispute:

[3] This dispute originated when Manuel Goncalves decided to makea bid for the Licence in response to a call for tenders issued by theMinistry on June 21, 2012. The invitation stated that only a regis-tered BC Timber Sales Enterprise, or, BCTSE, was eligible to bid forthe Licence. Mr. Goncalves is the principal of two related companies:

M.G. Logging & Sons Ltd. v. British Columbia Fenlon J.A. 479

Sons, and another company, M.G. Logging Ent. Ltd. (“Enterprise”).Sons is a registered BCTSE but Enterprise is not. Every registeredBCTSE has a unique registration number with the Ministry. Sons’registration number is 162036.

[4] Mr. Goncalves completed the Ministry’s required Applicationand Tender Form (the “Application”). The Application required ap-plicants to state their full legal name “as per BCTS Certificate”. Mr.Goncalves inserted Enterprise’s corporate name in the space requir-ing this information. The Application also contained a space for theincorporation number of the applicant but Mr. Goncalves did not fillthat space in. He did, however, put Sons’ registration number,162036, in the space requiring the applicant’s registration number. Atparagraph 10 of the Application, Mr. Goncalves declared that the ap-plicant was registered as a BCTSE and was eligible to make applica-tion for the Licence.

[5] On July 19, 2012, The Ministry posted a notice on its websitestating that the Licence had been awarded to Sons. However, the nextday Mr. Bill Dobbs, the acting timber sales manager for the Ministry,sent Mr. Goncalves an email stating that the Ministry was unable toaccept the tender because Enterprise was the company that made theApplication but was not registered as a BCTSE and therefore ineligi-ble to bid. The Ministry subsequently awarded the Licence to thenext highest bidder.

5 The trial judge then set out the analytical framework to be applied: [15] Sons’ claim arises out of a tender process. It must therefore beconsidered pursuant to the analytical framework articulated by theSupreme Court of Canada in The Queen (Ont) v. Ron Engineering[1981], 1 S.C.R. 111. That framework requires the court to determinewhether Sons has made a sufficiently compliant bid in response tothe call for applications to bring “Contract A” into existence with theMinistry.

[Emphasis added.]

6 The trial judge determined that the bid submitted was ambiguous asto the identity of the applicant (at para. 19):

1. The name put on the Application in the space requiring the fulllegal name of the applicant (as per the BCTS Certificate) wasM.G. LOGGING ENT. LTD., Enterprise’s legal name.

2. Sons’ BCTS number, 162036, was placed on the Application inthe space for the entry of that number.

3. Both spaces are on the top line of the Application.


4. On behalf of the applicant, Mr. Goncalves declared that the appli-cant was a BC Timbers Sales Enterprise eligible to make an appli-cation for the Licence.

5. Sons was eligible to make a bid but Enterprise was not.

6. Mr. Goncalves has deposed that he inadvertently used the wrongcorporate name when he filled out the Application and intended tomake the Application in the name of Sons.

7. Mr. Dobbs, the Acting Timber Sales Manager, deposed that Enter-prise was the applicant. However, I do not consider this evidenceto be admissible for the purpose of interpreting the Applicationbecause it simply states Mr. Dobbs’ interpretation of theApplication.

7 Rather than determining whether the bid was compliant, the trialjudge considered the principles governing the interpretation of contractdocuments which contain ambiguous or conflicting provisions:

[20] A document intended to have contractual force should be con-strued as a whole, giving effect to everything in it if at all possible:G.H.L. Fridman, the Law of Contract in Canada 6th ed. Carswell,2011. The principles applicable to the interpretation of contractualdocuments with conflicting provisions were explained by McLachlinJ., as she then was, in Freemont Development Co. v. Barafield Mort-gage Co., [1983] B.C.J. No. 1919 at paras 5-6:

5 The primary rule of construction is that a deed shouldnot be held void where its words may be applied to anyextent to make it good. The Court should make every ef-fort to find a meaning and uphold the contract, so long asa definite intention can properly be extracted: MarquestIndustries Ltd. v. Willows Poultry Farms Ltd. (1968) 1D.L.R. (3d) 513, 517 (B.C.C.A.). To this end, the Courtmay supply what is necessarily to be inferred and rejectthat which is repugnant: First City Investments Ltd. v.Fraser Arms Hotel Ltd. et al. (1979), 13 B.C.L.R. 107,115 (B.C.C.A.).

6 It follows from this rule of construction, that where dif-ferent parts of a contract are in conflict, effect must begiven to that part which is calculated to carry into effectthe real intention of the parties as gathered from the in-strument as a whole: Djukastein (Djukastin) v. Warville(1981), 28 B.C.L.R. 301 (B.C.C.A.). This has been re-ferred to as giving effect to the “dominating concept” of


the contract: Skoko et al. v. Chychrun Construction Ltd.(1982), 23 R.P.R. 262, 264 (B.C.C.A.).

8 The trial judge applied these principles to Mr. Goncalves’ application(the “Application”) and found that the Ministry “could reasonably haveconcluded that Sons was the applicant” based on “the wording of thewhole of the Application form and on the surrounding circumstancesknown to both parties” (at para. 21). He continued:

[21] ... In particular, I consider it significant that both parties knewthat only registered BCTSE’s could apply for the Licence, that theapplicant provided a valid registration number and certified that itwas eligible to bid.

[22] The Application requires the full legal name of the applicant, asset out in the BCTS certificate. However, it also requires that the ap-plicant provide its BCTS registration number. I conclude that thepurpose of requiring that the information be set out in this way is toensure that only eligible applicants apply and to ensure that theproper legal name of the successful bidder is put on the Licencewhen issued. The Ministry requires the submission of an applicant’sBCTS number to ensure that applicant is eligible to hold a licence. Inaddition, the Application requires the applicant to declare in writingthat it is registered as a BCTSE and that it is eligible to make applica-tion for the Licence. Mr. Goncalves made that declaration on behalfof the applicant.

9 The trial judge stated that Tercon Contractors Ltd. v. BritishColumbia (Minister of Transportation & Highways), 2010 SCC 4(S.C.C.), is “authority for looking beyond the name given for a bidder todetermine who is actually making the bid” (a conclusion to which I willreturn later in these reasons). He framed the main question in the case aswhether “the Ministry ... concluded that Sons was the applicant and ac-cepted the Application on that basis” (at para. 24).

10 In assessing whether the Ministry had concluded Sons was the realapplicant, even though Enterprise was named on the form, the trial judgelooked to the conduct of the Ministry after the bids were opened at 2 p.m.on July 19, 2012. The Timber Sales Manager (the “Manager”) signed aDeposit Record which listed all of the bids received and showed Enter-prise as the highest bidder, but listed Sons’ registration number (at para.28). The Ministry posted a public notice on its website awarding the Li-cence to Sons (at para. 29). There was also evidence that someone at theMinistry obtained corporate searches for both Sons and Enterprise justafter 3 p.m. on July 19. In addition, someone recorded Sons’ registration


number on the search and made a notation that Sons had no outstandingaccounts. It was not clear whether the searches were conducted before orafter the Ministry posted the notice on its website stating the Licence hadbeen awarded to Sons.

11 The trial judge then said: [35] It is important for the court to make a finding as to what actuallyoccurred in the Ministry because I have found that the Ministry couldreasonably have concluded that Sons was the applicant. However, itcould also have reasonably concluded that Enterprise was the appli-cant. If the Ministry had concluded that Enterprise was the bidderand the bid was therefore ineligible before awarding the Licence toSons, Sons cannot sustain this action. In that case it would have beenSons’ own negligence that resulted in the application being ruledineligible.

[36] However, if the court finds that the Ministry did award the Li-cence to Sons and then purported to revoke that award, the courtcould find the Ministry breached Contract A if it concludes that Sonswas the applicant.

[37] I have reviewed the record and have come reluctantly to the con-clusion that I am unable to find the facts necessary to decide thisissue on the basis of that record.

[Emphasis added.]

On Appeal

Positions of the parties12 Sons submits in response to the Ministry’s appeal that the trial judge

was correct to refer the matter to the trial list because there were credibil-ity issues about what went on at the Ministry that had to be resolved.However, in its cross appeal Sons submits to the contrary that the trialjudge erred in concluding he could not, on the record before him, findthat Sons had a binding “Contract A” and that the Ministry had breachedthat contract by failing to award the Licence to it.

13 The Ministry submits the trial judge erred first, in failing to apply anobjective analysis to determine bid compliance at the time the bids weresubmitted; and second, in failing to find that the plaintiff’s bid was non-compliant such that no Contract A could have formed. The Ministry sub-mits that when the correct test is applied, there is no need to resolve theconflicting evidence as to the Ministry’s subjective understanding of the


bidder’s identity, and therefore judgment should be granted dismissingSons’ claims.

Analysis14 In my respectful view, the trial judge correctly identified the analyti-

cal framework applicable to tendering contracts, but erred because he fo-cused on resolving the ambiguity in the Application as a necessary firststep to determining compliance, rather than asking whether the bid wasobjectively compliant in the form in which it was submitted.

15 The trial judge’s approach stems from the peculiar circumstances ofthis case: if Mr. Goncalves made a mistake by using the wrong companyname and the Ministry figured that out, at first consideration it wouldseem reasonable that Mr. Goncalves should still get the contract.

16 However, tendering contracts are subject to a unique and stringentanalytical framework designed to protect the integrity of the tenderingprocess (See R. v. Ron Engineering & Construction (Eastern) Ltd.,[1981] 1 S.C.R. 111 (S.C.C.) at 121; Graham Industrial Services Ltd. v.Greater Vancouver Water District, 2004 BCCA 5 (B.C. C.A.) at para.25). Disregarding that framework to do what may seem reasonable in aparticular case would beget uncertainty and unfairness in the tenderingprocess in future and would not in my view be fair to compliant biddersin the present case.

17 The genesis of the analytical framework governing the tendering pro-cess is Ron Engineering. Finch C.J.B.C summarized this framework inGraham:

[17] In Ron Engineering, supra at 121-25, the Supreme Court ofCanada introduced the now familiar Contract A/Contract B analysisfor the tendering process. Estey J. held that an owner’s invitation totender constitutes an offer to all potential bidders. A contract (“Con-tract A”) comes into existence when a contractor submits a tender inresponse to that offer. The terms and conditions of Contract A aregoverned by the terms and conditions in the call for tenders, whichusually include that if the owner accepts the contractor’s bid, the con-tractor will be obliged to enter the substantive construction contract(“Contract B”). Contract A will also usually include a term that bidsare irrevocable once submitted and provide for forfeiture of the biddeposit in the event a contractor attempts to withdraw its tender.

[18] In his reasons, Estey J. noted that the rights of the parties, as setout in the terms and conditions of the tender documents, crystallize atthe time a tender that is capable of acceptance is submitted. ...


[19] It follows from this reasoning that if a bid is not filed “in con-formity with the terms and conditions under which the call for ten-ders was made”, the rights of the owner under Contract A, such asthe irrevocability clause, do not arise. Indeed, Estey J. suggested at121 that Contract A, and the parties rights under the terms of Con-tract A, would not come into existence where the bid fails materiallyto comply with the tender specifications ...

. . .

[21] ... Contract A is only formed if a bid is, in Estey J.’s words,“capable of acceptance in law”. It is the submission of a complianttender which establishes the legal relationship, Contract A, betweenthe parties: Sound Contracting Ltd. v. Nanaimo (City) (2000), 74B.C.L.R. (3d) 239 (C.A.) ¶18.

[Emphasis added.]

18 An owner owes no contractual duty of fairness to a bidder who doesnot submit a compliant bid, and owes contractual duties to all compliantbidders: Coco Paving (1990) Inc. v. Ontario (Minister of Transporta-tion), 2009 ONCA 503 (Ont. C.A.) at para. 5.

19 The law in British Columbia on the formation of Contract A wassummarized by Saunders J.A. in Silex Restorations Ltd. v. Strata PlanVR 2096, 2004 BCCA 376 (B.C. C.A.) at para. 12:

1) a non-compliant bid does not, by its mere submission, create Con-tract A;

2) the measure of non-compliance where there is a “discretionclause” is substantial compliance, not strict compliance. In otherwords, the question is whether there is material non-compliance;

3) material non-compliance must be assessed on an objective basis.20 A discretion clause authorizes an owner (sometimes referred to as the

tender authority), to accept a bid that contains irregularities that are notmaterial. In the absence of a discretion clause, an owner cannot accept abid unless it is strictly compliant. Most tender documents contain a dis-cretion clause because it is generally to the owner’s benefit to be able toaccept the most advantageous bid even if it contains a minor omission ordefect.

21 The Ministry submits that the tendering documents in the present caserequired strict compliance because they do not contain a discretionclause. While acknowledging that this is unusual, the Ministry says it hasadopted a strict compliance tendering regime for timber licences because


it reduces the potential for litigation since the contentious question ofwhether an irregularity amounts to a material defect does not arise.

(a) Do the tendering documents contain a discretion clause?22 Sons argues that the tendering documents contain a discretion clause,

relying on item 11 of the Application form which requires the applicantto:

11. declare that the information provided in this Application and theaccompanying declaration is true and correct and acknowledge that ifthis Application or the accompanying declaration contains a materialmisrepresentation, omission or misstatement of fact, I/we may besubject to action taken under section 78 of the Forest Act.

23 In its Appeal Factum, Sons submits that “[b]y implication, non-mate-rial misrepresentations, omissions or misstatements of fact are not sub-ject to any penalty, and the Application and Tender form is to be con-strued on the basis of ‘substantial’ compliance, not strict compliance”.

24 I would not accede to this submission. In my view s. 78 of the ForestAct, R.S.B.C. 1996, c. 157, empowers the Ministry to impose penaltieson a bidder, in a separate proceeding independent of the bid process, ifmaterial misrepresentations are included in a bid. Section 78 provides:

78 (1) By notice served on a person, the timber sales manager, inaddition to any other action that may be taken under this Act, may doany or all of the following, if any of the criteria referred to in subsec-tion (2) are met:

(a) disqualify the person, indefinitely or for a specified period,from being registered as a BC timber sales enterprise;

(b) disqualify the person from making an application under Part 3for a BC timber sales agreement, either in person or throughan agent, for a period not exceeding 2 years beginning on thedate of the notice;

(c) suspend, in whole or in part, rights in any BC timber salesagreements held by the person;

(d) cancel any BC timber sales agreements held by the person.

(2) The timber sales manager may take an action under subsection(1) against a person if satisfied that the person


(a) has made a material misrepresentation, omission or misstate-ment of fact in

(i) an application for registration as a BC timber sales en-terprise under the regulations or in information fur-nished with the application, or

(ii) an application for a BC timber sales agreement or ininformation furnished with the application,

25 Further, item 11 of the Application does not, on a plain reading, con-fer upon the Ministry the discretion to accept a bid that is non-compliant.The language used is in stark contrast to the clause relied on in Graham:“[i]f a Tender contains a defect or fails in some way to comply with therequirements of the Tender Documents, which in the sole discretion ofthe Corporation is not material, the Corporation may waive the defectand accept the Tender” (at para. 6).

26 In summary on this issue, in my view the tender documents do notcontain a discretion clause. It follows that strict compliance with theterms of the tender documents was required in order to give rise to aContract A.

(b) Was the bid strictly compliant?27 Determining whether a bid is compliant starts with a review of the

tender documents. The tender documents contain the following terms: 4. ELIGIBLE APPLICATIONS

(a) An eligible application is defined under s. 20 of the ForestAct.

(b) Under s. 20 of the Forest Act the Timber Sales Manager can-not approve an application that is not eligible.

(c) The Timber Sales Manager will not consider for approval anapplication that is not eligible, which includes an applicationthat does not comply with every requirement of this invitationfor applications (the Invitation).

5. APPLICATION PARTICULARS

(a) An application must comply with every requirement ofthe Invitation.

. . . . .

(c) An application and bonus offer proposed must be sub-mitted by written tender in a sealed container marked“Application and Tender for Timber Sale Licence A88553”.


. . . . .

(e) An application must include a completed Applicationand Tender for Timber Sale Licence A88553 form (theapplication and tender) that is included in this Invitation,signed by the applicant ...

[Emphasis added.]

28 Section 20 of the Forest Act referred to in clause 4(a) and (b) aboveprovides:

20 (1) In this section, “eligible application” means an applicationmade in response to an invitation for applications under subsection(2) that

(a) is made by an applicant who has tendered as required undersubsection (2) (b),

(b) conforms to subsection (3), and

(c) is not rejected under section 81 (3) or refused under section81 (5).

(2) On request or on his or her own initiative and by advertising inthe prescribed manner, the timber sales manager

(a) may invite applications for a timber sale licence, and

(b) in doing so,

(i) may specify that applications for the timber sale li-cence are to be accepted only from one or more cate-gories of BC timber sales enterprises as established byregulation, and

(ii) must require that the applicant by written tender in asealed container propose only a bonus bid or only abonus offer.

(3) An application for a timber sale licence must

(a) be in the form required by the timber sales manager, ...

[Emphasis added.]

29 The application form itself states in the opening line: “[t]his form ofapplication and tender must be completed in full by the applicant andsubmitted to the Timber Sales Manager” (Emphasis added.)

30 The trial judge found that the Application was submitted in an ambig-uous manner as to the bidder’s identity because it contained the name ofone ineligible company, Enterprise, and the BCTSE number of anothereligible company, Sons. The Application also left out the incorporationnumber of the applicant company. In my opinion, it is clear from these


findings of the trial judge that the bid was not strictly compliant on itsface.

31 Furthermore, under the Contract A/Contract B framework, the bidconstitutes an acceptance of the offer to tender as well as an offer toperform Contract B, the work to be done which was in this case a licenceto harvest timber. The identity of the contracting party is in my view anessential term of the contract. It would be open to other bidders to protestthe award of the licence to a company other than the named applicant,especially when that named applicant was ineligible to bid because itdoes not have a BCTSE registration.

(c) Was the Ministry required to resolve the ambiguity in the bid?32 It is convenient at this point to deal with the trial judge’s reliance on

Tercon as “authority for looking beyond the name given for a bidder todetermine who is actually making the bid”. Insofar as the trial judgeread Tercon as allowing an owner to repair a defect in a bid by takingsteps to clarify or change the name of the applicant on the tender formafter the bid deadline, I would respectfully disagree with thatcharacterization.

33 In Tercon, a compliant bidder sued the province when it awarded partof a road building contract to Brentwood Enterprises Ltd., a companywhich, unable to submit a competitive bid on its own, teamed up withanother company that was not qualified to bid and had not been listed onthe tendering form. The province was found to be aware of the joint ven-ture between the applicant and the ineligible company (at para. 49).

34 In Tercon, the Court did not find that an owner should look beyondthe bid to determine who the real applicant is. To the contrary, that caseturned on the province’s knowledge that the bid submitted by Brentwoodwas to be performed by Brentwood and an ineligible company. Becauseof that knowledge, the province accepted a bid it knew was non-compli-ant, thereby breaching its duty of fairness to compliant bidders. There isa marked difference between the finding in Tercon that an owner cannotturn a blind eye to the true identity of an applicant, and requiring anowner to take steps to determine who the applicant is when the bidder’sidentity is ambiguous.

35 Sons submits, correctly, that assessment of bid compliance dependson the terms of the particular tender documents. In this case Sons arguesthat the Manager was obliged by the tender documents to engage in aprocess of due diligence to confirm the eligibility of an applicant and was


therefore required to sort out the ambiguity as to whether “Enterprise” or“Sons” was the bidder. Sons relies on 9(b) of the Particulars of the Invi-tation for Applications:

9. (b) Examination of Applications:

. . .

(ii) The Timber Sales Manager will take whatever stepsare necessary to satisfy herself/himself that an applicationis bona fide and may require an applicant to provide proof

(1) of the applicant’s identity

(2) of the applicant’s registration as a BC TimberSales enterprise

(3) that the applicant continues to meet each of the re-quirements of the BC Timber Sales Regulation forregistration, and

(4) that the applicant has not ceased to be a BC Tim-ber Sales enterprise.

36 Sons submits that the Ministry’s efforts to research the corporate sta-tus of Sons, the BCTSE registration number, and whether Sons owed onaccount any funds to the Ministry, were all part of the Manager’s compli-ance with 9(b) to assure himself that the Application was bona fide andmade by an eligible applicant.

37 The placement of the “Examination of Applications” provisions in9(b) between the provisions for “Opening” of the bids at 9(a) and the“Approval” and “Notification” provisions at 9(c) and (d) suggests theyare to be complied with before acceptance is communicated to the suc-cessful bidder. As the trial judge observed, the summary trial record isnot clear on what steps were taken and whether the Ministry had realizedthat Enterprise was an ineligible bidder when the approval was posted tothe Ministry website. However, in my view the obligation to examineapplications as required in item 9 arises only on creation of Contract A,i.e., only upon submission of a compliant bid. All compliant bidders thenhave a right to expect the Ministry will not actually award the licenceand enter into Contract B without confirming that the highest bidder is infact eligible.

38 The rights of the parties under Contract A do not “crystallize” until atender that is “legally capable of acceptance is submitted”: Ron Engi-neering at 121-22; Graham at para. 18. Since Sons did not submit a com-pliant bid, Contract A does not arise, and the Ministry was not required


to take any steps to review the bid to confirm the identity of theapplicant.

39 Sons also relies on the common law to assert that the Ministry wasobliged to take reasonable steps to ensure applicant eligibility, citing thedissent in Double N Earthmovers Ltd. v. Edmonton (City), 2007 SCC 3(S.C.C.) at para. 117. However, the majority in that case did not acceptsuch a duty. To the contrary, the majority found:

51 The notion that an owner is expected to investigate bids falls wellshort of the necessary “obviousness” to form part of the presumedintentions of the “actual parties”: M.J.B. Enterprises, at para. 29 (em-phasis deleted). There is no reason why the parties would expect anowner to investigate whether a bidder will comply, when each bidderis legally obliged to comply in the event its bid is accepted. Whetheror not the bidder is, at the time of tender, capable of performing aspromised is irrelevant in light of the bidder’s legal obligation to do soonce its bid is accepted.

52 The duty of “fairness and equality” was recognized in Martel inpart because it was thought to be “consistent with the goal of protect-ing and promoting the integrity of the bidding process” (para. 88(emphasis added)). Double N’s focus instead is with the integrity ofthe bidders. The bidding process, by contrast, is fully protected by anobligation that all bids receive equal treatment. The best way to makesure that all bids receive the same treatment is for an owner to weighbids on the basis of what is actually in the bid, not to weigh them onthe basis of subsequently discovered information.

[Emphasis added.]

40 Sons’ submission that the Ministry should have taken steps to resolvethe ambiguity as to which company was bidding is inconsistent with thisCourt’s decision in Vachon Construction Ltd. v. Cariboo (Regional Dis-trict) (1996), 24 B.C.L.R. (3d) 379 (B.C. C.A.). In that case, the plaintiffwas the unsuccessful bidder for a construction contract with the CaribooRegional District (the “District”). At the opening of bids, it became ap-parent that in the competitor’s bid, there was a discrepancy between thewritten and the numerical price. The bidder’s representative was asked toclarify the discrepancy and he indicated that the lower price was the in-tended price. Both prices in the bid were lower than the plaintiff’s. TheDistrict accepted the competitor’s bid, which the plaintiff claimed wasinvalid. The plaintiff sued for breach of the tendering contract and wassuccessful on appeal. This Court found that the bid was not compliantand could not be accepted because the price was uncertain; that ambigu-


ity could not be corrected by an owner after the bids were opened (atparas. 20, 21).

41 Sons argues that the initial conduct of the Ministry in awarding thecontract to it demonstrates that the Ministry figured out who the “real”applicant was despite the ambiguity on the form; the irregularity shouldnot therefore be construed as amounting to non-compliance.

42 In my opinion that argument cannot succeed for the following rea-sons. First, an owner cannot accept a non-compliant bid where strictcompliance is required (as in the present case), and cannot accept a mate-rially non-compliant bid where substantive compliance is required (i.e.,when the documents contain a discretion clause): Graham at paras. 19,21.

43 As Madam Justice Dorgan observed in Cambridge Plumbing SystemsLtd. v. Strata Plan VR 1632, 2009 BCSC 605 (B.C. S.C.):

[17] That an owner is “incapable” at law of accepting a non-compli-ant bid is an implied term of Contract A: M.J.B. Enterprises Ltd. v.Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619, [1999] S.C.J.No. 17, per Mr. Justice Iacobucci (“M.J.B.”). The rationale underly-ing this implied term was articulated at para. 41 of M.J.B. as follows:

[41] The rationale for the tendering process, as can beseen from these documents, is to replace negotiation withcompetition. This competition entails certain risks for theappellant [the bidder]. The appellant must expend effortand incur expense in preparing its tender in accordancewith strict specifications and may nonetheless not beawarded Contract B. It must submit its bid security which,although it is returned if the tender is not accepted, is asignificant amount of money to raise and have tied up forthe period of time between the submission of the tenderand the decision regarding Contract B. As Bingham L.J.stated in Blackpool and Fylde Aero Club Ltd [citation re-moved], with respect to a similar tendering process, thisprocedure is “heavily weighted in favour of the invitor”. Itappears obvious to me that exposing oneself to such risksmakes little sense if the respondent is allowed, in effect,to circumscribe this process and accept a non-compliantbid. Therefore I find it reasonable, on the basis of the pre-sumed intentions of the parties, to find an implied termthat only a compliant bid would be accepted.

The implied term that only a compliant bid may be accepted at law,thus, protects the reasonable expectations of the parties and maintains


the integrity of the tendering process, which replaces negotiationwith competition.

[Emphasis added.]

44 Second, taking the Ministry’s post-bid conduct and views into ac-count is inconsistent with the requirement that bid compliance is to bemeasured objectively at the time the bid is submitted.

45 Dorgan J. noted in Cambridge that some authorities have referencedthe post-bid actions and perspective of owners in tendering disputes indetermining materiality of non-compliance:

[28] Cambridge raises one case that seems to look at the actions ofowners to determine compliance: Hub Excavating Ltd. v. Orca Es-tates Ltd., 2007 BCSC 1512, [2007] B.C.J. No. 2209. In that case,the owner told the tenderer that his bid was in order, which the trialjudge determined “could only be taken to mean that it was compli-ant”: at para 109. However, it was the trial judge’s interpretation ofthe terms and conditions of the tender documents themselves, and notthe actions of the owners, that led him to conclude the bid was com-pliant. Instead, the owners’ behaviour lent support to the trial judge’sview that an owner should “promptly advise a contractor if its posi-tion is that the contractor’s bid is non-compliant”, as this is part ofthe owner’s obligation to treat bidders fairly: at para.116. In anyevent, the trial judge’s conclusions on the implied terms of fairnesshave been overruled on appeal: 2009 BCCA 167, [2009] B.C.J. No.752 (“Hub”).

[29] Nevertheless, it is worth noting that other authorities have refer-enced the actions and perspective of owners in tendering disputes aswell. For example, in Double N, Justices Abella and Rothstein notedthat the “evidence show[ed] that City officials did not view the provi-sion of licence and serial numbers as a material condition of thetender”: at para. 41. The referenced evidence supported the conclu-sion that the defect at issue was not obviously material to any of theparties in that dispute.

[30] The actions of the owners during the tendering process werealso “not without significance” to the Court of Appeal’s conclusionthat the bid at issue was materially non-compliant in Silex: at para.29. Specifically, the fact that the owners requested that the bidderextend the duration of the bid bond to ensure its irrevocabilitythroughout the entire tendering process suggested to the Court thatthe owners knew the bidder had not complied with the required termsof the tender call.


46 Dorgan J. reconciled these cases by concluding: [31] I am persuaded by these authorities that while the Owner’s ac-tions are not determinative of compliance per se, on an objective ba-sis, the Owners’ actions may support the conclusion that a defect hasnot deleteriously impacted the reasonable expectations of the parties(especially those of the other bidders) or obviously undermined thetendering process as a whole. In other words, this evidence cannot berelied on to conclude whether a term is required or essential to theterms of the tender documents, but may provide context to the latterportion of the Graham test with respect to the materiality of any non-compliance at issue.

[Emphasis added.]

47 In Maple Reinders Inc. v. Cerco Developments Ltd., 2011 BCSC 924(B.C. S.C.), Madam Justice Fitzpatrick alluded to these passages fromCambridge and, relying primarily on Silex at para. 29, concluded that“the conduct of the parties may be relevant in determining the materialityof a particular omission” (at para. 50).

48 In my view it remains the law that the compliance of a bid is to bemeasured objectively at the time the bid is submitted. The cases refer-enced above all relied primarily on that evidence. The subjective conductalluded to was merely noted as consistent with the essential objectiveconclusion. For example, in Silex Saunders J.A. for the Court wrote:

[29] The test of materiality is objective. However, to the extent thatthe behaviour of the parties is any indication of the significance ofthe requirement for a 90-day bid bond to a reasonable person, it is notwithout significance that the Strata Corporation required Silex to ex-tend the bond as a condition of further discussions towards conclu-sion of a contract, that is, existence of security was important to theStrata Corporation even though it was not alive to the issue of non-compliance and its project consultant had not drawn the non-compli-ance to its attention.

[Emphasis added.]

49 Graham demonstrates why relying on the owner’s views and post-bidconduct to determine compliance is problematic. The plaintiff in thatcase bid on a call for tenders the defendant had put out for the CapilanoPumping Station, Water Mains and Substation at Capilano Regional Parkin North Vancouver. Graham’s bid was about $5 million lower than theother three bidders. Immediately after the bids were opened, Graham ad-vised the Water District that its bid contained a $2 million arithmeticalerror and sought to withdraw it. Graham subsequently took the position


in a letter to the Water District a few days later that its bid did not con-form to the tender requirements and was therefore incapable of accept-ance by the Water District.

50 The Water District advised Graham that it had reviewed the bids andconsidered Graham’s bid to be without material defects. It thereforeawarded the project to Graham and forwarded the construction contractdocuments for signature. In accordance with the instructions to tender, ifGraham did not execute and return the construction contract within tendays of receipt, it risked the loss of its bid bond which was 10% of thetender price, or an action for the difference between its tender price andthe next lowest bid.

51 The Court concluded that bid compliance was to be determined usingan objective test:

[15] In my opinion, the learned chambers judge was correct to applyan objective test to the question of whether Graham’s bid was non-compliant in a material sense. Having found that the trial judge ar-rived at the correct test, I would not interfere with his application ofthat test and conclusion that, according to an objective analysis, Gra-ham’s bid was materially non-compliant.

(d) Was the Ministry bound to enter into Contract B once the award wasposted?

52 Finally, Sons argues that once the Ministry posted the notice on itswebsite awarding the contract to Sons, ss. 20(4) and (6) of the Forest Actcompelled it to enter into the Contract B Timber Licence. Those sectionsof the Act provide:

(4) On receipt of applications and tenders in response to an invitationadvertised under subsection (2), the timber sales manager

(a) must approve the eligible application of the applicant whoseproposed bonus bid or bonus offer is the highest of those ten-dered by all applicants with eligible applications, or

(b) at the direction of the minister, must decline to approve anyof the eligible applications.

. . .

(6) If an eligible application is approved under this section, the tim-ber sales manager and the applicant whose application is approvedmust enter into a timber sale licence.

[Emphasis added.]

M.G. Logging & Sons Ltd. v. British Columbia Harris J.A. 495

53 I would not accede to this argument for two reasons. First, on a plainreading of s. 20 and the tender terms, only an eligible application couldbe approved. Section 20 of the Forest Act defines an eligible applicationas one that “conforms to subsection 3”. Under section 20(3)(a) applica-tions must “be in the form required by the timber sales manager”. Theinvitation further specified that the Manager would not consider ineligi-ble applications for approval. Such applications included those that didnot comply with every requirement of the invitation.

54 Second, section 20 of the Forest Act defines “eligible application”,but does not address compliance. In the absence of an express declarationor necessary implication I would not construe s. 20 as displacing or re-voking the analytical framework developed in the Ron Engineering lineof cases: Bryan’s Transfer Ltd. v. Trail (City), 2010 BCCA 531 (B.C.C.A.). In my view, s. 20 cannot be interpreted as allowing the province toaccept a non-compliant bid.

Conclusion55 In my view it is not necessary to remit this matter to the trial court for

further consideration. The trial judge found that the application was am-biguous as to the identity of the bidder and did not include an incorpora-tion number. Applying the analytical framework for tenders in a strictcompliance regime, Sons submitted a non-compliant bid and no ContractA was formed. In the absence of Contract A, I conclude that Sons cannotsucceed on any of its claims. I would therefore dismiss Sons’ appeal, andallow the appeal of the Ministry with costs.

Bennett J.A.:

I AGREE.

Harris J.A.:

I AGREE.

Appeal by Ministry allowed; appeal by plaintiff dismissed.


[Indexed as: R. v. Briltz]

Her Majesty the Queen, Appellant/Respondent and Larry DeanBriltz, Respondent/Appellant

Saskatchewan Court of Appeal

Docket: CACR 2493, 2500

2016 SKCA 2

Richards C.J.S., Caldwell, Whitmore JJ.A.


Judgment: January 14, 2016

Criminal law –––– Offences — Refusing to provide breath or blood sam-ple — Sentencing –––– Accused had at least 25 criminal driving convictions andmany other criminal convictions — While on parole and subject to two-yeardriving prohibition due to 2011 convictions for evading police, driving whiledisqualified, and driving with blood alcohol concentration over 0.08, accusedled first police officer on chase in July 2013 and second officer on two chases inAugust 2013 — Officers had to abandon chases due to excessive speeds — Ac-cused was eventually stopped and charged with evading police, driving whiledisqualified, impaired driving, resisting arrest, and refusing to provide breathsamples — Accused was found guilty on all counts and sentenced to five yearsimprisonment less credit for 377 days at enhanced rate of 1.5 to 1 due to remandconditions, including double-bunking, and given lifetime driving prohibition —Accused was given consecutive sentences of 24 months for first incident, 28months for second incident, and 56 months for third incident, with total sentenceof nine years reduced by applying principle of totality to all sentences, leavingglobal sentence of five years before application of remand credit — Accused ap-pealed from conviction and sentence; Crown appealed from sentence — Ac-cused’s appeal dismissed; Crown’s appeal allowed — Trial judge’s verdictswere not unreasonable or unsupported by evidence — Identity evidence of of-ficer at first incident was not without its frailties, but trial judge also consideredcircumstantial evidence as to similarity of events in all three incidents and prop-erly instructed herself on law as it related to frailties of eyewitness identifica-tion — Trial judge was entitled to rely on evidence of officer at second and thirdincident that vehicle driven on all three occasions was distinctive, as this asser-tion was not contradicted or shaken on cross-examination — Trial judge did noterr in interpreting whether officer “pursued” accused for purpose of s. 249.1(1)of Criminal Code — As for sentence, it was not proportionate to accused’smoral culpability in committing offences and did not achieve paramount andonly sentencing goal, which was protection of public — Goal could only be

R. v. Briltz 497

achieved through long period of incarceration — Initial sentence of nine yearsreflected goal and trial judge erred by applying totality principle to reduce sen-tence without keeping goal of protection of public in forefront — Given ac-cused’s high moral culpability in committing offences and aggravating circum-stances, fit combined sentence was eight years’ imprisonment.

Criminal law –––– Offences — Offences relating to peace officers — Re-sisting or obstructing public or peace officer — Sentencing — Adult offend-ers –––– Accused had at least 25 criminal driving convictions and many othercriminal convictions — While on parole and subject to two-year driving prohibi-tion due to 2011 convictions for evading police, driving while disqualified, anddriving with blood alcohol concentration over 0.08, accused led first police of-ficer on chase in July 2013 and second officer on two chases in August 2013 —Officers had to abandon chases due to excessive speeds — Accused was eventu-ally stopped and charged with evading police, driving while disqualified, im-paired driving, resisting arrest, and refusing to provide breath samples — Ac-cused was found guilty on all counts and sentenced to five years imprisonmentless credit for 377 days at enhanced rate of 1.5 to 1 due to remand conditions,including double-bunking, and given lifetime driving prohibition — Accusedwas given consecutive sentences of 24 months for first incident, 28 months forsecond incident, and 56 months for third incident, with total sentence of nineyears reduced by applying principle of totality to all sentences, leaving globalsentence of five years before application of remand credit — Accused appealedfrom conviction and sentence; Crown appealed from sentence — Accused’s ap-peal dismissed; Crown’s appeal allowed — Trial judge’s verdicts were not un-reasonable or unsupported by evidence — Identity evidence of officer at firstincident was not without its frailties, but trial judge also considered circumstan-tial evidence as to similarity of events in all three incidents and properly in-structed herself on law as it related to frailties of eyewitness identification —Trial judge was entitled to rely on evidence of officer at second and third inci-dent that vehicle driven on all three occasions was distinctive, as this assertionwas not contradicted or shaken on cross-examination — Trial judge did not errin interpreting whether officer “pursued” accused for purpose of s. 249.1(1) ofCriminal Code — As for sentence, it was not proportionate to accused’s moralculpability in committing offences and did not achieve paramount and only sen-tencing goal, which was protection of public — Goal could only be achievedthrough long period of incarceration — Initial sentence of nine years reflectedgoal and trial judge erred by applying totality principle to reduce sentence with-out keeping goal of protection of public in forefront — Given accused’s highmoral culpability in committing offences and aggravating circumstances, fitcombined sentence was eight years’ imprisonment.

