A-365-91
Luke Francœur, Cana-Vid Holdings Inc., Cana-
Vid Leasing Ltd. and First Choice Video, Inc.
(Appellants)
v.
Her Majesty the Queen (Respondent)
INDEXED AS: FRANCŒUR V. CANADA (CA.)
Court of Appeal, Pratte, MacGuigan and Desjardins
JJ.A.—Vancouver, January 7; Ottawa, February 24,
1992.
Practice — Pleadings — Amendments — Statement of claim
alleging negligent misrepresentations and negligent exercise of
powers under Customs Act — Motions Judge denying leave to
amend statement of claim to: (1) clarify pleading (2) particu
larize allegation of negligence (3) allege Charter violation (4)
allege abuse of power under Customs Act in making seizure
and (5) allege invalid search warrant, as creating whole new
cause of action, barred by provincial statute of limitations —
Appeal allowed in part — Motions Judge's reasons inapplica
ble to (1), (2) — Under RR. 420(1), 424 and 527, amendment
adding new cause of action after expiry of limitation period
must be allowed "if it seems just to do so" and "if new cause
of action arises out of same facts or substantially same facts as
a cause of action in respect of which relief has already been
claimed in the action by the party applying for leave to make
the amendment" — General rule to allow amendment where
necessary to determine real questions in controversy between
parties, provided not resulting in injustice to other party not
compensable by costs — Amendments alleging Charter viola
tion and abuse of power allowed as raising new cause of
action, but arising from same facts — Amendment (S) properly
refused as raising new issue not alluded to in statement of
claim.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II,
No. 44], s. 24.
Constitution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.) [R.S.C., 1985, Appendix Il, No. 44],
s. 52.
Customs Act, R.S.C. 1970, c. C-40.
Federal Court Rules, C.R.C., c. 663, RR. 420(1), 424,
427.
Limitation Act, R.S.B.C. 1979, c. 236.
CASES JUDICIALLY CONSIDERED
REVERSED:
Francœur v. Canada, T-2153-87, Cullen J., order dated
16/4/91, not yet reported.
REFERRED TO:
Ketteman v. Hansel Properties Ltd., [1987] 1 A.C. 189
(H.L.); Baker (G.L) Ltd. v. Medway Building & Supplies
Ltd., [1958] 1 W.L.R. 1216 (Ch.D.); Clarapede & Co. v.
Commercial Union Association (1883), 32 W.R. 262
(C.A.); Prete v. Ontario (1990), 47 C.R.R. 307 (Ont.
H.C.).
COUNSEL:
Carey Linde and Christopher Harvey for appel
lants.
John J. Reynolds for respondent.
SOLICITORS:
Law Office of Carey Linde, Vancouver, for
appellants.
Deputy Attorney General of Canada for respon
dent.
The following are the reasons for judgment ren
dered in English by
PRATrE J.A.: This is an appeal from an order of the
Trial Division [T-2153-87, Cullen J., order dated
16/4/91, not yet reported] dismissing an application
made by the appellants, plaintiffs in the Court below,
for leave to amend their statement of claim.
The appellant, Luke Francœur, is a businessman
who, with his two Canadian companies, the appel
lants Cana-Vid Holdings Inc. and Cana-Vid Leasing
Ltd., was involved in the business of renting to the
public, through a network of franchisees, videotaped
movies imported from the United States and leased
from another appellant, First Choice Video, Inc., an
American company also controlled by Francœur.
In their statement of claim, filed on October 15,
1987, the appellants allege that they engaged in that
business on the faith of representations made to Fran-
coeur by an official of the Department of National
Revenue, in October and November 1982, to the
effect that custom duties payable on the importation
to Canada of leased videotapes could be calculated
on the "residual value" of the tapes rather than on
their fair market value. The appellants say that, on the
basis of those representations, they entered into a
number of business arrangements and, from February
1983 until April 1984, imported leased videotaped
movies from the Untied States in respect of which
they paid custom duties on the basis of their "residual
value" rather than their fair market value. The appel
lants acknowledge that the representations made to
Francoeur by the official of the Department of
National Revenue were false since, under the Cus
toms Act [R.S.C. 1970, c. C-40], the duties payable
on the importation of the leased tapes had to be cal
culated on the basis of their fair market value. They
add, however, that, as a consequence, Francoeur and
his companies were suspected of having violated the
Customs Act, that a search warrant was issued in
early May 1984 and that a search of the premises
occupied by Cana-Vid Holdings Inc. was carried out
as a result of which 200 new videotaped movies were
seized. The statement of claim further alleges that, on
August 31, 1984, more than 8,000 taped movies were
seized in the hands of the appellant's franchisees pur
suant to the Customs Act, that another seizure of
1,000 movies took place on June 5, 1985, and,
finally, that, as a result of all those seizures, the
appellants suffered serious financial damage for
which they claim compensation from the respondent
on the following grounds:
(a) that damage is the direct result of the mis -repre
sentations negligently made to Francœur by the
official of the Department of National Revenue;
and
(b) that damage, in any event, was the direct result
of the negligent exercise by officials of the Depart
ment of National Revenue of their powers under
the Customs Act since the seizures that were
effected under their direction were unjustified,
unwarranted and, to their knowledge, certain to
cause great harm to the appellants.
