T-4039-81
The Queen (Plaintiff)
v.
François St -Aubin (Defendant)
Trial Division, Rouleau J.—Montreal, January 25
and 26; Ottawa, May 30, 1984.
Jurisdiction — Third party proceedings — Defendant and
accomplice convicted by criminal court of fraudulently obtain
ing price stabilization payments for yellow seed onions and
each ordered to repay part of amount — Defendant, sued in
Federal Court for whole amount, seeking to implead accom
plice by means of third party notice — Third party proceed
ings dismissed for lack of jurisdiction as not incident of main
action but new case not meeting requirement of raising issues
involving federal law — Criminal Code, R.S.C. 1970, c. C-34,
s. 663(2)(h).
Evidence — Estoppel by record — Judgments and Orders
— Res judicata — Crown seeking recovery in Federal Court of
fraudulently obtained price stabilization payments for yellow
seed onions — Defendant convicted in criminal court and
ordered to repay amount obtained — Defendant arguing
criminal order civil in nature and constituting res judicata —
Applying R. v. Groves, res judicata not applicable as parties
not same and damages claim civil in nature whereas criminal
sanction not so — Purpose of Code s. 663(2)(h) rehabilitation
and deterrence — However, amount paid in criminal proceed
ings credited to defendant — Criminal Code, R.S.C. 1970, c.
C-34, s. 663(2)(h).
Practice — Third party proceedings — Defendant and
accomplice convicted of fraudulently obtaining price stabiliza
tion payments for yellow seed onions and each ordered to
repay part of amount — Defendant, sued in Trial Division for
whole amount, seeking to implead accomplice by third party
notice — Third party proceedings dismissed for lack of juris
diction as not incident of main action but new case not meeting
requirement of raising issues involving federal law — Criminal
Code, R.S.C. 1970, c. C-34, s. 663(2)(h).
The defendant and an accomplice were convicted in criminal
court of fraudulently obtaining price stabilization payments for
yellow seed onions. Each was ordered to repay part of the
amount obtained. The defendant is now sued in the Federal
Court for repayment of the entire amount.
The defendant seeks to implead his accomplice so that the
latter might repay his share to the Crown, thereby reducing the
defendant's own burden. He also argues that the criminal court
order is civil in nature and constitutes res judicata with respect
to the present action.
Held, the action is allowed and the third party proceedings
dismissed.
The argument of res judicata is rejected. It has been held in
previous cases, notably in R. v. Groves, that a repayment order
made in the context of criminal proceedings is not civil in
nature since its purpose is rehabilitation and deterrence. More
over, in this case, the parties are not the same and the remedies
are quite different in nature. However, the amount paid by the
accused pursuant to the criminal order would be credited to
him.
As was decided by the Supreme Court in R. v. Thomas
Fuller Construction Co. (1958), third party proceedings are a
substantive proceeding and not a mere incident of the principal
action, and must be considered separately in determining whe
ther federal law applies. The defendant, therefore, cannot
implead his accomplice since the remedy sought is purely civil
in nature and must be dealt with in a provincial court.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. Groves (1977), 79 D.L.R. (3d) 561 (Ont. H.C.); R.
v. Thomas Fuller Construction Co. (1958) Ltd. et al.,
[1980] 1 S.C.R. 695; McNamara Construction (Western)
Ltd. et al. v. The Queen, [1977] 2 S.C.R. 654.
COUNSEL:
S. Barry for plaintiff.
Manon Bourbonnais for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Blanchard, Vinet, Plante & Bourbonnais,
Valleyfield, Quebec, for defendant.
The following is the English version of the
reasons for judgment rendered by
ROULEAU J.: In order to stabilize the price of
yellow seed onions produced in Canada in 1977,
the Agricultural Stabilization Board set up a pro
gramme under which producers were paid a cer
tain amount of money per pound of onions
produced.
The defendant accordingly sent the Board a
request for payment claiming he had sold 972,200
pounds of yellow seed onions and attaching false
invoices in that the alleged purchaser Jean Roy
Transport does not exist.
The sum of $18,374.58 was paid to the defend
ant; out of this amount, the latter paid $12,000 to
his accomplice Jean Roy, pursuant to an agree
ment between them. The conspiracy was uncov
ered and resulted in a criminal conviction on Janu-
ary 19, 1981, coupled with an order to repay the
sum of $6,374.58 to the injured party, namely Her
Majesty the Queen in Right of Canada. Roy was
ordered to pay the balance, namely the sum of
$12,000, which he still has not reimbursed.