Criminal law –––– Offences — Impaired driving/care or control — Sentenc-ing — General principles –––– Accused had at least 25 criminal driving convic-


tions and many other criminal convictions — While on parole and subject totwo-year driving prohibition due to 2011 convictions for evading police, drivingwhile disqualified, and driving with blood alcohol concentration over 0.08, ac-cused led first police officer on chase in July 2013 and second officer on twochases in August 2013 — Officers had to abandon chases due to excessivespeeds — Accused was eventually stopped and charged with evading police,driving while disqualified, impaired driving, resisting arrest, and refusing to pro-vide breath samples — Accused was found guilty on all counts and sentenced tofive years imprisonment less credit for 377 days at enhanced rate of 1.5 to 1 dueto remand conditions, including double-bunking, and given lifetime driving pro-hibition — Accused was given consecutive sentences of 24 months for first inci-dent, 28 months for second incident, and 56 months for third incident, with totalsentence of nine years reduced by applying principle of totality to all sentences,leaving global sentence of five years before application of remand credit — Ac-cused appealed from conviction and sentence; Crown appealed from sentence —Accused’s appeal dismissed; Crown’s appeal allowed — Trial judge’s verdictswere not unreasonable or unsupported by evidence — Identity evidence of of-ficer at first incident was not without its frailties, but trial judge also consideredcircumstantial evidence as to similarity of events in all three incidents and prop-erly instructed herself on law as it related to frailties of eyewitness identifica-tion — Trial judge was entitled to rely on evidence of officer at second and thirdincident that vehicle driven on all three occasions was distinctive, as this asser-tion was not contradicted or shaken on cross-examination — Trial judge did noterr in interpreting whether officer “pursued” accused for purpose of s. 249.1(1)of Criminal Code — As for sentence, it was not proportionate to accused’smoral culpability in committing offences and did not achieve paramount andonly sentencing goal, which was protection of public — Goal could only beachieved through long period of incarceration — Initial sentence of nine yearsreflected goal and trial judge erred by applying totality principle to reduce sen-tence without keeping goal of protection of public in forefront — Given ac-cused’s high moral culpability in committing offences and aggravating circum-stances, fit combined sentence was eight years’ imprisonment.

Criminal law –––– Sentencing — Sentencing for multiple convictions ––––Accused had at least 25 criminal driving convictions and many other criminalconvictions — While on parole and subject to two-year driving prohibition dueto 2011 convictions for evading police, driving while disqualified, and drivingwith blood alcohol concentration over 0.08, accused led first police officer onchase in July 2013 and second officer on two chases in August 2013 — Officershad to abandon chases due to excessive speeds — Accused was eventuallystopped and charged with evading police, driving while disqualified, impaireddriving, resisting arrest, and refusing to provide breath samples — Accused wasfound guilty on all counts and sentenced to five years imprisonment less creditfor 377 days at enhanced rate of 1.5 to 1 due to remand conditions, including

R. v. Briltz 499

double-bunking, and given lifetime driving prohibition — Accused was givenconsecutive sentences of 24 months for first incident, 28 months for second inci-dent, and 56 months for third incident, with total sentence of nine years reducedby applying principle of totality to all sentences, leaving global sentence of fiveyears before application of remand credit — Accused appealed from convictionand sentence; Crown appealed from sentence — Accused’s appeal dismissed;Crown’s appeal allowed — Trial judge’s verdicts were not unreasonable or un-supported by evidence — Identity evidence of officer at first incident was notwithout its frailties, but trial judge also considered circumstantial evidence as tosimilarity of events in all three incidents and properly instructed herself on lawas it related to frailties of eyewitness identification — Trial judge was entitled torely on evidence of officer at second and third incident that vehicle driven on allthree occasions was distinctive, as this assertion was not contradicted or shakenon cross-examination — Trial judge did not err in interpreting whether officer“pursued” accused for purpose of s. 249.1(1) of Criminal Code — As for sen-tence, it was not proportionate to accused’s moral culpability in committing of-fences and did not achieve paramount and only sentencing goal, which was pro-tection of public — Goal could only be achieved through long period ofincarceration — Initial sentence of nine years reflected goal and trial judge erredby applying totality principle to reduce sentence without keeping goal of protec-tion of public in forefront — Given accused’s high moral culpability in commit-ting offences and aggravating circumstances, fit combined sentence was eightyears’ imprisonment.

Criminal law –––– Offences — Flight in motor vehicle from pursuing peaceofficers — Sentencing –––– Accused had at least 25 criminal driving convic-tions and many other criminal convictions — While on parole and subject totwo-year driving prohibition due to 2011 convictions for evading police, drivingwhile disqualified, and driving with blood alcohol concentration over 0.08, ac-cused led first police officer on chase in July 2013 and second officer on twochases in August 2013 — Officers had to abandon chases due to excessivespeeds — Accused was eventually stopped and charged with evading police,driving while disqualified, impaired driving, resisting arrest, and refusing to pro-vide breath samples — Accused was found guilty on all counts and sentenced tofive years imprisonment less credit for 377 days at enhanced rate of 1.5 to 1 dueto remand conditions, including double-bunking, and given lifetime driving pro-hibition — Accused was given consecutive sentences of 24 months for first inci-dent, 28 months for second incident, and 56 months for third incident, with totalsentence of nine years reduced by applying principle of totality to all sentences,leaving global sentence of five years before application of remand credit — Ac-cused appealed from conviction and sentence; Crown appealed from sentence —Accused’s appeal dismissed; Crown’s appeal allowed — Trial judge’s verdictswere not unreasonable or unsupported by evidence — Identity evidence of of-ficer at first incident was not without its frailties, but trial judge also considered


circumstantial evidence as to similarity of events in all three incidents and prop-erly instructed herself on law as it related to frailties of eyewitness identifica-tion — Trial judge was entitled to rely on evidence of officer at second and thirdincident that vehicle driven on all three occasions was distinctive, as this asser-tion was not contradicted or shaken on cross-examination — Trial judge did noterr in interpreting whether officer “pursued” accused for purpose of s. 249.1(1)of Criminal Code — As for sentence, it was not proportionate to accused’smoral culpability in committing offences and did not achieve paramount andonly sentencing goal, which was protection of public — Goal could only beachieved through long period of incarceration — Initial sentence of nine yearsreflected goal and trial judge erred by applying totality principle to reduce sen-tence without keeping goal of protection of public in forefront — Given ac-cused’s high moral culpability in committing offences and aggravating circum-stances, fit combined sentence was eight years’ imprisonment.

Criminal law –––– Post-trial procedure — Appeal from sentence —Grounds — Error in principle –––– Accused had at least 25 criminal drivingconvictions and many other criminal convictions — While on parole and subjectto two-year driving prohibition due to 2011 convictions for evading police, driv-ing while disqualified, and driving with blood alcohol concentration over 0.08,accused led first police officer on chase in July 2013 and second officer on twochases in August 2013 — Officers had to abandon chases due to excessivespeeds — Accused was eventually stopped and charged with evading police,driving while disqualified, impaired driving, resisting arrest, and refusing to pro-vide breath samples — Accused was found guilty on all counts and sentenced tofive years imprisonment less credit for 377 days at enhanced rate of 1.5 to 1 dueto remand conditions, including double-bunking, and given lifetime driving pro-hibition — Accused was given consecutive sentences of 24 months for first inci-dent, 28 months for second incident, and 56 months for third incident, with totalsentence of nine years reduced by applying principle of totality to all sentences,leaving global sentence of five years before application of remand credit — Ac-cused appealed from conviction and sentence; Crown appealed from sentence —Accused’s appeal dismissed; Crown’s appeal allowed — Trial judge’s verdictswere not unreasonable or unsupported by evidence — Identity evidence of of-ficer at first incident was not without its frailties, but trial judge also consideredcircumstantial evidence as to similarity of events in all three incidents and prop-erly instructed herself on law as it related to frailties of eyewitness identifica-tion — Trial judge was entitled to rely on evidence of officer at second and thirdincident that vehicle driven on all three occasions was distinctive, as this asser-tion was not contradicted or shaken on cross-examination — Trial judge did noterr in interpreting whether officer “pursued” accused for purpose of s. 249.1(1)of Criminal Code — As for sentence, it was not proportionate to accused’smoral culpability in committing offences and did not achieve paramount andonly sentencing goal, which was protection of public — Goal could only be

R. v. Briltz 501

achieved through long period of incarceration — Initial sentence of nine yearsreflected goal and trial judge erred by applying totality principle to reduce sen-tence without keeping goal of protection of public in forefront — Given ac-cused’s high moral culpability in committing offences and aggravating circum-stances, fit combined sentence was eight years’ imprisonment.

Cases considered by Caldwell J.A.:

R. c. Lacasse (2015), 2015 SCC 64, 2015 CSC 64, 2015 CarswellQue 11715,2015 CarswellQue 11716, [2015] S.C.J. No. 64, [2015] A.C.S. No. 64, 86M.V.R. (6th) 1 (S.C.C.) — considered

R. v. Akapew (2009), 2009 SKCA 137, 2009 CarswellSask 794, 249 C.C.C. (3d)212, [2010] 2 W.W.R. 248, [2009] S.J. No. 710, 90 M.V.R. (5th) 159, 343Sask. R. 155, 472 W.A.C. 155 (Sask. C.A.) — referred to

R. v. Andres (2002), 2002 SKCA 98, 2002 CarswellSask 550, 29 M.V.R. (4th)15, 168 C.C.C. (3d) 372, 223 Sask. R. 121, 277 W.A.C. 121, [2002] S.J. No.491 (Sask. C.A.) — considered

R. v. Bear (1994), 3 M.V.R. (3d) 173, 120 Sask. R. 294, 68 W.A.C. 294, [1994]9 W.W.R. 1, 1994 CarswellSask 237, [1994] S.J. No. 272 (Sask. C.A.) —considered

R. v. Bear (2007), 2007 SKCA 127, 2007 CarswellSask 654, 53 M.V.R. (5th)165, 302 Sask. R. 153, 411 W.A.C. 153, [2007] S.J. No. 611 (Sask. C.A.) —considered

R. v. Biddle (1993), 24 C.R. (4th) 65, 14 O.R. (3d) 756, 65 O.A.C. 20, 84 C.C.C.(3d) 430, 1993 CarswellOnt 118, [1993] O.J. No. 1833 (Ont. C.A.) —considered

R. v. Biddle (1995), 36 C.R. (4th) 321, 22 O.R. (3d) 128 (note), 178 N.R. 208,96 C.C.C. (3d) 321, 79 O.A.C. 128, [1995] 1 S.C.R. 761, 123 D.L.R. (4th)22, 1995 CarswellOnt 7, 1995 CarswellOnt 521, EYB 1995-67425, [1995]S.C.J. No. 22 (S.C.C.) — referred to

R. v. Bigsky (2006), 2006 SKCA 145, 2006 CarswellSask 828, [2007] 4 W.W.R.99, 289 Sask. R. 179, 382 W.A.C. 179, 217 C.C.C. (3d) 441, 45 C.R. (6th)69, [2006] S.J. No. 801 (Sask. C.A.) — considered

R. v. Biniaris (2000), 2000 SCC 15, 2000 CarswellBC 753, 2000 CarswellBC754, 184 D.L.R. (4th) 193, 143 C.C.C. (3d) 1, 32 C.R. (5th) 1, [2000] S.C.J.No. 16, 252 N.R. 204, [2000] 1 S.C.R. 381, 134 B.C.A.C. 161, 219 W.A.C.161 (S.C.C.) — referred to

R. v. Bitternose (2009), 2009 SKCA 60, 2009 CarswellSask 311, [2009] S.J. No.288 (Sask. C.A.) — considered

R. v. Breton (2004), 2004 ABCA 391, 2004 CarswellAlta 1603, 8 M.V.R. (5th)180, 357 A.R. 371, 334 W.A.C. 371, [2004] A.J. No. 1365 (Alta. C.A.) —followed

R. v. Desnomie (2010), 2010 SKCA 64, 2010 CarswellSask 291, [2010] S.J. No.273, 350 Sask. R. 273, 487 W.A.C. 273 (Sask. C.A.) — considered


R. v. Eashappie (1994), 3 M.V.R. (3d) 187, 120 Sask. R. 161, 68 W.A.C. 161,1994 CarswellSask 2, [1994] S.J. No. 271 (Sask. C.A.) — referred to

R. v. Guimond (2002), 2002 SKQB 145, 2002 CarswellSask 194 (Sask. Q.B.) —followed

R. v. Gunn (2012), 2012 SKCA 80, 2012 CarswellSask 534, [2012] S.J. No. 503,35 M.V.R. (6th) 181, [2013] 1 W.W.R. 495, 399 Sask. R. 170, 552 W.A.C.170, 291 C.C.C. (3d) 265, 265 C.R.R. (2d) 110 (Sask. C.A.) — referred to

R. v. Harrison (2004), 2004 SKCA 150, 2004 CarswellSask 712, 9 M.V.R. (5th)16, 254 Sask. R. 159, 336 W.A.C. 159, [2004] S.J. No. 656 (Sask. C.A.) —referred to

R. v. Hotomanie (2009), 2009 SKCA 135, 2009 CarswellSask 792, (sub nom. R.v. H. (L.D.)) 343 Sask. R. 235, (sub nom. R. v. H. (L.D.)) 472 W.A.C. 235(Sask. C.A.) — referred to

R. v. Kagayalingam (2006), 2006 ONCJ 402, 2006 CarswellOnt 6690, [2006]O.J. No. 4334 (Ont. C.J.) — considered

R. v. Laprise (2009), 2009 SKCA 46, 2009 CarswellSask 231, 324 Sask. R. 263,451 W.A.C. 263 (Sask. C.A.) — considered

R. v. Leroux (2015), 2015 SKCA 48, 2015 CarswellSask 274, [2015] S.J. No.231, [2015] 9 W.W.R. 709, 460 Sask. R. 1, 639 W.A.C. 1 (Sask. C.A.) —considered

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

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

R. v. Mozylisky (2009), 2009 SKCA 94, 2009 CarswellSask 535, 331 Sask. R.303, 460 W.A.C. 303 (Sask. C.A.) — referred to

R. v. Slippery (2014), 2014 SKCA 23, 2014 CarswellSask 132, [2014] S.J. No.123, 433 Sask. R. 183, 602 W.A.C. 183, 64 M.V.R. (6th) 288 (Sask.C.A.) — referred to

R. v. Stellato (1993), 18 C.R. (4th) 127, 78 C.C.C. (3d) 380, 61 O.A.C. 217, 12O.R. (3d) 90, 43 M.V.R. (2d) 120, 1993 CarswellOnt 74, [1993] O.J. No. 18,1993 ONCA 3375 (Ont. C.A.) — referred to

R. v. W. (D.) (1991), 3 C.R. (4th) 302, 63 C.C.C. (3d) 397, 122 N.R. 277, 46O.A.C. 352, [1991] 1 S.C.R. 742, 1991 CarswellOnt 80, 1991 CarswellOnt1015, [1991] S.C.J. No. 26, EYB 1991-67602 (S.C.C.) — referred to

R. v. Briltz Caldwell J.A. 503

R. v. Yebes (1987), [1987] 6 W.W.R. 97, [1987] 2 S.C.R. 168, (sub nom. Yebesv. R.) 43 D.L.R. (4th) 424, 78 N.R. 351, 17 B.C.L.R. (2d) 1, 36 C.C.C. (3d)417, 59 C.R. (3d) 108, 1987 CarswellBC 243, 1987 CarswellBC 705, [1987]S.C.J. No. 51 (S.C.C.) — referred to

R. v. Z. (R.R.) (2008), 2008 SKQB 313, 2008 CarswellSask 507, 71 M.V.R.(5th) 177, (sub nom. R. v. R.Z.) 319 Sask. R. 213, [2008] S.J. No. 472 (Sask.Q.B.) — considered


Criminal Code, R.S.C. 1985, c. C-46Generally — referred tos. 129(a) — referred tos. 249.1(1) [en. 2000, c. 2, s. 1] — considereds. 253(1)(a) — referred tos. 254(3)(a) — referred tos. 254(5) — considereds. 259(4) — considereds. 675(1)(a) — considereds. 686(1)(a) — considereds. 686(1)(a)(i) — referred tos. 686(1)(a)(ii) — referred tos. 718.1 [en. R.S.C. 1985, c. 27 (1st Supp.), s. 156] — referred tos. 718.2(c) [en. 1995, c. 22, s. 6] — considereds. 718.3(4)(c) [en. 1995, c. 22, s. 6] — considered

APPEAL by accused from judgment reported at R. v. Briltz (2014), 2014 SKPC54, 2014 CarswellSask 236, [2014] S.J. No. 211, 447 Sask. R. 1 (Sask. Prov.Ct.); CROSS-APPEAL by Crown from judgment reported at R. v. Briltz (2014),2014 CarswellSask 945, [2014] S.J. No. 820 (Sask. Prov. Ct.).

Erin Bartsch, for Appellant / RespondentCarson Demmans, for Respondent / Appellant

Caldwell J.A.:

I. Introduction1 The Crown seeks leave to appeal against a global sentence of five

years’ imprisonment imposed on Larry Dean Briltz following his convic-tion of eight indictable offences under the Criminal Code. The convic-tions relate to three incidents involving driving while disqualified (s.259(4)) and evading the police (s. 249.1(1)), the last of which also gaverise to convictions for resisting arrest (s. 129(a)) and refusal to comply


with a valid breath demand (s. 254(3)(a)) - the trial judge also judiciallystayed a conviction for impaired driving (s. 253(1)(a)).

2 The Crown submits the global sentence of imprisonment is demon-strably unfit (R. v. M. (C.A.), [1996] 1 S.C.R. 500 (S.C.C.)) because thetrial judge erred in her application of the totality principle, leading her toimpose a sentence that is not proportionate to the gravity of the offencesand that fails to adequately protect the public - it says Mr. Briltz is anhabitual driving offender.

3 In his turn, Mr. Briltz appeals against seven of his eight convictionsas well as against his sentence of imprisonment and his lifetime drivingprohibition. As to the convictions, under nine grounds of appeal, Mr.Briltz generally submits the verdicts are unreasonable or not supportedby the evidence (s. 686(1)(a)(i) of the Criminal Code) or that the trialjudge made wrong decisions on questions of law (s. 686(1)(a)(ii)). As tohis sentence, Mr. Briltz submits the trial judge misconstrued defence sub-missions as to the availability of consecutive sentences and committederrors of principle (R. v. M. (C.A.) ) by imposing consecutive sentencesin the circumstances and in her handling of the totality of his sentence. Ifthe impugned convictions are not overturned, he submits a global sen-tence of three to four years would be fit in the circumstances. If he issuccessful in his convictions appeals, Mr. Briltz asks this Court to com-mute his sentence to “time served” on the sole remaining convictionunder s. 259(4).

4 Although the Crown filed its appeal first, I start by addressing Mr.Briltz’s conviction appeal, where I find there is no credible basis uponwhich to set aside any of the trial judge’s verdicts. As to the sentenceappeals, I would grant leave to the Crown to appeal against sentence;and, for the reasons below, I would allow the Crown’s appeal and varyeach of the sentences imposed below, resulting in a global sentence -after application of the principle of totality - of eight years’ imprison-ment. It follows that I would dismiss Mr. Briltz’s appeal againstsentence.

5 I will now explain this result.

II. Background

A. Criminal Record6 Mr. Briltz has a long record of criminal offences. At the time of the

offences in question, he was on parole - having been statutorily released


after serving a portion of a two-year sentence - and he was subject to atwo-year driving prohibition. This sentence had resulted from his 2011convictions on charges of evading the police, driving while disqualified,driving while his blood-alcohol concentration exceeded 80 milligramsper 100 millilitres (“over .08”), and possession of a controlled substance.

7 In total, his over 40-year record of offending discloses no less than 25criminal driving offences, namely, evading the police (x2), dangerousdriving (x2), driving while impaired (x5), driving while over .08 (x6),driving while disqualified (x8), failure to stop at the scene of an accident(x1), and refusal to provide breath sample (x1). In addition to this, he hasamassed convictions for violent offences (x21), property-related offences(x15), trafficking and possession offences (x10), obstruction offences(x11), violations of court orders (x10), unlawfully-at-large offence (x1),escape lawful custody offence (x1), and failure to attend court offences(x3).

B. Current Offences8 The charges in question result from three separate incidents during

the summer of 2013, all involving a fairly distinctive vehicle: a burntorange Chevrolet HHR. But, the police did not identify Mr. Briltz as thedriver of this vehicle until the third incident, when they apprehendedhim. The vehicle was unregistered but it had borne a different licenseplate during each incident, seemingly in a failed effort to confuse thepolice.

9 The first incident took place on the afternoon of July 4, 2013, afterConstable Alexander of the Regina Police Service, who was on bicyclepatrol, had approached a male sitting in a vehicle atop the Douglas ParkHill. She observed signs indicating the man might be under the influenceof drugs. She asked him for his driver’s license and registration. The mandrove away, speeding down the Douglas Park Hill toward McDonaldStreet, running a stop sign at the bottom of the hill, and cutting off an-other vehicle. Constable Alexander lost sight of the vehicle and radioedfor other officers to look out for it. Constable Ash heard her radio warn-ing and shortly after located the vehicle on Park Street. Its driver ob-served Constable Ash and drove into a gas station parking lot located justoff Arcola Avenue with Constable Ash following in his cruiser. Consta-ble Ash engaged his cruiser’s emergency lights and siren, but the targetvehicle did not stop. Constable Ash pursued it east on Arcola Avenuewhere it continued to accelerate onto Ring Road. The constable ended his


pursuit when speeds reached approximately 130 kilometers per hour andfurther pursuit had been assessed as too dangerous.

10 The second incident occurred a month later, on August 10, whenConstable Ash ran across the same driver and vehicle while on patrol.This time, the constable came within a few feet of the vehicle before heactivated his cruiser’s emergency lights and siren. The driver hesitatedbriefly, apparently in response to the lights and siren, and then spedaway. Constable Ash pursued. The target vehicle took a path past thesame gas station as in the first incident, proceeded east down Arcola Av-enue and then south on Ring Road. When the constable was within acouple of car lengths, the driver drove his vehicle through an intersectionagainst a red traffic light, heedless of vehicles crossing that intersection.At this point, Constable Ash discontinued his pursuit as it had again beenassessed as too dangerous to continue.

11 A few days later, on August 14, 2013, Constable Ash, who was onduty with Constable Kerth, saw the same driver and vehicle again. Thistime, the driver quickly turned his vehicle into an alleyway. The consta-bles followed in their cruiser. They observed the vehicle travel hurriedlythrough a parking lot and around an apartment building, kicking up dustas it went. The constables followed as the vehicle proceeded ontoLewvan Drive, where they pursued it at 100 kilometres per hour withtheir cruiser’s siren and emergency lights engaged. Again, the police dis-continued their pursuit, deeming it too dangerous to continue. However,a few minutes later, the two constables spotted the vehicle parked in aresidential area of south Regina with its driver still seated in it. Thedriver exited the vehicle, saw the two constables approaching and at-tempted to flee from them on foot. The constables swiftly caught up andarrested the driver, who physically resisted his arrest.

12 The driver, who the police later identified as Mr. Briltz, was belliger-ent during his arrest and later processing. He reeked of beverage alcohol- the constables later found a half-empty bottle of vodka in the centreconsole of his vehicle. Mr. Briltz was so unsteady on his feet that theconstables had to aid him in walking the thirty feet from where they hadarrested him to their cruiser. All the while, Mr. Briltz yelled obscenitiesat them and spoke with slurred speech. He continued to yell once insidethe cruiser and he more strongly exuded the smell of beverage alcohol.Mr. Briltz uttered a profane response to Constable Ash’s inquiry as towhether he had understood the breath demand the constable had made.Later, at the police station, Mr. Briltz refused to provide a breath sample.


He complained that his ribs were sore - ostensibly because he had trippedover a fence while fleeing from the constables - but, he later forgot whichside of his ribs he had said he had hurt; and, he nevertheless continued toloudly yell obscenities at the police throughout. He was later medicallyassessed as having no injury to his ribs.

C. Trial and Sentencing Decisions13 At trial, the judge resolved each of the following the issues:

(a) whether Mr. Briltz had been the driver during each drivingoffence;

(b) whether the police had pursued Mr. Briltz, within the meaning ofs. 249.1(1) of the Criminal Code;

(c) whether Mr. Briltz had refused without lawful excuse to complywith a valid breath demand;

(d) whether Mr. Briltz’s ability to drive had been impaired; and

(e) whether Mr. Briltz had resisted police engaged in the lawful exe-cution of their duty.

She found Mr. Briltz guilty of nine offences: three counts of evading thepolice (s. 249.1(1)), three counts of driving while disqualified (s. 259(4)),one count of refusing to provide a breath sample (s. 254(3)(a)), one countof obstruction by resisting arrest (s. 129(a)), and one count of impaireddriving (s. 253(1)(a)). She also entered a judicial stay on an impaireddriving conviction.

14 Mr. Briltz was 60 years old when the trial judge sentenced him onthese offences. The trial judge observed Mr. Briltz has had a life-longproblem with substance abuse - he is a severe alcoholic; nevertheless, hehas maintained employment throughout his life. Before the trial judge,Mr. Briltz voiced a willingness to address his substance abuse problems.

15 In its sentencing submissions, the Crown sought seven to eight years’imprisonment and a life-time driving prohibition, arguing for consecutivesentences on the s. 249.1(1) evasion offences. For his part, Mr. Briltzsaid a sentence of three years’ imprisonment was fit in the circumstances,arguing for concurrent sentences for the driving offences.

16 The trial judge found public protection as well as general and specificdenunciation and deterrence were the paramount objectives of sentencingin the circumstances, including the fact Mr. Briltz is an habitual drivingoffender. She reasoned that some of the sentences should be served con-


secutively and reached a total sentence of nine years’ imprisonment. Shethen applied the principle of totality, saying:

The total of these sentences comes to nine years. However, applyingthe principle of totality, to ensure that the sentence is not too harsh, aglobal sentence of five years is appropriate. The accused seeks anenhanced remand credit of 1.5 to 1, which the Court is prepared toallow, having regard to the accused’s circumstances on remand, andthe Summers decision of the Supreme Court....

In her oral decision, the trial judge set out individual sentences for eachof the eight convictions before addressing the principle of totality andthen she adjusted each individual sentence accordingly to her conclusionunder that principle.

17 As noted, both the Crown and Mr. Briltz appeal from this sentence.

III. Issues18 The three appeals before the Court may be summarised as giving rise

to these issues:

(a) In convicting Mr. Briltz, did the trial judge:

(i) arrive at a verdict that is unreasonable or unsupported bythe evidence; or

(ii) make a wrong decision on a question of law, such that theconvictions must be set aside?

(b) In sentencing Mr. Briltz, did the trial judge:

(i) err in her determination of the paramount objectives ofsentencing;

(ii) impose a sentence that is not proportionate to the gravity ofthe offences and the degree of Mr. Briltz’s responsibility;or

(iii) err in her consideration of the principle of totality, to arriveat a sentence that is demonstrably unfit?

I will address each of these issues in turn.

A. Conviction Appeal19 Under s. 675(1)(a) of the Criminal Code, an offender may appeal

from a conviction on any question of law, fact, or mixed fact and law andthis Court may allow such an appeal on any of the grounds set out in s.686(1)(a). The standard of review under s. 686(1)(a)(i), where the courtconsiders the reasonableness of a verdict or whether it is unsupported by


the evidence, is deferential in that the court may, to a limited extent, ex-amine and consider the weight of the evidence but may not simply sub-stitute its own view of the evidence for that of the trial judge. Moreover,a trial judge’s findings of fact, inferences of fact and assessments ofcredibility are themselves entitled to deference, unless the offender canestablish they were borne of palpable and overriding error. See R. v.Yebes, [1987] 2 S.C.R. 168 (S.C.C.) and R. v. Biniaris, 2000 SCC 15,[2000] 1 S.C.R. 381 (S.C.C.). The standard of review on questions of lawunder s. 686(1)(a)(ii) is correctness.

20 With that, I turn to consider the grounds upon which Mr. Briltz ap-peals from his convictions.

1. Are the verdicts unreasonable or unsupported by the evidence?21 Here, Mr. Briltz first alleges the trial judge’s verdicts are susceptible

to being set aside under s. 686(1)(a)(i) of the Criminal Code on theground that they are unreasonable or cannot be supported by the evi-dence. He points to six alleged errors in the factual findings and the in-ferences of fact drawn by the trial judge to support his assertion. In somerespects, he has identified these errors as errors of law or of mixed factand law, but I have nevertheless addressed them here under the rubric ofunreasonable verdict.

22 It is important to recall that where an accused has alleged an unrea-sonable verdict, an appellate court may only interfere to set aside theverdict if it is of the opinion the judge could not reasonably have con-cluded the accused was guilty beyond a reasonable doubt. This meansthat when it is asked to set aside a verdict, the appellate court must lookto see whether on the whole of the evidence the verdict is one that thejudge, acting judicially, could reasonably have rendered (see R. v. Yebesand R. v. Biniaris ).

a. Constable Alexander’s testimony23 Mr. Briltz first says his conviction with respect to the initial incident

is unreasonable or not supported by the evidence because the trial judgeaccepted the evidence of Constable Alexander to the effect that the driverof the target vehicle had had arm-tattoos and he, Mr. Briltz, does nothave any tattoos.

24 On its own, the evidence of the driver’s identity adduced throughConstable Alexander was not without its frailties, largely by reason ofher very brief interaction with him. This is why the trial judge disre-


garded Constable Alexander’s evidence of identity. In this way, Mr.Briltz’s appeal under this ground is essentially misplaced because hecharacterises the constable’s testimony as to the driver bearing tattoos ascredible; whereas, the trial judge had found it was credible but was “ofdoubtful reliability.” Pointedly, the trial judge found the constable’s tes-timony was “not sufficient to establish identity beyond a reasonabledoubt” and was “insufficient to prove identity”.

25 Rather, when reaching her finding that Mr. Briltz had been the driverin all three incidents, the trial judge satisfied herself of this beyond areasonable doubt on the basis of Constable Ash’s direct evidence of iden-tity and the circumstantial evidence as to the similarity of the events inall three incidents. This included evidence that:

(a) Mr. Briltz had acquired a burnt-orange Chevrolet HHR in thespring of 2013, even though he was then prohibited from driving;

(b) Mr. Briltz had not registered or insured his vehicle;

(c) on July 4, 2013, Constable Ash had pursued an unregistered,burnt-orange Chevrolet HHR in Regina near Arcola Avenue andRing Road, but the driver successfully evaded him;

(d) on August 10, 2013, Constable Ash had again unsuccessfully pur-sued an unregistered, burnt-orange Chevrolet HHR in Regina nearArcola Avenue and Ring Road, but this time he had a good oppor-tunity to see the driver - and he was specifically looking to see ifthe driver was the same man he had seen driving on July 4, 2013;

(e) on August 14, 2013, Constables Ash and Kerth apprehended Mr.Briltz after he had exited the driver’s seat of his unregistered,burnt-orange Chevrolet HHR following a pursuit in Regina - andthe constables saw no one else at the scene of the arrest;

(f) Mr. Briltz admitted he had been in the target vehicle on August14, 2013, and that he was aware the police had “red lighted” it andpursued it, but he denied he had been driving it;

(g) Constable Ash was certain Mr. Briltz had been driving the targetvehicle on July 4, August 10 and August 14, 2013;

(h) on each of July 4, August 10 and August 14, 2013, the driver ofthe burnt-orange Chevrolet HHR did not stop when Constable Ashindicated he should do so by pursuing it with his cruiser’s sirenand emergency lights engaged;


(i) there are only approximately 50 orange Chevrolet HHRs regis-tered in Saskatchewan and most of them have decals, vanity li-cense plates or some other distinguishing feature; and

(j) the burnt-orange Chevrolet HHR Constable Ash had pursued oneach occasion had no decals, had not borne vanity plates and hadno other distinguishing features.

26 Given this, the fact Constable Alexander thought she had seen tattooson the driver’s arms after a brief encounter - evidence the trial judge haddiscounted as unreliable - simply does not call into question the reliabil-ity of the trial judge’s finding on the issue of identity. That finding iswell-supported by the circumstantial evidence adduced in this case and,more importantly, by the evidence of identity adduced through ConstableAsh, which I will now examine more carefully.

b. Constable Ash’s testimony27 Under this heading, Mr. Briltz says the trial judge erred by accepting

the testimony of Constable Ash to the effect that the driver he had ob-served on August 10, 2013, was the same driver he had observed on July4, 2013. Mr. Briltz says the case is more akin to R. v. Guimond, 2002SKQB 145 (Sask. Q.B.), 395 Sask R 304, where the only evidenceagainst the accused was circumstantial. He again relies on Constable Al-exander’s testimony that the driver she had seen had had tattoos on hisarm - evidence that the trial judge had rejected as being “of doubtfulreliability”.

28 As is evident from her decision, when it came to assessing the testi-mony of Constables Ash and Alexander, the trial judge properly in-structed herself on the law as it relates to the frailties of eye-witnessidentification, citing R. v. Desnomie, 2010 SKCA 64, 350 Sask. R. 273(Sask. C.A.); R. v. Bitternose, 2009 SKCA 60 (Sask. C.A.); R. v. Bigsky,2006 SKCA 145, 289 Sask. R. 179 (Sask. C.A.); as well as the OntarioCourt of Appeal decision in R. v. Biddle (1993), 84 C.C.C. (3d) 430 (Ont.C.A.) and the Supreme Court’s decision in that case at [1995] 1 S.C.R.761 (S.C.C.). The trial judge noted this case law embraced a number ofprinciples, but:

[44] Foremost among these principles is that brief eyewitness obser-vation concerning identity is insufficient to prove identity by itself.However, strong circumstantial evidence may, in combination withsuch eyewitness identification evidence, prove the identity of the ac-cused beyond a reasonable doubt. In considering the eyewitness evi-


dence, however, it is imperative that the Court consider the reliabilityof the eyewitness evidence in the circumstances, and not simply thecredibility of the witnesses. This requirement acts as a safeguardagainst the obvious risk that a witness, although convinced they arebeing truthful, is nevertheless mistaken in their observation. ...

29 Beginning there, the trial judge plainly found both constables to becredible witnesses, saying their testimony was “candid and straightfor-ward” and had “not [been] shaken on cross-examination and is acceptedas credible”. Furthermore, she found Constable Ash’s evidence of iden-tity to be reliable; whereas, she rejected as “of doubtful reliability” theevidence of identity tendered through Constable Alexander. Then, inconsideration of the “foremost” of the principles she had drawn from thecase law, the trial judge concluded Constable Ash’s evidence alone wasinsufficient to prove the identity of the driver in all three incidents be-yond a reasonable doubt.

30 However, in this case, the trial judge also had resort to direct andcircumstantial evidence of Mr. Briltz’s involvement in the offences al-leged. And, using the approach espoused by the Ontario Court of Appealin R v Biddle, it is clear the trial judge considered the whole of this otherevidence and the eye-witness evidence of identification strong enough toground a finding beyond a reasonable doubt that Mr. Briltz had been thedriver in all three incidents. I can see no error in her approach or herdetermination in that regard.

31 Moreover, in the course of reaching her determination, the trial judgealso plainly considered and rejected Mr. Briltz’s alternate explanation forhis presence during the third incident, saying his version of events“strains credulity” and noting he had admitted to memory problems, hadsuggested he might have dementia, had contradicted his own testimony,and had admitted to being under the influence of alcohol and marihuanaat the time of his arrest. In short, Mr. Briltz was not a credible witnessand his evidence did not leave the trial judge in reasonable doubt as tohis guilt (see R. v. W. (D.), [1991] 1 S.C.R. 742 (S.C.C.)).

32 For these reasons, this ground of appeal is without merit.

c. The distinctiveness of the target vehicle33 Here, Mr. Briltz says the trial judge erred by finding as corroborative

evidence that the same vehicle had been used in all three incidents. Hesays she should not have relied on Constable Ash’s testimony that themodel of vehicle in question was rare or that other vehicles of that model


bore distinguishing features, such as vanity plates. He points to the fact adifferent license plate had been observed in each incident, none of whichmatched Mr. Briltz’s vehicle, which was unregistered.

34 Put simply, the trial judge was entitled to rely on the evidence as tothe distinctiveness of the target vehicle as proffered through ConstableAsh. This evidence was not contradicted or “shaken on cross-examina-tion” at trial. Moreover, absent a palpable and overriding error, an appel-late court is simply not entitled to interfere with the individual findingsof fact made, and inferences of fact drawn, by a trial judge. As the recorddiscloses no such error, I find this ground of appeal is without merit.

d. The findings that pursuits had occurred35 Here, the trial judge is said to have erred by convicting Mr. Briltz of

evading three pursuits (contrary to s. 249.1(1)) in the face of evidencethat the Regina Police Service has a “do not pursue” policy. However,Mr. Briltz has wholly misconstrued the evidence. The evidence is clear:Constable Ash discontinued his “active pursuit” of the target vehicle ineach incident once it had become too dangerous - for public safety rea-sons - to continue. This evidence in no way suggests a pursuit did notoccur by reason of police policy, as Mr. Briltz submits. This ground hasno merit whatsoever.

e. The evidence of overtaking36 Next, Mr. Briltz suggests the trial judge erred by convicting him three

times under s. 249.1(1) when there was no evidence that the police hadfollowed him with the intent of overtaking him. I will address legal as-pects of the line of reasoning that underpins this allegation in more detailunder heading 2(a) (below); but, here, it is sufficient to say there wasoverwhelming evidence that a police pursuit had occurred in each of thethree incidents. This ground has no merit.

f. Inconsistent evidence of impairment37 Lastly, Mr. Briltz says the trial judge erred by convicting him of re-

fusing to comply with a breath demand because she found ConstablesAsh and Kerth were both credible witnesses and yet they each had differ-ent recollections of the indicia of impairment Mr. Briltz had exhibited. Inother words, he alleges the Crown has failed to prove the breath demandwas lawful and, therefore, his refusal does not attract criminal liability.


38 This ground largely overlooks the standard upon which a breath de-mand may be made upon a driver (R. v. Stellato (1993), 78 C.C.C. (3d)380 (Ont. C.A.); R. v. Gunn, 2012 SKCA 80, 399 Sask. R. 170 (Sask.C.A.); R. v. Slippery, 2014 SKCA 23, 433 Sask. R. 183 (Sask. C.A.));moreover, it misapprehends the focus of the inquiry. The question beforethe trial judge here was twofold: (a) whether Constable Ash - the officerwho had made the demand - had held a subjective belief that Mr. Briltz’sability to drive was at least slightly impaired by alcohol; and (b) whetherthe observations articulated by Constable Ash in support of his beliefwere reasonable and sufficiently sustainable on an objective basis to un-derpin his demand for a breath sample. This was the very inquiry under-taken by the trial judge and, given the overwhelming indicia of impair-ment spoken to by Constable Ash, she correctly concluded the breathdemand was lawful. Which is to say, given the standard of reasonablegrounds to believe, the alleged inconsistency between Constable Kerth’sevidence of impairment and that of Constable Ash was irrelevant to theinquiry. Moreover, this is not a case where inconsistencies in witnesstestimony as to indicia of impairment are relevant and material to theassessment of an arresting officer’s credibility or the reliability of theofficer’s testimony.