On February 28, 1991, the appellants filed a
motion for leave to amend the statement of claim that
they had filed on October 15, 1987, and that they had
already amended once on January 29, 1988. The new
amendments that they wished to make could be clas
sified in five groups:
(1) Amendments of a "housekeeping" nature made
for the sole purpose of clarifying the statement of
claim; such were the proposed amendments to
paragraphs 27, 35, 43 and 49;
(2) Amendments made for the purpose of particu
larizing the allegation of negligence previously
alleged in a general manner; such was the purpose
of the new paragraphs 56 to 62 that the appellants
wished to add;
(3) Amendments alleging violation of the Cana-
dian Charter of Rights and Freedoms [being Part I
of the Constitution Act, 1982, Schedule B, Canada
Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985 Appen
dix II, No. 44]] and seeking relief both under sec
tions 24 and 52 [Constitution Act, 1982, Schedule
B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C.,
1985, Appendix II, No. 44]]; the proposed new
paragraphs 54 and 55 were amendments of that
kind;
(4) Amendments made for the purpose of alleging
that, in seizing the goods of the appellants, the offi
cials of the Department of National Revenue had
not only, as previously alleged, been negligent but
had also abused their powers under the Customs
Act; the proposed amendments to paragraphs 37,
41, 45, 46 and 48 fell into that category;
(5) An amendment alleging that the Customs offi
cial who swore the information that led to the issue
of a search warrant in May 1984 failed to disclose
reasonable and probable cause and to make a full
and fair disclosure of all relevant facts thus render
ing the search warrant invalid and the seizure ille
gal; that was the purpose of the proposed new par
agraph 34.
The appellants' motion was dismissed for reasons
that the Motions Judge expressed in the following
terms [at pages 1-2 of reasons]:
In my view this series of "amendments" if allowed would cre
ate a whole new action, now barred by the statute of limitations
of British Columbia. The action has clearly been found as [sic]
negligence whereas the plaintiff[s] would now open up and add
on an action for "abusive conduct" on the part of the defend
ant's servants, and a violation of the plaintiffs' rights under
section 8 of the Charter. It is quite removed from the stance
taken in the original and later amended statement of claim.
I am of a different opinion.
Clearly, the "housekeeping" amendments to
paragraphs 27, 35, 43 and 49 should, as counsel for
the respondent conceded at the hearing, have been
allowed. And I would treat in the same manner the
second group of amendments to which I previously
referred, namely the proposed new paragraphs 56 to
62. The reasons given by the Motions Judge in sup
port of his decision have no application to those two
classes of amendments.
The other proposed amendments are of a different
kind. They may, as was said by the Motions Judge,
add new causes of action after the expiry of the appli
cable limitation period. However, contrary to what
the Motions Judge seems to have assumed, that was
not a sufficient reason to disallow them. Under Rules
420(1), 424 and 427 [Federal Court Rules, C.R.C., c.
663], an amendment adding a new cause of action
after the expiry of a period of limitation must never
theless be allowed "if it seems just to do so" and "if
the new cause of action arises out of the same facts or
substantially the same facts as a cause of action in
respect of which relief has already been claimed in
the action by the party applying for leave to make the
amendment."
It is impossible to enumerate all the factors that a
judge must take into consideration in determining
whether it is just, in a given case, to authorize an
amendment) However, the general rule is that an
amendment should be allowed "for the purpose of
determining the real questions in controversy
I Ketteman v. Hansel Properties Ltd., [1987] A.C. 189
(H.L.), at p. 220, per Lord Griffiths.
between the parties" 2 provided that the allowance
would not result in an injustice to the other party not
capable of being compensated by an award of costs. 3
Counsel for the respondent did not argue that the
allowance of the amendments would cause Her Maj
esty any prejudice other than to possibly deprive Her
of a defence under the Limitation Act of British
Columbia [R.S.B.C. 1979, c. 236]. The only question
to be considered, therefore, with respect to the last
three groups of proposed amendments, is whether the
new causes of action sought to be added to the state
ment of claim arise "out of the same facts or substan
tially the same facts" as the causes of action that are
already pleaded.
The amendments of the third category alleging
violation of the Charter certainly raise a new cause of
action against which the respondent might perhaps
invoke a defence based on the statute of limitations . 4
However, it is clear that this new cause of action
arises from the same facts as those that have already
been alleged. I do not see any reason not to allow
those amendments.
The amendments of the fourth group alleging
"abuse" of power are also said to add a new cause of
action because allegations of that nature imply that
the respondent's officials acted illegally with the
intent of causing harm. However, as the statement of
claim already alleges that the respondent's officials
acted with full knowledge of the serious harm that the
appellants were likely to suffer as a result of their
action, these new allegations appear to be little more
than a new characterization of previously alleged
facts. For that reason, those amendments should have
been allowed.
The Motions Judge rightly refused to authorize the
addition of a new paragraph 34 alleging that the
search warrant issued in early May 1984 was irregu-
2 Baker (G.L.) Ltd. v. Medway Building and Supplies Ltd.,
[1958] 1 W.L.R. 1216 (Ch.D.), at p. 1231, per Jenkins L.J.
3 Clarapede & Co. v. Commercial Union Association
(1883), 32 W.R. 262 (C.A.), at p. 263, per Brett M.R.
4 Prete v. Ontario (1990), 47 C.R.R. 307 (Ont. H.C.).
laxly obtained. This new allegation raises an entirely
new issue which was not even alluded to in the state
ment of claim.
As a result, I would allow the appeal in part, set
aside the order of the Trial Division and authorize the
appellants to make the proposed amendments except,
however, the amendment adding a new paragraph 34.
I would give the appellants their costs of the appeal
but would order them to pay the respondent Her costs
of the motion in the Trial Division as well as all the
costs already incurred that will be rendered unneces
sary by the amendments.
MACGUIGAN J.A.: I agree.
DESJARDINS J.A.: I concur.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.