Italian Centre Shop South Ltd. v. Moreira, 2011 ABQB 41

Court of Queen ’ s Bench of Alberta Citation: Italian Centre Shop South Ltd. v. Moreira, 2011 ABQB 41 Date: 20110124 Docket: 1003 11360 Registry: Edmonton Between: Italian Centre Shop South Ltd. Plaintiff - and - Marcia Moreira Defendant _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.M. Ross _______________________________________________________ 1. Information [ 1 ] The Plaintiff applies for

summary judgment and the Defendant applies for a stay of proceedings of this civil action pending the resolution of criminal proceedings arising from the same facts. I have adjourned the

summary judgment application pending my determination of the stay application. 2. Facts

[ 2 ] The Plaintiff, Italian Centre Shop South Ltd., sued the Defendant, Marcia Moreira, for allegedly stealing $127,638.72 from the Plaintiff over the course of a number of years of employment. Further investigations have indicated that the amount which the Plaintiff believes was wrongfully acquired by the Defendant between November 2006 and June 2010 is $173,597.39. The Plaintiff sought, together with its application for

summary judgment, leave to amend the Statement of Claim to increase the amount claimed. The application to amend was granted with the consent of the Defendant. [ 3 ] The Statement of Claim was filed on July 6, 2010. On October 12, 2010 the Defendant was charged criminally. The Information alleges that between November 1, 2006 and June 28, 2010, she defrauded the “Italian Center [sic] Shop Ltd.” of more than $5000. It is common ground that the criminal and civil proceedings arise out of the same facts. 1.

The Plaintiff’s evidence against the Defendant [ 4 ] The affidavit of Eric Klein, a chartered accountant employed by the Plaintiff, indicates the nature of the evidence of the alleged theft. The affidavit details suspicious circumstances and activities associated with the Defendant, such as an abnormally high number of “cancelled items” (items entered on the store system and later deleted), logging on with other employee’s signons (which the Defendant as a supervisor had access to) and turning off the till screen. Mr. Klein monitored the Defendant’s activities on June 28, 2010.

His affidavit describes “irregular” transactions that the Defendant was observed to engage in on that day. She would “suspend” a transaction while a customer was present, collect the payment from the customer and later cancel the transaction. She would account for the payment received by recording false “cash back” transactions. She would then be able to remove cash from the till in the “cash back” amounts. [ 5 ] Mr. Klein deposes that he confronted the Defendant with some of the transactions on June 29 th . He alleges that she got flustered, and then made an “admission of guilt” as follows.

She stated that she took money “to cover for the other cashiers mistakes.” He said that didn’t make sense, and in any event “was still stealing.” She asked if she was fired or if he wanted her to quit. He asked her “how long have you been stealing for ‘months or years?’” She responded “years.” He asked “if we were talking ‘hundreds or thousands?’” She said “thousands.” [ 6 ] Mr. Klein goes on to depose that he performed a search for all “stand alone cash back transactions” from October 2006 to June 2010.

He eliminated all such transactions that “look” like regular transactions, in that they were for rounded amounts, such as $40. He isolated all “suspicious” transactions, for non-rounded amounts. From June 2010 to November 2006 these totaled $177,447.91. He cross-referenced these for days the Defendant was working and came up with $173,597.39, or 97.8% of all suspicious transactions took place on days that the Defendant worked. He deposes that he believes “to a high degree of probability” that the Defendant stole this amount in the aggregate. 2.

The Defendant’s response [ 7 ] The Defendant filed a Statement of Defence on August 19, 2010. It simply denies all material allegations in the Statement of Claim and provides no further details. [ 8 ] The Defendant also filed an affidavit in support of her stay application. It does not deal with the substance of the Plaintiff’s allegations. She deposes to the criminal charge against her, and states that the allegations of fact in the fraud charge are exactly the same as those in the civil action.

Her counsel has informed her “that the material provided to him as part of the Disclosure package is mostly the same material as filed by the Plaintiff in support of its Application for

Summary Judgment.” She deposes that any evidence she would give in the civil action in response to the

summary judgment application or in examination for discovery would be prejudicial to her ability to make a full and complete defence to the criminal charge: “In the civil action I cannot under oath explain the manner in which I handled the Plaintiff’s money without it constituting evidences [sic] that I would not be required to give in a Criminal trial.” She also states that a stay would not prejudice the Plaintiff as she has “no plans for any major changes in my personal or financial circumstances that would affect the Plaintiff’s case.” [ 9 ] The Defendant was not cross-examined on her affidavit.