39 This ground of appeal is without merit.

g. Summary of conclusions40 In sum, I find no merit to Mr. Briltz’s submissions to the effect that

the verdicts of guilt may be set aside on the grounds that they are unrea-sonable or unsupported by the evidence. On the whole of the evidence,the trial judge’s verdicts on the ss. 259(4), 249.1(1) and s. 254(5) of-fences are strongly supported by the evidence and are ones that a judge,acting judicially, could reasonably have rendered (see R. v. Yebes and R.v. Biniaris).

2. Did the trial judge make a wrong decision on a question of law?41 I turn now to the second leg of Mr. Briltz’s appeals from conviction.

Here, Mr. Briltz alleges the judgment of the trial judge should be setaside under s. 686(1)(a)(ii) of the Criminal Code on the ground of wrongdecisions on questions of law that were placed before the Court at histrial. I will now examine each allegation.


a. The meaning of pursued under s. 249.1(1)42 As noted above, Mr. Briltz says the trial judge erred in law by con-

victing him under s. 249.1(1) of the Criminal Code because there was noevidence before her of a pursuit taking place. By this, he refers to thelanguage of s. 249.1(1):

Every one commits an offence who, operating a motor vehicle whilebeing pursued by a peace officer operating a motor vehicle, fails,without reasonable excuse and in order to evade the peace officer, tostop the vehicle as soon as is reasonable in the circumstances.

[Emphasis added]

43 Mr. Briltz submits Constable Ash’s evidence to the effect that he hadnot intended to overtake the target vehicle belies the legal conclusion thatConstable Ash had been pursuing it. He says the trial judge misinter-preted the finding in R. v. Z. (R.R.), 2008 SKQB 313, 319 Sask. R. 213(Sask. Q.B.), where Ryan-Froslie J. (as she then was), relying on R. v.Kagayalingam, 2006 ONCJ 402 (Ont. C.J.), had interpreted pursuit forthe purposes of s. 249.1(1) to mean “following with the intent to over-take”. It is noteworthy that the Court in R. v. Kagayalingam also said thatactive following was not synonymous with pursuit.

44 I find no merit to Mr. Briltz’s submission. What his argument over-looks is that the overall tenor of Constable Ash’s evidence was consistentwith a pursuit occurring in each incident. Moreover, as the trial judgeclearly appreciated, the concept of overtaking a vehicle can take on con-textual nuances:

[66] On the facts in this case, Constable Kerth stated in-chief that onseeing the HHR, which was similar to the HHR that had been in-volved in the previous evades, they proceeded to try and catch up toit and pull it over to see who was driving and obtain driver informa-tion to determine if it had been involved in the past evades. Whenasked in cross-examination if they tried to overtake the vehicle, theyeach replied in the negative.

[67] It is important to note, however, that the word “overtake” can beascribed different meanings, particularly in different contexts such asin matters involving highway traffic and the rules of the road whereovertaking a vehicle may mean passing the vehicle and continuing onrather than pursuing it. Indeed, defence counsel gave the word twodifferent definitions. It is important to cite in full counsel’s and Con-stable Ash’s exchange in this regard found at page 61 of thetranscript:

Counsel: Okay. So I take it you didn’t try to overtake that vehicle?


Constable Ash: To - by - do you mean to pass it?

Counsel: Yes. To overtake, catch up to it.

Constable Ash: Well, I was behind it.

Counsel: Right.

Constable Ash: Like, as-

Counsel: But -

Constable Ash: — I followed it for a short distance -

Counsel: Yes.

Constable Ash: — less than a car length away, but, no, I never triedto overtake it. That’s not safe.

[68] As for Constable Kerth, counsel addressed the same issue butwithout prefacing his question with a definition of “overtake”. Theexchange is found at page 93 of the transcript:

Counsel: Okay. You don’t try to overtake that vehicle?

Constable Kerth: Absolutely not, no.

[69] Based on the first exchange, it is clear that counsel defined theword “overtake” in two ways. First, he defined the word as “to pass”and second as “to catch up with”.

[70] It is clear from the testimony of Constable Ash and ConstableKerth that each officer was trying to “catch up with” the vehicle inorder to pull the accused over and not to “pass” the vehicle. The ac-cused was speeding away. The constables accelerated to the pointwhere they were approximately a car length away. Both constableshad the police cruiser’s flashing lights and sirens activated. In allmeaningful ways, then, both constables were trying to “catch upwith” the accused in order to make him stop and, in that sense, over-take the accused. Although Constable Kerth denies that he was at-tempting to “overtake” the accused, the confusion arises from coun-sel leaving the definition of the word ambiguous. Based on the facts,Constable Kerth was clearly attempting to “catch up with” the ac-cused’s vehicle to make it pull over so he could engage with thedriver.

[71] In argument, counsel appears to only adopt the first meaning,being “to pass”. This is illogical given the context and purpose of s.249.1(1) of the Criminal Code. That section is meant to deter indi-viduals from evading police. One can be evading another withouthaving the other attempt to pass the evading party. Indeed, in R.Z.,supra, there was no mention of the officer attempting to pass the ac-cused, who was convicted. Therefore, R.Z. is also consistent with thelatter definition of the word “overtake”.


[72] The latter definition also appears to be in line with the AlbertaProvincial Court decision of R. v. Zylinski, 2009 ABPC 226. In thatcase, Judge Johnson, after citing the definition of pursuit cited inKagayalingam, concluded as follows at paragraph 36:

He clearly intended that the vehicle stop and he put on hislights to signal that purpose. When the vehicle did notstop he followed it continuing, through the use of hisemergency lights, to try to make it stop. He was not fol-lowing to observe the vehicle — he was following it tomake it stop. That constitutes a pursuit.

[73] I find, therefore, that the meaning of the word “overtake” in-cludes “to catch up with” and does not require any attempt to passthe other vehicle.

[Emphasis in original]

45 In my assessment, the trial judge correctly interpreted the meaning ofthe word pursued in s. 249.1(1); more importantly, she correctly con-cluded the police had pursued Mr. Briltz during each of the three inci-dents in question. The evidence before the trial judge in respect of eachof these incidents may be summarised as this: Constable Ash targetedand decided to stop a vehicle and he engaged his cruiser’s emergencylights and siren to signal that intention; but, when the targeted vehicle didnot comply, he followed it with the intention of trying to make it stop, allthe while continuing to indicate his intention to do so with his cruiser’ssiren and emergency lights. That is sufficient to constitute a pursuitwithin the meaning of s. 249.1(1) of the Criminal Code.

b. “In the execution of his duty” under s. 129(a)46 For a conviction for obstruction by resisting arrest to lie under s.

129(a) of the Criminal Code, the peace officer involved in the arrestmust be found to have been acting “in the execution of his duty”. Here,Mr. Briltz says the trial judge erred in law by finding that Constables Ashand Kerth were acting in the execution of their duty when they arrestedhim because they had no reason to believe he had committed any crimi-nal offence.

47 As it stands, this ground of appeal rests on the shaky footing of Mr.Briltz’s contention that he is not guilty of the offences under s. 249.1(1)of the Criminal Code. As his argument goes, if the police did not pursuehim, then he did not evade them and they had no grounds to arrest himfor that; and, so, his conviction for resisting that arrest should be over-turned. I have already found no error in the trial judge’s handling of the


charges under s. 249.1(1) and that her verdicts in that regard were notunreasonable or unsupported by the evidence. As such, there is simply nomerit to this ground of appeal.

c. Summary of conclusions48 In summary, I find no merit to either of Mr. Briltz’s contentions that

the trial judge erred by making a wrong decision on a question of law inthis case.

3. Disposition on the conviction appeal49 As I have explained, the eight guilty verdicts in this case are

grounded soundly in the evidence that was before the trial judge and donot result from a wrong decision on a question of law. Given these find-ings, I conclude we are not entitled to interfere with the verdicts and theconvictions must be sustained. For this reason, I would dismiss the ap-peal from conviction.

50 I turn now to address the appeals against sentence.

B. Sentence Appeals51 Given the interplay of the issues raised by Mr. Briltz and the Crown

in their respective appeals against sentence, the matter of the fitness ofthe five-year sentence of imprisonment imposed in this case may be ad-dressed under one analysis.

52 The Crown’s position is clear. It states the public undoubtedly “de-serves to be protected” from Mr. Briltz by reason of his habitual propen-sity to commit serious driving offences despite repeated judicial inter-vention in the past. The Crown says Mr. Briltz is an habitual drivingoffender. In strong language, it says the only way to protect the publicfrom Mr. Briltz is to incarcerate him for a lengthy period of time - itseeks a sentence of “nothing less than 7 to 8 years” imprisonment.

53 Mr. Briltz says the trial judge erred in principle when exercising herdiscretion to impose consecutive (rather than concurrent) sentences withrespect to the ss. 249.1(1) and 259(4) offences because they occurredsimultaneously. Mr. Briltz says correction of this error would reduce thestarting point for his global sentence from 108 months to just 86 months.Thereafter, under the principle of totality, he submits that, by applyingthe same arithmetic as the trial judge had employed, this starting pointsentence ought to be reduced to 48 months, being 5/9ths of its duration. Inany event, he says five years’ imprisonment is an excessive sentence


when his circumstances are compared to cases like R. v. Bear (1994),120 Sask. R. 294 (Sask. C.A.) [R v Bear 1994], where the Court imposeda 3.5 year sentence of imprisonment on a driving offender the Court hadlabelled as all but the worst of the worst. He says the top of the range isfour years based on R. v. Bear, 2007 SKCA 127, 302 Sask. R. 153 (Sask.C.A.) [R v Bear 2007]. In the end, he suggests a fit sentence of imprison-ment would be in the range of “three to four years, less time on remand.”

54 As with any sentence appeal, analysis of the fitness of the sentence isframed by the standard of review: absent an error in principle, failure toconsider a relevant factor, or an overemphasis of the appropriate factors,an appellate court should only intervene to vary a sentence imposed attrial if the sentence is demonstrably unfit (R. v. M. (C.A.) at para 90).This has recently been re-clarified in R. c. Lacasse, 2015 SCC 64(S.C.C.) at paras 43-55. The analysis itself begins, in this case, with con-sideration of the sentencing principles and objectives brought into playby the particular circumstances of the offences and the offender inquestion.

1. Did the trial judge err in her determination of the paramountobjectives of sentencing?

55 While acknowledging the trial judge recognized the recidivist natureof Mr. Briltz’s offending, the Crown submits she still erred in principle,leading her to impose a sentence that was neither just nor proportionateto the gravity of the eight offences and Mr. Briltz’s moral culpability incommitting them. As a result, the Crown reasons the five-year term ofimprisonment imposed on Mr. Briltz does not achieve the fundamentalpurpose of sentencing or reflect the fundamental principle of sentencingand is therefore demonstrably unfit.

56 At the time of these offences, the fundamental purpose of sentencing,as set out in s. 718 of the Criminal Code, was to contribute - along withcrime prevention initiatives - to respect for the law and the maintenanceof a just, peaceful and safe society by imposing just sanctions that haveone or more of the following objectives: denunciation of unlawful con-duct, deterrence of the offender and others from committing offences,separation of offenders from society where necessary, assistance in reha-bilitating offenders, providing reparation for harm done, and promotionof a sense of responsibility in offenders and an acknowledgement ofharm done.


57 When crafting a sentence to achieve this purpose, the fundamentalprinciple at play is that the sentence must be proportionate to the gravityof the offence and the degree of responsibility of the offender (s. 718.1).In this way, the Criminal Code (s. 718.1) calls upon a sentencing judgeto assess the gravity of an offence and to weigh the moral culpability ofthe offender in part so as to determine which of the objectives of sentenc-ing (s. 718) are paramount in the particular circumstances of the offenceand offender in question, and to craft a fit sentence accordingly.

58 In some cases the paramount objectives will be more obvious than inothers. Here, where the court is to assess the serious driving offences ofan habitual offender, the goal of sentencing is to protect the public (R vBear 1994). And, under s. 718, this goal is achieved through emphasis ofthe sentencing objective of separation - i.e., incarceration. JusticeVancise explained this over 20 years ago in R v Bear 1994:

[6] This is a classic example of an individual who has been dealt withleniently and has not responded. The last series of offences commit-ted by him are typical. Not only did he continue to drive while dis-qualified, he failed to comply with the terms of a probation orderwhich required him to take alcohol counselling during probation,even though it is patently obvious the cause of his problem is alcoholabuse. The question arises, what are the appropriate factors to con-sider and how must they be balanced in sentencing such anindividual?

[7] The framework or principle for sentencing formulated in R. v.Morrissette (1970), 1 C.C.C. (2d) 307, 75 W.W.R. (N.S.) 644 (Sask.C.A.) [now reflected in ss. 718 and 718.1], requires the courts, inseeking to protect the public, to impose a fit and just punishmenthaving regard for the gravity of the offence; for deterrence, both gen-eral and specific; for the reformation of the offender; and for the in-tegrity of the administration of justice.

[8] Driving offences are particularly difficult to deal with because,for the most part, they deal with, at least for the lesser driving of-fences, otherwise law abiding citizens with no previous record whohave committed what has been regarded, at least up to now, as aquasi criminal offence. That attitude is however, changing, particu-larly where death or injury have occurred, and has clearly changedwhere the accused has a long record of driving offences, includingdriving while disqualified.

[9] While in most cases, rehabilitation and reformation would be astrong factor in determining an appropriate sentence, in cases involv-ing repeat offenders with multiple driving offence convictions, who


have been given every opportunity to reform, this ceases to be a con-sideration. The offender has clearly shown himself incapable of reha-bilitation, with the result that protection of the public can no longerbe achieved, or even hoped for, through his reform.

[10] Similarly, when dealing with an offender who is not only a re-peat offender, but a multiple re-offender of driving offences, specificdeterrence is not an important principle to consider. The offender hasnot been specifically deterred, previous penalties have had little or noimpact on his criminal activity and he has continued to offend.

[11] The length of sentences for driving offences has been steadilyincreasing for the so-called lesser offence of impaired driving, aswell as for driving offences involving bodily harm or death. Thiscourt, and other appellate courts, seek by imposing longer sentences,to inhibit others from committing this criminal activity. It is gener-ally conceded that legal sanctions have an overall deterrent effect,above all when it is generally known by the public that certain crimi-nal activity, such as impaired driving or driving while disqualified,will be fairly certain to produce a known result, that is, a long periodof incarceration. What is not known is whether longer sentences for aparticular offence, taken by themselves have the effect of reducingthe crime rate, or deterring a particular class of offenders.

. . .

[13] Protection of the public is the paramount and overriding consid-eration of sentencing. One must ask how that goal is best achieved.The principles of sentencing enunciated by Culliton C.J.S. in R. v.Morrissette, supra, are all designed to achieve protection of the pub-lic, but each in a different way. He stated:

“...Both trial and appellate Judges must be ever mindful ofthe fact that the principal purpose of the criminal process,of which sentencing is an important element, is the pro-tection of society.”

. . .

“The real problem arises in deciding the factor to be em-phasized in a particular case. Of necessity, the circum-stances surrounding the commission of an offence differin each case so that even for the same offence sentencesmay justifiably show a wide variation.” (p. 309 of C.C.C.)

[14] In cases such as this, where it is clear neither general deterrencenor specific deterrence have had any impact on the accused, andwhere it is clear rehabilitation is a faint possibility, how may protec-tion of the public be achieved? If one accepts the fundamental goal of


sentencing is the protection of society, the most direct method ofachieving that goal, assuming protection of society cannot beachieved by rehabilitation or reformation, is incarceration. Personslike Mr. Bear are the persons law abiding users of the highways havethe right to be protected from. There is but one way to protect thepublic from such people thereby incapacitating the offender by im-posing a custodial sentence.

As Justice Vancise observed, the principal question in cases such as thisis not whether the public requires protection from the offender - it does -but whether it is necessary to remove the offender from society to ensurethat the public is protected and, if so, for how long.

59 Justice Vancise further noted in R v Bear 1994 and again in R. v.Andres, 2002 SKCA 98 (Sask. C.A.) at para 25, (2002), 223 Sask. R. 121(Sask. C.A.), that an examination of sentences imposed for driving of-fences reveals increasing judicial and Parliamentary intolerance to recidi-vism, resulting in the availability and imposition of longer sentences ofimprisonment. On this point, Justice Vancise in R v Bear 1994 said:

[24] Logically, a sentence for the less serious offence of impaireddriving, even where the offender has a long record of similar convic-tions, should be less than the sentence for the more serious offences.But there comes a time when the objective of protection of the publiccoupled with the offender’s continued recidivism (which renders himor her a greater danger to society), requires a longer sentence, oneapproaching those imposed for the more serious offences.

[25] What then, is the result of all this? In my opinion, the sentenceimposed on repeat offenders charged with impaired driving, or im-paired driving causing bodily harm or death, must bear some rela-tionship to sentences imposed for the more serious offences commit-ted in similar circumstances because of the accused’s repeatedrecidivism. It ought to be in the same range. Depending on the cir-cumstances, including the number of previous convictions and theconsequences, it can however be very close to the top of the range orin appropriate circumstances even exceed it (See: R. v. Eashappie(C.O.) (1994), 120 Sask.R. 161, 68 W.A.C. 161 (C.A.), issued con-currently). By imposing a lengthy sentence for driving offences in-volving multi-re-offending, and in particular driving offences involv-ing impaired driving and impaired driving where bodily injury hasoccurred, the courts will signal a predictability and consistency andachieve the primary objective of the protection of the public.

See for example: R. v. Akapew, 2009 SKCA 137 (Sask. C.A.) at para 27,(2009), 343 Sask. R. 155 (Sask. C.A.); R. v. Andres, at para 19; R. v.


Eashappie (1994), 120 Sask. R. 161 (Sask. C.A.) at paras 33-35; R vBear 2007 at para 7; R. v. Harrison, 2004 SKCA 150 (Sask. C.A.) at para4, (2004), 254 Sask. R. 159 (Sask. C.A.).

60 But, it is clear to me the trial judge was well aware of this case lawand the principle at play in cases of this nature. In her consideration ofMr. Briltz’s circumstances, she said this:

The accused has shown a persistent disregard for the law, for therules of the road and for the safety of the public by his repetitivecriminal behaviour, and the numerous criminal driving related con-victions he has accumulated. A lengthy period of incarceration iswarranted in this case.

. . .

In addition to the pertinent provisions of the Code and the case law,the Court takes into consideration the overall circumstances of thiscase, included — including the repeated offending within a relativelyshort period of time of one month ten days, accumulating eight con-victions, the reckless behaviour and risk created to the public andpolice during the offences in question, the lengthy and continuouscriminal record of the accused, with 24 prior related offences, theaccused’s personal circumstances, and the aggravating and mitigatingfactors.

61 So, while I find that the primary goal in the circumstances of Mr.Briltz’s current offending and his record of past offences is undoubtedlyprotection of the public, I cannot agree that the trial judge lost sight ofthis primary goal in crafting her sentence. That said, I turn now to con-sider whether the trial judge failed to achieve that goal with the sentenceshe imposed.

2. Is the sentence proportionate to the gravity of the offences and thedegree of Mr. Briltz’s responsibility?

62 It is useful at this point to set out the sentences initially imposed bythe trial judge before her application of the principle of totality. In thisregard, she sentenced Mr. Briltz on each of his eight offences in thisway:

First Incident Sentence

s. 259(4) Drive while disquali- 10 Months-consecutivefied

s. 249.1(1) Evade police 14 Months



Total Sentence 24 Months-consecutive

Second Incident Sentence




Third Incident Sentence

s. 259(4) Drive while disquali- 16 Months-concurrentfied

s. 249.1(1) Evade police 20 Months-consecutive

s. 254(4) Breath sample refusal 36 Months-consecutive

s. 129(a) Resist arrest 12 Months-concurrent


Global Sentence 108 Months (or 9Years)

63 As can be seen, the trial judge described the sentence of imprison-ment she imposed in respect of the first and second offences under s.259(4) as being consecutive to the sentences she imposed for the corre-sponding first and second offences under s. 249.1(1), rather than theother way around. While resulting in no change to the bottom line com-bined sentence in respect of those two incidents, the approach gave riseto a mischaracterization of the sentences she had imposed with respect tothe third incident. There, she described the sentence for the s. 259(4) of-fence as being concurrent, which means the sentence for the s. 249.1(1)offence is not truly consecutive to it, as she seems to have intended.Were the sentences actually consecutive, the total sentence for the thirdincident would have amounted to 72 months’ imprisonment (16 months+ 20 months consecutive + 36 months consecutive = 72 months), puttingthe total combined sentence at 124 months, or ten and one-third years.

64 Nonetheless, I am hard-pressed to conclude the trial judge erred inher assessment of the gravity of the offences committed by Mr. Briltz orin her assessment of his moral culpability for committing them. A totalcombined sentence of 108 months’ imprisonment would achieve the goalof protecting the public from Mr. Briltz by properly emphasising the ob-jective of separating him from society.


65 I say this because Mr. Briltz’s past conduct of driving while disquali-fied supports the Crown’s contention that he will be a danger to the pub-lic in the future. He has continued to drive despite being continually dis-qualified from doing so; moreover, he is a severe alcoholic whorepeatedly drives drunk while disqualified from driving. Mr. Briltz is aninveterate, contumacious driving offender who presents a continuingdanger to public safety. His prior convictions, incarceral sentences, driv-ing prohibitions and court orders appear to have had little positive effecton him in the past and it is reasonable to assume this will remain the casein the future. Furthermore, the imposition of driving prohibitions wouldseem to have actually had the negative effect of giving him cause to ille-gally skirt vehicle registration and insurance requirements. As noted, tocommit the instant sets of offences, Mr. Briltz acquired and drove anunregistered, uninsured vehicle notwithstanding his driving prohibitions.In fact, he was still serving his sentence for a series of offences nearlyidentical to those at hand when he was arrested on the charges that nowbring him before this Court.

66 The only relevant sentencing goal in this case is protection of thepublic. Sentencing will only achieve this goal through a long period ofincarceration. It is clear neither specific nor general deterrence have hadany impact on him. He has a long-standing problem with alcoholism anddrug abuse, but has not shown that he is amenable to rehabilitation. Hecontinues to drive while his ability to do so is impaired, to drive while heis disqualified, and to evade police when he is observed doing so. TheCrown has no evidence of the degree of impairment in the third incidentbecause Mr. Briltz unlawfully refused to provide a sample of his breath.These are the type of offences he has committed for approximately 40years - fortunately without killing or injuring anyone so far - heedless ofthe penal consequences meted out. He offers no explanation or apologyfor his unlawful conduct. In the circumstances, the only option remainingis to disable him to protect the public.

67 The trial judge properly identified many of these facts as aggravatingand her initial global sentence of nine years’ imprisonment reflects herconsideration of these aggravating circumstances. As such, I find no rea-son to conclude the trial judge erred in her initial assessment of the over-all gravity of the offences committed by Mr. Briltz or in her initial as-sessment of his moral culpability for having committed them.


3. Did the trial judge err in her consideration of the principle of totality?

a. Consecutive sentences68 I would begin, under this heading, by quickly addressing Mr. Briltz’s

contention that the trial judge erred when she imposed sentences under s.249.1(1) that were consecutive to the sentences she had imposed for hisother offences.

69 The trial judge had to decide whether to impose consecutivesentences by reason that the eight separate offences arose under threeseparate incidents of offending and because three of them arose under s.249.1(1). But, I find the trial judge did not err by deciding that Mr.Briltz’s sentences for his s. 249.1(1) offences should be served consecu-tive to his other offences arising from each incident and that his com-bined sentences for each incident should themselves be servedconsecutively.

70 By its very nature, the sentence for a s. 249.1(1) offence ought to beusually served consecutively to any other sentence. This is so because itis imposed in respect of the offender’s deliberate, unlawful attempt toevade criminal liability for having committed another, different criminaloffence (see R. v. Mozylisky, 2009 SKCA 94 (Sask. C.A.) at para 8,(2009), 331 Sask. R. 303 (Sask. C.A.)). On this point, I must agree withthe sound reasoning of the Court in R. v. Breton, 2004 ABCA 391, 357A.R. 371 (Alta. C.A.):

[17] A sentence for evasion should normally be served consecutivelyto a sentence for another offence, keeping in mind the totality princi-ple. This is because offenders who evade police often do so in anattempt to evade responsibility for a separate offence. To elaborateon the comments of Marshal, J., in R. v. Beaudry [(1995), 171 AR149 (PC), aff’d (1996), 181 AR 130 (CA)], offenders should not bepermitted to weigh the odds and consider that if they stop, they willbe caught and punished; but that if they do not stop, they may not becaught and any sentence evading the police may be served concur-rently to that for the offence for which they are avoiding detection.

As Justice Hunter observed in R. v. Akapew at para 51, “generally, con-current sentences [for s. 249.1 offences] are imposed only when the courtmust adjust the sentence to comply with the totality principle. ...”

71 As for the trial judge’s decision to impose consecutive combined-sentences in respect of each of the three incidents in this case, I observethat s. 718.3(4)(c) of the Criminal Code provided the trial judge with theauthority to impose consecutive sentences because she had convicted Mr.


Briltz of “more than one offence” and she had determined to impose“terms of imprisonment for the respective offences”. By the terms of s.718.3(4)(c), the trial judge’s decision to impose sentences that are con-secutive in this way is a discretionary one; and, her decision to do soattracts the same level of deference as is owed to her decision as to thelength of each term of imprisonment she imposed (see R. v. M. (T.E.),[1997] 1 S.C.R. 948 (S.C.C.), at 982; R. v. Hotomanie, 2009 SKCA 135,343 Sask. R. 235 (Sask. C.A.)). Moreover, while discretionary, as a gen-eral rule a sentencing court will impose consecutive sentences wherethere is no relationship between the separate commissions of the respec-tive offences; subject, of course, to the totality principle. In that regard, Ifind no error in the trial judge’s decision.

b. The totality principle72 In the scheme of this case, it mattered little whether the trial judge

had decided to impose consecutive or concurrent sentences. I say thisbecause, by reason of the fundamental principle of sentencing, the trialjudge had to ensure her global sentence would be proportionate to theoverall gravity of the offences and to Mr. Briltz’s overall moral culpabil-ity in committing them, regardless of how they stacked up - i.e., whetherconcurrently or consecutively. And, in that regard, she crafted her initialglobal sentence of nine years to achieve its goal of protecting the publicfrom Mr. Briltz. The totality principle is engaged here because whereconsecutive sentences are imposed “the combined sentence should not beunduly long or harsh” (s. 718.2(c) of the Criminal Code). On this, theCrown says the trial judge erred by making no finding that the overallcombined sentence in this case was unduly long or harsh. Moreover, itsays she further erred in her re-assessment of the overall gravity of theoffences and of the overall moral culpability of Mr. Briltz under the to-tality principle, leading her to improperly discount his sentences. Finally,the Crown says she failed to explain herself. The end result being that thesentence is demonstrably unfit.

73 I am persuaded by the Crown’s submission that the trial judge ap-pears to have failed to consider whether and to what extent a combinedsentence of nine years exceeded Mr. Briltz’s moral culpability for theseoffences; or, at the least, she failed to explain her reasoning in that re-gard. The chief concern I have with the trial judge’s decision is that theresult of her application of the principle of totality in the circumstances isnot accompanied by any explanation or reasoning. In this regard, imme-


diately after she had imposed individual sentences for each of the eightconvictions, she simply said:

The total of these sentences comes to nine years. However, applyingthe principle of totality, to ensure that the sentence is not too harsh, aglobal sentence of five years is appropriate. The accused seeks anenhanced remand credit of 1.5 to 1, which the Court is prepared toallow, having regard to the accused’s circumstances on remand, andthe Summers decision of the Supreme Court, cited at 2014, SCC 26(sic).

[Emphasis added]

She then reapportioned the individual sentences under the umbrella ofthe five year global sentence in this way:










s. 259(4) Drive while disquali- 9 Months-concurrentfied





Global Sentence 60 Months (or 5Years)

While her approach of describing the drive while disqualified offencesentences as being consecutive to the sentences for evasion led her to errwhen calculating the combined sentences for the third incident (whichactually total 39 months), I need not address it because, given the record,


I must respectfully conclude the trial judge committed a more fundamen-tal error when addressing the principle of totality, as I will explain.

74 In R. v. Leroux, 2015 SKCA 48, 460 Sask. R. 1 (Sask. C.A.), a deci-sion of this Court rendered after the trial judge had pronounced her sen-tence, we elucidated that a sentencing judge ought to provide some rea-sons for reducing a sentence under the principle of totality:

[82] The absence of analysis from the sentencing decision in thiscase also runs afoul of several of the propositions set forth in R vSheppard, 2002 SCC 26, [2002] 1 SCR 869, with respect to the dutyof a trial judge to give reasons. Namely, reasons were important hereto clarify the basis for the extent of application of the principle oftotality. I say this because — from the record — it is not apparent tome how the judge came, in his application of the principle of totality,to reduce the overall sentence by 14 years. The lack of reasons alsoleft the Crown without much assistance in considering a potential ap-peal on this basis. Thus, there is both a functional need and an appel-late need to know why the principle of totality operated so as to re-duce the sentence as it did. The decision is in error because it lacks abasis for meaningful review of its correctness, whether by the Crown,an appellate court or the public. And that does not address s. 726.2 ofthe Criminal Code, which generally requires sentencing judges togive reasons for judgment when imposing a sentence.

75 Albeit that she delivered an oral sentencing decision, the trial judgewas called upon by R v Sheppard to present her reasons for reducing Mr.Briltz’s sentence by nearly one-half under the principle of totality. Un-fortunately, although she had carefully reviewed the aggravating factorsthat had led her to impose a combined sentence of nine years, she gaveno indication as to what factors led her to ultimately conclude nine years’imprisonment was not a just sanction or was unduly long or harsh underthe principle of totality. The Crown suggests she might have erroneouslybelieved a combined sentence should not exceed the maximum sentencefor the offence for which she had imposed separate, consecutivesentences (i.e., on indictment, s. 249.1(1) carries a five-year maximum, ifno one has been killed or injured); but, that is pure speculation, as thereis no suggestion of that or any other reason in her decision. Moreover, Icannot discern from the record a compelling reason to reduce the com-bined sentence in this case to five years’ imprisonment. As such, I findthe trial judge erred in her approach and consideration of the totalityprinciple in the circumstances of this case.


76 Having established error, it remains to determine whether the sen-tence imposed is nonetheless demonstrably unfit in the circumstances (R.c. Lacasse). As I noted earlier in these reasons, I have found no error inthe trial judge’s approach or consideration of the fundamental purposeand fundamental principle of sentencing in the circumstances of thiscase. I accept her reasoning in that regard as it was not borne of an errorin principle, failure to consider a relevant factor, or an overemphasis ofthe appropriate factors - aside from the unfortunate mischaracterisationalready noted. This suggests that a fit sentence may well be within therange of 9 to 10 years’ imprisonment and that a five-year sentence ofimprisonment is demonstrably unfit. That is to say, while I might inter-fere with her sentence in this case, I would only do so in respect of theapplication of the totality principle in the circumstances. And, I wouldremedy the error by conducting that analysis afresh.

77 In that regard, Lamer C.J.C.’s instruction in R. v. M. (C.A.) is apt. Hedescribed the totality principle in these terms:

[42] In the context of consecutive sentences, this general principle ofproportionality expresses itself through the more particular form ofthe “totality principle”. The totality principle, in short, requires asentencing judge who orders an offender to serve consecutivesentences for multiple offences to ensure that the cumulative sentencerendered does not exceed the overall culpability of the offender. AsD. A. Thomas describes the principle in Principles of Sentencing(2nd ed. 1979), at p. 56:

The effect of the totality principle is to require a sentencerwho has passed a series of sentences, each properly calcu-lated in relation to the offence for which it is imposed andeach properly made consecutive in accordance with theprinciples governing consecutive sentences, to review theaggregate sentence and consider whether the aggregatesentence is “just and appropriate”.

Clayton Ruby articulates the principle in the following terms in histreatise, Sentencing, supra, at pp. 44-45:

The purpose is to ensure that a series of sentences, eachproperly imposed in relation to the offence to which it re-lates, is in aggregate “just and appropriate”. A cumulativesentence may offend the totality principle if the aggregatesentence is substantially above the normal level of a sen-tence for the most serious of the individual offences in-volved, or if its effect is to impose on the offender “a


crushing sentence” not in keeping with his record andprospects.

[Emphasis added]

78 Mr. Briltz’s overall moral culpability is great. His criminal conduct inrepeatedly fleeing from the police is very serious. It speaks of wantondeliberateness and heedless contumacy. Worse, it indicates he actuallyappreciates the seriousness of his other driving offences but is neverthe-less willing to put his own safety and public safety further at risk to avoidfacing the consequences of it. He chose to commit the offence under s.249.1(1) on three separate occasions. In that way, he deliberately andrepeatedly placed himself and his offending above the safety of others.By this conduct, he shows he is aware of - but remains indifferent to - theoverall seriousness of his continual disregard for the law and court or-ders. Again, it is apparent previous lenient sentences of imprisonmentcoupled with driving prohibitions have had no effect on him. Given thecircumstances, the Court is left with no choice but to disable him to pro-tect the public.

79 Having considered his absolute moral culpability in committing theseoffences, the aggravating circumstances of the offences, and the very fewmitigating circumstances in this case, I find a fit, combined sentence iseight years’ imprisonment.

80 As noted, the trial judge’s initial assessment before application of thetotality principle was that a sentence of nine years (or ten and one-thirdyears, if properly calculated) was fit in the circumstances. As her deci-sion suggests, that would have been unduly long or harsh. However, Ifind an eight year sentence of imprisonment is not unduly long or harshwhen measured against the gravity of the crimes Mr. Briltz has commit-ted, the level of his moral culpability, and the degree of danger to thepublic he presently poses.

81 In arriving at this conclusion, I have had regard for Mr. Briltz’s age,his alcoholism, his family circumstances, and his prospects for reform orrehabilitation. Eight years’ imprisonment for a 61 year old man is a sig-nificant sentence, but not a life sentence. The nature and extent of hiscriminality, his alcoholism and his age is such that I expect reform orrehabilitation will be difficult for him, should he choose to take that path.Nevertheless, in light of its totality, an eight-year sentence is apt to bemore conducive to his rehabilitation than destructive of it. As Justice


Cameron observed in R. v. Laprise, 2009 SKCA 46, 324 Sask. R. 263(Sask. C.A.):

[17] It is, of course, for the courts to impose sentences, in keepingwith the purposes, principles, and objectives of sentencing, and forthe executive branch of government to administer the sentences, as itdoes, in cases such as these, through various agencies, including theNational Parole Board. Programs will be offered to the appellantwhile in prison — programs geared towards his rehabilitation and re-integration into society. And the Parole Board, with its powers ofearlier release in view, will be in a position to assess his progress andact upon it as appropriate. With that in mind, there is no good reasonto suppose that the combined sentence is crushing or destructive ofhis prospects for reform.

4. Disposition on the sentence appeals82 I find no merit to Mr. Briltz’s appeal against sentence. I would grant

the Crown leave to appeal against sentence. I would grant the Crown’sappeal against sentence by reason that the trial judge erred in principleand imposed a combined sentence that was demonstrably unfit in the cir-cumstances because it is not proportionate to the overall gravity of theoffences committed and Mr. Briltz’s overall moral culpability in commit-ting them.

83 I would vary the total combined sentence, after applying the principleof totality, to one of eight years’ imprisonment. The lifetime driving pro-hibition should remain in place. For purposes of sentence administration,the individual sentences are varied as follows:


s. 259(4) Drive while disquali- 8 Monthsfied















Total Combined Sentence 96 Months (or 8Years)

IV. Disposition84 I would dismiss Mr. Briltz’s appeal from conviction. I would grant

the Crown leave to appeal against sentence, allow that appeal and varythe combined term of imprisonment to eight years, but with no change tothe remand credit calculated by the trial judge. All ancillary orders re-main in place. It follows that I would dismiss Mr. Briltz’s appeal againstsentence.

Accused’s appeal dismissed; Crown’s appeal allowed.


[Indexed as: Precision Drilling Canada Limited Partnershipv. Yangarra Resources Ltd.]

Precision Drilling Canada Limited Partnership, PlaintiffDefendant by Counterclaim and Yangarra Resources Ltd.,

Defendant Plaintiff by Counterclaim and Devon NECCorporation, Defendant

Alberta Court of Queen’s Bench

Docket: Calgary 1201-03487

2015 ABQB 649

Master J.T. Prowse, In Chambers


Judgment: October 14, 2015

Debtors and creditors –––– Interest — Calculation — Rate –––– Plaintiffcompany P brought action against defendant resource company, for unpaid drill-ing fees — P moved for summary judgment in action and was successful — Pmade claim for interest, based on contract between parties — P claimed thatthere should be 18% interest commencing 30 days after each invoice was ren-dered, to judgment — Resource company claimed that interest clause was unen-forceable penalty clause — Resource company also claimed that they could de-lay payments of interest until court ruled against them — Resource companyapplied to amend statement of defence to plead these defences — P applied forinterest to be enforced — P’s application granted — Agreed-upon interest ratewas proper measure to save parties’ time and avoid litigation — Although 18%rate went over that needed to compensate P, it was not unconscionable — Inter-est rate was taken from industry-wide precedent — It was proper to allow inter-est from time of invoice, notwithstanding that there was bona fide dispute overinvoices — This result was consistent with contractual wording.

