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A-365-86
Amway Corporation (Appellant) (Defendant)
v.
The Queen (Respondent)(Plaintiff)
INDEXED AS: CANADA V. AMWAY OF CANADA LTD.
Court of Appeal, Heald, Mahoney and Stone JJ.—Montréal, December 1, 2, 3, 4; Ottawa, December 18, 1986.
Practice — Discovery — Examination for discovery — Competence and compellability of corporation charged with offence under Customs Act to attend examination for discov ery — Corporation witness — Action penal in nature and corporation person charged with offence — Corporation nei ther competent nor compellable witness as entitled to protec tion of Charter and Canada Evidence Act — Federal Court Rules, C.R.C., c. 663, R. 465(1)(b),(5),(7),(12),(15) — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss. 46(1),(2), 52(b) — Canada Evidence Act, R.S.C. 1970, c. E-10, ss. 2, 4(1).
Customs and excise — Customs Act — Practice — Corpo ration charged with Customs Act offence — Competence and compellability to undergo examination for discovery — Cor poration witness — Penal action — Availability of Charter and Canada Evidence Act protection — Customs Act, R.S.C. 1970, c. C-40, ss. 2, 18, 102, 180, 192, 249 (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 64(2)), 252 (as am. idem) — Excise Tax Act, R.S.C. 1970, c. E-13, s. 58 — Canada Evidence Act, R.S.C. 1970, c. E-10, ss. 2, 4(1).
Criminal justice — Evidence — Corporation charged with Customs Act offence — Whether compellable to undergo examination for discovery — Penal action — Corporation when examined for discovery is witness — Entitled to protec tion of Canada Evidence Act, R.S.C. 1970, c. E-10, s. 4(1).
Constitutional law — Charter of Rights — Criminal process — Corporation charged with Customs Act offence — Compellability to undergo examination for discovery — Charter s. 11(c) protection applies in absence of "limit pre scribed by law" — Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act, 1982, 1982, c. 11 (U.K.), ss. 1, 11(c).
The appellant, a corporation, is being sued under the Cus toms Act for failure to report and for smuggling of goods into Canada. This is an appeal against an interlocutory order of the Trial Division ordering the appellant to produce one of its officers for examination for discovery.
Held, the appeal should be allowed.
As the Trial Judge found, although the action is for the recovery of a penalty by a civil proceeding, this is a penal action in which the appellant is a person charged with an offence.
The corporation is a witness when examined for discovery. As such, it is entitled to claim whatever benefit the law provides it against being compelled to testify. It is therefore entitled to the benefit of subsection 4(1) of the Canada Evidence Act by virtue of which a person charged with an offence is not a competent witness, except for the defence, and is therefore not a compellable witness for the plaintiff in a civil proceeding. This is true provided that there are no statutory provisions to the contrary.
Likewise, the appellant can claim the benefit of the Charter right not to be compelled to be a witness provided that there are no reasonable limits prescribed by law that can be demons trably justified in a free and democratic society. These limits would be the same as the "statutory provisions to the contrary" referred to above. But, contrary to what the Trial Judge found, there are no such limitations in subsection 249(1) or section 252 of the Customs Act, nor in Rule 465. The Trial Judge therefore erred in finding that the Customs Act and the Rules of Court operated to make the appellant a compellable and competent witness in spite of paragraph 11(c) of the Charter and subsection 4(2) of the Canada Evidence Act.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. Chabot, [1980] 2 S.C.R. 985; R. v. Judge of the General Sessions of the Peace for the County of York, Ex p. Corning Glass Works of Canada Ltd. (1971), 3 C.C.C. (2d) 204 (Ont. C.A.); R. v. N.M. Paterson and Sons Ltd., [1980] 2 S.C.R. 679; Klein v. Bell, [1955] S.C.R. 309.
COUNSEL:
Guy Du Pont and Marc Noël for appellant (defendant).
Edward R. Sojonky, Q.C. and Michael F. Ciavaglia for respondent (plaintiff).
SOLICITORS:
Verchère, Noël & Eddy, Montréal, for appel lant (defendant).
Deputy Attorney General of Canada for respondent (plaintiff).