The plaintiff then filed an action in the Federal
Court claiming the sum of $12,000, being the
difference between the sum of $18,374.58 which
the defendant received without being entitled
thereto and the sum of $6,374.58 which it was
required to repay pursuant to the order made in
criminal court on January 19, 1981. The defendant
sought to implead Jean Roy so that the latter
might repay his share to the Crown, thereby
reducing his own burden. He added in his defence
that the order made in criminal court is civil in
nature and constitutes res judicata with respect to
the present action.
This argument has been analyzed in previous
cases, where it was held that a repayment order
made in the context of criminal proceedings was
not civil in nature since it was intended only to
discourage the commission of crimes by involving
the accused with himself, the victim and society,
thus making him aware of his responsibilities in a
constructive manner.
Paragraph 663(2)(h) of the Criminal Code
[R.S.C. 1970, c. C-34] specifies that such an order
is aimed at "securing the good conduct of the
accused and ... preventing a repetition by him of
the same offence ...." In R. v. Groves (1977), 79
D.L.R. (3d) 561 (Ont. H.C.), at page 570, O'Dris-
coll J. stated:
Section 663, when read as a whole and with special attention
to para. (h) with its reference to "such other reasonable
conditions as the court considers desirable for securing the good
conduct of the accused and preventing the repetition of the
offence or the commission of other offences", strongly suggests
that Parliament's intent when it enacted s. 663(2)(e), as in the
case of the other paragraphs, was to procure the rehabilitation
of the offender as well as to achieve the principles of deterrence
and protection of the public—all of which are legitimate goals
of sentencing.
He added [at page 571] that there is no res
judicata when the victim chooses to seek compen
sation through a civil action. However, the amount
paid by the accused pursuant to the criminal order
would be credited to him; the interaction of the
two courts would be limited to this. In the case we
are concerned with, moreover, although the cause
of action arises from the same source, the parties
are not the same and the substance of the remedies
is quite different; in claims for damages, whether
the wrong is attributable to mere negligence or to
illegal activities, the remedy sought is monetary
compensation for the injury, and such compensa
tion is purely civil in nature.
During the proceedings the defendant sought to
implead Jean Roy so that the latter might pay his
share of the damages. The issue here is whether a
purely civil claim between two individuals can be
treated as an ancillary matter in the Federal Court
where the main cause of action is within the
Federal Court's jurisdiction.
This issue was canvassed in the Supreme Court's
decision in R. v. Thomas Fuller Construction Co.
(1958) Ltd. et al., [1980] 1 S.C.R. 695. In that
case the defendant, Her Majesty the Queen, filed a
third party notice against Fuller in the Federal
Court claiming indemnity under its contract with
Fuller against its liability toward the Foundation
Company of Canada Limited and claiming also
contribution pursuant to The Negligence Act of
Ontario [R.S.O. 1970, c. 296] .
For Pigeon J., the question was whether federal
law embraced the issues on the third party notice.
In his view the proceedings against the third party
are a substantive proceeding and not a mere inci
dent of the principal action and must be con
sidered separately in determining whether federal
law applies. In McNamara Construction (Western)
Ltd. et al. v. The Queen, [ 1977] 2 S.C.R. 654, it
was held that an action for breach of a construc
tion contract could not be brought in the Federal
Court because it was up to the provincial courts to
decide such matters. The claim against Fuller
arose out of provincial laws that could not be
asserted in the Federal Court. Again according to
Pigeon J. [at page 713]:
Consequently, I fail to see any basis for the application of the
ancillary power doctrine which is limited to what is truly
necessary for the effective exercise of Parliament's legislative
authority. If it is considered desirable to be able to take
advantage of provincial legislation on contributory negligence
which is not meant to be exercised outside the courts of the
province, the proper solution is to make it possible to have those
rights enforced in the manner contemplated by the general rule
of the Constitution of Canada, that is before the superior court
of the province.
In conclusion, St -Aubin cannot implead Jean
Roy, however incidental this question may be,
since the remedy sought is purely civil in nature
and must be dealt with in a provincial court.
Moreover, the Crown's claim must be granted as
sought, since the criminal order in no way consti
tutes res judicata with respect to the case at bar.
Action granted with costs.
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