Cases considered by Master J.T. Prowse, In Chambers:

Adanac Realty Ltd. v. Humpty’s Egg Place Ltd. (1991), 15 R.P.R. (2d) 77, 78Alta. L.R. (2d) 383, 113 A.R. 215, 1991 CarswellAlta 30, [1991] A.J. No.130 (Alta. Q.B.) — considered

Birch v. Union of Taxation Employees, Local 70030 (2008), 2008 ONCA 809,2008 CarswellOnt 7219, 93 O.R. (3d) 1, 2009 C.L.L.C. 220-006, 243 O.A.C.6, [2008] O.J. No. 4856, 305 D.L.R. (4th) 64 (Ont. C.A.) — referred to

Brennenstuhl Estate v. Trynchy (2007), 2007 ABQB 703, 2007 CarswellAlta1591, 63 R.P.R. (4th) 55, 37 E.T.R. (3d) 71, 84 Alta. L.R. (4th) 265, [2008]5 W.W.R. 549, 435 A.R. 85 (Alta. Q.B.) — considered

Precision Drilling v. Yangarra Resources Master J.T. Prowse 535

Deer Valley Shopping Centre Ltd. v. Sniderman Radio Sales & Services Ltd.(1989), 67 Alta. L.R. (2d) 203, 96 A.R. 321, 1989 CarswellAlta 88, [1989]A.J. No. 305 (Alta. Q.B.) — considered

H.F. Clarke Ltd. v. Thermidaire Corp. (1974), [1976] 1 S.C.R. 319, 3 N.R. 133,17 C.P.R. (2d) 1, 1974 CarswellOnt 253, 1974 CarswellOnt 253F, 54 D.L.R.(3d) 385, 18 C.P.R. (2d) 32, 54 D.L.R. (3d) 385 at 399, [1976] 1 S.C.R. 340(note) (S.C.C.) — considered

Horizon Resource Management Ltd. v. Blaze Energy Ltd. (2011), 2011 ABQB658, 2011 CarswellAlta 1914, [2012] 8 W.W.R. 569, 526 A.R. 206 (Alta.Q.B.) — considered

Horizon Resource Management Ltd. v. Blaze Energy Ltd. (2013), 2013 ABCA139, 2013 CarswellAlta 446, 100 C.B.R. (5th) 248, 78 Alta. L.R. (5th) 353,[2013] 7 W.W.R. 415, 544 A.R. 289, 567 W.A.C. 289 (Alta. C.A.) —considered

Precision Drilling Canada Limited Partnership v. Yangarra Resources Ltd.(2015), 2015 ABQB 433, 2015 CarswellAlta 1244 (Alta. Q.B.) —considered

32262 B.C. Ltd. v. See-Rite Optical Ltd. (1998), 1998 CarswellAlta 239, 216A.R. 33, 175 W.A.C. 33, 60 Alta. L.R. (3d) 223, [1998] 9 W.W.R. 442, 39B.L.R. (2d) 102, 1998 ABCA 89, [1998] A.J. No. 312 (Alta. C.A.) —considered


Judicature Act, R.S.A. 2000, c. J-2s. 10 — considered

APPLICATION by plaintiff company P to enforce interest clause, after success-ful summary judgment motion against defendant resource company.

Brian P. Reid, for Precision Drilling Canada Limited PartnershipTrevor R. McDonald, for Yangarra Resources Ltd

Master J.T. Prowse, In Chambers:

1 On July 6, 2015 I granted summary judgment to Precision DrillingCanada Limited Partnership (“Precision”) for approximately $3.5 millionfor unpaid drilling fees against Yangarra Resources Ltd. (“Yangarra”).The reasons for judgment are reported at 2015 ABQB 433 (Alta. Q.B.).

2 When the time came to finalize the wording of the formal judgment,the issue of interest arose. Specifically, pursuant to the contract betweenthe parties, Precision is claiming 18% interest commencing 30 days afterthe date each invoice was rendered until the date of judgment. This


would amount to approximately $2.4 million. For the reasons which fol-low I allow Precision’s claim for interest.

3 Yangarra’s position is that the 18% interest provision under section7.15(f) of the program specification sheet is an unenforceable penaltyclause. Yangarra says that interest should only be allowed in the range of3% to 5% which, it submits, is an amount which would put Precision inthe same financial position it would have been in if Yangarra had paidthe invoices 30 days after they were issued.

Procedural issues4 Yangarra’s two primary arguments against Precision’s claim for in-

terest are:

(i) the contractual provision for 18% interest is an unenforceable pen-alty clause, and

(ii) the contract contains a provision which allows Yangarra to delay,without interest, payment of any invoice which they in good faithdispute. Interest would only begin to run when its objection to theinvoice(s) is disallowed by the court.

5 As Yangarra did not plead these defences in its amended statement ofdefence, Yangarra applies to amend its amended statement of defenceaccordingly.

6 An amendment to a statement of defence is usually allowed no matterhow late so long as the plaintiff is not prejudiced. In my view, Precisionis not prejudiced by the proposed amendments and they are allowed.

Relief against penalties7 Yangarra points to section 10 of the Judicature Act, RSA 2000, c.J-2

as follows: Subject to appeal as in other cases, the Court has power to relieveagainst all penalties and forfeitures and, in granting relief, to imposeany terms as to costs, expenses, damages, compensation and all othermatters that the Court sees fit.

Cases cited by Yangarra8 Yangarra cites H.F. Clarke Ltd. v. Thermidaire Corp. (1974), [1976]

1 S.C.R. 319, 1974 CarswellOnt 253 (S.C.C.) where the Supreme Courtof Canada held that a formula fixing damages was an unenforceablepenalty.


9 In H.F. Clarke, one of the contracting parties agreed not to competeduring the currency of the contract and for three years after its lawfultermination. The contract contained a formula fixing damages for breachof this covenant. The issue was whether that formula constituted a mea-sure of liquidated damages, or whether it constituted a penalty againstwhich relief should be given. The court declined to enforce the formula,ruling at paragraph 28 as follows:

I regard the exaction of gross trading profits as a penalty in this casebecause it is, in my opinion, a grossly excessive and punitive re-sponse to the problem to which it was addressed; and the fact that theappellant subscribed to it, and may have been foolish to do so, doesnot mean that it should be left to rue its unwisdom. Snell’s Principlesof Equity (27th ed. 1973), at p. 535 states the applicable doctrine asfollows:

The sum will be held to be a penalty if it is extravagantand unconscionable in amount in comparison with thegreatest loss that could conceivably be proved to have fol-lowed from the breach.

(emphasis added)

10 Yangarra cites Deer Valley Shopping Centre Ltd. v. Sniderman RadioSales & Services Ltd., 1989 CarswellAlta 88, 67 Alta. L.R. (2d) 203(Alta. Q.B.) where an interest provision on overdue rent was held to bean unenforceable penalty.

11 The plaintiff in Deer Valley was a commercial landlord seeking dam-ages as a result of its tenant abandoning the premises. The lease providedthat the landlord was entitled to interest on overdue rent at 5 per centabove prime. This clause was held to be an unenforceable penalty. TheCourt noted, at paragraphs 133 to 135:

A clause purporting to require interest as moneys owing and unpaidcan be examined to determine if the clause is a penalty and thusunenforceable.

InMitsui & Co. v. Ocelot Indust. Ltd., 43 Alta. L.R. (2d) 189, [1986]3 W.W.R. 337, 68 A.R. 125 (C.A.), Belzil J.A. held that the InterestAct did not apply to the clause providing for interest. He made thefollowing comments about the nature of the clause at p. 128:

The stipulation for interest is rather a form of compensa-tion to be paid to the vendor for not receiving when duethe money which it is entitled to receive under the termsof the contract entered into between the parties. It thusfalls within the second category of interest described in


Jowitt. The equity of such a provision is manifest: wherethe vendor is not paid on the due date, it may be forced toborrow at current rates, or alternatively lose the benefit ofhigher rates offered in the investment market while thedefaulting buyer has the advantage of it.

Such a stipulation for interest is in the nature of a pre-assessment of damages by the parties. It may lose thatcharacter, and become a penalty entailing relief in itswake, if the rate stipulated is exorbitant and not a genuinepre-assessment of damages, but that issue does not arisein this case.

The onus of proving that a clause is a penalty lies upon the party whois being sued on the clause, in this case the defendant. This was laiddown in Robophone Facilities v. Blank, [1966] 1 W.L.R. 1428 at1447, [1966] 3 All E.R. 128 (C.A.).

12 Applying the law to the specific facts of the case, the Court stated atparagraphs 147 and 148:

This claim calls for interest to be paid by the defendant to the plain-tiff on “overdue rent” with that interest varying from 13 per cent to18 per cent. There is no evidence before me that would indicate thatthe landlord would be able to earn 13 per cent to 18 per cent on rentmoneys not paid by the defendant. The only evidence I have that isspecific is that the landlord was paying 10.25 per cent interest on themortgage granted to it by Canada Life Assurance Corporation in June1983. This interest rate is substantially less than the 13 per cent to 18per cent called for under the provision.

On such evidence as I have I find that the provision is not a reasona-ble pre-estimate of damage. It is not enforceable.

13 Next Yangarra cites Adanac Realty Ltd. v. Humpty’s Egg Place Ltd.,1991 CarswellAlta 30, 78 Alt. L.R. (2d) 383 (Alta. Q.B.) where a clausefor payment of interest was held to be unenforceable. In that case a com-mercial tenant abandoned the rented premises and the landlord acceptedthe termination. The landlord sought unpaid future rent for the unexpiredterm as well as arrears owing. Included in the landlord’s claim was inter-est on unpaid rent at the rate of 24% per annum pursuant to a clause inthe lease. The Court followed the decision in Deer Valley and found thatthe clause constituted an unenforceable penalty rather than a reasonablepre-estimate of damages.

14 Yangarra cites 32262 B.C. Ltd. v. See-Rite Optical Ltd., 1998 ABCA89, 1998 CarswellAlta 239 (Alta. C.A.), in support of its position that a


clause setting damages should only be allowed where the amount set willput the plaintiff back in the position it would have been in if the contracthad been carried out. The plaintiff in that case was the lessor of a busi-ness sign. When the lessee stopped making payments, the plaintiffclaimed damages pursuant to a clause 24 in the sign lease allowing themthe total of all remaining payments under the lease. The lessee arguedthat this was an unenforceable penalty. The Court made the followingobservation at paragraph 16:

In determining whether Clause 24 is oppressive, in the circumstancesof this case, it is necessary to consider what rights the Appellantwould have had to damages for the breach, absent that Clause. TheSupreme Court of Canada has considered how damages ought to becalculated when a chattel lease has been breached. Langille v.Keneric Tractor Sales Ltd. (1987), 43 D.L.R. (4th) 171 (S.C.C.).Wilson, J. held that the damages flowing from the breach of a chattellease should be calculated in accordance with general contract princi-ples. At 181, she pointed out that that general rule is that “the awardshould put the plaintiff in the position he would have been in had thedefendant fully performed his contractual obligations.”

15 Yangarra’s argument is that awarding Precision interest at the rate of18%, when Precision’s cost of funds is approximately 5%, would putPrecision in a better position than it would have been in if Yangarra hadpaid the outstanding invoices in time.

Cases cited by Precision16 Precision says that for its interest claim at 18% it would have to be

established that it took advantage of Yangarra, or otherwise that the pro-vision was unconscionable.

17 Dealing with the topic of unconscionability, Precision cites the deci-sion in Brennenstuhl Estate v. Trynchy, 2007 ABQB 703 (Alta. Q.B.). Inthat case a farmer, Mr. Brennenstuhl, had been offered a favourableagreement for sale transaction by Mr. Prylowski, but instead opted for amuch less favourable lease-option transaction. Later, after Mr. Brennen-stuhl had passed away, his estate sought to set aside the lease-optionagreement, arguing that it was unconscionable. The Court ruled as fol-lows, at paragraphs 143 to 146:

This case is distinguishable from B. (S.M.) v. B. (K.R.), [1997] O.J.No. 3199 (Ont. Gen. Div.). There, Steinberg J. stated at para. 10:

It is not necessary, in setting aside an unconscionable con-tract, that the court must find that the person deriving the


benefit from it deliberately committed a wrongful orfraudulent act. It is enough that the circumstances weresuch that the stronger took undue advantage of theweaker, whether or not he or she intended to so do.

That case, and the principle stated, is in the context of matrimoniallaw where different considerations apply. In a non-matrimonial set-ting, and absent concerns such as undue influence and fiduciary obli-gations, there is no burden on a party whose conduct is otherwiseblameless to establish that the price paid was fair and reasonable.There must, in my view, be an element of knowingly taking advan-tage, or wilful blindness to such. Those factors have not been provento exist by the Estate.

In these circumstances, Mr. Brennenstuhl was represented by a law-yer. Mr. Prylowski did nothing to attempt to take advantage of Mr.Brennenstuhl. He cannot and should not be deprived of the bargaineventually struck.

As a result, the Estate has failed to establish that the transaction be-tween Mr. Prylowski and Mr. Brennenstuhl was unconscionable.

(emphasis added)

The law on penalty clauses18 There is a divergence with respect to the test to be applied to evaluat-

ing whether to set aside a contractual provision as a penalty.19 In both Deer Valley, supra, and Adanac, supra, the approach seems to

have been simply that, if the pre-estimated damages clause would likelyhave achieved an award higher than actual damages, then the clause is apenalty clause and is unenforceable. With respect, those two decisions donot seem to apply the test suggested by the Supreme Court of Canada inH.F. Clarke, which is whether the clause in question is “extravagant andunconscionable”.

20 The following article, Kevin E. Davis, Penalty Clauses Through theLens of Unconscionability Doctrine: Birch v. Union of Taxation Em-ployess, (2010) 55 McGill L.J. 151, provides a case commentary onBirch v. Union of Taxation Employees, Local 70030, 2008 ONCA 809(Ont. C.A.), leave to appeal to S.C.C. refused.

21 In that article, the author comments: Birch was preceded by a path-breaking line of cases in which Cana-dian appellate courts signalled their willingness to depart from thestrict common law rule against enforcing a stipulated remedy thatamounts to a penalty rather than a genuine pre-estimate of damages.


22 The footnote to the above comment is as follows:See especially Liu v. Coal Harbour Properties Partnership, 2006BCCA 385, 273 D.L.R. (4th) 508 at para. 24, 56 B.C.L.R. (4th) 230,(the decision to grant relief against a penalty depends on whether toenforce the penalty would be unconscionable); Peachtree II Associ-ates — Dallas L.P. v. 857486 Ontario Ltd. (2005), 76 O.R. (3d) 362,(sub nom 869163 Ontario Ltd. v. Torrey Springs II Associates Ltd.Partnership, 256 D.L.R. (4th) 490 (C.A.) [Peachtree II cited to O.R.](“I agree with Professor Waddams’ observation in The Law of Dam-ages that as there is often little to distinguish between [penalties andforfeitures] and that there is much to be said for assimilating bothunder unconscionability. The effect of assimilation would be ‘to pro-vide a more rational framework for the decisions of both forfeituresand penalties’” at para. 32 [reference omitted]), leave to appeal toS.C.C. refused, 31126 (19 January 2006); Elsley Estate v. J.G. Col-lins Insurance Agencies Ltd., [1978] 2 S.C.R. 916, 83 D.L.R. (3d) 1(“It is now evident that the power to strike down a penalty clause is ablatant interference with freedom of contract and is designed for thesole purpose of providing relief against oppression for the party hav-ing to pay the stipulated sum. It has no place where there is no op-pression” S.C.R. at 937). It is important to note that all but the first ofthese cases dealt with this issue in obiter dicta.

(emphasis added)

23 My observation is this: an agreed upon interest rate for payments inarrears saves both litigants’ time and the courts’ time. Otherwise, itwould be necessary for an unpaid goods or services supplier, when suingfor non-payment, to adduce evidence as to things such as its average re-turn on capital and its blended average cost of borrowing. These figureswould be constantly changing.

24 While there is no doubt that an agreed upon interest rate of 18% con-tains an element of ‘incentive’ in addition to an element of compensa-tion, I find nothing extravagant or unconscionable about a goods or ser-vice provider charging 18% interest if they are not paid on time forgoods or services provided. In my many years of experience, interestcharges are typically charged in such circumstances, and it is very com-mon for such interest charges to range from 1.5% to 2% per month.

25 As further evidence of the widespread use of 18% interest for unpaidgoods and services, I note that the provision for 18% interest in the con-tract between Precision and Yangarra is taken from an industry wideprecedent.


26 I find nothing ‘extravagant or unconscionable’ in the 18% interestrate agreed to between Precision and Yangarra, and therefore find it to beenforceable.

Contractual entitlement to delay payment27 Yangarra says that it is contractually entitled to delay payment, with-

out interest, where it bona fide disputes payment of an invoice. It pointsto the following clauses found in its contract with Precision:

9.1 — At the end of each month [Precision] shall submit, for eachdrilling site, an itemized invoice to [Yangarra] for all equipment,materials, supplies and labour furnished and services rendered pursu-ant to a drilling program during the month and shall include withsuch statement copies of all third party invoices in regard to theequipment, materials, supplies, labour or services covered by thestatement together with all applicable receipts. Subject to section 9.2,[Yangarra] shall pay [Precision] the amount of each invoice withinthe period specified in the applicable program specification sheet [inthis case 30 days]. All invoices shall be submitted to [Yangarra] atthe address shown above or at any other address that [Yangarra] mayspecify to [Precision] in writing for the purpose.

9.2 — If [Yangarra] disputes any invoice or any part of an invoice ingood faith, [Yangarra] shall give [Precision] written notice of the de-tails of the dispute within thirty (30) days of receiving the invoice(“dispute notice”) and [Yangarra] shall be entitled to withhold pay-ment of the portion of the invoiced amount relating to the dispute.[Yangarra] shall make timely payment of any undisputed portion ofthe invoiced amount. Except for any claim that [Yangarra] may makeas a result of an audit undertaken pursuant to article XIX, [Yangarra]expressly releases [Precision] in respect of any claim not communi-cated to [Precision] by dispute note timely delivered and waives anyclaim it may have against [Precision] in respect thereof.

9.3 — Any sum not paid when due (including sums ultimately paidin respect of any dispute) shall bear interest at the rate specified inthe applicable program specification sheet [in this case 18%].

(emphasis added)

28 Yangarra says that the contractual provisions quoted above are identi-cal to the provisions considered by the Court of Queen’s Bench inHorizon Resource Management Ltd. v. Blaze Energy Ltd., 2011 ABQB658, 2011 CarswellAlta 1914 (Alta. Q.B.), and Yangarra asserts that thecourt in that case did not allow interest to run while the invoices in ques-tion were subject to a bona fide dispute.


29 I found the wording of both the trial judgment in Horizon at para.1101 and the Court of Appeal judgment on appeal (see Horizon ResourceManagement Ltd. v. Blaze Energy Ltd., 2013 ABCA 139, 2013 Carswell-Alta 446 (Alta. C.A.) at paragraph 87) to be somewhat unclear on thispoint. However, a review of the judgment role at trial and on appeal clar-ifies that in Horizon interest was allowed from the due date of paymentof the invoices in question, notwithstanding that the invoices were bonafide disputed. Consequently, Horizon supports Precision’s position thatinterest runs notwithstanding a bona fide dispute.

30 This result is consistent with the wording of clause 9.3 quoted above,which provides that interest is payable on any sum not paid when due“including sums ultimately paid in respect of any dispute”.

Conclusion31 The provision for Precision to collect 18% interest on invoices 30

days after they were rendered is not an unenforceable penalty, and thecontractual provision allowing the withholding of payment for invoicessubject to a bona fide dispute does not relieve Yangarra from its contrac-tual covenant to pay interest on overdue invoices. I therefore award judg-ment to Precision for the interest claimed. Costs may be spoken to.

Application granted.


[Indexed as: Buckley v. Buckley]

Danielle Buckley, Applicant and Henriette Buckley, MargotBuckley, Brett Campbell and Sean Cambpell, Respondents

Saskatchewan Court of Queen’s Bench

Docket: Saskatoon QB 992/15

2015 SKQB 338

E.J. Gunn J.


Estates and trusts –––– Power of attorney — Revocation and variation ––––Respondent mother had four children including applicant daughter and respon-dent daughter — Parents consulted with lawyers respecting estate planning —Parents signed property power of attorney in favour of daughters jointly — Fa-ther passed away — In 2009 mother executed property and personal powers ofattorney appointing applicant only as her attorney — Mother had geriatric as-sessment in May 2015, which indicated that she had moderately advanced de-mentia and was not able to make informed decisions about her personal, finan-cial and business affairs — In June 2015 mother executed revocation of 2009enduring powers of attorney and new enduring powers of attorney — Applicantsought order that revocation of enduring powers of attorney and execution ofnew enduring powers of attorney by mother in 2015 were invalid and that origi-nal enduring powers of attorney executed by mother in 2009 were valid — Ap-plication dismissed — Mother could only revoke enduring power of attorney ifshe had capacity to do so within meaning of Powers of Attorney Act (“Act”) —There was conflicting evidence as to mother’s capacity at relevant time — Opin-ion in geriatric report was clear that mother was not able to make informed deci-sions about personal, financial and business affairs as result of moderately ad-vanced dementia — Report was dated less than one month prior to execution ofrevocation — Subsequent assessment indicated that mother had cognitive disa-bilities — However, it was not clear that having cognitive disabilities wouldmake it impossible for mother to have capacity to execute or revoke power ofattorney at relevant time — Assessment of family members and friends con-flicted — In face of conflicting evidence of whether or not mother had requiredcapacity at time of executing revocation and new enduring powers of attorney,trial of issue was required.

Cases considered by E.J. Gunn J.:

Bishop v. Bishop (2006), 2006 CarswellOnt 5377, [2006] O.J. No. 3540 (Ont.S.C.J.) — considered

Buckley v. Buckley 545

Bishop v. Bishop (2007), 2007 CarswellOnt 1471, 2007 ONCA 170 (Ont.C.A.) — considered

Egli (Committee of) v. Egli (2005), 2005 BCCA 627, 2005 CarswellBC 3014, 20E.T.R. (3d) 159, 48 B.C.L.R. (4th) 90, 262 D.L.R. (4th) 208, (sub nom. Egliv. Egli) 220 B.C.A.C. 148, (sub nom. Egli v. Egli) 362 W.A.C. 148, [2005]B.C.J. No. 2741 (B.C. C.A.) — considered

Godelie v. Ontario (Public Trustee) (1990), 39 E.T.R. 40, 1990 CarswellOnt497, [1990] O.J. No. 1207 (Ont. Dist. Ct.) — considered

Hughes v. Hughes-Haycock (2003), 2003 CarswellOnt 2543, 41 R.F.L. (5th)296, 3 E.T.R. (3d) 263, [2003] O.J. No. 2763, [2003] O.T.C. 620 (Ont.S.C.J.) — considered

Marienhoff v. Edwards (2003), 2003 SKQB 157, 2003 CarswellSask 284, 233Sask. R. 261, [2003] 8 W.W.R. 70, 1 E.T.R. (3d) 203, [2003] S.J. No. 277(Sask. Q.B.) — considered

Midtdal v. Pohl (2014), 2014 ABQB 646, 2014 CarswellAlta 1933, 3 E.T.R.(4th) 225 (Alta. Q.B.) — considered

Ocean v. Economical Mutual Insurance Co. (2009), 2009 NSCA 81, 2009 Car-swellNS 401, 76 C.C.L.I. (4th) 1, [2009] I.L.R. I-4873, 281 N.S.R. (2d) 201,893 A.P.R. 201 (N.S. C.A.) — referred to

Rikley v. Mooney (2006), 2006 SKQB 544, 2006 CarswellSask 806, 29 E.T.R.(3d) 171, 52 R.P.R. (4th) 240 (Sask. Q.B.) — considered

Teffer v. Schaefers (2008), 2008 CarswellOnt 5447, (sub nom. Schaefers Estate,Re) 93 O.R. (3d) 447, [2008] O.J. No. 3618 (Ont. S.C.J.) — considered


Powers of Attorney Act, 2002, S.S. 2002, c. P-20.3Generally — referred tos. 2(1) “capacity” — considereds. 3 — considereds. 4 — considereds. 11(1)(a) — considereds. 11(1)(b)(i) — considereds. 12(1)(a) — considereds. 19 — considereds. 19(1)(b) — considereds. 20 — considereds. 21 — considered

Substitute Decisions Act, 1992, S.O. 1992, c. 30Generally — referred tos. 8(1) — considered


Rules considered:

Queen’s Bench Rules, Sask. Q.B. Rules 2013R. 3-49(3) — considered

APPLICATION by applicant seeking order that revocation of enduring powersof attorney and execution of new enduring powers of attorney by mother in 2015were invalid and that original enduring powers of attorney executed by motherin 2009 were valid.

Scott Spencer, K. Burke, for ApplicantCurtis Onishenko, for Respondents

E.J. Gunn J.:

1 Danielle Buckley applies by originating application for the followingdeterminations:

1. ...that the purported revocation of the Enduring Powers of At-torney executed by Henriette Buckley on June 19, 2015 isinvalid;

2. ...that the Enduring Powers of Attorney executed by HenrietteBuckley on July 6, 2015 were and are invalid;

3. ...that the original Enduring Powers of Attorney executed byHenriette Buckley on April 28, 2009 are valid and effective;

4. ...that the authority of Brett Campbell and Margot Buckleyand Sean Campbell under the Enduring Powers of Attorneyexecuted by Henriette Buckley on July 6, 2015 is terminatedand that they immediately account for any transactions theyentered pursuant to such authority.

Background2 Some of the facts do not appear to be in issue. Lieutenant-Colonel

Robert Roy Buckley and Henriette Buckley [the Buckleys] had four chil-dren: Danielle (the applicant), Nicole, Margot (one of the respondents)and Robert. The Buckley’s consulted with Henry and Cheryl Kloppen-burg, barristers and solicitors, with respect to estate planning. In 2004,the Buckley’s placed their accounts at the Bank of Nova Scotia in jointnames with Danielle with right of survivorship. Danielle and theBuckleys signed a Trust Agreement November 26, 2004. Pertinent provi-sions contained in the Trust Agreement are the following:

. . .

Buckley v. Buckley E.J. Gunn J. 547

2. Danielle acknowledges to the parents that she has given no consid-eration for the addition of her name to the accounts and further ac-knowledges the addition of her name to the accounts does not consti-tute an advancement to her from the estate of the parents or either ofthem.

3. Danielle agrees with the parents that she holds the accounts asTrustee for the parents or the survivor of them and that the parents orthe survivor of them shall enjoy the entire beneficial interest in theaccounts just as they would enjoy such beneficial interest as the solelegal owner of the said accounts. In particular, Danielle and the par-ents declare that it is their intention that the parents or survivor ofthem shall receive all capital and interest accruing from the accounts,if applicable.

. . .

6. Should the accounts continue to be owned by the parents or thesurvivor of them and Danielle at the date of the last to die of theparents, then Danielle agrees that she holds the accounts in trust forthe beneficiaries entitled according to the terms of the Last Will andTestament of the last of the parents to die.

3 Similarly as part of their estate planning exercise, the Buckleys addedNicole to the title to the family home with right of survivorship. TheBuckleys signed a Trust Agreement on November 26, 2004 with Nicolesigning the agreement on August 24, 2005.

4 Pertinent provisions in this Trust Agreement are the following: . . .

2. Nicole acknowledges to the parents that she has given no consider-ation for the transfer of the said land and further acknowledges thatthe transfer does not constitute an advancement to her from the estateof the parents or either of them.

3. Nicole agrees with the parents that she holds the legal title to theland as Trustee for the parents or the survivor of them and that theparents or the survivor of them shall enjoy the entire beneficial inter-est in the land just as they would enjoy such beneficial interest as thesole legal owner of the said land. In particular, Nicole and the parentsdeclare that it is their intention that the parents or the survivor ofthem shall receive all rents, revenues and other income accruing fromthe land, if applicable.

. . .

6. Nicole and the parents agree that the parents or the survivor ofthem shall have the right to use the said land as their home until the


death of the last of them to die, or until both of them or the survivorof them shall in writing advise Nicole that they no longer desire tohave such property held for their use. Parents hereby declare theirintention that the land is to be sold if that is the most economic deci-sion reached by the parents or a Power of Attorney acting on theirbehalf.

. . .

8. Should the land continue to be owned by the parents or the survi-vor of them and Nicole at the death of the last to die of the parents,then, Nicole agrees that she holds the land in trust for the benefi-ciaries entitled to the land according to the terms according to theLast Will and Testament of the last of the parents to die.

5 In 2005, the Buckleys signed a property power of attorney in favourof their daughters, Danielle and Margot, jointly. This power of attorneywas held at the Kloppenburg Law Office and was never released.

6 Lieutenant-Colonel Buckley passed away November 22, 2006. Dani-elle was named as the sole executrix in his will, and Henriette Buckleywas his sole beneficiary. The Kloppenburg firm handled the legal busi-ness of the estate, which was concluded in 2007.

7 In 2009, Henriette gave instructions to Cheryl Kloppenburg to pre-pare a new property and personal power of attorney appointing only Da-nielle as her attorney. These powers of attorney were executed by Henri-ette on April 28, 2009. Each of these powers of attorney were “EnduringPowers of Attorney” not to be terminated by any lack of capacity thatoccurs after their execution. Cheryl Kloppenburg completed the Indepen-dent Legal Advice and Witness Certificate in relation to each power ofattorney in which she stated that, in her opinion, Henriette was an adultwho had the capacity to understand the nature and the effect of a powerof attorney at the time she signed the documents. Henriette also provideda letter to the Kloppenburg Law Office on the same date, April 28, 2009,giving the firm certain instructions in relation to the powers of attorney.The letter stated the following:

I direct you to hold on my behalf subject to my direction deed grant-ing personal and property power of attorney to act on my behalf toLyse Danielle Buckley;

My intention is that the grant of power of attorney that you holdshould be held until:

1. I, being of sound mind call upon you to turn them over to me;


2. Until such time as I am disabled or incompetent for the pur-poses of managing my business affairs;

I direct you to turn over the power of attorney to Lyse DanielleBuckley, on these conditions and events:

1. That she present you with a letter from two qualified medicalpractitioners actively practising their profession in the placewhere I live certifying that I am incompetent to attend to mypersonal, financial and business affairs;

2. Upon her agreeing to indemnify you as a firm against anyconsequences and any liability flowing from the release to herof the document enabling her to act on my behalf as mypower of attorney.

I have been informed by Cheryl L. Kloppenburg, solicitor, that theeffect of granting a Power of Attorney is to give, in this case, LyseDanielle Buckley, power to take control and manage my affairs andsubstitute their judgment from mine in a way that I might well havedisagreed with. If any abuse of the Power of Attorney occurs, it isremediable by civil action.

8 Henriette initially remained in her own home after the death of herhusband. A cleaning lady and a maintenance man assisted her with housecleaning and yard work. Danielle came four or five times a year to visitfrom her home in Bragg Creek, Alberta. The majority of Henriette’s billswere paid by direct debit and Danielle deposes she helped with the othermail which was left unopened or unattended to by Henriette. CherylKloppenburg continued to provide some assistance to Henriette with in-come tax and some other matters.

9 In August of 2012, Henriette’s family doctor, Dr. Myles Deutschler,referred her to the Geriatric and Evaluation Management Program[GEM] at Saskatoon City Hospital. On September 7, 2012, a home visitwas carried out and a report was prepared by Margaret Dodson, an occu-pational therapist with the GEM program. Some recommendations byMs. Dodson in her report included that Henriette have supervision withfinances, that she write down information to assist her with remember-ing, and that she consider a community day program for continuing cog-nitive, physical and social stimulation after discharge from the GEM pro-gram. A report dated October 1, 2012 and signed by Grace Cressman, theclinical co-ordinator at Saskatoon City Hospital, reflected the followingstatement in relation to Henriette’s memory: “19/26 not terrible but a lit-tle decreased”.


10 Henriette continued to remain in her home with assistance fromNurse Next Door and Home Care. Dr. Deutschler once again referredHenriette to GEM in May of 2015. Danielle and Margot attended thesession with Henriette on May 19, 2015. Dr. Khayyam met with Henri-ette, Danielle and Margot following the session.

11 In a letter dated May 22, 2015 signed by Dr. Naiyar Khayyam (Geri-atric Medicine) and Dr. L. Thorpe (Geriatric Psychiatry) directed “ToWhom it may Concern” and copied to Dr. Deutschler and to Mrs. C.L.Kloppenburg, the following statements appear:

Henriette Buckley had a geriatric assessment on May 19, 2015 whichincluded detailed functional and cognitive testing, medical assess-ment, and psychiatric assessment. Mrs. Henriette Buckley has mod-erately advanced dementia, as a result of which she is not able tomake informed decisions about her personal, financial and businessaffairs. Mrs. Buckley’s duly appointed substitute decision-makersand powers of attorney will need to make these decisions for hernow.

12 On May 28, 2015, Henriette had a pacemaker implanted. On June 3,2015, Cheryl Kloppenburg released the power of attorney to Danielle.On June 10, 2015, Danielle delivered a notarial copy of the power ofattorney to Financial Advisor Sagar Parkih at Scotiabank (Stonegate).

13 On June 13, 2015, Henriette moved to Brightwater Senior Living atStonebridge. When she arrived at Brightwater, the facility performed anassessment in order to learn about Henriette’s cognitive and physicalneeds. It was clear at that time to Pat Stephenson, the Executive Directorof Brightwater, that Henriette had cognitive disabilities.

14 On June 19, 2015, Leigh Campbell (Margot’s husband), took Henri-ette to Scotiabank to cancel her credit cards. Henriette did not appear toknow that her bank accounts were in joint names with Danielle. Henrietteopened a new savings account in her own name.

15 That same day, Henriette signed a revocation of power of attorneywhich was witnessed by Leigh Campbell. This revocation described theprevious power of attorney to have been given “approximately Jan 07”.

16 The legal department of Scotiabank did not accept the June, 2015 rev-ocation of power of attorney.

17 Leigh Campbell contacted WMCZ law firm and spoke to KeziaSonntag, a lawyer with that firm, to make arrangements for Henriette todiscuss a power of attorney. Mr. Campbell provided Ms. Sonntag withcopies of some e-mails which had been exchanged among family mem-


bers. There is no evidence of what e-mails were shared with Ms.Sonntag. Mr. Campbell also provided to Ms. Sonntag the names of theindividuals he believed Henriette was considering appointing as her per-sonal and property attorneys.

18 Leigh Campbell advised Ms. Sonntag that there was a doctor’s reportstating that Henriette was no longer capable of making decisions withregard to her finances.

19 Arrangements were made for Ms. Sonntag to meet with Henriette atBrightwater on July 3, 2015 in order to receive instructions. Ms. Sonntagand her articling student, Michael Ochs, spent approximately two hourswith Henriette. Ms. Sonntag describes Henriette as being lucid, eloquent,engaged, and repetitive. Henriette made the same points frequently, oftenusing similar words or phrases. Ms. Sonntag questioned Henriette abouther family.

20 Ms. Sonntag questioned Henriette about her assets and received thefollowing information:

a) The location of her bank accounts. She was not certain how muchwas in these accounts at this time, but gave her best estimate forone of the Bank of Nova Scotia accounts. She advised me that herhusband had always done the banking.

b) The address of her house, her telephone number, and that this pro-perty was held jointly with her daughter, Nicole. She advised methat the property was transferred into joint names while her hus-band was alive and he had told Henriette at the time that it was“done for tax purposes”.

c) The name, including spelling of her financial advisor at RBC.

(See para. 7 of affidavit sworn August 7, 2015)21 Ms. Sonntag explained to Henriette the effect of a power of attorney.

Henriette did not recall when she signed a power of attorney naming Da-nielle as her attorney. Henriette was not prepared to sign anything July 3.

22 There is no evidence that Ms. Sonntag did any independent investiga-tion to assess the accuracy of the information provided to her byHenriette.

23 On July 6, 2015, arrangements were made by Leigh Campbell for Ms.Sonntag to return to Brightwater to see Henriette. Once again, Ms.Sonntag described Henriette as being lucid, well-spoken, engaged andrepetitive. Ms. Sonntag brought documents with her dealing with thenaming of two personal attorneys and one property attorney. Ms.


Sonntag gave the documents to Henriette and read through them withher. Henriette asked a question about the meaning of an enduring powerof attorney and received an explanation from Ms. Sonntag. Henriettesigned the documents appointing Margot and Sean successively as herpersonal attorneys and Brett as her property attorney. Ms. Sonntag signedthe documents as a witness and she executed the certificate of lawyer asshe was of the opinion that “Henriette understood the nature and effect ofa Power of Attorney”. (Affidavit sworn August 7, 2015, para. 22)

24 The Independent Legal Advice and Witness Certificate signed by Ms.Sonntag provides as follows:

I, Kezia Sonntag of WMCZ Lawyers, 410 - 475-2nd Avenue South,Saskatoon, Saskatchewan. SK S7K 1P4, certify:

a) That I am a practicing [sic] member in good standing of theLaw Society of Saskatchewan.

b) That I was consulted by Henriette Marie Buckley of 102Wellman Crescent, Saskatoon, Saskatchewan, S7T OJ1 re-garding the making of her Enduring Power of Attorney datedthe 6th day of July 2015.

c) That I explained the nature and effect of an Enduring Powerof Attorney and reviewed the provisions of the above-men-tioned Enduring Power of Attorney with Henriette MarieBuckley.

d) That I witnessed the signing of the above-mentioned Endur-ing Power of Attorney by Henriette Marie Buckley.

e) That in my opinion, Henriette Marie Buckley was an adultwho had the capacity to understand the nature and effect of anEnduring Power of Attorney at the time that she signed theabove-mentioned Enduring Power of Attorney.

Dated at the city of Saskatoon, in the Province of Saskatchewan, this6th day of July, 2015

___________________________________

Henriette Marie Buckley

(Line drawn through name)

Kezia Sonntag

(Change initialled)

25 The signature included on the enduring power of attorney by Henri-ette Marie Buckley commences with the initials “H” and “M”. The sur-name “Martel” is crossed out with the surname “Buckley” added. Dani-elle deposes that the surname “Martel”, which was crossed out, was


Henriette’s maiden name prior to her marriage to Lieutenant Buckley 57years earlier.