Counsel for the Defendant indicated during the hearing that the Defendant lives in Edmonton and owns a house here. She would be prepared to have a lis pendens filed against the house so that it could not be sold pending the civil action. The Plaintiff provided no evidence of specific prejudice to it that would result from the stay.

3. Law and Analysis 1. Test for stay of civil proceeding due to concurrent criminal proceeding [10] The Alberta authority for the test of when a stay of a civil proceeding is justified due to a concurrent criminal proceeding is set out in Saccomanno v. Swanson (1987), (AB KB), 34 D.L.R. (4th) 462, 49 Alta. L.R. 327 (Alta. Q.B.)(“Saccomanno” cited to D.L.R.). [11] In Saccomanno, Berger J. (as he then was) held that an accused is not entitled to a stay of proceedings in a concurrent civilproceeding arising from the same facts, but that the Court has discretion to grant a stay in exceptional circumstances.

The applicant“must show some specific or particular way in which he will be prejudiced in the conduct of the criminal trial”: at 466, citing Stickney v.Trusz (1973), (ON SC), 2 O.R. (2d) 469, [1973] O.J. No. 2279 (Ont. H.C.J.), aff’d (1974), (ONSCDC), 3 O.R. (2d) 538 at 538, 46 D.L.R. (3d) 80 at 81 (Ont. Div. Ct.), aff’d (1974), 3 O.R. (2d) 538 at 539, 46 D.L.R. (3d) 80 at 82(Ont. C.A.), leave to appeal to S.C.C. denied [1974] S.C.R. xii (S.C.C.

Oct 23, 1974). [12] The applicant in Saccomanno was unable to point to any specific prejudice, other than that he would be compelled to answerquestions at examination for discovery. Berger J. dealt with this issue in the context of a second application, in which the applicantsought an order that he should not be compelled to answer questions on discovery.

He observed that “substantive responses given by thedefendant at examination for discovery cannot, on a plain reading of s. 5(2) of the Canada Evidence Act and of s. 13 of the Charter, berelied upon by the Crown to incriminate the accused in subsequent criminal proceedings” (at 468). The applicant had argued that theanswers given on discovery might be relied upon to point the way to other evidence that may assist the prosecution. In response to thisargument, Berger J. held, at 469: The examination for discovery, however, has yet to take place. The concern of the applicant is speculative and premature.

In my opinion,the discretion conferred upon the court by the Judicature Act and by the Rules of Court allow for appropriate directions to be made by achambers judge who is satisfied that the answers to certain questions will point to derivative evidence and will assist the prosecution.These directions may include, but are not restricted to: (

a) An order prohibiting any person present in the examination room from disclosing the questions and answers; (

b) In appropriate cases, excusing the defendant-accused from answering a particular question until such times as the criminalproceedings are concluded. [13] The defendant was therefore ordered to answer questions at examination for discovery subject to objections to specificquestions, which should be submitted to a chambers judge for determination and appropriate direction. [14] Canada (Attorney General) v. Courchene (2006), 34 C.P.C. (6th) 292, 2006 CarswellMan 293 (Man. Q.B.) (“Courchene”cited to C.P.C.) addressed a stay application dealing with a response to an application for

summary judgment. The applicant argued thatnot granting the stay would prejudice his right to a fair criminal trial because he would be required under the Manitoba Rules of Court toproduce an affidavit in response to the plaintiff’s application for

summary judgment. The Court noted that the applicant had alreadydisclosed his defence to some extent by filing a statement of defence and he did not seek a stay prior to doing so. With regard to thedisclosure by way of compelled affidavit, the Court noted that this evidence could not be used in the criminal trial under s. 13 of theCharter, on the basis that the evidence was compelled and because “the protection of s. 13 applies whether the evidence is givenvoluntarily or by compulsion”: at para. 11, citing R. v.