The following are the reasons for judgment rendered in English by
MAHONEY J.: This appeal is taken against the following interlocutory order of the Trial Division [[1987] 1 F.C. 3]:
IT IS ORDERED THAT the Defendant, Amway Corporation, upon an appointment being served upon its solicitors, produce either Jay VanAndel or Richard DeVos for examination for discovery.
Neither VanAndel nor DeVos reside in Canada. An amount of almost $150 million is sought to be recovered in the action, which deals with transac tions between January 7 and May 6, 1977, and similar actions dealing with transactions during other periods of time.
In an earlier judgment involving the same par ties and actions, A-915-85, rendered September 15, 1986, I characterized the amounts sought to be recovered as "duty, sales tax, interest and forfei ture". This appeal requires a precise characteriza tion of the nature of the action as three of the four grounds of appeal are predicated on the theses that it is a penal action and that the appellant is, in the action, a person charged with an offence.
That appears to have been the conclusion reached by the learned Trial Judge who held, at page 17, that:
... the deemed forfeiture provisions of sections 180 and 192 of the Customs Act provide for the imposition of a penalty for the commission of an offence, by means of a civil procedure.
The respondent sought to find a different charac terization in the following, at pages 24-25:
... this would only excuse the defendants from discovery insofar as the deemed forfeitures are concerned. They would not be excused from discovery with respect to the duties and taxes owing.
It is true that, in paragraph 9 of the statement of claim, it is alleged that the defendants are liable to Her Majesty for additional duties of $1,299,119.31 pursuant to section 102 of the Customs Act, R.S.C. 1970, c. C-40. However, judgment in respect of that alleged liability is not sought in this
action. The relief sought, in addition to costs and the usual "such further and other relief", is limited to "the sum of $9,415,706.66 by way of forfeiture".
In reaching her conclusion, the learned Trial Judge carefully considered the pertinent provisions of the Customs Act, the Excise Tax Act, R.S.C. 1970, c. E-13, and the authorities. I agree with the learned Trial Judge in the conclusion that the applicable provisions of sections 180 and 192 of the Customs Act,* taken with sections 249 [as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 64(2)] and 252 [as am. idem], provide for the recovery of a penalty by a civil proceeding in this Court and, it follows, that this is a penal action. I also agree with the reasoning of the learned Trial Judge in reaching those conclusions.
* The Customs Act, R.S.C. 1970, c. C-40.
18. Every person ... arriving in Canada ... shall
(b) before unloading or in any manner disposing thereof, make a report in writing ... of all goods in his charge or custody ... and of the quantities and values of such goods ...and
(c) then and there truly answer all such questions respect ing the articles mentioned in paragraph (b) as the collector or proper officer requires of him and make due entry thereof as required by law.
180. (1) Where the person in charge or custody of any article mentioned in paragraph 18(b) has failed to comply with any of the requirements of section 18, all the articles mentioned in paragraph (b) of that section in the charge or custody of such person shall be forfeited and may be seized and dealt with accordingly.
(2) If the articles so forfeited or any of them are not found, the owner at the time of importation and the importer, and every other person who has been in any way connected with the unlawful importation of such articles shall forfeit a sum equal to the value of the articles ....
192. (1) If any person
(b) makes out or passes or attempts to pass through the custom-house, any false, forged or fraudulent invoice of any goods of whatever value; or
(c) in any way attempts to defraud the revenue by avoiding the payment of the duty or any part of the duty on any goods of whatever value;
(Continued on next page)
I likewise agree that a defendant in this action is a person charged with an offence. "Charge" is not a term of art. The Supreme Court of Canada, per Dickson J., as he then was, in R. v. Chabot, [1980] 2 S.C.R. 985, at page 1005, said:
As the Supreme Court of the United States observed in United States v. Patterson ((1893), 150 U.S.R. 65) at p. 68 a criminal charge, strictly speaking, exists only when a formal written complaint has been made against the accused and a prosecution initiated. "In the eyes of the law a person is charged with crime only when he is called upon in a legal proceeding to answer to such a charge."
The statement of claim alleges:
5. The Defendants made untrue declarations to Customs con cerning the fair market value of the goods contrary to the provisions of Section 18 and 180 of the Customs Act.