26 These new powers of attorney were presented by Margot to Ms. Ste-phenson at Brightwater. Ms. Stephenson advised Margot that she did notaccept the validity of the new powers of attorney and would not do sounless she was presented with a geriatric reassessment of Henriette withtwo doctors confirming that Henriette had the capacity to execute theselegal documents.

27 Cheryl Kloppenburg wrote to Kezia Sonntag on July 8, 2015 in whichshe stated the following:

8 July 2015

Kezia Sonntag / [email protected]

At WMCZ Lawyers, Saskatoon, SK

RE: Henriette Buckley, widow of Lt-Col Robert Buckley residing atBrightwater Senior Living of Stonebridge

Our File 7059-003-051

We are informed that you attended recently on Henriette Buckley(herein also Mrs. Buckley) She has been a long time client of thisfirm, as was her husband the late Lt Col Robert Buckley, CD.

In 2009 we prepared, on Mrs. Buckley’s instructions, a Power of At-torney in favour of her daughter, Danielle Buckley. So far as weknow that was not revoked while Mrs Buckley was possessed of le-gal capacity to do so.

In May, 2015 Mrs. Buckley was examined / assessed by a medicalteam including Geriatric Psychiatrist Dr. Lilian Thorpe and Dr. N.Khayyam, Geriatric Medicine.

When this firm received a report from these two doctors, indicatingthat Mrs. Buckley was not able to make informed decisions about herpersonal, financial and business affairs, we released Mrs. Buckley’sPower of Attorney to her daughter Danielle Buckley. Leigh Camp-bell (son in law) and his wife, Margot Buckley have a copy of thismedical reporting about Mrs Buckley’s present medical status.

If the purpose of your attendance on Mrs. Buckley on July 6, 2015was to take instructions from Mrs. Buckley, kindly advise if youhave other medical / psychiatric assessments which put the assess-ments of Dr. Thorpe and Dr. Khayyam into question. If that visit wasat the behest of any person other than Mrs Buckley, kindly advise.

I look forward to hearing from you.

Yours truly,


(“signature of Cheryl L. Kloppenburg”)

(Mrs.) C. L. Kloppenburg / [email protected]

28 Kezia Sonntag responded by letter dated July 10, 2015 as follows: July 10, 2015

Kloppenburg & Kloppenburg

Suite 2, 527 Main Street

Saskatoon, Saskatchewan S7N 0C2

Attention: Cheryl Kloppenburg

Dear Madam:

Re: Henriette Buckley Power of Attorney

Thank you for your correspondence of July 8th, 2015. Our office actson behalf of Mrs. Henriette Buckley and I recently met with her ontwo separate occasions to discuss her Power of Attorney. I assessedthe legal capacity of Mrs. Buckley to execute a Power of Attorneyduring these meetings and it was my opinion that Mrs. Buckley un-derstood the nature and effect of an Enduring Power of Attorney dur-ing both of our meetings.

I can confirm she executed both a new personal and property Endur-ing Power of Attorney. Being that Danielle Buckley is no longerMrs. Buckley’s acting Power of Attorney, I kindly ask that you re-frain from releasing any further confidential information that may bein your possession by virtue of acting on behalf of Mrs. Buckley toany other individual, including Danielle Buckley.

There are, of course, legal remedies available to anyone who maywish to challenge Mrs. Buckley’s legal capacity. However, as youhave acted on Mrs. Buckley’s behalf for a number of years, I expectthat anyone seeking to do so will be required to retain new legalcounsel to avoid a conflict of interest.

Please contact me with any further questions or concerns. YoursTruly,

WMCZ Lawyers

Per: (“signature of Kezia Sonntag”)

Kezia Sonntag

[email protected]

306-659-1236

29 On July 10, 2015, Robert Buckley visited with Henriette. She deniedhaving signed a new power of attorney and said she did not know whatshe signed with the new lawyer. She believed it was a revocation.


The Legislation30 The valid execution and effect of an enduring power of attorney is

governed by The Powers of Attorney Act, 2002, SS 2002, c P-20.3 [Act].31 The following provisions of the Act are relevant:

3. A power of attorney may provide that the attorney’s authorityunder the power of attorney is not terminated by a lack of capacity ofthe grantor that occurs after the power of attorney has been executed.

4. Any adult who has the capacity to understand the nature and effectof an enduring power of attorney may grant an enduring power ofattorney.

. . .

11(1) An enduring power of attorney is not valid unless it is:

(a) in writing; and

(b) dated and signed;

(i) by the grantor

. . .

. . .

12. An enduring power of attorney is not valid unless it meets at leastone of the following requirements:

(a) it is witnessed by a lawyer and accompanied by a legaladvice and witness certificate in the prescribed form.

. . .

. . .

19 (1) The authority of an attorney under an enduring power of attor-ney is terminated:

. . .

(b) on the written revocation of the enduring power of at-torney by the grantor while the grantor has the capacity tounderstand:

(i) the nature and effect of an enduring power of at-torney; and

(ii) the effect of terminating an enduring power ofattorney;

. . .

Issues

1. Jurisdiction.


2. What is the test for determining capacity to make or to revoke apower of attorney pursuant to the Act?

3. Procedure.

4. Did Henriette possess the capacity within the meaning of the Actto revoke her power of attorney June 19, 2015 and to execute anew enduring power of attorney July 6, 2015?

Discussion

1. Jurisdiction32 The jurisdiction of the court to deal with this matter emanates from s.

20 of the Act and from Rule 3-49(3) of The Queen’s Bench Rules.33 Section 20 of the Act permits an application to be made to the court

by the public guardian and trustee or any other interested party for adviceor directions with respect to an enduring power of attorney.

34 Rule 3-49(3) provides that an action may be started by originatingapplication if an enactment provides for a remedy, certificate, direction,opinion or order to be obtained from the court without describing theprocedure to obtain it.

2. What is the test for determining capacity to make or to revoke apower of attorney pursuant to the Act?

35 At common law, in the absence of evidence to prove otherwise, allpersons are presumed to be competent (Ocean v. Economical MutualInsurance Co., 2009 NSCA 81 (N.S. C.A.) at para 81, (2009), 281N.S.R. (2d) 201 (N.S. C.A.)). Capacity, for the purposes of the Act, isdefined in s. 2, though this definition does not apply to ss. 4, 19(1)(b),and 21. Thus, for the purposes of determining whether a grantor has thecapacity to grant a power of attorney or terminate a power of attorney,their understanding must extend only to the nature of doing so. The Actdoes not define “incapacity” or any similar concept.

36 Saskatchewan’s concise provision mirrors the test for the determina-tion of mental capacity at common law. Midtdal v. Pohl, 2014 ABQB646, 3 E.T.R. (4th) 225 (Alta. Q.B.) [Midtdal] refers to the court’s deci-sion in Godelie v. Ontario (Public Trustee) (1990), 39 E.T.R. 40 (Ont.Dist. Ct.) (WL), where Misener D.C.J. said the following:

18 In my view, mental incapacity, by itself, is irrelevant to the com-mon law unless it deprives the actor of his ability to make an in-formed judgment about the particular matter under consideration.


When that ability is lacking because of mental incapacity, then theparticular right under consideration may be circumscribed or the par-ticular obligation relieved against. It is therefore necessary in everycase to examine the precise conduct in question, to determine the es-sential elements of that conduct and to inquire as to the actor’s abilityto understand the nature and quality of those elements so that an in-formed judgment can be made. If that understanding is present, thenany other form of mental disability, however great, is irrelevant. Itfollows therefore that the criteria to determine whether the mentaldisability is relevant are not universal. Rather, they will vary fromcase to case simply because the essential elements of conduct inevita-bly vary from case to case.

37 The relevant time to assess capacity must be at the time the documentwas executed. Behaviours demonstrated at any other time are ultimatelynot relevant. A review of some case authority provides some insight intohow this assessment might be done.

38 In Midtdal, Vivian began experiencing cognitive decline in 2005. Shesigned her power of attorney in 2007. At trial, family members expressedconcerns with Vivian’s memory issues, clinginess, agitation, and anxiety.The 2007 narrative record, however, reported that Vivian was able toperform a significant number of activities of daily living despite her cog-nitive decline. The report indicated she was alert and answered appropri-ately, though displayed short-term memory loss. Nursing and respite carerecords revealed varying degrees of confusion with a level of functioningthat made living at home, with assistance, feasible. There was no directevidence available as to Vivian’s capacity when she attended the law-yer’s office to sign the power of attorney (as her lawyer had since passedaway). On these bases, the court found that Vivian understood the natureand effect of the power of attorney she executed.

39 Rikley v. Mooney, 2006 SKQB 544, 29 E.T.R. (3d) 171 (Sask. Q.B.),involved a dispute among siblings and a dispute concerning theirmother’s capacity to grant a power of attorney. In 2005, Mary Rikleygranted a power of attorney in favour of her daughter, Helen. This wasunbeknownst to Mary’s son, Clayton, who, at that time, was Mary’spower of attorney. A third son applied to the court pursuant to s. 19 ofthe Act to have the recent appointment terminated. M.-E. Wright J. dis-missed the application due to lack of evidence to support Mary’s inca-pacity at the time she executed her recent grant of power of attorney:

15 ...where the grantor of an attorney, enduring or otherwise, remainscompetent to instruct his or her attorney, and capable of terminating


the powers of his or her own volition, the intervention of the Court isnot warranted. Were the Court to invoke in particular s. 19(2) of ThePowers of Attorney Act, 2000 in such circumstances, there would benothing precluding a competent grantor from simply reappointing thesame attorney the next day.

16 Without evidence as to the grantor’s capacity, and specifically ev-idence as to her lack of capacity, I am not prepared to invoke s. 19(2)of The Powers of Attorney Act, 2002 to terminate Ms. Mooney’s au-thority. This aspect of Mr. Rikley’s application is dismissed.

40 In Bishop v. Bishop [2006 CarswellOnt 5377 (Ont. S.C.J.)], 2006CanLII 30585, upheld on appeal Bishop v. Bishop, 2007 ONCA 170(Ont. C.A.), Alma executed a general power of attorney in favour of twoof her four children, Anne and Christine, in 1993. In the years to follow,significant tension ensued among the four siblings with respect to theirmother’s affairs. In 2005, after a visit from her son James, Alma grantedto him a power of attorney, in his name only. In determining the propri-ety of this grant, the court acknowledged the evidence that indicated thatAlma had suffered cognitive decline since 2002 as the result of untreatedAlzheimer’s disease. Specifically, significant weight was placed on amedical expert’s opinion who conclusively testified that Alma was notcapable, in 2005, of assigning or changing her power of attorney. A por-tion of the expert’s opinion read as follows:

22 . . .

Assuming it to be true that Alma Bishop signed over her POA to JimBishop in September, 2005, it would seem clear that she is not capa-ble to assign of [sic] POA. While she still retains the ability to under-stand and appreciate what a POA is for and why she needs one aswell as the consequences of not having a POA, she clearly does notretain the ability to remember her actions for an acceptable period oftime. Furthermore, and even if she was capable to make a POA inSeptember, 2005 when she allegedly did do [sic] (I have not seen theforms) I do not believe she was aware that she was signing theseforms because I doubt her son Jim Bishop was aware of her diagnosisand I doubt he took her diagnosis into account when giving her thepapers to sign. Furthermore, I believe it is possible that she wasunder undue influence given the “hurried approach” used by JimBishop to have her sign the Power of Attorney and the fact that shewas not living in her home environment when this was done. Patientswith Alzheimer’s dementia need consistency and familiarity in orderto optimize their cognitive function. The circumstances that lead [sic]to Alma Bishop “changing” her Power of Attorney occurred during a


time when she was uprooted from her familiar environment. Further-more, Alma’s medical condition requires her to have careful and re-petitive explanation. Before she signs any legal papers she shouldhave an assessment of her capacity to ensure she remains capable. Ifshe wishes to change her POA in the future she should ideally beassessed over a few weeks to ensure her decision remains consistent.I do not believe Alma Bishop was given any care or considerationrelated to her Alzheimer’s disease before she was asked to sign theforms.

41 James argued that his mother, as per the expert’s opinion, understoodand appreciated the nature of a power attorney and thus the criteria setout in Ontario’s Substitute Decisions Act, 1992, SO 1992, c 30 was met.The court rejected this argument, as demonstrated by the following ex-cerpt:

5 I am not able to agree with the respondent’s conclusion. Theweight of the evidence in this case, particularly the report of Dr.Dombrower, leads me to the conclusion that Alma Bishop did nothave the capacity to give, revoke, or change her power of attorney inSeptember of 2005. If Alma Bishop was to give a valid continuingpower of attorney for property to the respondent, she ought to haveknown, been aware of, and appreciated those seven factors outlinedunder section 8(1) of the Substitute Decisions Act. I am satisfiedfrom a review of Dr. Leifer’s handwritten notes, Dr. Dombrower’sindependent medical report, and the facts and circumstances existingin Alma Bishop’s life as at September, 2005 that she did not havethis capacity.

42 On appeal, the Court of Appeal noted: 2 The trial judge’s finding that “Alma” did not have the capacity togrant the power of attorney in September 2005 was fully warrantedin the totality of the circumstances, including but not limited to themedical evidence.

43 It should, however, be noted that the provisions of the Ontario legisla-tion are much more detailed than in Saskatchewan.

44 In Ontario’s legislation (Substitute Decisions Act, 1992, s 8), capacityentails the following:

Capacity to give continuing power of attorney

8. (1) A person is capable of giving a continuing power of attorney ifhe or she,

(a) knows what kind of property he or she has and its approxi-mate value;


(b) is aware of obligations owed to his or her dependants;

(c) knows that the attorney will be able to do on the person’s be-half anything in respect of property that the person could do ifcapable, except make a will, subject to the conditions and re-strictions set out in the power of attorney;

(d) knows that the attorney must account for his or her dealingswith the person’s property;

(e) knows that he or she may, if capable, revoke the continuingpower of attorney;

(f) appreciates that unless the attorney manages the property pru-dently its value may decline; and

(g) appreciates the possibility that the attorney could misuse theauthority given to him or her.

45 In Hughes v. Hughes-Haycock (2003), 3 E.T.R. (3d) 263 (Ont. S.C.J.)(WL), Dorothy and Ken (mother and son) applied to set aside Ken’s fa-ther’s power of attorney that was granted to Ken’s sister, Jan. The father(Russell) suffered from advanced Alzheimer’s disease and lived in anursing home, where Dorothy also lived. Russell’s cognitive decline be-gan as early as 1987; he was registered with the Alzheimer’s WanderingRegistry in 1996. He engaged in strange behaviour and was officiallydeemed “incapable” by a community care program in 1999. Out of thetwo children, Jan was the child responsible for the well-being of her par-ents and as such, she attempted to have her father sign a power of attor-ney, which Dorothy, for other reasons, destroyed. When Jan took Russellto a lawyer’s office to sign a new power of attorney, the lawyer, as aresult of Russell’s state, refused to prepare the document.

46 In 2001, Jan took both of her parents to a lawyer in a neighbouringtown to have new power of attorneys prepared for both parents. Thislawyer opined that Russell “seemed fine.” The lawyer claims not to haveknown of Russell’s history of mental illness though Jan testified that shehad communicated to the lawyer her father’s Alzheimer’s diagnosis.New power of attorneys were prepared and signed 11 days later. In as-sessing the validity of this appointment, the court wrote as follows:

25 I find that the evidence shows that Russell has had a long historyof mental illness. He was diagnosed with some sort of dementia thatwas a form of Alzheimer’s back in the early 1990’s, which intensi-fied over time. Although the Respondent says that he had his ups anddowns he certainly had a condition that warranted further inquiryfrom counsel as to his capacity on March 27th, 2001. Had Mr. Woodknown that Russell had this condition he would have required a med-


ical report prior to completing the power of attorney. I find that theRespondent deliberately omitted to tell Mr. Wood of her father’scondition to avoid this scenario.

26 Based on the evidence, I find that on the balance of probabilities,he did not have the competence to grant the power of attorney and assuch declare it invalid.

47 In Teffer v. Schaefers (2008), 93 O.R. (3d) 447 (Ont. S.C.J.) (WL)[Teffer], an application was made for a declaration of mental incapacityand an order terminating the respondent lawyer’s power of attorney. Jo-hanna was an 87-year-old female who was diagnosed with Alzheimer’sin September of 2006 and required 24-hour-care. A physician assessedher capacity to manage property and make decisions with respect to herpersonal care (para. 2):

2. . . .

Johanna Schaefers was admitted to hospital in March 2006. She wasnoted at the time to become forgetful over the past year and havedeveloped paranoid ideation. She had difficulty with her activities ofdaily living. In addition she recently (to the time of admission) exper-ienced a fall. She was noted to have an MMSE score on March 24,2006 of 20 out of 30. She showed poor short-term memory associ-ated with visual spatial disorientation. Her insight and judgment weresaid to be impaired. It was concluded that she had progressive mem-ory loss associated with delusional ideation due to a dementing ill-ness. Her CT scan revealed atrophy and no acute pathology. Dr.Richard Schulman diagnosed her as having Alzheimer’s disease inthe consultation dated September 28, 2006. On October the 11th2006 she was declared incapable of managing property in accordancewith the Mental Health Act by Dr. Richard Schulman.

48 In an additional report dated the same day, the physician observed (atpara. 3):

3. . . .

Although a person with cognitive impairment can still give a Powerof Attorney for Property if the conditions are amenable, it is unlikelythat this was so for Johanna Schaefers. Given that she was not man-aging her property it is unlikely that she knew what kind of propertyshe had and its approximate value. Her severe short term memoryimpairment emphasized in this hospitalization would have preventedher from keeping recent information about her complex and substan-tial properties in mind. Given that she was delusional with respect tomany people around her (including her financial advisor at the time)it is unlikely that she was able to make a choice of attorney in accor-


dance with a non-delusional state of mind revealing of her true pre-ferred intentions. Furthermore, it is unlikely that she was sufficientlytrusting to choose to give a Power of Attorney for Property toanyone.

49 These reports were dated November 12, 2006. In December 1998, Jo-hanna executed a power of attorney in favour of her lawyer, Peter, aswell as a second power of Attorney dated April 27, 2006, also in hisfavour. While there were no issues raised with respect to the powers ofattorney document executed in 1998, the applicants contested the validityof the 2006 disposition on the basis of incapacity.

50 The court ultimately denied the validity of the 2006 powers of attor-ney:

27 On the record before me I am satisfied that the April 27, 2006Power of Attorney cannot stand as valid. I accept Dr. MichelSilberfeld’s opinion as set out in the two reports dated November 12,2006. Dr. Silberfeld’s opinion is that Johanna Schaefers did not havethe capacity to give a Power of Attorney for Property on or aboutApril 27, 2006. As such, deference cannot be given to her intentionsas set out in that Power of Attorney for Property. Verbeek argues,however, that even if the April 27, 2006 Power of Attorney is inva-lid, the 1998 Power of Attorney for Property, as discovered in thesafety deposit box would still be valid and in force as there are nocapacity issues for Johanna Schaefers at the time she executed the1998 Power of Attorney for property.

51 While the 1998 document was not deemed invalid, Peter’s authorityunder the power of attorney was terminated on other bases.

3. Procedure52 Justice Hall, J.A., of the British Columbia Court of Appeal, writes,

with respect to the determination of capacity for the purposes of a powerof attorney, “In my opinion, the capacity of the donor will always be afactual decision for a trial court to make based on the evidence. ...” (Egli(Committee of) v. Egli, 2005 BCCA 627 (B.C. C.A.) at para 34, (2005),220 B.C.A.C. 148 (B.C. C.A.)).

53 Justice Laing in Marienhoff v. Edwards, 2003 SKQB 157, 233 Sask.R. 261 (Sask. Q.B.) writes:

25 As noted above, the evidence on the mental capacity of Mr.Brochu at the time he executed the power of attorney in favour of therespondent herein, is mixed, and it is not possible to decide the mat-ter on the basis of the affidavit evidence filed. ...


54 A similar conclusion was reached in Teffer: 52 . . .

3. With respect to the 1998 Power of Attorney for Property the evi-dence is conflicting and confusing and without clear evidence that itis not valid I cannot find and conclude that it cannot stand. None ofthe Affidavits have been the subject matter of cross-examinationsand on the record before me I cannot resolve the contradictions.

55 So, if the evidence presented on the issue of capacity is conflicting, atrial will be necessary.

4. Did Henriette possess the capacity within the meaning of the Act torevoke her power of attorney June 19, 2015 and to execute a newenduring power of attorney July 6, 2015?

56 Henriette may only revoke an enduring power of attorney if she hadthe capacity to do so within the meaning of the Act. Similarly, she mayappoint a new power of attorney only if she has the capacity to do so.

57 There is conflicting evidence in respect to Henriette’s capacity at therelevant time. I will, in the first instance, consider the evidence which isuncontroverted in order to determine whether this application can be de-cided on the basis of the information filed with the court.

58 The most cogent evidence here is the report prepared by two medicalpractitioners, with specialties in geriatric medicine and in geriatric psy-chiatry. This report was dated May 22, 2015, a mere 29 days prior to theexecution of the revocation by Henriette. The medical report is strength-ened by the fact that this was not the first time these physicians had theopportunity to assess Henriette.

59 Their opinion is clear - Henriette was not able to make informed deci-sions about her personal, financial and business affairs as a result of herdiagnosis of moderately advanced dementia as of the date of the report. Itshould, however, be noted that this report was not the subject of swornevidence and did not specifically address the issue of whether she couldhave the capacity to understand the nature and effect of an enduringpower of attorney in spite of her diagnosis.

60 The assessment conducted at Brightwater in June of 2015 indicated toMs. Stephenson that Henriette had cognitive disabilities. However it isnot clear that having cognitive disabilities would make it impossible forHenriette to have capacity to execute or revoke a power of attorney at therelevant time.


61 The assessment of various family members and friends is conflicting.62 Danielle deposes that:

57. Robert, Nicole and I met with mom that afternoon [July 10].Mom confirmed that she had found a new lawyer, with Leigh’s help,and that she had signed a new Power of Attorney. As our conversa-tion progressed, Mom seemed confused and said she did not remem-ber what she signed and that she had simply signed where she wastold to sign.

(Affidavit sworn July 22, 2015)63 Cheryl Anholt deposes that:

2. I met Bob and Henriette 18 years ago and we became close per-sonal friends. My relationship with Henriette continues to this day.

. . .

20. I have noticed over the last few years Henriette has become veryforgetful and is easily confused.

. . .

24. Now that Henriette resides at Brightwater, I visit Henriette ap-proximately once a week subject to holidays and other commitments.I often have had to remind her of our last visit, because she will re-mark that it has been a long time since she has seen me, even if I hadvisited with her only the previous week.

. . .

37. Based on my personal interaction with Henriette, I find it verydifficult to believe that she was competent to execute the Revocationor the “new” Powers of Attorney.

(Affidavit sworn September 2, 2015)64 Robert Buckley, Henriette’s son, deposes that “[m]om has not been

competent to make personal and financial decisions for some time...”(para. 6). And, at para. 15:

15. Based on my personal interactions with my Mom at the time sheexecuted the “new” Powers of Attorney I find it impossible that any-one acting in good faith could have considered her competent to exe-cute legal documents.

65 Brett Campbell, Henriette’s grandson and the person named as Henri-ette’s property attorney in the power of attorney signed on July 6, de-poses as follows:

7. I do agree that Henriette shows signs of dementia. She is not aslucid as she once was, but that is to be expected at her age. I do think


that she has capacity to make personal decisions regarding her af-fairs. Each time we have met she has been consistent with regards toher discontent regarding how she has been treated by Danielle and toa lesser extent Robert. During our conversations, she is easily under-stood and does not say anything out of the ordinary or unexpected. Icannot recall an instance where she has been confused regardingwhere she was, what she was doing, who she was with or her generalcircumstances.

66 Margot deposes on p. 1 that:

• My Mother does have symptoms of dementia; she can be confusedabout dates and can be repetitive; however she remains very capa-ble of carrying on intelligent conversation, appreciating and man-aging the dynamics of our family and knowing what makes hercomfortable.

67 And further on p. 3:

• ... I have no doubt in my mind that my Mother understands thenature and effect of a Power of Attorney and that she wants herattorney to be someone which [sic] will allow her to participate indecisions that are made on her behalf and not be dismissive andauthoritarian as she believes Danielle has been.

68 Leigh Campbell deposes that: 14. ... It was my opinion that Mrs. Buckley understood the nature andeffect of an Enduring Power of Attorney, and the effect of terminat-ing an Enduring Power of Attorney, at the time she signed the docu-ment. She fully understood that in revoking [sic] power of attorneyshe was enabling the account(s) to be transferred back to her nameand her control.

(Affidavit sworn August 25, 2015)69 Michael Ochs, the student-at-law who attended the meetings with

Henriette deposes: 3. It is my opinion that during both our meetings Mrs. Buckley un-derstood the nature and effect of an Enduring Power of Attorney.

70 Ms. Sonntag prepared the documents for Henriette to sign and metwith her on two occasions. Ms. Sonntag stated in her affidavit that shewas of the opinion that Henriette understood the nature and effect of apower of attorney. Ms. Sonntag completed the certificate of lawyer ear-lier referenced.

71 I must conclude that in the face of the conflicting evidence of whetheror not Henriette had the required capacity at the time of executing the


revocation and the new enduring powers of attorney, a trial of the issue isrequired.

72 As a first step, it might be advisable for a new medical assessment tobe done in relation to Henriette’s current capacity to make or revoke herpowers of attorney under the Act. If she is currently capable, her wishesmight be ascertained in order to avoid the expense of a trial. If she is notnow capable, then a trial is required to determine whether she had capac-ity at the time of the June 2015 revocation and the making of the newpowers of attorney in July of 2015.

73 I order a trial of the issue of whether Henriette had the mental capac-ity to revoke her enduring power of attorney June 19, 2015 and themental capacity to legally grant new powers of attorney to the respon-dents on July 6, 2015. The burden of proof will be on the applicant on abalance of probabilities. I order that the originating application and myjudgment be served personally on Henriette by the applicant.

74 Costs of this application will be in the cause.

Application dismissed.

Niam v. Silverberg 567

[Indexed as: Niam v. Silverberg]

Nouracham Niam, Applicant and Christine Silverberg,Respondent

Alberta Court of Queen’s Bench

Docket: Calgary 1401-10012

2015 ABQB 682

C.S. Brooker J.

Heard: February 20, 2015


Professions and occupations –––– Barristers and solicitors — Fees — Mis-cellaneous –––– Client was beneficial owner of 3.2 million shares of companythat had pleaded guilty to bribery-related offence and it was ordered to pay pen-alty — Crown brought forfeiture application and client’s shares were seized —Client retained solicitor to represent her in forfeiture application — Parties en-tered into contingency fee agreement where they agreed to flat 25 per centfee — Solicitor took steps to defend forfeiture application and Crown aban-doned application — Solicitor prepared order, approved by court, that Crownwould return shares to solicitor — It was then announced that company was be-ing acquired by subsidiary — Solicitor took steps to properly register shares inclient’s name — Shareholders were paid for shares but restraint order was issuedin United Kingdom over assets held by client, including proceeds of sale ofshares — Client brought action challenging enforceability of contingency feeagreement — Action dismissed — Circumstances in which solicitor was entitledto compensation under contingency fee agreement were if action was success-fully defended to point when action proceeds became payable or returnable toclient then solicitor was entitled to compensation — Reasonable and commer-cially sound interpretation of action proceeds included physical shares and con-tingent event was return of shares — Solicitor had taken steps in defending for-feiture application and obtained shares on behalf of client as result of courtorder — Contingent event, return of action proceeds to client, had occurred andtriggered obligation to pay under contingency fee agreement — Solicitor wasnot precluded from recovering funds by operation of contingency fee agree-ment — Client was under contractual obligation to liquidate sufficient numberof shares to satisfy solicitor’s account and commercially reasonable approachwould have been to sell sufficient shares as soon as proper certificates were re-ceived — There was insufficient evidence that client was acting in bad faith orotherwise acted dishonestly but client failed to take prompt and commerciallyreasonable steps to liquidate sufficient shares to pay solicitor and she was not


relieved from contractual obligation to pay — Formal service of contingency feeagreement was not effected but agreement was conveyed to client in context inwhich it was clear that certain rights and obligations were being engaged byexecuting document — In circumstances, failure to strictly comply with servicerequirements did not render contingency fee agreement unenforceable — Con-tingency fee agreement was valid and enforceable.

Cases considered by C.S. Brooker J.:

BG Checo International Ltd. v. British Columbia Hydro & Power Authority(1993), [1993] 2 W.W.R. 321, [1993] 1 S.C.R. 12, 147 N.R. 81, 75 B.C.L.R.(2d) 145, 99 D.L.R. (4th) 577, 20 B.C.A.C. 241, 35 W.A.C. 241, 14C.C.L.T. (2d) 233, 5 C.L.R. (2d) 173, 1993 CarswellBC 10, 1993 Car-swellBC 1254, [1993] S.C.J. No. 1, EYB 1993-67096 (S.C.C.) — referred to

Baergen v. Peterson Ross (1986), 48 Alta. L.R. (2d) 386, 74 A.R. 230, 1986CarswellAlta 249, [1986] A.J. No. 1035 (Alta. Q.B.) — distinguished

Bhasin v. Hrynew (2014), 2014 SCC 71, 2014 CSC 71, 2014 CarswellAlta 2046,2014 CarswellAlta 2047, [2014] 11 W.W.R. 641, 27 B.L.R. (5th) 1, 4 Alta.L.R. (6th) 219, 464 N.R. 254, 379 D.L.R. (4th) 385, 20 C.C.E.L. (4th) 1,[2014] S.C.J. No. 71, [2014] 3 S.C.R. 494, 584 A.R. 6, 623 W.A.C. 6(S.C.C.) — followed

Botan v. St. Amand (2011), 2011 ABQB 774, 2011 CarswellAlta 2256, 529 A.R.313 (Alta. Q.B.) — followed

Botan v. St. Amand (2013), 2013 ABCA 227, 2013 CarswellAlta 1051, 85 Alta.L.R. (5th) 199, 553 A.R. 333, 583 W.A.C. 333 (Alta. C.A.) — referred to

Coronation Insurance Co. v. Florence (August 8, 1994), Cory J, [1994] S.C.J.No. 116 (S.C.C.) — considered

Creston Moly Corp. v. Sattva Capital Corp. (2014), 2014 SCC 53, 2014 CSC53, 2014 CarswellBC 2267, 2014 CarswellBC 2268, 373 D.L.R. (4th) 393,59 B.C.L.R. (5th) 1, [2014] S.C.J. No. 53, [2014] 9 W.W.R. 427, 461 N.R.335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1, (sub nom. SattvaCapital Corp. v. Creston Moly Corp.) [2014] 2 S.C.R. 633 (S.C.C.) — re-ferred to

Filiatrault v. Zurich Insurance Co. (1981), [1981] I.L.R. 1-1440, 126 D.L.R.(3d) 555, 1981 CarswellBC 687, [1981] B.C.J. No. 1937 (B.C. S.C.) —considered

Fisher v. Prince Edward Island (Minister of Environment, Labour and Justice)(2013), 2013 PESC 27, 2013 CarswellPEI 53, 1068 A.P.R. 149, 344 Nfld. &P.E.I.R. 149, 81 C.E.L.R. (3d) 123 (P.E.I. S.C.) — referred to

Hanke v. Resurfice Corp. (2007), 2007 SCC 7, 2007 CarswellAlta 130, 2007CarswellAlta 131, [2007] S.C.J. No. 7, 69 Alta. L.R. (4th) 1, [2007] 4W.W.R. 1, 45 C.C.L.T. (3d) 1, 357 N.R. 175, 278 D.L.R. (4th) 643, [2007] 1S.C.R. 333, 404 A.R. 333, 394 W.A.C. 333, [2007] R.R.A. 1 (S.C.C.) —followed

Niam v. Silverberg 569

Jackie & Handerek v. Dohmann (1987), 83 A.R. 308, 1987 CarswellAlta 513(Alta. C.A.) — followed

Kenneth W. Penonzek Professional Corp. v. Schmidt (2003), [2003] A.J. No.1651, 2003 CarswellAlta 2036 (Alta. Q.B.) — considered

Kensington Energy Ltd. v. B & G Energy Ltd. (2005), 2005 ABQB 734, 2005CarswellAlta 1785 (Alta. Q.B.) — considered

Kensington Energy Ltd. v. B & G Energy Ltd. (2008), 2008 ABCA 151, 2008CarswellAlta 528, 89 Alta. L.R. (4th) 207, 432 A.R. 141, 424 W.A.C. 141(Alta. C.A.) — referred to

Leffler v. Collins (1997), [1997] A.J. No. 604, 213 A.R. 395, 1997 CarswellAlta1158 (Alta. Q.B.) — distinguished

Morrison v. Pantony (2008), 2008 ABCA 145, 2008 CarswellAlta 516, 89 Alta.L.R. (4th) 233, (sub nom. Morrison v. Pantony (Rod) Professional Corp.)429 A.R. 259, (sub nom. Morrison v. Pantony (Rod) Professional Corp.)421 W.A.C. 259, [2008] A.J. No. 419 (Alta. C.A.) — followed

North Lethbridge Garage Ltd. v. Continental Casualty Co. (1930), [1930] 1W.W.R. 491, 24 Alta. L.R. 390, [1930] 2 D.L.R. 835, 1930 CarswellAlta 2(Alta. C.A.) — considered

Oliver (Guardian ad litem of) v. Ellison (1996), 18 B.C.L.R. (3d) 337, (sub nom.Oliver v. Ellison) 70 B.C.A.C. 114, (sub nom. Oliver v. Ellison) 115 W.A.C.114, 1996 CarswellBC 142 (B.C. C.A.) — referred to

Royal Bank v. Rizkalla (1984), 59 B.C.L.R. 324, 50 C.P.C. 292, 1984 Car-swellBC 450, [1984] B.C.J. No. 2747 (B.C. S.C.) — distinguished

S. (M.) (Next friend of) v. M. (D.) (2014), 2014 ABQB 702, 2014 CarswellAlta2088 (Alta. Q.B.) — considered

Sonnenberg v. Schumacher & Associates (2005), 2005 ABQB 352, 2005CarswellAlta 840, 16 C.P.C. (6th) 88, 52 Alta. L.R. (4th) 151 (Alta. Q.B.) —distinguished

Strategy Summit Ltd. v. Remington Development Corp. (2011), 2011 ABQB549, 2011 CarswellAlta 1616, 52 Alta. L.R. (5th) 155, [2012] 4 W.W.R.768, 523 A.R. 329 (Alta. Q.B.) — considered

155569 Canada Ltd. v. 248524 Alberta Ltd. (2000), 2000 CarswellAlta 91, 2000ABCA 41, 30 R.P.R. (3d) 185, 77 Alta. L.R. (3d) 231, 255 A.R. 1, 220W.A.C. 1, [2000] A.J. No. 101 (Alta. C.A.) — considered

364511 Ontario Ltd. v. Darena Holdings Ltd. (1998), 1998 CarswellOnt 670,[1998] O.J. No. 603, 55 O.T.C. 13 (Ont. Gen. Div.) — considered


Canada Business Corporations Act, R.S.C. 1985, c. C-44Generally — referred to

Corruption of Foreign Public Officials Act, S.C. 1998, c. 34Generally — referred to

Investment Canada Act, R.S.C. 1985, c. 28 (1st Supp.)Generally — referred to


Rules considered:

Alberta Rules of Court, Alta. Reg. 124/2010Generally — referred toPt. 10 — referred toR. 10.2 — consideredR. 10.7(2)(d) — consideredR. 10.7(2)(g) — consideredR. 10.7(4) — consideredR. 10.7(5) — consideredR. 10.8 — consideredR. 10.18 — consideredR. 11.27 — considered

Alberta Rules of Court, Alta. Reg. 390/68R. 616 — consideredR. 618 — considered

ACTION by client challenging enforceability of contingency fee agreement.

Darin Hannaford, Debra Curcio Lister, for ApplicantMr. Kenneth F. Baily, Q.C., for Respondent

C.S. Brooker J.:

Introduction1 The Applicant, Ms. Nouracham Niam, challenges the enforceability

of a contingency fee agreement she entered into with her solicitor in de-fending a forfeiture application made by the Crown. For the reasons thatfollow, I find the contingency agreement valid and enforceable.

Background

a) The initial seizure, subsequent return, and ultimate restraint of theshares

2 On January 22, 2013, Griffith Energy International (“GEI”), a Cal-gary-based energy company, plead guilty to a bribery-related offenceunder the Corruption of Foreign Officials Act, SC 1998, c 34 in relationto events which took place in the country of Chad. It was ordered to paya penalty of $10,350,000. At the time of GEI’s conviction, NourachamNiam (“Niam”) was the beneficial owner of 3.2 million shares of GEI.Of this amount, 1.6 million shares were held in the name of NourachimNiam (as opposed to Nouracham Niam), referred to as the “Nourachim

Niam v. Silverberg C.S. Brooker J. 571

Shares” and 1.6 million shares were held in the name of Adoum Hassan,referred to as the “Hassan Shares” (together the “Niam Shares”).

3 In early February of 2013, Niam retained a Calgary-based lawyer,Ms. Christine E. Silverberg (“Silverberg”), to represent her in the ex-pected forfeiture application in relation to the GEI guilty plea and con-viction. Silverberg was contacted by Mr. Earl F. Glock (“Glock”),Niam’s counsel in the United States, about the possibility of defendingNiam in the Canadian forfeiture proceedings. Niam initially retainedSilverberg, through her professional corporation (“CESPC”) pursuant toan hourly retainer agreement.

4 The Crown issued a Notice of Forfeiture Application seeking an orderforfeiting the Niam Shares on February 13, 2013. In mid-February, theNiam shares were seized by the RCMP during the execution of a searchwarrant.

5 In the interim, GEI sought an initial public offering on the LondonStock Exchange which involved changing its name from GEI to CaracalEnergy Inc. (“Caracal”). The name change occurred in May of 2013.