Dubois (SCC), [1985] 2 S.C.R. 350. [15] The latter statement in Courchene regarding the application of s. 13 of the Charter is, in my view, not consistent with R. v.Henry, 2005 SCC 76, [2005] 3 S.C.R. 609 (“Henry”). In Henry, the appellants voluntarily testified as witnesses at their first trial formurder. Their convictions for murder were set aside on appeal. At the re-trial on those same charges, the appellants voluntarily testifiedagain, and gave a different account of the incident.

The Supreme Court held that the Crown was permitted to cross-examine theappellants at their second trial using the contradictory testimony from their first trial. The Court concluded that the appellants’ s. 13

rights were not violated by the Crown’s use of their prior volunteered testimony in cross-examination as they freely testified in bothproceedings and were not in need of protection from being indirectly compelled to incriminate themselves. [16] Regarding the importance of compulsion in the determining the application of s. 13, the Court stated at para. 22: “Theconsistent theme in the s. 13 jurisprudence is that “the purpose of s. 13. is to protect individuals from being indirectly compelled toincriminate themselves.” The Court also reiterated its earlier explanation of the purpose of s. 13 in R. v. Noël, 2002 SCC 67, [2002] 3S.C.R. 433 at para. 21:

Section 13 reflects a long-standing form of statutory protection against compulsory self-incrimination in Canadian law, and is bestunderstood by reference to s. 5 of the Canada Evidence Act.

Like the statutory protection, the constitutional one represents what FishJ.A. called a quid pro quo: when a witness who is compelled to give evidence in a court proceeding is exposed to the risk ofself-incrimination, the state offers protection against the subsequent use of that evidence against the witness in exchange for his or herfull and frank testimony. [Emphasis added in Henry.] [17] Reflecting on the implications of Henry, authors David Paciocco and Lee Stuesser in The Law of Evidence, 5th ed. (Toronto:IrwinLaw, 2008) at 294, conclude that “...section 13 protects compelled testimony and nothing more.” [18] The Court in R. v.

Nedelcu (2007), (ON SC), 154 C.R.R. (2d) 171, 2007 CarswellOnt 1851 at para. 12 (WL) (Ont. S.C.J.) interpreted Henry as requiring that, in order to engage the protections under s. 13 of the Charter, testimony must havebeen statutorily compelled. The court further concluded that, even though discovery evidence was statutorily compelled, because it wascompelled in a civil context, it did not engage the purpose of s. 13.

Therefore, an accused who gave evidence at trial could be cross-examined using contradictory evidence given at examinations for discovery. [19] In most cases, courts have concluded that evidence given at examinations for discovery has the protection of s. 13, as BergerJ. did in Saccomanno (see Sopinka, Lederman, and Bryant, The Law of Evidence in Canada, 3d. ed. (Markham: LexisNexis Canada,2009) at 507.). Such comments in the context of stay applications, however, would be obiter dicta only.

As Berger J. also noted, it ispremature to rely on the protection afforded by s. 13 before any attempt is made to use the impugned evidence to incriminate theaccused: Saccomanno, at 469, citing R. v. Dubois, (SCC), [1985] 2 S.C.R. 350 at para. 22: “As

section 13 guaranteesthe right of a person against self-incrimination, rather than the rights of a witness giving testimony, it inures to an individual only at themoment an attempt is made to use previous testimony to incriminate its author.” [20] When it comes to evidence given on a

summary judgment application, there is an additional issue. In Alberta, there is norequirement in the Alberta Rules of Court for the party opposing a motion for

summary judgment to file an affidavit. Thus there is nostatutory compulsion to testify. There may, however, be a strategic or common law “compulsion”, in that a party responding to asummary judgment application cannot rely on pleadings, but must provide affidavit evidence in support of an arguable claim or defence:Lameman v. A.G. (Canada) #1, 2008 SCC 14, [2008] 1 S.C.R. 372 at para. 11. 2. Are there exceptional circumstances present in this case? [21] There are a number of distinctions between Saccomanno and Courchene and the present case.