6. The Defendants therefore passed false invoices in respect of the said goods through the Customs House and did thereby avoid payment of part of the duty properly payable on the said goods contrary to the provisions of Section 192(1)(b) of the Customs Act.
An action is a legal proceeding; offences are charged in the statement of claim; the appellant was called upon to answer them when the state ment of claim was served.
A second matter requiring definition, before the specific grounds of appeal are considered, is the status of a corporation being examined for discov ery. Is the corporation, in law, the witness notwith standing that, of necessity, it speaks through the
(Continued from previous page)
such goods if found shall be seized and forfeited, or if not found but the value thereof has been ascertained, the person so offending shall forfeit the value therof as ascertained ....
2. (1) In this Act, or in any other law relating to the customs,
"value" in respect of any penalty, punishment or forfeiture imposed by this Act and based upon the value of any goods or articles, means the duty-paid value of such goods or articles at the time of the commission of the offence by which such penalty, punishment or forfeiture is incurred;
The Excise Tax Act, R.S.C. 1970, c. E-13.
58. Where an excise tax is payable under this Act upon the importation of any article into Canada, the Customs Act is applicable in the same way and to the same extent as if that tax were payable under the Customs Tariff.
medium of a human representative? The absence of authority directly on the point leads one to suspect that an affirmative answer to that question has been generally taken for granted. Surely if a corporation were not accorded a like right to an individual party not to incriminate itself on discov ery, there would be jurisprudence to that effect.
The proposed examination for discovery is to be conducted under the general authority of Rule 465(1)(b) [Federal Court Rules, C.R.C., c. 663].
Rule 465. (1) For the purpose of this Rule, a party may be examined for discovery, as hereinafter in this Rule provided,
(6) if the party is a corporation or any body or group of persons empowered by law to sue or to be sued, either in its own name or in the name of any officer or other person, by questioning any member or officer of such corporation, body or group,
and, in this Rule, a party who is being, or is to be, so examined for discovery is sometimes referred to as the "party being examined" or the "party to be examined" as the case may be, and the individual who is being, or is to be, questioned is sometimes referred to as the "individual being questioned" or the "individual to be questioned", as the case may be.
(15) Upon examination for discovery otherwise than under paragraph (5), the individual being questioned shall answer any question as to any fact within the knowledge or means of knowledge of the party being examined for discovery that may prove or tend to prove or disprove or tend to disprove any unadmitted allegation of fact in any pleading filed by the party being examined for discovery or the examining party.
While it is the "individual being questioned", it is the corporation that is the "party being exam ined". The purpose of an examination for discov ery is twofold: to ascertain the facts upon which the party being examined bases its case and to obtain admissions of fact which may be used in evidence against the party being examined. Except where Rule 465(5) applies, and that is not the present case, the individual being questioned is required to obtain and give answers outside his personal knowledge but within that of the party being examined. Such answers are not evidence at all insofar as the individual being questioned is
concerned; they are hearsay, but they are the evidence of the party being examined, the corporation.
Both R. v. Judge of the General Sessions of the Peace for the County of York, Ex p. Corning Glass Works of Canada Ltd. (1971), 3 C.C.C. (2d) 204 (Ont. C.A.), and R. v. N.M. Paterson and Sons Ltd., [1980] 2 S.C.R. 679, were con cerned with the compellability of corporate offi cers to testify at the trials of their corporations, not with officers being examined for discovery. In the former, Arnup IA., for the Ontario Court of Appeal, contrasted the position of an officer called as a witness at trial and one being examined for discovery on behalf of his company, at pages 208-209.
In my view, there are fundamental differences between evi dence given on examination for discovery of a person produced by a corporation for that purpose and evidence given at trial by a witness who is an officer or employee of that corporation. On discovery, the witness literally speaks for the corporation. He has been described, as long ago as 1902, as the "mouthpiece" of the corporation: Morrison v. Grand Trunk R. Co. (1902), 5 O.L.R. 38, 2 C.R.C. 398. The term was adopted, with reference to a servant of the corporation, by Roach, J., in Fisher v. Pain et al., [1938] O.W.N. 74 at p. 76, [1938] 2 D.L.R. 753n. As pointed out by Grant, J., if such a witness does not know the answer to a relevant question, he must inform himself from others employed by the corporation or from its records. Con versely, he may be examined only as to matters coming to his knowledge as an officer of the corporation. Knowledge which he has acquired otherwise than as such officer cannot be explored: Fisher v. Pain, supra.