6 In June of 2013, Niam and Silverberg discussed the possibility of en-tering into a contingency fee agreement in relation to Silverberg’s legalrepresentation during the forfeiture proceedings. An initial draft of theagreement was prepared by CESPC in July of 2013. Glock acted as legalcounsel to Niam during the negotiation and drafting of the agreement,and following a period of revision and discussion, CESPC provided afinal, signed copy of the agreement to Niam executed on October 31,2013. Niam returned a signed and notarized copy of the agreement, exe-cuted November 4, 2013 (the “CFA”).

7 While earlier variations of the CFA provided for different contin-gency percentages based upon the stage at which the forfeiture proceed-ings were resolved, the parties ultimately agreed to a flat 25% fee, lessany monies already received pursuant to the hourly retainer agreement.The CFA also provided for a maximum fee in relation to the value of theshares, capped at 500 pence per share. I note that prior iterations of thecontingency fee percentage calculation contemplate early resolution ofthe forfeiture proceedings (i.e.: at one point the parties were discussingvarious percentages if the matter settled before disclosure).

8 Silverberg proceeded to take steps in defence of the Crown’s actionfor forfeiture of the Niam Shares. According to Silverberg, possible dis-crepancies existed between what was put before the court during the GEIsentencing submissions (including what was contained in the Agreed


Statement of Facts or “ASF”) and what was provided in the informationto obtain for the search warrant. Silverberg deposed that she took a num-ber of steps, commencing in February 2013, in an effort to force disclo-sure from the Crown in relation to the ASF.

9 A disclosure hearing was held in November 2013, following whichthis Court determined that three determinations were to be made,namely: (i) whether the Crown had any disclosure obligations; (ii) if so,what the scope of disclosure was, and; (iii) which issues of solici-tor/client privilege required resolution. The matter was ultimately set forFebruary 28, 2014.

10 In response to a public presentation made by GEI’s then counsel,Silverberg informed the Crown of her intention to make an application toadduce fresh evidence. The Crown was informed of this intention on De-cember 2, 2013. However, Silverberg ultimately decided to await theCourt’s preliminary ruling as to whether the Crown had any disclosureobligations prior to bringing her application.

11 On February 28, 2014, this Court determined that the Crown was infact under an obligation to provide disclosure, but that any decision as tothe nature and extent of the disclosure would be reserved until after theapplication to adduce fresh evidence.

12 On April 4, 2014, prior to the return date for the fresh evidence appli-cation, the Crown notified the parties of its intention to abandon the for-feiture application. Its letter of notification read, in part:

Please be advised that the Crown will be withdrawing this applica-tion for forfeiture. We have given further consideration to the matterand determined that it should not proceed.

[We] will take appropriate steps to formalize that decision throughfiling notice on the record or addressing the matter before the Courton April 16, 2014.

13 In response to this correspondence, Silverberg prepared an orderwhich was approved by the Crown as to form. The order was endorsedby this Court on April 16, 2014 (the “April Order”). It expressly “orderedand adjudged” that the Crown return the Niam share certificates toCESPC. It also provided that Niam was entitled to provide a copy of theorder to Caracal’s transfer agent and registrar (Computershare InvestorServices plc/Inc., referred to as “Computershare”) and in so doing sur-render her GEI shares in exchange for share certificates issued byCaracal.


14 On April 14, 2014 (ten days after Niam was notified that the Crownintended to withdraw its Forfeiture Application, and two days prior to theApril Order) it was publicly announced that a wholly owned subsidiaryof Glencore Xstrata PLC (“Glencore”) would be acquiring Caracal byway of a plan of arrangement under the Canada Business CorporationsAct, RSC 1985, c C-44 (the “Plan”). In order to participate in the Plan,Niam had to tender the Caracal share certificates properly registered inher name for consideration. Issues arose due to the fact that of the GEIshares, 1.6 million were issued using the incorrect spelling of her name(the Nourachim Shares) and the other 1.6 million were held beneficiallyand registered in the name of a third party (the Hassan Shares).

15 The GEI share certificates were provided to CESPC on April 18,2014, pursuant to the April Order. At this point in time, Computersharewas in receipt of a letter by the RCMP directing it not to deal with any ofthe shares until further notice. Ostensibly, this hold was placed on theshares to secure them over the appeal period from the April Order. OnMay 12, 2014, the RCMP informed Computershare that there was nolonger a hold over the Niam Shares.

16 A number of steps were taken by CESPC in order to obtain the GEIshares and to thereafter properly register them as Caracal shares bearingNiam’s correct name. CESPC tried unsuccessfully to open a brokerageaccount for Niam in Canada. A power of attorney, and ultimately a courtorder, were required in order to convert the Hassan Shares into sharesbearing Niam’s name. There was some urgency as Caracal’s shareholdermeeting for Plan approval was scheduled for June 6, 2014. CESPC ob-tained the 1.6 million share certificates in Niam’s correctly spelled nameon June 4, 2014, and received the Hassan Shares, now properly regis-tered, on June 17, 2014. All shares were conveyed to Computershare inaccordance with the requirements of the acquisition process.

17 Shareholder approval of the Plan was obtained following the June 6,2014 meeting. Subsequently, the Court made a final order approving thePlan, under which a subsidiary of Glencore acquired all of the issued andoutstanding common shares of Caracal. On June 10, 2014, the Courtmade a further order providing that upon the surrender of the formerHassan Shares (now properly registered as Caracal shares in Niam’sname) pursuant to the Plan, Computershare was to deposit the realizedfunds into CESPC’s trust account.

18 On June 19, 2014, Niam discharged CESPC as legal counsel.


19 On July 2, 2014, Glencore received final regulatory approval underthe Investment Canada Act, RSC 1985, c 28 (1st Supp) in connectionwith the Plan to effect the acquisition of all outstanding Caracal sharesthrough its wholly owned subsidiary. Six days after receiving this ap-proval the funds were released by Glencore to be paid to shareholders. Itappears as though the funds realized from the sale of the Caracal shareswere transferred to Computershare in the usual course and then held inan account at the Royal Bank of Scotland.

20 On July 24, 2014, on application by the Director of the Serious FraudOffice, a Restraint Order was issued by a court in the United Kingdomover certain assets held by Niam including the proceeds of the sharesales. The amount totalled £17.6 million (Sterling), representing the en-tire proceeds from the sale of the 3.2 million Caracal shares as paid byGlenmore. These funds remain under seizure in the United Kingdom.CESPC has since hired a solicitor in the United Kingdom to assist inrecovering the funds it says are owed under the CFA. Niam has also re-tained legal counsel to assist in obtaining these funds.

b) CESPC’s attempts to get paid21 As the above events unfolded, CESPC took a number of steps to sat-

isfy its account under the CFA. Much of the correspondence in relationto this issue is contained in Silverberg’s Response Affidavit sworn De-cember 9, 2014, setting out the multiple attempts Silverberg made at hav-ing CESPC’s account settled.

22 On May 6, 2014, Silverberg emailed both Niam and Glock outliningwhy it was not possible to open a brokerage account in Niam’s name.She continued on to state that the bank would, however, agree to open abrokerage account in the name of CESPC and transfer 25% of the sharesto this account to be used for payment of her legal fees, which she pro-posed would constitute full satisfaction of CESPC’s account.

23 On May 9, 2014, Silverberg provided a draft proposal of her accountfees to Glock. In her accompanying email she again discusses paymentoptions, repeating that CESPC would be prepared to “modify the agree-ment such that we accept 800,000 shares in full payment”. The emailconcludes by stating “...what I would like to do is make a global modifi-cation to the Contingency Agreement to settle our affairs on the basis of25% of Shares (800,000) instead of 25% of Action Proceeds...”

24 In her May 13, 2014 email to Niam, Silverberg states that CESPCwill not release the share certificates unless arrangements are made for


payment of the account. To this end, she suggests that Niam transfer800,000 shares to CESPC. By way of response email dated May 14,2014, Niam rejected this proposal, stating that it “...would alter the Con-tingency Agreement which provides for a contingency fee to be paidfrom “Action Proceeds” as defined in paragraph 1(b)(i) of that agree-ment.” Niam also expresses her “shock” over what she describes as an“intimidating threat” on CESPC’s part that it will not register the sharesin Niam’s name until it has been paid. Niam goes on to instructSilverberg to exchange the GEI shares for Caracal shares, and to have theCaracal shares sold to Glenmore pursuant to the Plan. She states that theproceeds of sale are to be held for her in trust by CESPC and that none ofthe proceeds are to be paid out absent prior written authorization. As out-lined above, these instructions were followed.

25 On May 24, 2014, Silverberg provided a further draft accounting toNiam, this time laying out the actual dollar figure owed based on sharevalue. The draft did not provide an alternate calculation for the receipt ofshares as full payment.

26 On June 11, 2014, Silverberg again raises the issue of payment ofCESPC’s accounts with Niam, stating that the matter of payment shouldbe resolved before further steps would be taken. Silverberg requests thatNiam liquidate sufficient shares for the payment of legal fees, or alterna-tively hold certain funds realized from the Caracal sale in trust pending afinalization of the statement of account. By way of reply email the fol-lowing day, Niam wrote:

At the outset I wish to express my appreciation for the professionalservices that you have rendered to me. I am really grateful and haveno hesitation to confirm that you are entitled to be compensated forsuch services and that I am obligated to compensate you.

I have however, read the Contingency Agreement and the Annexuresthereto which was provided to me. I am in doubt as to whether youare on reasonable grounds and for other reasons entitled to theamount which was the subject of our Contingency Agreement.

I am considering contesting the Agreement. I infer from the docu-mentation being provided to me that in the event of the Agreementbeing contested, a decision will have to be taken by the responsibleauthority or a judge as to the amount due to yourselves. [...]

27 Niam concluded her email by suggesting that she would obtain anundertaking from her bank to pay CESPC the final amount owing as de-termined by a reviewing authority. On June 17, Niam suggested that ifSilverberg was not comfortable with this arrangement, Niam would alter-


natively arrange to have 25% of the proceeds from the share sale placedin CESPC’s trust account, under Niam’s name, awaiting the result of areview of the CFA. Silverberg rejected this proposal by way of emaildated June 18, 2014.

28 As noted above, CESPC was terminated as Niam’s counsel on June19, 2014. The next day CESPC obtained an ex parte statutory chargingorder over 800,000 shares (being 25% of the 3.2 million shares). Thisorder was varied by consent on July 11, 2014, providing that sufficientproceeds of sale to cover the fee claimed under the CFA be provided byNiam’s new counsel to CESPC, to be held in trust pending a determina-tion of CESPC’s account. The order further provided that if the Plan didnot complete, 800,00 shares would be returned to CESPC as security forpayment.

29 In October of 2014 the parties appeared before a Review Officer inrelation to CESPC’s statement of account issued as per the CFA. Pursu-ant to Rule 10.18 of the Alberta Rules of Court, questions relating to theinterpretation, enforceability and application of the CFA were referred tothis Court for determination. These are the sole issues before me. Anydisputes over the reasonableness of the charges is properly before theReview Officer.

30 Subsequent to the taxation appointment, Niam filed an application(once amended) setting out the issues to be determined.

Issues31 The issues before me are as follows:

a) Whether a contingent event occurred so as to entitle CESPC topayment under the CFA;

b) If a contingent event has occurred, whether CESPC is neverthelesspresently precluded from recovering any funds by operation ofparagraphs 11 and 14 of the CFA; and

c) Whether the requirements of the Alberta Rules of Court applicableto contingency fee agreements have been satisfied;

Analysis32 Not surprisingly, the parties hold opposite views on each of the

above. Niam takes the position that the CFA is not operable, whileCESPC asserts that the agreement is binding and the contingency has


been satisfied. It takes the position that Niam is simply attempting torenege on her obligations. I shall address each of the above issues in turn.

a) Has a contingent event occurred so as to entitle CESPC to paymentunder the CFA

33 The circumstances in which CESPC is entitled to compensation underthe CFA are set out at paragraph 5 of the agreement, which reads:

If the Action is successfully defended to the point at which ActionProceeds become payable or returnable to you, CESPC shall be enti-tled to be paid reasonable contingent compensation for services ren-dered in relation to the response to the Action, and such reasonablecontingent compensation shall be determined in accordance withparagraphs 6, 7, 15 and 21 (“Contingent Compensation”).

34 Paragraph 6 of the CFA reads: Subject to paragraph 7 [which caps the value at 500 pence per share],the contingency fee shall be calculated on the basis of 25% of theAction Proceeds, whether the matter is resolved by way of settlementor by way of judgment in the Action.

35 Paragraphs 15 and 21 provide, respectively, that any monies alreadypaid shall be deducted from this amount, and that any disbursements in-curred shall be reflected in the final amount payable.

36 The parties disagree over whether the “Action Proceeds” have be-come “payable or returnable” to Niam, such that the obligation to com-pensate CESPC is triggered. “Action Proceeds” is defined at paragraph1(b) of the CFA as follows:

“Action Proceeds” means:

(i) the value of the shares as at the date of the order of return orvalue of the shares if converted earlier, owned by you, asoriginal owner or as transferee of Mr. Adoum Hassan, that arenot forfeited in the pending application and are returned toyou; and

(ii) which are obtained by CESPC on your behalf as a result ofeither negotiations or the prosecution and defence of the Ac-tion by way of proceedings in the Court of Queen’s Bench ofAlberta [...]

37 The Applicant argues that no Action Proceeds, as defined, have be-come payable or returnable to her, such that there has been no contingentevent triggering the payment obligation. Specifically, she argues that in


order to satisfy the definition of Action Proceeds, three factors must beestablished, namely:

(a) the value of the shares have been returned to Niam;

(b) the value of the shares was obtained by CESPC on Niam’s behalf;and

(c) the value of the shares was obtained by CESPC as a result of ei-ther negotiations or the prosecution and defence of the Action.

38 It is clear that the date of return is April 16, 2014, being the date ofendorsement of the April Order, when the GEI share certificates wereordered returned to Niam through CESPC. The physical delivery of theshares occurred 12 days later. Both also agree that the cash representingthe value of the shares has never been received by either party.

39 The Applicant takes the position that the value of the shares on thedate of return was approximately $30 million, and that this value hasnever been “returned” to Niam or otherwise “obtained” by CESPC onNiam’s behalf. She argues that by definition, Action Proceeds meanssomething other than in specie shares. Niam takes the position that if theparties had simply intended “Action Proceeds” to mean “shares”, itwould have simply been defined as such in the CFA. She points to thewording of paragraph 1(b)(i), namely “the value of the shares”, as dem-onstrating this different intention. The Applicant submits that her inter-pretation reflects the key principles of commercial contractual interpreta-tion as it gives meaning to all of the contractual terms, and thatinterpreting Action Proceeds to simply mean shares would render thephrase “the value of” meaningless. While the Applicant acknowledgesthat the physical shares have been returned, she argues that the value ofthe those shares has not been.

40 CESPC argues that the definition “Action Proceeds” either means orincludes shares in specie. CESPC submits that the shares were not con-verted into cash prior to their return and that the GEI shares had neverbeen forfeited, but were returned to Niam, being received by Silverbergon April 28, 2014. At this point, CESPC submits that the contingentevent occurred. CESPC further submits that through its efforts, the GEIshares were ultimately put into a form such that the money value of thoseshares, sufficient to pay its account, was obtainable. It submits that acash value could have been realized by Niam at any time after June 4,2014, when the share certificate for 1.6 million Caracal shares in Niam’scorrectly spelled name was received.


41 CESPC points to an email from Glock to Niam, dated May 23, 2014,as supporting its position that by this point in time the Contingent Com-pensation was payable. It reads:

Christine will calculate the exact fees due under the Contingency FeeAgreement and give you that accounting for your approval. She willalso prepare an Assignment of Proceeds for you to sign so thosefunds can be transferred to her general account. Christine has been inhearings/meetings today and yesterday, so she will try and get thoseprepared this weekend and e-mailed to you early next week for yoursignature.

42 CESPC argues that that Niam’s interpretation is commercially un-sound. It states that the physical shares in GEI were the subject of theCrown’s forfeiture application and that it was retained by Niam to securetheir return. CESPC argues that it took a number of steps which resultedin achieving the desired result, and that the contingent event — the returnof the shares — has undisputedly been triggered.

43 As such, it urges this Court to find that “Action Proceeds” should beinterpreted as meaning the shares, and not the money value of the shares.It suggests that the term “are” in Paragraph 5 is indicative of the plural,meaning shares (i.e.: the “shares are returned to you”), and that themoney value of the shares would have been referred to using the singular“is” (i.e.: “the money is returned to you”).

44 CESPC submits that its argument is supported by the wording of par-agraph 12 of the CFA, which states “you agree to liquidate, upon demandby CESPC, sufficient shares” to pay disbursements and remit the contin-gent compensation, as set out in paragraph 5. It argues that if the ActionProceeds did not include shares, this paragraph would be renderedredundant.

45 The key principles of contractual interpretation are well known anddo not warrant extensive review. It is clear that issues regarding the inter-pretation of a contingency fee agreement should be resolved first by theordinary rules respecting contractual interpretation: Morrison v. Pantony,2008 ABCA 145, 429 A.R. 259 (Alta. C.A.), para 13. The Court in Mor-rison succinctly summarized the rules of interpretation as follows:

Contracts are interpreted on an objective basis, having regard to whata reasonable person would infer from the words used. The contractmust be interpreted considering the factual and legal backgroundagainst which it was concluded and the practical objectives which itwas intended to achieve: ATCO Electric Ltd. v. Alberta (Energy andUtilities Board), 2004 ABCA 215, 31 Alta. L.R. (4th) 16 at para. 77.


With contingency retainer agreements, the special relationship be-tween a solicitor and client is an important part of that background.[...]

46 The above makes it clear that in disputes over contractual interpreta-tion, the Court must examine the contract as a whole, giving the termstheir ordinary meaning consistent with the circumstances known to theparties at the time of its formation: see, more recently, Creston MolyCorp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633(S.C.C.), para 47. Finally, the various clauses in a contract are to be in-terpreted in the context of the intention of the parties as evident from thecontract as a whole, with general terms thought to be qualified by spe-cific ones: BG Checo International Ltd. v. British Columbia Hydro &Power Authority, [1993] 1 S.C.R. 12 (S.C.C.), at para 9.

47 The circumstances in this case are as follows: Niam’s physical shareshad been seized pursuant to the forfeiture proceedings initiated by theCrown. She sought their return. She contracted with CESPC to achievethis objective. To argue that the physical shares — which were the tangi-ble subject of the forfeiture application — and which were the only thingthat might have been “returned” (as there was no prior conversion) donot fall within the definition of Action Proceeds is not a commerciallysound interpretation of paragraph 1(b) of the CFA.

48 The wording of paragraph 4 also supports this interpretation, it statesin part that:

...CESPC shall proceed with the response to the Application andshall continuously defend your right to the shares at issue and to nothave the shares or the converted value of those shares forfeited, ei-ther as proceeds of crime or as offence related property. [underliningmine]

49 Again, this wording is indicative of the fact that the parties were con-templating the return of the physical shares, as opposed to the moneyvalue of the shares.

50 This interpretation is commercially sound. I note, for example, thatgiven the circumstances in existence at the time of the forfeiture applica-tion and the execution of the CFA, it was possible Niam may havewished to retain her GEI shares as an investment. Had she done so, itwould be difficult to argue that the Action Proceeds had not been re-turned. An interpretation that views “Action Proceeds” as not includingshares in specie is not commercially reasonable in the circumstances.


51 I agree with the Respondent that while the money value of the shareswas intended to constitute the contingent compensation, the contingentevent was the return of the shares. The shares were obtained by CESPCon behalf of Niam as a result of the April Order. The “value of theshares” must mean the value on the open market as of the date of return.I reject Niam’s argument that “value” cannot be realized until the cashequivalent of the shares has been obtained. This interpretation is notborne out on an objective reading of the CFA, given the circumstances inwhich the parties entered into the contract.

52 Niam argues that even if the phrase “value of the shares” is inter-preted to mean shares in specie, the requirements in paragraph 1(b)(ii)have not been met. In particular, she submits that CESPC did not obtainthe shares on her behalf “as a result of either negotiations or the prosecu-tion and defence of the Action”. She argues that the steps taken bySilverberg (and her associate, Mr. James) did not amount to a “negotia-tion”; nor was the forfeiture application “defended”. Rather, Niam sub-mits that the Crown unilaterally abandoned its forfeiture application, andthat its motive for doing so is purely a matter of speculation and is there-fore not attributable to any actions taken by CESPC.

53 Niam argues that in order to constitute a “negotiation” CESPC andthe Crown must have engaged in some form of consensual bargaininginvolving discussions, with an eventual mutual compromise. Niam sub-mits that the work done by CESPC was largely in relation to the forfei-ture proceedings and not in furtherance of reaching a settlement. She fur-ther submits that the contents of the April Order were not negotiated bySilverberg and the Crown, with the Crown merely agreeing as to form.

54 As for the “prosecution and defence” of the Action, Niam submitsthat this phrase entails a trial and a final disposition of the issue, as op-posed to mere interlocutory proceedings. She states that no defence ofthe Action occurred, as a defence could not yet have been mounted byCESPC given that adequate disclosure had not been made at the time ofthe Crown’s abandonment.

55 Niam submits that the language used in a number of other paragraphsin the CFA support her proposed interpretation of the agreement andclear up any ambiguity arising from the wording of paragraph 1(b)(ii).As seen above, paragraph 5 uses the phrase “if the Action is successfullydefended”, while paragraphs 4 and 6 both speak of resolution of the Ac-tion “by way of settlement or by way of judgment in the Action.” Ac-cording to Niam, such language substantiates her argument that the steps


taken by CESPC do not satisfy one of the two contemplated methods oflegal representation, being either: (i) negotiation with eventual settle-ment, or; (ii) defence of the Action leading to judgment.

56 CESPC submits that there is no merit to Niam’s argument that itsactions fail to qualify as either a negotiation or defence of the Action.Silverberg’s Response Affidavit outlines, in some detail, what she de-scribes as her “strategic agenda” in defending the forfeiture applica-tion — namely mounting an attack on the veracity and reliability of theASF in part by obtaining full disclosure. CESPC took the position thatthe Crown had either mislead the Court, or had been negligent in failingto investigate/failing to verify GEI’s investigation. Her affidavit goes onto state that this approach was specifically initiated to demonstrate to theCrown that it would be unwise to pursue the forfeiture application.

57 CESPC submits that the steps taken in furtherance of the strategicagenda clearly amount to a defence of the Action. I agree. Silverberg’saffidavit evidence and her answers given on questioning on her affidavitclearly demonstrate a litigation strategy aimed at attacking the strength ofthe Crown’s case against her client — in this instance, the validity of theASF. Silverberg was successful in obtaining a ruling that the Crown hadcertain disclosure requirements, although the scope of these requirementshad yet to be delineated. An application for fresh evidence was immi-nent. These measures clearly constitute steps taken in defence of the Ac-tion, being the forfeiture application. The interpretation proposed byNiam is unnecessarily restrictive and does not reflect the clear intent ofthe parties, which was for CESPC to assist Niam in getting her sharesback — whether through a final verdict of the court or by some earliermeans of resolution.

58 In Royal Bank v. Rizkalla (1984), 50 C.P.C. 292 (B.C. S.C.) the courtaddressed whether certain mortgagors had a defence which might bear onthe granting of an order nisi. While this case is clearly distinguishable onthe facts, McLachlin J, as she then was, went on to examine what ismeant by the term “defence”, stating, at para 9:

A defence is a contention that the plaintiff’s claim is not established.It adopts one or more of the following positions:

(i) an objection on grounds of jurisdiction;

(ii) a denial of the plaintiff’s allegations (traverse);

(iii) a submission that if the plaintiff’s allegations are true theydisclose no cause of action (demurrer); and


(iv) a submission that if the plaintiff’s allegations are true thereare facts which provide a legal justification for the defen-dant’s conduct (confession and avoidance).

59 I note that our Court of Appeal recognized this definition in 155569Canada Ltd. v. 248524 Alberta Ltd., 2000 ABCA 41, 255 A.R. 1 (Alta.C.A.), at para 136. While this definition clearly refers to defence in acivil context, it is of some assistance in the case at bar. The steps takenby CESPC were clearly initiated in an attempt to demonstrate that theCrown’s allegations were not established, and to challenge the use andaccuracy of the ASF. The actions of CESPC amount to a “defence of theAction” as that phrase is understood by giving the terms their ordinarymeaning consistent with what was known by the parties at the time ofdrafting.

60 For Niam to argue that no negotiations occurred misunderstands themany more nuanced forms of negotiation. Having reviewed the exhibitsattached to Silverberg’s Response Affidavit, it is clear that CESPC tooksteps to highlight and bring to the attention of the Crown any perceivedweaknesses in its case. In paragraph 19 of her affidavit, Silverberg de-poses that her litigation strategy was based on a belief that if the Crownwas forced to make full disclosure, it might entertain negotiations, returna portion of the shares, or even abandon its position. There is no realdispute that emphasising the possible weakness or areas of exposure ofthe other side’s case is often a key step in the negotiation process. Dis-putes are often settled on a middle ground, after each party realizes cer-tain frailties in their case which may make proceeding to trial a gamble.

61 Niam counters that even if CESPC’s actions amount to a defence ofthe action, the action was not resolved by way of “settlement” or “judg-ment”. Niam argues that paragraphs 4 and 6 of the CFA both refer to theresolution of the Action “by way of settlement or by way of judgment”.Niam takes the position that the April Order does not meet this criterion,pointing to the differing definitions of “judgment” versus “order” in theRules of Court. Again, this narrow interpretation is not borne out giventhe factual and legal background against which the CFA was drawn up,and the practical objectives it was intended to achieve.

62 The April Order provided, inter alia, for the return of the seized GEIshares to CESPC. This was the objective sought by both parties to theCFA. That it was realized in the form of an order as opposed to finaljudgment cannot be determinative of the issue. I agree with CESPC thatsetting the CFA aside on this basis would result in a commercial absurd-


ity and defeat the intent of the parties at the time the agreement wasdrafted. The April Order was an order of this Court which “Ordered andAdjudged” the return of shares. It resulted in a final disposition of theissue. This undoubtedly meets the definition of Action Proceeds, againbeing the value of the shares obtained by CESPC as a result of negationsor defence of the Action “by way of proceedings in the Court of Queen’sBench of Alberta.”

63 A review of the CFA as a whole reveals that the parties clearly con-templated that the proceedings might conclude, with the occurrence ofthe contingent event, prior to a full hearing on the merits of the forfeitureapplication. An attempt to characterize the April Order as anything otherthan a final ruling concluding the Action merely confuses form withsubstance.

64 Finally, Niam argues that the value of the shares was not obtained “asa result of” either any negotiations or defence of the Action. She submitsthat some causative link is required between CESPC’s legal representa-tion, and obtaining the proceeds, arguing that there is simply no evidenceof a causative connection between the legal representation by CESPCand the Crown’s withdrawal of the forfeiture application.

65 To this end, Niam relies on the classic “but for” test used in tort law,as recently restated in Hanke v. Resurfice Corp., 2007 SCC 7, [2007] 1S.C.R. 333 (S.C.C.). As no real argument was put forward on the appli-cation of the tortious causation principle to the law of contract, I do notintend to enter into an applicability analysis. This is especially so asNiam’s argument can be dealt with using the basic principles of contrac-tual interpretation.

66 I reject Niam’s suggestion that it is merely speculative to suggest thatthe Crown abandoned its application in response to CESPC’s litigationstrategy. While the correspondence from the Crown notifying CESPC ofits intent to withdraw its application for forfeiture is vaguely worded asto the reasons for withdrawal, it is common sense and logic, as opposedto speculation, which informs any analysis as to why the Crown acted asit did. Notably, there is no evidence that some other event was the cata-lyst for the Crown’s decision. Given the timing of the disclosure pro-ceeding and the fresh evidence application, as well as the allegation thatthe Crown either knowingly or negligently misled the court, in relation tothe Crown’s seemingly sudden decision to abandon its forfeiture applica-tion belies any other reasonable explanation.


67 I note that prior to CESPC’s requests for payment and the apparentsouring of relations between the parties, Niam did not express any uncer-tainty as to the validity of the CFA. In fact, she appeared to acknowledgeits validity in her April 7, 2014 email to Silverberg, which read in part:

...I want to sell half of the shares which is if we finish all the processand Honourable Judge John James registers the shares in proper way.I want to sell only 1.6 million shares specifically, those which Ibought from Adoum Hassan and I want to keep the other half, the 1.6which is under my name. thus, I will be able to pay your present [sic]age.

68 One week later Glencore publicly announced that it would be acquir-ing Caracal by way of a plan of arrangement, rendering the above inten-tions unattainable.

69 Based on all of the above, I find that the contingent event — beingthe return of the Action Proceeds to Niam, has occurred, thus triggeringthe obligation to pay under the CFA. I turn next to the second issueraised — whether CESPC is actually able to recover the funds.

b) If a contingent event has occurred, is CESPC nevertheless presentlyprecluded from recovering any funds by operation of paragraphs 11and 14 of the CFA

70 Essentially, the second question before this court is whether compen-sation only becomes payable to CESPC when Niam has received theshares, sold them, and received payment free and clear from restraint.Niam argues that circumstances beyond her control have intervened, ren-dering her unable to realize on the dollar value of the shares. She relieson paragraph 14 of the CFA in arguing that the intervening action of theDirector of the Serious Fraud Office of the United Kingdom in issuingthe Restraint Order has effectively suspended her obligations under thecontract. Paragraph 14 states:

In the event you take prompt and commercially reasonable steps toliquidate sufficient shares to remit the fees and disbursements paya-ble to CESPC pursuant to this Agreement, but are unable to receivethe sale proceeds due to circumstances beyond your control, fees anddisbursements shall not be due and payable to CESPC until five (5)business days after the proceeds are received by you free of any re-striction or constraint.

71 Niam submits that paragraph 14 was added in order to address thepossibility of a forfeiture claim from a foreign jurisdiction, which wasraised as a concern and discussed by the parties. Niam argues that para-


graph 14 represents an acknowledgement that by entering into the CFA,CESPC was taking a risk that forces beyond Niam’s control — namelyforeign proceedings — could jeopardize the ability to receive the saleproceeds. She takes the position that no fees are payable to CESPC untilfive days after she receives the proceeds from the sale of the shares.

72 CESPC disagrees with this suggested interpretation. Specifically,CESPC argues that paragraph 14 should not be read as obligating Niamto pay only when she receives the cash value for all of the shares. Rather,it submits that the contingent compensation became payable once Niamwas in a position to sell sufficient shares to pay the contingency fee.CESPC asserts that Niam was in a position to do so by June 4, 2014, hadshe acted in a prompt and commercially reasonable manner.

73 In her Response Affidavit, Silverberg deposes that the revisions to theCFA during negotiations in relation to paragraph 14 were made to clarifythe understanding that the contingent compensation was only intended tobe paid from the sale of the recovered shares, as opposed to any other ofNiam’s assets. CESPC takes the position that paragraph 14 was notmeant to act as a force-majeure type of clause.

74 CESPC argues that its interpretation is supported by the wording ofParagraph 11 of the CFA which reads:

The Contingent Compensation [...] shall be payable within five (5)days, or on a date so soon thereafter as the Action Proceeds havebeen received by you or by CESPC on your behalf. CESPC will sub-mit a statement of account to you setting out the fees, disbursementsand other charges payable by you.

75 CESPC argues that if Niam had acted in a prompt, commercially rea-sonable manner, she would have liquidated sufficient shares to pay itsaccount upon receiving the Action Proceeds. It submits that Niam re-sisted giving any authority to CESPC to deal with the shares in order toaddress its fee, and that Niam otherwise refused to transfer shares forpayment or liquidate the shares on the open market.

76 The threshold question is whether Niam failed to take prompt andcommercially reasonable steps to liquidate sufficient shares to payCESPC. If she failed to do so, she is unable to rely on the remainder ofparagraph 14 in relation to her non-payment.

77 The timing of events is not is dispute. On April 14, 2014 (ten daysafter Niam was notified that the Crown intended to withdraw its Forfei-ture Application) the Glencore acquisition was publicly announced. Theshares were ordered returned two days later. CESPC received the shares


on April 28, 2014. Various issues with the share certificates caused adelay in providing the certificates to Computershare. However, by June4, 2014 CESPC had received the share certificate for the 1.6 million Car-acal shares registered in Niam’s proper name (held in trust for Niam). OnJune 11, 2014, CESPC issued a formal written demand, pursuant toclause 12 of the CFA requesting that Niam liquidate sufficient shares topay the contingency fee and disbursements, or to transfer sufficientshares to CESPC to liquidate. Again, Niam’s instructions during thistime were to sell the Caracal shares pursuant to the Glencore arrange-ment and to hold the proceeds in trust. The Hassan shares were receivedon June 17, 2014 and immediately tendered to Computershare. Niam’sentire Caracal shareholding was liquidated on July 8, 2014 pursuant tothe Plan.

78 The parties disagree as to whether the steps taken by Niam during thistime period constitute a prompt and commercially reasonable effort toliquidate sufficient shares to pay CESPC’s account. Niam argues that, inthe circumstances, all actions taken by her during the relevant time pe-riod were both commercially sound and reasonable. She takes the posi-tion that it was entirely reasonable to hold on to the Caracal shares overthis period of time in order to partake in the Glencore acquisition, whichinvolved a fixed buyer at a high fixed price, as a part of a court sanc-tioned process. I note that the information circular provided to Caracalshareholders in advance of the June 6, 2014 special meeting providedthat upon completion of the Plan, current shareholders exercising theirconversion rights would receive 550 pence per share. Niam asserts thather actions and her instructions to counsel were all aimed at liquidatingher shares through the Glenmore acquisition, and that such actions werereasonable.

79 Conversely, CESPC argues that the Glencore acquisition was specu-lative during this time period; it had not yet received regulatory approvaland there was no sale process in place. As such, it was not reasonable toforestall other, available means of liquidation in anticipation of an uncer-tain future event. CESPC takes the position that Niam could have dis-posed of enough shares to pay the contingency fee at any time after June4, 2014 up to July 2, 2014 (the date Glencore received regulatory ap-proval). In her Response Affidavit, Silverberg deposes that during thisapproximate time period, Caracal shares were trading on the LondonStock Exchange in large volumes at prices between 535 and 547 penceper share. CESPC argues that during this time period, Niam was not


faced with circumstances “beyond her control”. She could have tenderedthe shares but chose not to.

80 Counsel for Niam provided authority for how the term “prompt” andthe phrase “commercially reasonable” have been interpreted. Niam relieson North Lethbridge Garage Ltd. v. Continental Casualty Co., [1930] 2D.L.R. 835 (Alta. C.A.), para 26 for the proposition that “prompt” meanssomething other than “immediate”: see also Fisher v. Prince EdwardIsland (Minister of Environment, Labour and Justice), 2013 PESC 27,344 Nfld. & P.E.I.R. 149 (P.E.I. S.C.), para 13. In Filiatrault v. ZurichInsurance Co. (1981), 126 D.L.R. (3d) 555 (B.C. S.C.), the Court notedthat, while the usual definition of “prompt” is “immediately” or “withalacrity”, in the context of statutory conditions the term must be definedas meaning “with that degree of promptness which is reasonable in allthe circumstances.”

81 I agree that that “promptness” is a contextual term determined by thecircumstances. As an example, doctors in emergency rooms are expectedto provide prompt treatment to patients. However, the level of prompt-ness required differs vastly between the patient who arrives with asprained an ankle, versus one who suffers a life threatening wound.Whether an action may be considered ‘prompt’ is difficult to determineabsent a contextual analysis.

82 A contextual analysis is also required to determine whether the stepstaken by Niam were commercially reasonable. This Court had the recentopportunity to interpret a similar phrase — “reasonable commercial ef-forts”-in Strategy Summit Ltd. v. Remington Development Corp., 2011ABQB 549, 523 A.R. 329 (Alta. Q.B.). It held that the phrase “reasona-ble commercial efforts” means something less than “best efforts”: para176. It quoted further from 364511 Ontario Ltd. v. Darena Holdings Ltd.(1998), 55 O.T.C. 13 (Ont. Gen. Div.) where the trial judge held:

I rely upon the normal dictionary meaning of these words. Reasona-ble implies sound judgment, a sensible view, a view that is not ab-surd. Commercial means having profit or financial gain as opposedto loss as a primary aim or object.

These words impose a standard of reasonable commercial efforts, notone of the best efforts or bona fide efforts. [...]

83 In the case at bar, neither party provided the Court with any evidenceabout what might be the measurement of taking prompt, commerciallyreasonable steps. This leaves the Court without any form of economic or


market model upon which it might perform a contextual analysis. Expertevidence in this area may have been beneficial.

84 That said, given the evidence on the record, I must determine whetherNiam’s decision to retain the Caracal shares until the Glenmore acquisi-tion finalized constituted prompt and commercially reasonable steps toliquidate sufficient shares to remit the fees payable to CESPC. I find theydo not.

85 Silverberg first requested satisfaction of CESPC’s account on May 9,2014. She outlined various options for payment, including a modificationto the CFA such that CESPC would accept 800,000 shares in full pay-ment. On May 13, 2014 she similarly requested that Niam either pay theaccount or transfer sufficient shares. Niam rejected this proposal, statingit would alter the terms of the CFA. A formal demand to liquidate suffi-cient shares to pay the contingency fee was issued by CESPC on June 11,2104, pursuant to the terms of paragraphs 11 and 12 of the CFA. Thefollowing day, Niam had advised that she did not feel CESPC was enti-tled to the entire amount of the contingency fee, and raised the possibilityof contesting the agreement.

86 For the reasons outlined above, Niam’s receipt of the GEI shares inspecie constituted a receipt of the Action Proceeds and a completion ofthe contingent event. As such, by operation of paragraph 12, Niam wasobliged to liquidate sufficient shares upon demand. She did not take therequired steps to do so until the certificates were surrendered to Com-putershare on June 17, 2014. The shares were liquidated in accordancewith the Plan on July 8.