As compared withSaccomanno, the Defendant here is able to point to a form of potential prejudice in addition to questioning on examination for discovery,because the pending

summary judgment application requires her (strategically, not as a matter of statutory compulsion) to file anaffidavit in response. [22] As compared with Courchene, the Defendant has not disclosed her defence in her Statement of Defence, which merely deniesthe allegations in the Statement of Claim. The Defendant is also not dilatory in applying for the stay in this case. The Defendant couldnot have applied for a stay before filing the Statement of Defence, because the criminal proceeding had not yet been commenced. [23] Further, as discussed above, as there is no statutory requirement to file an affidavit in response to the

summary judgmentapplication, it is not clear that s. 13 of the Charter would prohibit the use in criminal proceedings of the Defendant’s affidavit evidence,or any cross-examination on the affidavit . This would appear to depend on whether a strategic compulsion to respond to the application

means that the evidence is “compelled testimony.” That is an issue that has not yet been determined by the case law, and cannot be authoritatively determined in this proceeding. It is also not clear that the protection of s. 5 of the Canada Evidence Act would have any broader application than s. 13 of the Charter , and, again, this cannot be authoritatively determined in this proceeding. [ 24 ] Apart from direct use of the evidence at a criminal trial, the applicant has also argued that evidence given on the

summary judgment application or on examination for discovery (or questioning, as it is now called: Rule 5.17) might be indirectly of assistance to the prosecution. This is a real concern in this case because of the nature of the case against the Defendant. The disclosure in the criminal case is largely the same as the evidence provided by the Plaintiff in the

summary judgment application. That evidence indicates that apart from an alleged “admission” by the Defendant, which is not admitted by the defence and is also somewhat vague and equivocal, the case is very largely based on circumstantial evidence. A conviction in such a case requires that the finder of fact “be satisfied beyond a reasonable doubt that the only rational inference that can be drawn from the circumstantial evidence is that the accused is guilty”: R. v. Griffin , 2009 SCC 28 , [2009] 2 S.C.R. 42 at para. 33 .

As she attests, to defend the civil case, the Defendant must “explain the manner in which [she] handled the Plaintiff’s money.” Access to this information in advance of the criminal trial could provide a distinct advantage to the prosecution. [ 25 ] Questioning under “Part 5: Disclosure of Information” of the Rules of Court has not yet been scheduled.

When it is, Rule 5.33 provides that information or records provided through this process “must be treated as confidential and may only be used by the recipient of the information or record for the purpose of carrying on the action in which the information or record was provided or disclosed.” In addition to this general provision as to confidentiality, an application could be brought, as indicated by Berger J. in Saccomanno , to seek additional directions to ensure that the information is kept confidential.

In addition, the Defendant may object to answering particular questions until the criminal proceeding is concluded, and a ruling on such objections may be obtained on application. But, these alternative measures are not available with respect to evidence provided in response to the

summary judgment application, which is subject to the open court principle: Sierra Club of Canada v. Canada (Minister of Finance) , 2002 SCC 41 , [2002] 2 S.C.R. 522 . [ 26 ] I have concluded that there are exceptional circumstances in this case that justify a stay of the Plaintiff’s

summary judgment application. The circumstances are such that the Defendant has satisfied me that there is a likelihood that she will be prejudiced in the conduct of the criminal trial if she is required to respond to the

summary judgment application . However, in my view, the circumstances do not at this time require a stay of the civil action as a whole. Alternative measures, which may, if necessary, be detailed in later applications, can be taken to ensure that the Defendant is not prejudiced in the criminal trial by her disclosure of information under

Part 5 of the Rules of Court . 4. Conclusion [ 27 ] In conclusion, the Defendant’s application for a stay of proceedings is allowed only to the extent that the Plaintiff’s application for

summary judgment is stayed until the criminal proceeding against the Defendant has been concluded. The Plaintiff may proceed with the civil action in other respects, in particular under

Part 5: Disclosure of Information of the Rules of Court , subject to a potential additional application or applications for directions, including (but not limited to) directions to ensure that the information is kept confidential, and directions excusing the Defendant from answering particular questions until the criminal proceeding is concluded. Heard on the 25 th day of November, 2010. Dated at the City of Edmonton, Alberta this 21 st day of January, 2011.

J.M. Ross J.C.Q.B.A. Appearances: Mr. Randolph Langley Henning Byrne for the Plaintiff Mr. Robert D. Gillespie for the Defendant