At the trial, a witness subpoenaed to give evidence, who happens to be a servant, officer or even president and control ling shareholder of a corporate accused, is not called upon to speak "for" the corporation. He is not its "mouthpiece". He is required to testify as to all relevant facts within his knowledge, whether those facts were acquired by him during his employ ment or term of office or were acquired in circumstances completely unrelated to the corporation. He is in no different position from a witness who had been in complete charge of the corporation's affairs for many years, but has retired before the charge against it was laid. Both must tell what they know, so far as it is relevant and admissible. Both are entitled to all the protection that is available to any witness, and in particular, the protection against self-incrimination found in both the Canada Evidence Act, R.S.C. 1952, c. 307, and the Ontario Evidence Act, R.S.O. 1960, c. 125.
At trial the corporation is not a witness. It is not being "self-incriminated" because one of its managers is giving damaging evidence in the witness-box.
In my view, cases decided on the obligation of a corporation to produce documents which might tend to incriminate it are also distinguishable. The production to be made is that of the corporation and not that of its officer who swears the affidavit on production. Here, too, such officer is merely the "mouth- piece", the spokesman of the written words, on behalf of and as the corporation.
In R. v. Paterson, at page 691, Chouinard J., delivering the judgment of the Supreme Court of Canada, said:
Finally, I believe that Arnup J.A. in Corning Glass, supra, has aptly distinguished evidence given on an examination for discovery by a person produced by a corporation and evidence given at trial by an employee or officer of that corporation. On discovery, such an employee or officer is the corporation ....
While, strictly speaking, neither Arnup J.A., nor the Supreme Court were speaking to the present circumstances, I find their dicta most opposite.
As to the compellability of its officers to attend on the examination for discovery, the learned Trial Judge, at page 38, after considering the Corning Glass and Paterson decisions, concluded that:
... the only effect of refusing to order the officers of the corporation to appear for discovery in the present case would be to postpone the obtaining of their evidence until trial.
With respect, I cannot reconcile that conclusion with those judgments. I should have thought that they served to distinguish rather than confound the nature of testimony of an officer as a witness at his company's trial and that given as the corporate party's mouthpiece on discovery.
In my opinion, it is the corporation that is the witness when it is the party being examined for discovery. As such, it is entitled to claim whatever benefit the law provides it against being compelled to testify and, if under compulsion or otherwise testifying, against self-incrimination, vid. Klein v. Bell, [1955] S.C.R. 309, at page 315.
The conclusions of the learned Trial Judge, in the order dealt with in this appeal, were:
1. The appellant was a compellable witness by reason of sections 249 and 252 of the Customs Act and the Rules of Court.
2. The appellant was entitled to claim the right afforded by section 11 (c) of the Canadian Charter of Rights and Freedoms but that right had been duly abridged, as contemplated by section 1 of the Charter.
3. The appellant's common law privilege against self-incrimina tion in an action for a penalty or forfeiture had been abolished by section 5 of the Canada Evidence Act, R.S.C. 1970, c. E-10.
The first three grounds of appeal were stated by the appellant as follows:
1. the judgment appealed from requires the appellant to give evidence for the respondent and, by virtue of section 4 of the Canada Evidence Act, the appellant is not competent—and is, therefore, not compellable—to give evidence in the action for the respondent.
2. the judgment appealed from requires the appellant to give evidence for the respondent and, by virtue of section 11(c) of the Canadian Charter of Rights and Freedoms, the appellant has a right not to be compelled to give evidence in the action, which right has not been limited by virtue of section 1 of the Charter;
3. the judgment appealed from requires the appellant to give discovery as between parties before trial and the appellant, as a defendant in the action, which is a penal action, has a right not to give discovery to the respondent before trial;
As to the first ground of appeal, the pertinent provisions of the Canada Evidence Act are section 2 and subsection 4(1).