87 The obligation to act “promptly” takes on particular significance inthe circumstances of this case. The risk of forfeiture proceedings in aforeign jurisdiction was well known to the parties. It was discussed insome detail by Glock and Silverberg, as evidenced by a number ofemails on this point. In addition, Silverberg sought advice from a USattorney, Mr. Knight, on this topic. This risk is discussed in the notesSilverberg made during a telephone conference between herself, James,Niam, Glock and Knight on April 16, 2014, regarding what next stepsshould be taken upon return of the shares. Silverberg’s notes include thefollowing excerpt made during that conversation (exhibit 2 from the tran-script of Silverberg’s questioning, held January 20, 2015):

Choice is sell when can (after 30 days), or when arrangementcomplete.


We advise sell when can — share value will be up and negligibledifference between share value and 550 pence; avoid risk that share-holders won’t approve and deal will fall through — some brokerfees, but Earl [Glock] and Paul [Knight] agree there is a businessinterest to sell, sooner rather than later.

88 The above lends strength to the argument that the commercially rea-sonable approach would have been to sell sufficient Caracal shares tosatisfy CESPC’s account as soon as the proper certificates were received.Indeed, this appears to be the avenue suggested by Niam’s US counsel,as well as the US attorney who was advising on the risk of foreign gov-ernment intervention.

89 It must be remembered that Niam’s obligation to liquidate under theCFA applied only to a sufficient number of shares needed to satisfy hercontingency fee obligations. Niam was free to hold onto the balance ofthe shares and submit them pursuant to the Glencore Plan, attendant withany additional risks this course of action would have entailed. Her failureto liquidate the requisite number of shares prior to the Glencore acquisi-tion does not constitute prompt action in the circumstances. This is espe-cially so as CESPC had issued a formal demand as provided for underthe CFA.

90 While I agree that Niam did not have to use her “best efforts” to liqui-date sufficient shares, her actions in the circumstances do not satisfy therequirements of paragraph 14. Her decision to retain all 3.2 millionshares in order to tender them in the Plan does not reflect sound commer-cial judgement. Prompt and commercially reasonable steps in these cir-cumstances would have involved liquidating sufficient shares to meet herobligations under the CFA on the stock market.

91 I turn next to whether in failing to promptly deal with the shares,Niam was acting in bad faith. CESPC asserts that Niam became verydifficult to contact following the April Order, suggesting that this lack ofcommunication was part of a tactic adopted by Niam to ultimately avoidher payment obligations. While the record clearly discloses that CESPChad considerable difficulty communicating with Niam throughout Mayand June 2014, it also shows that these difficulties existed well before theApril Order and the souring of relations between the parties. Correspon-dence between Niam, Silverberg and Glock demonstrates that Niam wasa very mobile individual during the relevant time periods, crossing con-tents and time zones. It appears she spent time in South Africa, Chad,


and the United Kingdom in May of 2014, while Silverberg was attempt-ing to receive instruction from her.

92 While Niam’s latter tactics raise suspicions as to her intent, there isinsufficient evidence to establish that she was deliberately delaying herresponses in order to thwart CESPC’s ability to realize payment underthe CFA. Nor do I find that Niam was actively taking a position whichwould result in a lack of recovery of the proceeds. I note that in her Re-sponse Affidavit, Silverberg states that Niam did not care if holding anews conference would jeopardize the Glenmore acquisition because shedid not care about getting the money. This does not constitute sufficientevidence upon which this Court can make a finding that Niam was unin-terested in the proceeds, was acting in a high-handed manner, or wasotherwise demonstrating bad faith. I do not think, in the circumstances,that a protracted analysis of the principles set out in Bhasin v. Hrynew,2014 SCC 71, [2014] 3 S.C.R. 494 (S.C.C.) is warranted.

93 While there is insufficient evidence upon which to find that Niam wasacting in bad faith, or otherwise acted dishonestly, her conduct coloursmy analysis as to whether the steps taken in relation to liquidating suffi-cient shares to satisfy CESPC’s account were commercially reasonable.Niam’s actions subsequent to her receipt of the Caracal shares appear tobe predicated upon her personally held belief that she no longer facedany obligations under the CFA. Her correspondence of June 12, 2014,and June 17, 2014 makes clear that she is operating under the beliefwhile she will be obligated to pay some amount, it will be calculated onsome basis outside of the confines of the CFA.

94 With respect, the CFA had not been successfully contested, and Niamwas not free to deal with the whole of the shares in any manner in whichshe chose. She remained under a contractual obligation to act in a promptand commercially reasonable manner to liquidate sufficient shares to sat-isfy CESPC’s account. The risk of foreign interference was known, al-though it was not a certainty it was a real risk. If Niam wished to pursuethe Glencore deal using the balance of the shares, given the known risks(offset by the 550 pence/share guaranteed price) she was free to do so.However, she was contractually obligated to act in a certain manner vis-a-vis those shares which needed to be liquidated to pay CESPC.

95 I accept that there are a number of factors which may have playedinto Niam’s decision to remain in a vulnerable position in order to par-take in the Glencore deal. It appears from the circular that Niam wasguaranteed 550 pence/share if the deal went through. This is higher than


the 535-547 that Silverberg states the shares were trading at during theperiod leading up to the acquisition. Niam also had a guaranteed buyerfor all 3.2 million shares. While Silverberg deposes that the Caracalshares were trading in “large volumes” on the open market during therelevant time, the evidence is not clear as to exactly what percentage ofthe shares could have been divested.

96 However, these factors must be balanced against the fact that whilethe Glencore deal had been publicly announced, it had not yet been ap-proved. While the evidence suggests that the required regulatory ap-proval may have been a formality at this point, the fact is, the deal re-mained uncertain. This tentative method of divesting the shares must beweighed against the known risks. While exact level of risk of foreigninterference was not known, it was a distinct possibility, although not acertainty. This risk was previously discussed with Niam.

97 Niam was under a contractual obligation to liquidate a sufficientnumber of shares to satisfy CESPC’s account. The CFA compelled Niamto act in a specified manner in relation to those only shares earmarked tosatisfy the fees and disbursements owing to CESPC. This obligation ex-isted independent of Niam’s personal belief that the CFA may not beenforceable.

98 Given that Niam failed to act in a prompt and commercially reasona-ble manner, she is not entitled to rely on the balance of paragraph 14.The wording of that paragraph makes it clear that if Niam is unable toaccess the sale proceeds due to circumstances beyond her control, she isrelieved from paying fees until the proceeds are received free of any re-striction or constraint. However, her obligation to pay is only suspended“in the event” that she took prompt and commercially reasonable steps toliquidate sufficient shares. As I have found she has failed to do so, thebalance of paragraph 14 does not relieve her from any contractual obliga-tions to pay.

99 In the event that I am incorrect in my determination that Niam failedto take prompt and commercially reasonable steps to liquidate sufficientshares I shall address the balance of the parties’ arguments in relation toparagraph 14 of the CFA — namely — whether the fees are not currentlydue and payable because circumstances beyond Niam’s control have pre-vented her from receiving the sale proceeds.

100 It is clear that if Niam’s decision to tender all of her shares under theGlencore acquisition was, in fact, commercially reasonable, the actionsof the Director of the Serious Fraud Office of the United Kingdom in


issuing the Restraint Order would constitute a circumstance beyond hercontrol which has rendered her unable to receive the sale proceeds. InKensington Energy Ltd. v. B & G Energy Ltd., 2005 ABQB 734 (Alta.Q.B.), the Court described “circumstances beyond one’s control” as be-ing something one may not unilaterally control or dictate (reversed onother grounds: 2008 ABCA 151 (Alta. C.A.)). In the case at bar, the deci-sion of the Director of the Serious Fraud Office to restrain the funds wasone made without input or influence from Niam. She had no ability todictate what would or would not happen to the proceeds once the Re-straint Order was issued. Her current inability to access or otherwise dealwith the proceeds is due to circumstances beyond her control.

101 The question therefore becomes whether any fees are not payable un-less and until Niam receives the proceeds free and clear from restraint.Niam takes the position that CESPC is not entitled to payment of thecontingency fee until such point in time that Niam obtains the proceedsof sale. CESPC asserts that paragraph 14 should be interpreted as relatingsolely to the timing of the payment, as opposed to the basis of liabilityfor payment. CESPC suggests that the intent of the parties may still beachieved if it is able to independently secure the proceeds from the saleof “sufficient shares” to cover its fees. That is, paragraph 14 should notbe interpreted a precluding CESPC from recovering any fees owing fromthe proceeds held by the Serious Fraud office.

102 I agree. The wording of paragraph 14 evidences a clear intent of theparties to ensure that Niam would not be responsible for payment of thecontingency fee out of any other funds. That is, CESPC’s account couldonly be satisfied using monies obtained from the sale proceeds of thoseshares actually recovered during the original forfeiture proceedings. Onan objective reading, consistent with the circumstances known to the par-ties at the time of drafting, paragraph 14 is meant to provide some levelof protection to Niam. A reasonable person, knowing about the existingrisk of foreign interference, would interpret this paragraph as expressingthe parties’ understanding that Niam would only be liable to pay CESPCout of the proceeds of whatever shares were actually recovered. The ob-ject is clearly to prevent CESPC from demanding payment from a sourceother than the funds attributable to the recovered shares.

103 However, it is clear that this intent would not be frustrated if CESPCis able to secure payment of its account through the same identified pro-ceeds, albeit through an intermediate step. It appears from correspon-dence on the record, that the ability of CESPC to receive any funds ow-


ing out of the share sale proceeds may exist irrespective of Niam’scurrent inability to access her accounts. Specifically, CESPC submitsthat it may be able to obtain payment of its account from the SeriousFraud Office, regardless of how Niam’s interests in the funds are ulti-mately determined.

104 Correspondence between CESPC’s solicitor in the United Kingdomand the Serious Fraud Office supports this position. In its letter of August14, 2014, the Serious Fraud Office invites CESPC to provide a finalcourt order confirming entitlement to the contingency fee, such that itcan make a claim as a third party secured creditor.

105 I agree with CESPC that paragraph 14 was not meant to act as a blan-ket force-majeure type of clause. As long as the funds being accessed aredrawn exclusively from the pool of proceeds specifically earmarked forpayment of CESPC’s legal services (being the share sale proceeds) theintent of the parties may be realized.

106 I find that an objective interpretation of paragraph 14 does not pre-vent CESPC from securing sufficient proceeds to satisfy the contingencyfee from the restrained funds. This ability exists irrespective of Niam’sability to access the funds. The purpose of paragraph 14 is to ensure thatNiam was not liable to pay the contingency fee from any source otherthan the sale proceeds of the shares. If CESPC is able to recover anymonies owing from the Serious Fraud Office, the objectives of both par-ties will have been achieved.

107 In summary, I find that Niam failed to act in a commercially reasona-ble manner by not divesting adequate shares on the open market in orderto satisfy CESPC’s account. I further find that Niam’s obligation to sat-isfy CESPC’s account is not suspended by the intervening actions of theSerious Fraud Office.

c) Have the requirements of the Alberta Rules of Court applicable tocontingency fee agreements been satisfied

108 Finally, Niam argues that CESPC is not entitled to rely on the CFA asit was never properly served upon her by CESPC. In addition, she assertsthat the language used in the CFA is not precise and understandable. Shesubmits that the Rules of Court operate to render the CFA unenforceable.

109 CESPC takes the position that service was satisfactory in the circum-stances, and that Niam is otherwise unable to rely on the Rules in anattempt to contest the enforceability of the CFA.


110 The rules pertaining to contingency fee agreements are set out in Part10. Of note in these proceedings are rule 10.7(2) and (4), and rule 10.8which read in part:

10.7(2) To be enforceable, a contingency fee agreement must containthe following particulars in precise and understandable terms: [...]

(d) a statement of the event or contingency on which thelawyer’s fees are to be paid to the lawyer; [...]

10.7(4) The client must be served with a copy of the signed contin-gency fee agreement within 10 days after the date on which theagreement is signed, and an affidavit of service to that effect must beexecuted by the person who served the agreement.

10.8 If a lawyer does not comply with rule 10.7(1) to (4), (6) and (7),the lawyer is, on successful accomplishment or disposition of thesubject-matter of the contingency fee agreement, entitled only to law-yer’s charges determined in accordance with rule 10.2 as if no con-tingency fee agreement had been entered into.

111 I deal first with Niam’s assertion that the CFA fails to satisfy the re-quirements in rule 10.7(2)(d), namely, that the agreement fails to clearlydescribe the contingent event. Again, the contingent event is described inthe CFA as the successful defence of the Action resulting in the return orpayment of “Action Proceeds”. For the reasons given above, I find thecontingent event to have been precisely and understandably described.

112 Moreover, unlike the vast majority of situations in which an indivi-dual enters into a contingency fee agreement for legal services, Niamwas represented by her own legal counsel, Mr. Glock, at the time ofdrafting. The evidence establishes that there were nine different versionsof the CFA, drafted from June, 2013 to October, 2013. The only infer-ence to be drawn from the evidence on the record is that the CFA was athoroughly negotiated document, which reflected exactly what the partiesintended it to say.

113 I turn next to the issue of service.114 Both parties acknowledge that a signed copy of the CFA was never

formally served on Niam. Rather, as discussed above, CESPC emailedthe CFA (as executed by Silverberg on behalf of CESPC) to Glock andNiam on October 31, 2013, along with a full copy of Part 10 of theRules. On November 4, 2013, Niam executed the agreement on her ownbehalf in the presence of a notary public, and provided a copy of the fullyexecuted document to CESPC.


115 While Niam acknowledges having possession of a fully executedcopy of the CFA as of November 3, 2013, she argues that CESPC failedto serve her with an executed version, and that this non-compliance ismore than merely technical. Niam argues that Rule 10.7(4) expressly re-quires the lawyer to serve an executed version of a contingency feeagreement upon his or her client, and that the converse occurred in thisinstance.

116 She correctly asserts that service of a contingency fee agreementupon a client triggers the five day “cooling off” period, which allows aclient to terminate a contingency fee agreement: see rule 10.7(2)(g) and10.7(5). Niam submits that the wording of Rule 10.7(4) reflects the Leg-islative intent of ensuring strict compliance. She points out that, unlikeother rules, rule 10.7(4) does not provide for any exceptions; every con-tingency fee agreement must be served by a lawyer on his or her client.As such, she argues that rule 10.8 applies, and that CESPC is only enti-tled to payment as calculated on a quantum meruit basis, as measured bythe factors outlined in rule 10.2.

117 Niam provided a number of authorities in support of her propositionthat by operation of rule 10.8, if the CFA fails to satisfy the express re-quirements in the rules, it must be found unenforceable, with rule 10.8being strictly construed against CESPC.

118 Certain of these authorities can be easily distinguished from the casebefore me. For example Baergen v. Peterson Ross (1986), 74 A.R. 230(Alta. Q.B.) and Leffler v. Collins (1997), 213 A.R. 395 (Alta. Q.B.) bothdealt with instances where the contingency fee had never been reducedinto writing. This represents a much more substantive departure from therequirements than the arguably more technical deficiency at bar. Thesame can be said of Kenneth W. Penonzek Professional Corp. v. Schmidt,[2003] A.J. No. 1651 (Alta. Q.B.), where the taxation officer found thatin addition to there being no affidavit of execution, the agreement wasotherwise confusing, was unclear, and failed to demonstrate how the feewould be calculated.

119 In S. (M.) (Next friend of) v. M. (D.), 2014 ABQB 702 (Alta. Q.B.),not only was there no evidence that the agreement had been served (andtherefore no affidavit of execution), the agreement ran afoul of the rulesby failing to comply with the requirements to explain the manner inwhich the fee was calculated, nor how taxable costs were calculated. Fi-nally, the agreement did not contain the statement that the agreement oraccount was reviewable by the court upon request. Again, this is a much


more serious departure from the requirements than the case before me. Infinding the agreement unenforceable, the Court continued on to state, atpara 52:

...Rule 616(2) [10.7(2)] is very clear. To be enforceable, a contin-gency agreement must contain certain particulars and statements. If alawyer does not comply with Rule 616, then pursuant to Rule 618[10.8], he or she loses the ability to rely on that agreement and isentitled only to those legal fees that would have been payable in theabsence of the contingency fee agreement. In my view, the flexibleapproach referred to in Rusk, that should be taken to problems arisingfrom contingency fee arrangements does not extend to permit a disre-gard for the rules that apply to contingency agreements. Rather, theflexible approach is more appropriate when considering more minoror technical departures from the rules as well as interpretation issuesarising from an otherwise valid contingency agreement....

120 The above quote seems to suggest that where a departure from therules might be considered to be of diminished significance on the facts, acontingency agreement which fails to technically comply with the rulesmay, in limited circumstances, be upheld.

121 Other authority provided by Niam is more compelling. In Jackie &Handerek v. Dohmann (1987), 83 A.R. 308 (Alta. C.A.), our Court ofAppeal found that the solicitor’s failure to file an executed copy of acontingency fee agreement with the clerk of the court rendered it unen-forceable. It relied on (then) rule 618 (now 10.8) which it stated provideda clear and unequivocal answer to a failure to comply with the rules set-ting out the requirements when using contingency fee agreements. TheCourt agreed that rule 618 (10.8) was explicit in stating that the failure tocomply with the contingency fee agreement rules necessarily limits a so-licitor’s entitlement to compensation on a quantum meruit basis. While Inote that the filing requirement no longer exists, the Court’s reasons sug-gest that even a more technical departure from the rules may result in acontingency fee agreement being found unenforceable.

122 Interestingly, in the subsequent decision in Leffler, while the Courtfound that an agreement which had not been reduced to writing could notbe relied upon, Veit J went on to state, at para 3:

The oral contingency agreement is not enforceable by Mr. Collinsagainst Ms. Leffler. It is only in the rarest circumstances that therequirements of the rules relating to the requirement not only thatcontingency agreements be in writing, but also that they be filed, willbe relaxed. It may be, for example, that a fully informed client may


be able to effectively waive the benefit of those rules. This case is notexceptional.

[emphasis added]

123 The above demonstrates the possible departure from the approachtaken in Dohmann where the Court held that a failure to file would defeatthe agreement. It further demonstrates a willingness to relax not only themore technical requirements of the rules (such as the filing requirement)but also the more substantive requirements, in certain circumstances. Iam in full agreement with Justice Veit that the requirements contained inthe rules may only be relaxed in exceptional cases. However, I find thatthe case before me is indeed exceptional, given Niam’s sophisticationcoupled with the unique circumstances in which the CFA was drafted,revised, and ultimately presented to Niam.

124 In Sonnenberg v. Schumacher & Associates, 2005 ABQB 352, 52Alta. L.R. (4th) 151 (Alta. Q.B.), this Court held that where a contin-gency fee agreement was not in technical compliance with the rules,compensation would be calculated on a quantum meruit basis. In Son-nenberg, the client’s address was missing from the agreement, there wasno affidavit of execution, nor was there proof confirming the date of ser-vice of the executed agreement upon the client. The Court noted that theimportance of the latter requirement was that the date of service startedthe five day “cooling off” period, during which time the client could ter-minate the agreement.

125 Of note, in querying how strictly rule 616 (now 10.7(4)) was to beapplied, Germain J stated that “a judge may have overarching authorityto waive or relax the Rules, including those on fees...” (para 24).Germain J found that the failure to include the client’s address on theagreement was not fatal, holding as follows, at para 38:

I agree that Rule 618 [10.8] purposefully prohibits enforcement whenthere is non-compliance, but I find that the Rule should not be inter-preted so inflexibly that the most minuscule and immaterial omissionwould prevent the enforcement of the agreement. Therefore, eventhough I confirm that defects in a contingency agreement will bestrictly construed against the lawyer, the court is not without its judi-cial discretion to alleviate against minor technical oversights that arewithout import. The failure of the agreement to set out the address ofthe client is one of those minor drafting irregularities that I wouldrelieve against. [...]

126 However, he went on to find that the lack of proof of both time andmanner of service on the client prevented the lawyer from relying on the


agreement. Although the client had acknowledged receiving a copy ofthe agreement, she could not say when or how this occurred. The Courtfound that on the evidence before it, there was no satisfactory proof ofservice. However, it went on to say, at paras 40-41:

[...] The affidavit of service in this contingency agreement is notcompleted. Nevertheless, it would still be open for the lawyer toprove service in any way that would be recognized by the court.

Here, due to the passage of time and the departure of personnel fromthe law firm, there is no absolute way to prove service as mandatedby Rule 616(4). Applying a strict interpretation of this Rule based onthe Alberta jurisprudence, this breach cannot be relieved against.

127 Again, Sonnenberg can be factually distinguished in that the evidencecould not demonstrate when or how the client received a copy of theagreement. In the case at bar, the evidence clearly establishes thatCESPC sent a copy of the CFA (as signed by Silverberg on CESPC’sbehalf) to both Niam and Glock on October 31, 2013. Niam executed thedocument on November 4, 2013, in front of a notary public and then sentan electronic copy of it to CESPC. Subsequent dates for the cooling offperiod could therefore have been easily determined.

128 While I agree that the rules require service of a fully executed docu-ment, on the unique facts before me, it would be unreasonable to setaside the CFA simply because CESPC failed to return to Niam a copy ofthe exact document that Niam had just executed and provided to CESPC.In the circumstances, the final version of the CFA was provided to Niamand her counsel after an extensive period of negotiation and revision. Acomplete copy of Part 10 of the Rules was also provided. Niam thensigned the agreement in the presence of a notary. This differs from thetypical circumstances in which a contingency fee is provided to a client;i.e. a standard form agreement drafted solely by the lawyer and providedto the client after an initial consultation. Service, and the correspondingability of the client to terminate the agreement upon further reflection, ismuch more important in conventional cases.

129 Thus, while I find formal service as mandated under the rules was noteffected, the CFA was conveyed to Niam (and Glock) in a context inwhich it was clear that, by executing the document, certain rights andobligations were being engaged. While service was not technically ef-fected as required by rule 10.7(4), I find this to be a rare instance wherethe failure to strictly comply with the rules does not result in the CFAbeing found unenforceable under rule 10.8.


130 A departure from the strict approach usually taken by the courts wasrecently seen in Botan v. St. Amand, 2011 ABQB 774, 529 A.R. 313(Alta. Q.B.) (Michalyshyn J). In that case Mr. Botan sent his client (St.Amand) the firm’s form of contingency fee agreement following a tele-phone discussion about St. Amand’s possible claim. St. Amand signedthe agreement and returned it to Botan. There was no service upon theclient. In finding the contingency fee agreement valid, notwithstandingBotan’s failure to strictly comply with the rules, this Court held as fol-lows, at paras 42 - 44:

St. Amand argues the Agreement is invalid owing to a number oftechnical defects including that it was not dated or arguably signed,was not formally served on him, and was not appropriately witnessedin the sense that no one swore an affidavit attesting to his witness’ssignature.

Numerous cases were referred to regarding the need for strict thoughnot perfect compliance with the form of contingency fee agreementsand with former Rule 616: Morrison v. Rod Pantony ProfessionalCorporation, 2008 ABCA 145; Rusk v. Medicine Hat (City of) 2001ABQB 1020; Sonnenberg v. Schumacher & Associates, 2005 ABQB352.

In all of the circumstances I would not invalidate the Agreement. Theformalities around execution of a contingency fee agreement aim toavoid uncertainty and disputes as to what was agreed. Formal serviceof such an agreement creates a “cooling off” period enabling the cli-ent to walk away from the agreement without liability even for dis-bursements. Here the Agreement would have been no clearer to St.Amand with or without an affidavit of execution of the witness to St.Amand’s signature or indeed with or without Botan’s signature. AndSt. Amand was no worse off for the loss of the “cooling off” periodthat follows service. He could terminate the Agreement at any timebefore Botan submitted an application for compensation, without lia-bility for fees and — given Botan’s waiver of out-of-pocket ex-penses — without liability for disbursements.

131 Niam urges against placing any reliance upon Botan, arguing that itdoes not follow established jurisprudence. I find Botan to be of assis-tance in that it deals with a situation similar to that at bar, namely, thesole defect legitimately complained of is lack of service of a fully exe-cuted agreement. Moreover, Botan was confirmed by our Court of Ap-peal: 2013 ABCA 227 (Alta. C.A.). While the appeal dealt with an unre-lated issue, the Court was silent as to Michalyshyn J’s treatment of theenforceability of the contingency fee agreement. While Botan does ap-


pear to contemplate a departure from the rules even absent the “excep-tional” circumstances called for in Loffler, it nevertheless demonstratesthis Court’s willingness to uphold agreements which might otherwise beset aside on “technical” defects.

132 On the unique facts of this case, I find that Niam is not able to rely onrule 10.8 to set aside the CFA, notwithstanding the fact that she wasnever formally served by CESPC with a fully executed copy of theagreement.

133 My conclusion is supported by the fact that Niam is not the type ofclient typically seen entering into contingency fee agreements. The over-all aim of these types of agreements is to make court proceedings availa-ble to people who could not otherwise afford to have their legal rightsdetermined: Coronation Insurance Co. v. Florence, [1994] S.C.J. No.116 (S.C.C.) (Cory J). As more recently commented upon by this Courtin S. (M.) (Next friend of) v. M. (D.), at para 38:

That said, one must also consider that the people who rely on contin-gency fee arrangements are often vulnerable due to poverty, impactof injuries, educational status, or other social disadvantages. The Al-berta Rules of Court, Alta Reg 124/2010, Law Society Code of Con-duct, and jurisprudence related to contingency fee agreements andother legal fee arrangements offer some protection for this potentiallyvulnerable segment of the population.

134 The nature of contingency fee agreements and the typical power im-balance between lawyer and client have led to what was described byGermain J in Sonnenberg, at para 30, as:

...the delicate balancing of public policy around contingency agree-ments which has led to their acceptance, but only under strict Rulesto ensure fairness to both sides. If the strict Rules are followed, thenthe contingency is considered with much weight, on taxation. If thestrict Rules are breached, then the contingency is not considered.

135 Niam’s personal circumstances lessen the need for protection as his-torically recognized by the courts. The evidence demonstrates that Niamwas in a position to fund her litigation without having to enter into acontingency fee arrangement. Indeed, she had already retained CESPCon a retainer for earlier services. In addition, there is no indication thatNiam was otherwise vulnerable. In addition to possessing financialmeans, she is a worldly individual, she is politically connected, and sheis highly educated.


136 Finally, Niam’s situation is unusual in that she had independent legalcounsel advocating on her behalf during the drafting and execution of theCFA. The courts have recognized an element of conflict of interest inher-ent in contingency fee agreements: see Oliver (Guardian ad litem of) v.Ellison (1996), 18 B.C.L.R. (3d) 337 (B.C. C.A.) para 30. This conflict islessened — at least during the agreement negotiation stage — by havingindependent counsel involved in drafting the agreement. The evidence inthis case demonstrates that Glock had a high level of input duringdrafting.

137 The CFA is therefore enforceable notwithstanding CESPC’s failure toformally to serve a fully executed copy of the document on Niam.

138 On November 4, 2013 Niam and her U.S. counsel had a fully exe-cuted copy of the CFA. In fact, Niam had the original one signed by her(an electronic version of the fully executed CFA having been returned toSilverberg). In my view that date was the effective date of service. Tovoid the CFA simply because CESPC did not, upon receipt of the fullyexecuted document from Niam on November 4, 2013, turn around andre-send the same document back to Niam would be a triumph of formover substance.

139 Given the circumstances in this case, Counsel for CESPC applies pur-suant to Rule 11.27 of the Rules of Court, for this Court to validate ser-vice of the CFA on Niam effective November 4, 2013. Given the forego-ing discussion and findings, I allow that application.

140 Finally, Niam argues that the amount payable under the CFA is dis-proportionate to the work performed by CESPC. That issue is not beforeme. It is a matter for the taxing officer. The issues before me are set outin paragraph 31, supra.

Conclusion1 For the reasons set out above I conclude as follows:

a) The contingent event has occurred thereby entitling CESPC topayment under the CFA;

b) CESPC is not precluded from recovery of funds by operation ofparagraphs 11 and 14 of the CFA;

c) The requirements of the Rules of Court relating to contingencyagreements have been sufficiently satisfied.

2 Accordingly, I find the CFA enforceable.

Action dismissed.

DNM Systems Ltd. v. Lock-Block Canada Ltd. 603

[Indexed as: DNM Systems Ltd. v. Lock-Block Canada Ltd.]

In the Matter of the Arbitration Act, R.S.B.C. 1996, c. 55 andAmendments Thereto

DNM Systems Ltd., Petitioner and Lock-Block Canada Ltd.,DNM Retaining Wall Systems Ltd., DNM Systems Inc., David

Moase and Nancy Moase, Respondents

DNM Retaining Wall Systems Ltd., DNM Systems Inc., DavidMoase and Nancy Moase, Petitioner and Lock-Block Canada

Ltd. and DNM Systems Ltd., Respondents

British Columbia Supreme Court

Docket: Vancouver S152800, S152830

2015 BCSC 2014

Skolrood J.

Heard: September 10, 2015

Judgment: November 3, 2015

Alternative dispute resolution –––– Arbitration awards — General princi-ples –––– LB Ltd. entered into manufacture distribution and licence agreementwhere LB Ltd. granted licence to DNM Ltd. to manufacture and sell concreteblocks using LB’s proprietary system — Licence agreement had arbitrationclause — LB Ltd. issued notice of arbitration to DNM Ltd. — Arbitrator permit-ted LB Ltd. to amend statement of claim by adding four additional parties whowere not signatories to agreement that gave rise to arbitration — Arbitratorfound that additional parties were alter egos of DNM Ltd. — DNM Ltd. soughtto set aside arbitration award on basis of arbitral error pursuant to s. 30 of Arbi-tration Act (“Act”) — Application granted — Additional parties were not for-mally served with notice of application but they had notice of it — Additionalparties made strategic decision not to directly participate in application but toallow DNM Ltd. to respond and reserve technical issue to be raised later if theywere not happy with arbitrator’s decision — To allow strategy to succeed wouldamount to victory of form over substance — Arbitrator was aware of serviceissue and was satisfied that additional parties had adequate notice and there wasno prejudice — That determination fell within arbitrator’s jurisdiction and de-served deference — Neither DNM Ltd. nor additional parties were deprived ofopportunity to address issue of whether statement of claim should be amendedby adding additional parties as respondents to arbitration — Arbitrator had juris-diction to determine who proper or necessary parties were to arbitration — Deci-sion gave rise to question of jurisdiction and was reviewable under s. 30 of


Act — Standard of correctness applied — Court would disregard separate legalpersonalities of corporation and its shareholders only in limited circumstances,which were not present here — There was no basis for arbitrator to pierce corpo-rate veil of DNM Ltd. and add additional parties to arbitration — Arbitratorcommitted jurisdictional error and award was set aside.

Cases considered by Skolrood J.:

Aradia Fitness Canada Inc. v. Dawn M. Hinze Consulting Ltd. (2008), 2008BCSC 839, 2008 CarswellBC 1356 (B.C. S.C.) — considered

Arbutus Software Inc. v. ACL Services Ltd. (2012), 2012 BCSC 1834, 2012 Car-swellBC 3795 (B.C. S.C.) — followed

B.G. Preeco I (Pacific Coast) Ltd. v. Bon Street Holdings Ltd. (1989), 4 R.P.R.(2d) 74, 37 B.C.L.R. (2d) 258, 43 B.L.R. 67, (sub nom. B.G. Preeco I(Pacific Coast) Ltd. v. Bon Street Developments Ltd.) 60 D.L.R. (4th) 30,1989 CarswellBC 104, [1989] B.C.J. No. 1032 (B.C. C.A.) — referred to

CE International Resources Holdings LLC v. Sit (2013), 2013 BCSC 1804, 2013CarswellBC 2953 (B.C. S.C.) — considered

Edgington v. Mulek Estate (2008), 2008 BCCA 505, 2008 CarswellBC 2664, 86B.C.L.R. (4th) 78, [2009] 3 W.W.R. 440, 54 B.L.R. (4th) 165, [2008] B.C.J.No. 2397, 449 W.A.C. 56, 266 B.C.A.C. 56 (B.C. C.A.) — considered

Gulf Canada Resources Ltd./Ressources Gulf Canada Ltee v. ArochemInternational Ltd. (1992), 66 B.C.L.R. (2d) 113, (sub nom. Gulf CanadaResources Ltd. v. Arochem International Inc.) 11 B.C.A.C. 145, (sub nom.Gulf Canada Resources Ltd. v. Arochem International Inc.) 22 W.A.C. 145,(sub nom. Gulf Canada Resources Ltd. v. Arochem International Ltd.) 43C.P.R. (3d) 390, 1992 CarswellBC 95, [1992] B.C.J. No. 500 (B.C. C.A.) —considered

Javor v. Francoeur (2003), 2003 BCSC 350, 2003 CarswellBC 777, 13B.C.L.R. (4th) 195, [2003] B.C.J. No. 480 (B.C. S.C.) — considered

Javor v. Francoeur (2004), 2004 BCCA 134, 2004 CarswellBC 495, 25B.C.L.R. (4th) 114, [2004] B.C.J. No. 448 (B.C. C.A.) — referred to

Politeknik Metal San ve Tic A.S. v. AAE Holdings Ltd. (2015), 2015 BCCA 318,2015 CarswellBC 1926, 387 D.L.R. (4th) 494 (B.C. C.A.) — followed

Prest v. Petrodel Resources Ltd. (2013), [2013] 3 W.L.R. 1, [2013] UKSC 34,[2013] 4 All E.R. 673 (U.K. S.C.) — considered

Prince George (City) v. McElhanney Engineering Services Ltd. (1995), 9B.C.L.R. (3d) 368, [1995] 9 W.W.R. 503, 23 C.L.R. (2d) 253, (sub nom.Prince George (City) v. Sims (A.L.) & Sons Ltd.) 61 B.C.A.C. 254, (subnom. Prince George (City) v. Sims (A.L.) & Sons Ltd.) 100 W.A.C. 254,1995 CarswellBC 365, [1995] B.C.J. No. 1474 (B.C. C.A.) — considered


Arbitration Act, R.S.B.C. 1996, c. 55s. 1 “arbitral error” — considered

DNM Systems Ltd. v. Lock-Block Canada Ltd. Skolrood J. 605

s. 22(1) — considereds. 30 — considereds. 31 — considered

Matrimonial Causes Act, 1857 (20 & 21 Vict.), c. 85Generally — referred to

APPLICATION by DNM Ltd. to set aside arbitration award on basis of arbitralerror.

T.C. Louman-Gardiner, for Petitioner / Respondent, DNM Systems Ltd.P.R. Senkpiel, for Petitioners / Respondents, DNM Retaining Wall Systems

Ltd., DNM Systems Inc., David Moase and Nancy MoaseD.W. Gibbons, for Respondent, Lock-Block Canada Ltd.

Skolrood J.:

Introduction1 There are two petitions before the court, both of which seek to set

aside the arbitration award of Kenneth J. Glasner, Q.C. dated February 6,2015, as clarified February 13, 2015 (the “Award”).

2 The Award was issued in an arbitration involving Lock-Block CanadaLtd. (“Lock-Block”) as claimant and DNM Systems Ltd. (“DNM”) asrespondent.

3 By way of the Award, the arbitrator permitted Lock-Block to amendits statement of claim by adding four additional parties who are not sig-natories to the agreement giving rise to the arbitration.

4 Petition no. S152800 is brought by DNM and it seeks to set aside theAward on the basis of arbitral error, pursuant to s. 30 of the ArbitrationAct, R.S.B.C. 1996, c. 55 [Act]. In the alternative, DNM seeks leave toappeal the Award under s. 31 of the Act on the basis that the arbitratorcommitted a number of errors of law.

5 Petition no. S152830 is brought by the four parties that were added tothe arbitration by the arbitrator: DNM Retaining Wall Systems Ltd.,DNM Systems Inc., David Moase and Nancy Moase (collectively the“additional parties”). These petitioners also challenge the Award on thebasis of alleged arbitral error under s. 30 of the Act, but do not seek toinvoke s. 31.


Background

The Licence Agreement6 The background facts are relatively straight-forward.7 Lock-Block has developed a proprietary system for manufacturing

concrete blocks for use in the construction of various retaining structures.8 Effective March 1, 2008, Lock-Block entered into a “Manufacture

Distribution and Licence Agreement “ (the “Licence Agreement”) withDNM, then known as DNM Lock-Block Ltd., pursuant to which Lock-Block granted to DNM a licence to manufacture and sell concrete blocksmade using Lock-Block’s proprietary system.

9 The Licence Agreement included provisions (ss. 18 and 19) prohibit-ing DNM from selling competitive products or engaging in a competingbusiness during the term of the Agreement and for five years after theAgreement terminated. Under s. 19 of the Licence Agreement, the prohi-bition against competing purported to apply, in addition to DNM, to any-one owning or controlling greater than a ten percent interest in DNM andto DNM’s officers and directors.

10 Section 35 of the Licence Agreement provided that all disputes aris-ing out of or in connection with the Agreement shall be referred for arbi-tration to be administered by the British Columbia International Com-mercial Arbitration Centre (“BCICAC”) pursuant to its rules.

The Arbitration11 In January 2013, Lock-Block initiated an arbitration by issuing a no-

tice of arbitration to DNM and to BCICAC. On January 23, 2013, Lock-Block delivered its initial statement of claim in which it alleged thatDNM was manufacturing concrete blocks using lifting hooks not sup-plied by Lock-Block in breach of the Licence Agreement.

12 DNM submitted its statement of defence on or about February 7,2013.

13 The Licence Agreement terminated on April 30, 2013.14 On June 18, 2013, Lock-Block submitted an amended statement of

claim in which it alleged that DNM was improperly competing with it inbreach of ss. 18 and 19 of the Licence Agreement.

15 On August 15, 2013, DNM submitted its amended statement of de-fence denying that it was competing with Lock-Block. DNM included acounterclaim alleging that Lock-Block solicited DNM’s employees in


breach of s. 20 of the Licence Agreement. On October 7, 2013, Lock-Block submitted its response to counterclaim.

16 In October 2013, DNM and Lock-Block agreed on the appointment ofthe arbitrator. At a pre-hearing conference held on November 6, 2013,the parties agreed on a schedule for the arbitration. The schedule contem-plated the completion of document discovery by December 20, 2013,viva voce discovery by January 24, 2014 and a hearing on April 14-17,2014. That schedule was subsequently abandoned due to the health ofMr. Moase, one of the principals of DNM and DNM’s proposed discov-ery representative.