2. This Part applies to all criminal proceedings, and to all civil proceedings and other matters whatever respecting which the Parliament of Canada has jurisdiction in this behalf.
4. (1) Every person charged with an offence, and, except as otherwise provided in this section, the wife or husband, as the case may be, of the person so charged, is a competent witness for the defence, whether the person so charged is charged solely or jointly with any other person.
The learned Trial Judge did not mention section 4 in her lengthy reasons. I assume this argument was not urged upon her.
At common law, a party to an action was not a competent witness at all. Vid. The Laws of Eng- land, Halsbury, First Edition, 1910, Butterworth & Co., London, paragraph 777, footnote (r). The competence of a party to be a witness depends on statute. Subsection 4(1) of the Canada Evidence Act, which by section 2 applies to the present proceeding, makes a person charged with an
offence a competent witness for the defence. The effect of the order in issue is to compel the person charged to be a witness for the plaintiff. The person charged with an offence is not a competent witness, except for the defence, and is, therefore, not a compellable witness for the plaintiff in a civil proceeding any more than, in a criminal proceed ing, that person would be a compellable witness for the prosecution.
All of that is, of course, subject to any statutory provisions to the contrary. It will be convenient to deal with those later, as the same provisions are relied on as excluding the application of paragraph 11(c) of the Charter [Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.)].
The Charter provides:
11. Any person charged with an offence has the right
(c) not to be compelled to be a witness in proceedings against that person in respect of the offence;
1. The Canadian Charter of Rights and Freedoms guaran tees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
The learned Trial Judge found, at page 34, that:
... paragraph 11(c) applies to the proceedings in the Federal Court, at least insofar as the "deemed forfeiture" is concerned.
I have already indicated my disagreement with the conclusion that the proceedings are concerned with subject matter other than the deemed forfeiture. Subject to that, I agree with the conclusion of the learned Trial Judge and her reasons therefore. She made one observation, at page 33, which merits repetition by way of emphasis.
I cannot accept that the Crown's right to elect which procedure it will follow should determine the defendant's constitutional rights.
Nor can I.
The question now to be dealt with is whether the constitutional right afforded the appellant by para graph 11(c) has been limited at all by law. Only if that is the case does the inquiry move to consider whether such limitation is reasonable and whether it can be demonstrably justified in a free and democratic society. In my view, precisely the same inquiry will determine whether subsection 4(1) of the Canada Evidence Act has been made inappli cable so as to render the appellant a competent and, hence, compellable witness in the proceeding.
The learned Trial Judge, at page 35, held:
In the first place the limit on the right not to be compelled to be a witness is clearly "prescribed by law": section 252 of the Customs Act read together with the Federal Court Act and Rules, particularly Rule 465.
The balance of her reasons, as they relate to the question at all, dealt with the other inquiries required by section 1 of the Charter.
The relevant provisions of the Customs Act are subsection 249(1) and section 252. The headnote "Procedure" appears immediately before section 249 and applies as well to section 252.
PROCEDURE
249. (1) All penalties and forfeitures incurred under this Act, or any other law relating to the customs or to trade or navigation, may, in addition to any other remedy provided by this Act or by law, and even if it is provided that the offender shall be or become liable to any such penalty or forfeiture upon summary conviction, be prosecuted, sued for and recovered with full costs of suit, in the Federal Court of Canada, or in any superior court having jurisdiction in that province of Canada where the cause of prosecution arises, or wherein the defendant is served with process.
252. Every prosecution or suit in the Federal Court of Canada, or in any superior court or court of competent jurisdic tion, for the recovery or enforcement of any penalty or forfeit ure imposed by this Act, or by any other law relating to the customs or to trade or navigation, may be commenced, prose cuted and proceeded with in accordance with any rules of practice, general or special, established by the court for Crown suits in revenue matters, or in accordance with the usual practice and procedure of the court in civil cases, in so far as such practice and procedure are applicable, and, whenever the
same are not applicable, then in accordance with the directions of the court or a judge.
I have already set out Rule 465(1)(b). I do not believe there are any other provisions of that lengthy Rule that require recitation for present purposes. Rule 465 has been made under the gen eral authority of subsection 46(1) of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10. None of the subjects specifically dealt with in para graphs 46(1)(a) to (i) inclusive are relevant to this inquiry.
46. (1) Subject to the approval of the Governor in Council and subject also to subsection (4), the judges of the Court may, from time to time, make general rules and orders not inconsist ent with this or any other Act of the Parliament of Canada,
(a) for regulating the practice and procedure in the Trial Division and in the Court of Appeal, including, without restricting the generality of the foregoing,
(2) Rules and orders made under this section may extend to matters arising out of or in the course of proceedings under any Act involving practice and procedure or otherwise, for which no provision is made by that or any other Act but for which it is found necessary to provide in order to ensure the proper working of that Act and the better attainment of its objects.
I have set out subsection 46(2) only because it seems to complement the provision of section 252 of the Customs Act that an action for a forfeiture may be conducted under the generally applicable Rules of Court.
I find nothing in either subsection 249(1) or section 252 of the Customs Act that expressly limits the constitutionally guaranteed right of paragraph 11(c) of the Charter or expressly, or by necessary implication, limits the application of subsection 4(1) of the Canada Evidence Act to a defendant in an action brought in the Federal Court under the authority of subsection 249(1). The only way in which such a limitation can be found is if Rule 465 must be construed as imposing it. The Rule is undoubtedly law.
I do not think that, on a proper construction, Rule 465 purports either to render an incompetent witness competent nor a non-compellable witness
compellable. There is no point in entering into a lengthy discourse on this subject because, if the Rule purported to achieve either result, it would, to that extent, be ultra vires the rule making authority of subsection 46(1) of the Federal Court Act which, by its very terms, precludes a valid rule being inconsistent with subsection 4(1) of the Canada Evidence Act. Parliament's intention to empower its delegate to limit a constitutionally guaranteed right by making rules regulating prac tice and procedure would, at the very least, have to be explicitly stated before I should be prepared even to consider giving such a rule that effect.
In my opinion, the learned Trial Judge erred in concluding that the Customs Act and Rules of Court limit the appellant's constitutional right, under paragraph 11(c) of the Charter, not to be compelled to be a witness in proceedings against it in respect of offences with which it is charged. I am also of the opinion that the appellant is not a competent witness in these proceedings by reason of subsection 4(1) of the Canada Evidence Act and is not, therefore, a compellable witness on its examination for discovery.
It is, accordingly, not necessary to deal with the third ground of appeal and I see no useful purpose to be served by doing so. The appellant is not a compellable witness; it would be idle to speculate on its privileges against self-incrimination as if it were.
It is likewise unnecessary to deal with the fourth ground of appeal but I think it desirable to do so briefly. It is entirely unrelated to the other grounds and turns on the fact that neither of the individu als named in the order reside in Canada. The appellant stated it as follows:
... even if the appellant were subject to being compelled to submit to examination for discovery, the judgment appealed from is a delegation to the examiner of the power to fix the "place" for the examination, which power must be exercised by the Court in a case where the person to be questioned is out of the jurisdiction as the named officers are.
Rule 465(12) provides: Rule 465. .. .
(12) Where an individual to be questioned on an examination for discovery is temporarily or permanently out of the jurisdic tion, it may be ordered by the Court, or the parties may agree, that the examination for discovery be at such place, and take place in such manner, as may be deemed just and convenient.
In my opinion, it is clear that, in the circum stances, it was not open to the learned Trial Judge, in effect, to delegate to the examiner, who is empowered by Rule 465(7) to issue an appoint ment, the responsibility of selecting the place at which the examination was to be conducted. The Court is not obliged to settle the details of the time and place of the examination but, if the individual to be examined is not in Canada, the Court must at least, absent agreement, direct whether the examination is to be conducted in Canada and, if not, designate the jurisdiction where it is to proceed.
I would allow this appeal with costs, set aside the order of the Trial Division recited above and, pursuant to paragraph 52(b) of the Federal Court Act, I would dismiss the application to the Trial Division with costs.
HEALD J.: I agree. STONE J.: I agree.
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