17 On November 15, 2013, counsel for Lock-Block wrote counsel forDNM requesting various documents, including documents in the posses-sion or control of “associated entities” of DNM. Lock-Block specificallyidentified DNM Retaining Wall Systems Ltd. and DNM Systems Inc. assuch associated entities.

18 On November 26, 2013, counsel for DNM wrote back objecting toLock-Block’s request for documents on the basis that DNM RetainingWall Systems Ltd. and DNM Systems Inc. were not parties to the arbitra-tion and therefore not required to produce documents.

19 On March 31, 2014, Lock-Block filed an application in the arbitrationseeking an order requiring DNM to pay $40,000 into trust with the arbi-trator as security for that part of its claim relating to DNM’s use of im-proper lifting hooks. On April 23, 2014, the arbitrator granted the appli-cation and ordered that DNM deposit $40,000 into his trust account. I amtold that DNM has not complied with this order.

The Amendment Application20 On October 14, 2014, Lock-Block submitted a notice of application

seeking to add the additional parties as parties to the arbitration and toamend the statement of claim accordingly. In the alternative, Lock-Blocksought to simply add David Moase and Nancy Moase as parties.

21 Under the “Factual Basis” portion of its notice of application, Lock-Block alleged as follows:

7. Despite the restrictive covenants contained in the Licence Agree-ment, David and Nancy Moase continued to be engaged in the busi-ness of producing manufacturing, marketing and selling concreteblock products competitive with or similar to the Lock-Block Systemfollowing the termination of the Licence Agreement.


8. In an effort to unlawfully circumvent the restrictive covenants con-tained in the Licence Agreement, David and Nancy Moase engagedin the activities described in paragraph 7 above through different cor-porate entities, including DNM Systems Ltd., DNM Retaining WallSystems Ltd., and/or DNM Systems Inc.

9. David and Nancy Moase collectively dominate and control each ofDNM Systems Ltd., DNM Retaining Wall Systems Ltd., and DNMSystems Inc.

22 The “Legal Basis” part of Lock-Block’s notice of application con-tained the following:

3. The arbitration tribunal should grant the Claimant leave to amendits Statement of Claim substantially in the form as described in at-tached Schedule “A” because:

(a) the delay in amending the Statement of Claim is not prejudi-cial to any Party; and

(b) the proposed amendment does not go beyond the terms of thearbitration agreement.

. . .

4. Non-signatories may be bound by arbitration agreements by pierc-ing the corporate veil.

23 Lock-Block’s notice of application was served on counsel for DNMon October 14, 2014. In his cover letter, counsel for Lock-Block said:

Kindly advise if you will not accept service on behalf of any ofDavid Moase, Nancy Moase, DNM Retaining Wall Systems Ltd. andDNM Systems Inc.

24 Counsel for DNM did not respond to this letter. Counsel for Lock-Block says that he relied on this silence as confirmation that counsel forDNM had accepted service on behalf of the other parties.

25 On November 3, 2014, DNM submitted its application response inwhich it set out detailed submissions on why it was not open to the arbi-trator to pierce the corporate veil of DNM to add the additional parties tothe arbitration.

26 DNM’s reponse was supported by an affidavit sworn by David Moasein which he described his involvement in and the corporate structure ofDNM Systems Ltd., DNM Systems Inc. and DNM Retaining Wall Sys-tems Ltd. Mr. Moase said further:

36. I understand that Lock-Block Canada Ltd. wants to bring a claimagainst me for alleged breaches of the Licence Agreement by DNM.


37. I do not consent to the arbitration of any disputes that Lock-Block Canada Ltd. has with me in my personal capacity. I wish tohave such disputes resolved by the courts, as I wish to argue thatsuch proceedings should take place in Ontario, be governed by On-tario law, and I want to have the right to appeal any such decision.

27 Nancy Moase also swore an affidavit in which she made similarstatements.

28 The hearing of Lock-Block’s application took place over two days onNovember 17-18, 2014. At the hearing, counsel for DNM advised thearbitrator that he acted solely for DNM. None of the additional partieswere represented at the hearing although, as noted, both David Moaseand Nancy Moase swore affidavits in support of DNM’s position.

29 Following the hearing, on February 2, 2015, the arbitrator wrote tocounsel noting that the notice of application had been directed only toDNM and not to the additional parties. The arbitrator noted that whileboth David and Nancy Moase participated in the application by virtue oftheir affidavits, there was no indication that the additional parties wereever served with the notice of application or that counsel for DNM wasacting for any party other than DNM. The arbitrator asked for counsel’sposition on the service issue.

30 Counsel for DNM responded by saying that he only representedDNM and that he did not accept service on behalf of any other party. Forhis part, counsel for Lock-Block advised the arbitrator that he had servedthe application on counsel for DNM and had asked him to advise if hewould not accept service on behalf of the other parties, to which he re-ceived no response.

The Award31 The arbitrator rendered his award on February 6, 2015. On the issue

of whether the parties sought to be added had been served with the noticeof application, the arbitrator said as follows:

[47] While reviewing the evidence I brought to counsel’s attentionthat the notice of application was directed to DNM Systems Ltd. andto no one else. Both David and Nancy Moase participated in the ap-plication by virtue of their affidavits notwithstanding they were insupport of the Respondent’s resistance to the Claimant’s application.They expressed their views to have such disputes resolved by thecourts. They participated in providing evidence of their relationshipwith the non-signatory companies. Their relationship with the non-signatory companies has been dealt with.


. . .

[48] On February 2, 2015, Respondent’s counsel informs me he onlyrepresented DNM Systems Ltd. and no other parties at the hearing. Irecall Respondent’s counsel informing me of same at the hearing. Hedid not accept service on behalf of any other parties and that the non-signatory parties were not served with a notice of application.

[49] The Claimant’s counsel advised me (and I recall) correspon-dence to the Respondent’s counsel, “to kindly advise if you do notaccept service on behalf of any of David Moase, Nancy Moase,DNM Retaining Wall Systems Ltd., and DNM Systems Inc.” TheClaimant’s counsel were never so advised. A clearer communicationwould have avoided the problem.

[50] Clearly I would have preferred that the notice of application bedelivered to the non-signatories.

[51] I find having regard to all of the surrounding circumstanceswhile it would have been preferred to have the notice of applicationserved in the normal course, in these circumstances I cannot find thatthe non-signatories were prejudiced.

32 In terms of the substance of Lock-Block’s application, the arbitratorordered that the additional parties be joined as parties to the arbitrationon the basis that they “can be considered as alter egos” of DNM. In sup-port of this finding, he referred to the following evidence:

1. The language of sections 18, 19 and 20 of the Agreement ...

2. The relationship of David and Nancy Moase to the Respon-dent and non-signatory companies.

3. The degree of control David and Nancy Moase have over thenon-signatories.

4. The admission by David Moase in paragraph 17 of his affida-vit regarding the manufacturer of product using the stoneterrasystem.

5. The addresses of the Respondent and non-signatorycompanies.

6. The admission in the previous application regarding 400 con-crete blocks in monies due and payable to the Respondent.

7. The inter-relationship between Claimant and the non-signato-ries regarding the manufacturer [sic] of and distribution ofsimilar products and the alleged improper conduct.

8. David Moase’s duties as an officer and director of the Re-spondent and others in light of Lord Haldan’s and Lord Den-ning’s comment in paragraph 41. I add the good faith doctrine


in the performance of contracts as stated in Bhasin v. Hrynew,2014 SCC 71.

9. The optics of “Ltd.” and “Inc.” to the business community.

10. Commercial efficacy.

33 In a subsequent letter to counsel dated February 13, 2015, the arbitra-tor issued a clarification of his award, confirming that he found that theadditional parties are alter egos of DNM.

Legal Framework34 Sections 30 and 31 of the Act provide as follows:

Court may set aside award

30 (1) If an award has been improperly procured or an arbitrator hascommitted an arbitral error, the court may

(a) set aside the award, or

(b) remit the award to the arbitrator for reconsideration.

(2) The court may refuse to set aside an award on the grounds ofarbitral error if

(a) the error consists of a defect in form or a technical irregular-ity, and

(b) the refusal would not constitute a substantial wrong or mis-carriage of justice.

(3) Except as provided in section 31, the court must not set aside orremit an award on the grounds of an error of fact or law on the faceof the award.

(4) Nothing in this section restricts or prevents a court from chang-ing, suspending or terminating all or part of an award, in respect of afamily law dispute, for any reason for which an order could bechanged, suspended or terminated under the Family Law Act.

Appeal to the court

31 (1) A party to an arbitration, other than an arbitration in respect ofa family law dispute, may appeal to the court on any question of lawarising out of the award if

(a) all of the parties to the arbitration consent, or

(b) the court grants leave to appeal.

(2) In an application for leave under subsection (1) (b), the court maygrant leave if it determines that


(a) the importance of the result of the arbitration to the partiesjustifies the intervention of the court and the determination ofthe point of law may prevent a miscarriage of justice,

(b) the point of law is of importance to some class or body ofpersons of which the applicant is a member, or

(c) the point of law is of general or public importance.

(3) If the court grants leave to appeal under subsection (2), it mayattach conditions to the order granting leave that it considers just.

(3.1) A party to an arbitration in respect of a family law dispute mayappeal to the court on any question of law, or on any question ofmixed law and fact, arising out of the award.

(4) On an appeal to the court, the court may

(a) confirm, amend or set aside the award, or

(b) remit the award to the arbitrator together with the court’sopinion on the question of law that was the subject of theappeal.

35 As can be seen, under s. 30, a party may ask the court to set aside anarbitration award where the arbitrator has committed an arbitral error.“Arbitral error” is defined in s. 1 of the Act as follows:

“arbitral error” means an error that is made by an arbitrator in thecourse of an arbitration and that consists of one or more of thefollowing:

(a) corrupt or fraudulent conduct;

(b) bias;

(c) exceeding the arbitrator’s powers;

(d) failure to observe the rules of natural justice;

36 Absent arbitral error, a party may appeal to the court on a question oflaw, either with the consent of all parties to the arbitration or with leaveof the court.

37 The grounds on which a court may interfere with an arbitral awardunder ss. 30 and 31 have been the subject of considerable judicial consid-eration and I will address the relevant case law when dealing with theissues raised in the two petitions. At the outset, however, it is useful tonote the cautionary approach that the courts typically take in such cases,as well summarized by Madam Justice Dickson, as she then was, in


Arbutus Software Inc. v. ACL Services Ltd., 2012 BCSC 1834 (B.C.S.C.) [Arbutus Software] at para. 64:

Public policy requires the court to give substantial deference to deci-sions made in commercial arbitration. The need for deference arisesout of the two principal objectives of arbitration: early finality and adetermination made outside the court system.

38 In addition to the policy objectives identified by Madam Justice Dick-son, the deference afforded by the courts reflects the fact that arbitrationis a consensual process and the court will not likely interfere in the par-ties’ agreement to resolve their dispute outside of the judicial process.

The Parties’ Positions39 The additional parties take the position that the arbitrator committed

an arbitral error within the meaning of s. 30 of the Act. Specifically, theysubmit that the arbitrator breached the requirements of procedural fair-ness by deciding to add them as parties in circumstances in which theywere not served with Lock-Block’s notice of application and had no op-portunity to make submissions on the issue.

40 In addition, these petitioners submit that there was no legal or factualbasis for the arbitrator to pierce the corporate veil of DNM and to addthem as parties to the arbitration. They say that in doing so, the arbitratorexceeded his jurisdiction which constitutes arbitral error under s. 30.

41 DNM also alleges arbitral error based on a breach of procedural fair-ness. DNM submits that in allowing the proposed amendment to add theadditional parties, the arbitrator decided the very issue that was the sub-ject of the amendment. It says that it was denied a full and proper oppor-tunity to address this issue because it was not clear from Lock-Block’snotice of application that the arbitrator would be asked to pierce the cor-porate veil at the hearing of the application.

42 DNM’s alternate position is that it should be granted leave to appealfrom the Award on certain errors of law committed by the arbitrator, pur-suant to s. 31 of the Act, including:

a) the arbitrator applied the wrong legal test for piercing the cor-porate veil;

b) the arbitrator considered irrelevant evidence and failed toconsider relevant evidence; and

c) the arbitrator made findings unsupported by the evidence.


43 In response to both petitions, Lock-Block submits that there was nobreach of procedural fairness. It says that given counsel for DNM’s fail-ure to advise that he was not accepting service on behalf of the additionalparties, Lock-Block reasonably assumed that all parties had in fact beenserved. Lock-Block submits further that, in any event, both David andNancy Moase swore affidavits in support of DNM’s response in whichthey provided a full explanation of the relationship and operations of thedifferent DNM corporate entities and of their own involvement. Moreo-ver, DNM’s counsel made extensive submissions, both written and oral,on the issue of piercing the corporate veil.

44 In terms of the arbitrator’s jurisdiction, Lock-Block submits that it iswithin the arbitrator’s jurisdiction to determine the parties to the arbitra-tion, including determining whether non-signatories to an arbitrationagreement may be bound by that agreement. Lock-Block relies on Rule20(1) of the BCICAC Rules which authorizes an arbitration tribunal torule on its own jurisdiction. The BCICAC Rules apply by virtue of s.22(1) of the Act.

45 Lock-Block submits that there are no errors of law that would permitan appeal under s. 31 of the Act. It says that the issue of piercing thecorporate veil involves an inherently fact-driven analysis and that there isno discrete or extractable question of law. Lock-Block submits furtherthat, in any event, the matter in issue is not sufficiently important to war-rant leave to appeal nor is leave required in order to prevent a miscar-riage of justice.

Analysis

Arbitral Error - Procedural Fairness46 The requirements of natural justice and procedural fairness will vary

depending on the circumstances of each case: Arbutus Software at para.81. However, at a minimum, parties generally have the right to know thecase they have to meet and the right to be heard on issues affecting theirrights or interests. Denial of such rights will typically result in a findingof a breach of procedural fairness, keeping in mind again that each caseis fact specific.


47 The fairness requirement is incorporated into the domestic commer-cial arbitration process by virtue of Rule 19(1) of the BCICAC Rules,which states:

Subject to these Rules, the arbitration tribunal may conduct the arbi-tration in the manner it considers appropriate but each party shall betreated fairly and shall be given full opportunity to present its case.

48 As noted, both petitions allege arbitral error based on a breach of nat-ural justice and procedural fairness arising out of the failure of Lock-Block to properly serve the additional parties. DNM alleges further that itwas procedurally unfair for the arbitrator to decide the very issue thatwas the subject of the amendment application.

49 On the service issue, the additional parties framed their complaint asfollows in their written submission (at para. 38):

... the non-signatories did not participate in the selection of the arbi-trator; they were not served with the notice of application; they didnot attend the hearing in person or through counsel; and full andproper evidence was not led and submissions were not made on theirbehalf of from the perspective of their respective positions, each ofwhich differed in material respects. This procedure did not accordwith natural justice and Rule 19(1)... This is sufficient to require thatthe Arbitrator’s decision be set aside.

50 I do not accept the position of the additional parties. While, as thearbitrator noted, proper service on those parties would have been pre-ferred, the suggestion that they did not receive proper notice of the appli-cation is belied by the evidence.

51 Lock-Block’s notice of application was served on counsel for DNM,who was asked to advise if he would not accept service on behalf of theadditional parties. No response was provided, nor was there any explana-tion offered at the hearing of the petitions for the failure to do so. Simi-larly, no explanation was given as to why counsel for Lock-Block did notfollow up to confirm the service issue. As observed by the arbitrator,clearer communication would have avoided the issue.

52 Regardless, while the additional parties were not formally served withthe notice of application, it is clear that they had notice of it.

53 David and Nancy Moase both swore affidavits that formed part of theevidence on the application. While they did so in support of DNM’s po-sition, it is apparent that they were well aware of the potential conse-quences of the applications for them personally in that both stated thatthey did not consent to the arbitration of any disputes that Lock-Block


has with them in their personal capacity. Both also gave evidence aboutthe corporate structure and operations of DNM Retaining Wall SystemsLtd. and DNM Systems Inc. and their involvement with those compa-nies, issues that were central to Lock-Block’s application.

54 I am also satisfied that DNM Retaining Wall Systems Ltd. and DNMSystems Inc. had adequate notice of Lock-Block’s application. Specifi-cally, I find that David and Nancy Moase’s knowledge of the applicationconstitutes de facto knowledge of those two corporate entities, given thatthe Moases are clearly the directing minds of the companies.

55 According to David Moase in his affidavit, he and Nancy Moase arethe sole officers of DNM Retaining Wall Systems Ltd. and Nancy Moaseis the sole director. While David Moase deposes that there are othershareholders, he does not deny that he and Nancy Moase constitute themajority, saying simply that their combined shareholdings are not suffi-cient to pass special or extraordinary resolutions.

56 With respect to DNM Systems Inc., David Moase states that he andNancy Moase are the sole shareholders and officers of the company, withNancy Moase the sole director.

57 It is apparent that despite having notice of Lock-Block’s application,the additional parties made the strategic decision not to participate di-rectly in the application, but instead to let DNM respond and to keep inreserve the technical service issue to be raised at a later date in the eventthey were unhappy with the arbitrator’s decision. To allow that strategyto succeed, would, in my view, amount to a victory of form oversubstance.

58 I would add that the arbitrator was clearly alive to the service issueand, in fact, raised it with the parties, albeit after the hearing completed.The arbitrator determined that despite the service irregularity, he was sat-isfied that the additional parties had adequate notice and that there wasno prejudice. I would characterize this as a procedural determination fall-ing squarely within the arbitrator’s jurisdiction and one that the court willnot lightly interfere with.

59 I would also not accede to DNM’s submission that the notice of ap-plication did not clearly state that Lock-Block was seeking to pierce thecorporate veil of DNM and that it was unfair of the arbitrator to decidethat issue on the amendment application.

60 While perhaps not a model of clear drafting, the notice of applicationdoes on its face seek orders adding the additional parties as respondents


in the arbitration or, in the alternative, adding David and Nancy Moase.Under the “Legal Basis,” it states that “Non-signatories may be bound byarbitration agreements by piercing the corporate veil”. In support of thatstatement, the case of CE International Resources Holdings LLC v. Sit,2013 BCSC 1804 (B.C. S.C.) [Yeap] at para. 35 is cited.

61 Moreover, in its application response, DNM set out detailed submis-sions as to why the application should be dismissed, specifically that theadditional parties are not parties to the arbitration agreement and thatthere is no basis to pierce the corporate veil. Further, as noted, bothDavid and Nancy Moase provided evidence addressing those issues.

62 In the circumstances, I am not persuaded that either DNM or the addi-tional parties were deprived of the opportunity to address fully the issuewhether the statement of claim should be amended as sought by Lock-Block by adding the additional parties as respondents to the arbitration.Accordingly, the petitioners have failed to establish arbitral error basedon a breach of natural justice and procedural fairness.

Piercing the Corporate Veil - Question of Law or Jurisdiction?63 The additional parties and Lock-Block differ on whether the arbitra-

tor’s decision to pierce the corporate veil of DNM involves a jurisdic-tional question, to be considered under s. 30 of the Act, or raises a ques-tion of law on which leave to appeal is required under s. 31.

64 Again, the additional parties submit that the arbitrator exceeded hisjurisdiction by adding parties to the arbitration who are not parties to thearbitration agreement. In contrast, Lock-Block submits that it was withinthe arbitrator’s jurisdiction to determine the proper parties to the arbitra-tion and that his decision can only be challenged if he proceeded on thebasis of an error of law, in which case leave to appeal is required under s.31, absent the consent of all of the parties. Lock-Block submits furtherthat the decision whether to pierce the corporate veil involves a factualinquiry and as such is not a pure question of law. Section 31 thereforehas no application.

65 While I was referred to a number of authorities in which the court hasconsidered the issue of whether non-parties to an arbitration agreementcan be bound by an arbitration award, none of those cases address thespecific issue that arises here.

66 To the extent that the courts have considered the status of non-parties,the issue has often arisen in the context of an application to enforce a


foreign arbitration award or an application to stay a judicial proceedingin favour of an arbitration.

67 In Javor v. Francoeur, 2003 BCSC 350 (B.C. S.C.), an applicationwas brought in this court to enforce an award granted in an arbitrationheld in California. In the award, the arbitrator found in favour of theclaimant, the petitioner in this court, and held that the personal respon-dent was jointly liable with the corporate respondent on the basis that hewas the alter ego of the company.

68 Mr. Justice Holmes declined to enforce the arbitration award againstthe personal respondent. He said at paras. 30-31:

The issue here is whether Francoeur should bear personal liability inthis matter. In British Columbia, the jurisdiction of arbitrators derivesfrom statute and is confined to a jurisdiction over parties to arbitra-tion agreements. [Commercial Arbitration Act, R.S.B.C. 1996, c. 55,s. 22; Domestic Commercial Arbitration Rules of Procedure ss. 2 and20].

The claim against Francoeur for personal liability could not properlyhave been the subject of arbitration under the agreement here as hewas not a party. It would be a matter for judicial determination.

69 Mr. Justice Holmes’ decision was upheld by the Court of Appeal:2004 BCCA 134 (B.C. C.A.).

70 A somewhat different approach was taken by Madam Justice Fisherin Yeap which again involved an application to enforce a foreign arbitra-tion award issued in an international commercial arbitration held in NewYork. In granting the award, the arbitrator had found that the personalrespondent was a party to the underlying commercial agreements on thebasis that the corporate respondent was his alter ego.

71 In this court, Madam Justice Fisher held that the arbitration awardcould be enforced against the personal respondent. After reviewing thearbitrator’s analysis of why he concluded that he had jurisdiction overthe personal respondent, Madam Justice Fisher said at paras. 35-36:

These findings and conclusions are consistent with international arbi-tration law in this jurisdiction and elsewhere. The ICAA defines aparty to an arbitration agreement as including “a person claimingthrough or under a party” and non-signatories have been held to bebound by arbitration agreements in various ways that include pierc-ing the corporate veil (alter ego) and estoppel: see Nigel Blackaby &Constantine Partasides, Redfern and Hunter on International Arbitra-tion (Oxford: Oxford University Press, 2009) at 2.39-2.54; Gary B.Born, International Commercial Arbitration, vol 1 (Alphen aan den


Rijn, The Netherlands: Kluwer Law International, 2009) at 1137-1142; J. Kenneth McEwan and Ludmila B. Herbst, Commercial Arbi-tration in Canada: A Guide to Domestic and International Arbitra-tions (Toronto: Thomson Reuters Canada Limited, 2013) at 2:110.Moreover, these are questions that are normally determined in thearbitration under the applicable law: see for example, Pan LibertyNavigation Co v World Link (HK) Resources Ltd., 2005 BCCA 206at para. 19.

The issue of the arbitrator’s jurisdiction and Mr. Yeap’s status as aparty was a matter for the arbitrator to decide. The arbitration agree-ments provided that the proceedings were to be governed by the In-ternational Dispute Resolution Procedures of the American Arbitra-tion Association. Article 15(1) of those rules provides that thearbitrator has the power to rule on his own jurisdiction, “includingany objections with respect to the existence, scope or validity of thearbitration agreement”. In my opinion, it is not the role of this Courton such an application to consider the merits of a substantive issuethat was the arbitrator’s to decide.

72 In Aradia Fitness Canada Inc. v. Dawn M. Hinze Consulting Ltd.,2008 BCSC 839 (B.C. S.C.) [Aradia], the petitioner brought an applica-tion seeking an order that the personal respondent, who was the principalof the corporate respondent, must submit to an arbitration brought by thepetitioner under a franchise agreement between it and the corporaterespondent.

73 Mr. Justice Davies considered a number of authorities which haveconsidered the scope of arbitration clauses in relation to non-parties. Heconcluded that it was premature for him to decide whether the personalrespondent was a party to the franchise agreement or should otherwise bea party to the arbitration. In his view, that was an issue to be decided bythe arbitrator.

74 In coming to this conclusion, Mr. Justice Davies cited the Court ofAppeal decisions in Prince George (City) v. McElhanney EngineeringServices Ltd., [1995] 9 W.W.R. 503, 9 B.C.L.R. (3d) 368 (B.C. C.A.)and Gulf Canada Resources Ltd./Ressources Gulf Canada Ltee v.Arochem International Ltd. (1992), 66 B.C.L.R. (2d) 113, 11 B.C.A.C.145 (B.C. C.A.), as follows:

[38] In those circumstances, I follow the direction of our Court ofAppeal in McElhanney, at para. 53, as follows:

Thus if a party is alleged to be a party to an arbitrationagreement, but that party clearly establishes that it is not a


party to such an agreement, the court has a residual juris-diction to refuse a stay. This is no more than a jurisdictionto satisfy itself that the prerequisites of s.8 of the Acthave, in fact, been met. If those prerequisites clearly havenot been met, then the court should refuse a stay. If it isarguable whether the prerequisites have been met, thenthe stay should be granted and the issue can be resolved inthe arbitration.

[39] Further, as the Court of Appeal observed in Gulf Canada atpara. 43:

Considering s. 8(1) in relation to the provisions of s. 16and the jurisdiction conferred on the arbitral tribunal, inmy opinion, it is not for the court on an application for astay of proceedings to reach any final determination as tothe scope of the arbitration agreement or whether a partic-ular party to the legal proceedings is a party to the arbitra-tion agreement because those are matters within the juris-diction of the arbitral tribunal. Only where it is clear thatthe dispute is outside the terms of the arbitration agree-ment or that a party is not a party to the arbitration agree-ment or that the application is out of time should the courtreach any final determination in respect of such matterson an application for a stay of proceedings.

[Emphasis in Aradia.]

75 In my view, it is clear on the authorities that an arbitrator has jurisdic-tion to determine at first instance who the proper or necessary parties areto the arbitration.

76 This point is made by the authors of Commercial Arbitration in Can-ada: A Guide to Domestic and International Arbitrations (Toronto:Thomson Reuters Canada Limited, 2013) [Commercial Arbitration inCanada] at 2-48:

It is within the scope of the jurisdiction of the arbitral tribunal todetermine whether a particular person is a party to the arbitrationagreement. It is only when it is clear that a person is not a party to thearbitration agreement that the court should make a final determina-tion in this regard. Where it is not clear who is a party to an arbitra-tion agreement it is appropriate that a stay of proceedings be grantedand the matter decided by the arbitral tribunal.

77 In determining who the proper parties are, the arbitrator may includenon-signatories to the arbitration agreement in certain circumstances.


Those circumstances are summarized in Commercial Arbitration in Can-ada as follows at 2-48:

(1) the contractual agreement between a party and the non-partyincorporates the arbitration clause by reference;

(2) there is between a party and a non-signatory an agencyrelationship;

(3) the corporate relationship between a parent and its subsidiarymay be sufficiently close as to justify piercing the corporateveil and holding one corporation legally accountable for theactions of the other; and

(4) a non-party is bound by an estoppel.

(see also Yeap at para. 35).

78 Again, the arbitrator added the additional parties to the arbitrationpursuant to number three above in that he found that they are the alteregos of DNM.

79 The fact that the arbitrator had the authority to make this determina-tion does not however answer the issue now before the court as towhether his decision gives rise to a question of jurisdiction, and thereforereviewable under s. 30 of the Act, or a question of law requiring leave toappeal under s. 31.

80 In my view, the issue falls to be determined under s. 30.81 In coming to this conclusion, I start with the proposition that arbitra-

tion is a consensual process and that the arbitrator’s jurisdiction, overboth parties and subject matter, stems from the agreement reached by theparties. As held by Madam Justice Dickson in Arbutus Software at para.80:

The jurisdiction of an arbitrator is founded upon the arbitrationagreement, the pleadings and the questions posed by the parties. Thearbitrator acts without jurisdiction, and thus commits arbitral error, ifhe or she makes a decision that was not referred for adjudication:Hanna Collision, supra; BC Gas Inc. v. Westcoast Energy Inc.,[1990] B.C.J. No. 2924 (S.C.).

82 Quoting again from Commercial Arbitration in Canada at 5-1: Arbitration is by its nature a process based on agreement and con-sent. The parties to an arbitration agreement have virtually unfetteredautonomy in identifying the dispute that may be the subject of thearbitration proceeding. The agreement comprises the arbitrator’sterms of reference and delineates the task he or she is to perform,subject to applicable statutory provisions.


The primary source of an arbitrator’s competence is the content ofthe arbitration agreement.

. . .

Parties who have not agreed to submit to the arbitration should not beobliged to do so.

83 Further, on the specific issue of an arbitrator’s jurisdiction over par-ties, the authors state at 2-47:

Absent express legislative provisions, the court has no authority tocompel a person who is not a party to the arbitration agreement toarbitrate. As a general rule, persons cannot be bound by arbitrationproceedings without their consent.

. . .

An award expressly purporting to affect non-party rights is in excessof the arbitrator’s jurisdiction and is void.

It is a miscarriage of justice for a person who is not a party to anagreement to be held responsible for an obligation thereunder.

84 These principles are of course subject to the limited exceptions re-ferred to in paragraph 77 above. However, the key point is that if anarbitrator purports to bind a non-party in the absence of one of the excep-tions, or errs in the application of an exception, the arbitrator will haveexceeded his or her jurisdiction and committed arbitral error.

85 Thus in the specific circumstances of the case at bar, it was appropri-ate for Lock-Block to bring its amendment application before the arbitra-tor who had jurisdiction to determine whether to add the additionalparties.

86 However, because his determination of the issue goes to the heart ofhis jurisdiction, it is subject to review under s. 30 of the Act and the courtwill apply a standard of correctness.

87 I would add that, in my view, as established by the authorities, thequestion of whether to add parties to an arbitration by piercing the corpo-rate veil is a mixed question of fact and law. Thus, an application forleave to appeal an arbitrator’s decision to do so under s. 31 of the Act isunlikely to succeed as appeals under that section are limited to questionsof law. This would result in a situation in which non-parties could bedrawn into an arbitration with no recourse to the courts to challenge thearbitrator’s jurisdiction over them. Such a result is unreasonable and pro-vides further support for characterizing the arbitrator’s award in this caseas jurisdictional.


Did the Arbitrator Err in Piercing the Corporate Veil and Adding theAdditional Parties?

88 The additional parties rely on the leading English decision Prest v.Petrodel Resources Ltd., [2013] UKSC 34, [2013] 4 All E.R. 673 (U.K.S.C.), to argue that the arbitrator erred in piercing the corporate veil ofDNM.

89 That case arose in the context of matrimonial proceedings in whichthe wife alleged that the husband used a number of corporate entities tohold legal title to properties that belonged beneficially to him. The trialjudge held that the court has a wide discretion under the English Matri-monial Causes Act, 1857, 20 & 21 Vict. (Eng.), c. 85, to pierce the cor-porate veil and he therefore ordered that a number of the properties betransferred to the wife. The Court of Appeal allowed an appeal by thecompanies on the basis that there was no evidence that the corporatestructures were being used for an improper purpose or that the companiesheld the properties in trust for the husband.

90 On further appeal to the United Kingdom Supreme Court, the order ofthe trial judge was restored. In coming to its decision, the Supreme Courtdeclined to pierce the corporate veil on the basis that there were nogrounds for doing so. However, the Court held that the companies hadfailed to cooperate in the proceeding, including refusing to produce doc-uments, which was done at the direction of the husband. The Court in-ferred that the companies’ conduct was intended to protect the propertiesin the matrimonial litigation to the benefit of the husband, which allowedit to conclude that the companies held the properties in trust for thehusband.

91 The additional parties rely on the Supreme Court’s discussion of thetest for piercing the corporate veil. The principal reasons of the Courtwere delivered by Lord Sumption who noted, at para. 16, that the con-cept of “piercing the corporate veil” is an expression used to describe anumber of different things. He went on to say that, properly construed,the concept refers to situations in which “a person who owns and con-trols a company is said in certain circumstances to be identified with it inlaw by virtue of that ownership and control” (at para. 16).

92 Lord Sumption then reviewed numerous authorities in which the issueof piercing the corporate veil was considered, and he concluded at para.27 that “the principle that the court may be justified in piercing the cor-porate veil if a company’s separate legal personality is being abused for


the purpose of some relevant wrongdoing is well established in theauthorities”.

93 He expanded on his views at para. 35: I conclude that there is a limited principle of English law which ap-plies when a person is under an existing legal obligation or liabilityor subject to an existing legal restriction which he deliberately evadesor whose enforcement he deliberately frustrates by interposing acompany under his control. The court may then pierce the corporateveil for the purpose, and only for the purpose, of depriving the com-pany or its controller of the advantage that they would otherwisehave obtained by the company’s separate legal personality. The prin-ciple is properly described as a limited one, because in almost everycase where the test is satisfied, the facts will in practice disclose alegal relationship between the company and its controller which willmake it unnecessary to pierce the corporate veil. ...For all of thesereasons, the principle has been recognised far more often that it hasbeen applied. But the recognition of a small residual category ofcases where the abuse of the corporate veil to evade or frustrate thelaw can be addressed only by disregarding the legal personality ofthe company is, I believe, consistent with authority and with long-standing principles of legal policy.

94 Canadian courts have similarly held that the separate legal personali-ties of a company and its shareholders may be disregarded only in verylimited circumstances. For example, in Edgington v. Mulek Estate, 2008BCCA 505 (B.C. C.A.) [Edgington], Mr. Justice Lowry of our Court ofAppeal said at paras. 20-22 and 26:

I consider the position taken by the purchasers largely ignores thelongstanding principle that a corporation is in law an entity distinctand separate from its shareholders: Salomon v. Salomon & Co.,[1897] A.C. 22 (H.L.). Parties to transactions employ the use of cor-porate vehicles for a reason, as they are entitled to do. Shareholders,despite being in a position of control, do not, as a rule, incur liabilityfor the breach of their corporation’s contractual obligations. It is nota matter of control; the shareholders of a closely held company likeWestpark invariably have control of the company.

The separate legal personality of the corporation will not be lightlydisregarded. As recognized in Big Bend Hotel Ltd. v. Security MutualCasualty Co. (1980), 19 B.C.L.R. 102 at 108 (B.C.S.C.), respect forthe corporate form is strict:

On the whole, Canadian and English courts rigidly adhereto the concept set out in Salomon, supra, that a corpora-


tion is an independent legal entity not to be identified withits shareholders.

[22] There are certain circumstances in which what the authoritiesstate to be the “corporate veil” will be “pierced” or “lifted”, or wherethe separate legal personality of the corporation will be disregarded.Such circumstances generally arise where the corporate form hasbeen abused — that is, it has been used for fraudulent or illegitimatepurposes (see Big Bend Hotel).

. . .

It follows that any argument to the effect this Court must disregardthe separate legal personality of Westpark because a failure to do sowill result in “unfairness” cannot stand. The strict recognition ofWestpark as an entity distinct from its owners does not yield a resultthat comes anywhere near being flagrantly opposed to justice. A cor-poration and its shareholders are separate legal entities. While a nar-rowly held corporation or a corporation with a sole shareholder mayappear to be the “alter ego” of its shareholders, the two entities re-main legally distinct and must be treated as such.

95 The requirement that there be conduct akin to fraud in order to piercethe corporate veil was recently confirmed by the Court of Appeal inPoliteknik Metal San ve Tic A.S. v. AAE Holdings Ltd., 2015 BCCA 318(B.C. C.A.) at para. 36 (citing B.G. Preeco I (Pacific Coast) Ltd. v. BonStreet Holdings Ltd. (1989), 60 D.L.R. (4th) 30, 37 B.C.L.R. (2d) 258(B.C. C.A.)).

96 The additional parties submit that there is no allegation of conductakin to fraud advanced in this case and, as such, there is no basis onwhich the arbitrator could properly have pierced the corporate veil ofDNM.

97 I agree with the additional parties. The further amended statement ofclaim attached to Lock-Block’s notice of application alleges that DNMhas been engaged, either directly or indirectly, in competing with Lock-Block in breach of the Licence Agreement and further that Mr. and Mrs.Moase have carried on or have owned an interest in an entity that hasbeen engaged in competing with Lock-Block in breach of the LicenceAgreement. In other words, the allegations are of breach of contract andnot fraud.

98 The further amended statement of claim advances no allegations ofmisconduct against DNM Systems Inc. and DNM Retaining Wall Sys-tems Ltd., other than that these entities are operated as a single entitywith DNM and are under the influence and control of the Moases. This


appears to be an attempt to impose liability on those entities for the al-leged breach of contract by DNM, but without any allegation akin tofraud that would support piercing the corporate veil of DNM.

99 I would add that the evidence before the arbitrator, set out in Mr.Moase’s affidavit, is that DNM was incorporated at the insistence ofLock-Block, which preferred to contract with a corporate entity ratherthan with an individual. It would have been open to Lock-Block to re-quire that the Moases, as the principals of DNM, sign the Licence Agree-ment in their personal capacities, for example as guarantors of DNM’sobligations, but that did not occur.

100 Clause 19 of the Licence Agreement does purport to prohibit compe-tition from officers and directors of DNM, as well as anyone with agreater than ten percent ownership interest, but the agreement cannotbind those people as they are not parties to the agreement. However,Lock-Block can seek recourse against DNM for such competition, whichis precisely what it seeks to do by way of the arbitration.

101 Finally, while the arbitrator listed a number of factors in support ofhis decision to add the additional parties, as set out at paragraph 32above, it is not at all clear how those factors support piercing the corpo-rate veil of DNM. For example, the reference to “commercial efficacy”seems to suggest that the arbitrator was of the view that it would be morepractical or fair to have all of the parties participate in the arbitration,however the authorities establish that such concerns, even though well-meaning, do not support piercing the corporate veil: Edgington at paras.24 and 26.

102 As stated above, the court will disregard the separate legal personali-ties of a corporation and its shareholders only in limited circumstances,which are absent in this case. Accordingly, there was no basis for thearbitrator to pierce the corporate veil of DNM and to add the additionalparties as parties to the arbitration. In doing so, he committed an error ofjurisdiction.

Summary and Conclusion103 In summary, I find that the arbitrator committed a jurisdictional error

by adding the additional parties to the arbitration. The Award is thereforeset aside.

Application granted.