2011 QCCA 1890, 2011 QCCA 1890

Unofficial English Translation Duchesne c. Société d'habitation du Québec 2011 QCCA 1890 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF QUEBEC No.: 200-09-007125-104 (155-02-000042-091) DATE: October 11, 2011 CORAM: THE HONOURABLE JULIE DUTIL, J.A. LORNE GIROUX, J.A. JEAN BOUCHARD, J.A. NORMAND DUCHESNE APPELLANT – defendant v. SOCIÉTÉ D'HABITATION DU QUÉBEC RESPONDENT – plaintiff and 9028-6436 QUÉBEC INC.

IMPLEADED PARTY – garnishee JUDGMENT [ 1 ] The appellant appeals from a judgment of the Court of Quebec, Civil Division, District of Roberval (the Honourable Judge Pierre Lortie) rendered on July 19, 2010, [1] which dismissed his motion in opposition to the garnishment of his wages by the respondent in the hands of the impleaded party.

The Facts [ 2 ] On January 17, 1996, the appellant pleaded guilty to one count of fraud. [2] On January 29 of that same year, the Court of Quebec sentenced him to the following: - Discontinuous prison for 90 days; - Two-year probation order, including the following conditions: • Obligation to file proof with the registry of reimbursement of $38,702.99, an amount that was in an attorney's trust account at the time, the whole within thirty days of the judgment. • Provide proof that an additional amount of $41,297.11 was reimbursed to the plaintiff, the whole within 18 months of the judgment. [ 3 ] Two years later, on January 12, 1998, the appellant was charged with one count of breaching probation [3] for failure to reimburse the amount of $41,297.11 to the respondent in the time given to do so.

Once again, he pleaded guilty. On March 12, 1998, following this guilty plea on the offence of refusing to comply with the probation order of January 29, 1996, Simard J. stayed the appellant’s sentence, but ordered a two-year term of probation. The judge also imposed a $35 surcharge and gave the appellant one month to pay it. There is nothing to indicate that these elements of the appellant's sentence were not executed in the allotted time. [ 4 ] That same day, on March 12, 1998, the judge ordered the appellant to compensate the respondent pursuant to section 738(1)(

a) Cr. C. Here is the text of that order: [translation] WHEREAS the Court deems that, with respect to the offender, the circumstances justify a compensation order as set out in sections 738 and 739 of the Criminal Code . ACCORDINGLY, I order the offender to pay to the Société d'habitation du Québec, ... the amount of $41,297.11 in damages, within six

months, for the following reasons: Case 155-01-001791-946, fraud in excess of $1000. Any reimbursement will be made directly to the victim by filing a receipt with the registry of the Court of Quebec, Criminal and Penal Division. [ 5 ] This order was imposed on March 12, 1998.

It was only eleven years later, on July 10, 2009, that the respondent (the victim of the fraud committed by the appellant) made its presence known through counsel and requested that the appellant pay the amount of $41,297.11 given in the compensation order. [ 6 ] On December 9, 2009, following the breakdown of the resulting discussions and the appellant's refusal to pay, the respondent filed the compensation order with the registry of the Court of Quebec. Under subsection 741(1) Cr.

C. , this filing "is enforceable against the offender in the same manner as if it were a judgment rendered against the offender in that court in civil proceedings".

Also, the very next day, the respondent served a garnishee summons for the appellant's wages on both the appellant and the impleaded party, to which the appellant responded with a motion in opposition. [ 7 ] In support of his motion, the appellant argued that the respondent's right was prescribed or, alternatively, that the respondent obtaining a writ of execution over eleven years after the compensation order was issued is improper within the meaning of

article 54.1 C.C.P . Trial Judgment [ 8 ] With respect to the appellant's first ground, the judge found that the respondent's right was not prescribed because, in his view, prescription only began to run when the compensation order was filed with the registry of the Court of Quebec on December 9, 2009. Relying on Supreme Court of Canada case law, [4] the judge found that prior to the order being filed with the civil registry, it was considered part of the sentence.

Thus, the civil rules governing prescription did not then apply. [ 9 ] Because, in the judge's view, prescription did not run prior to the filing of the compensation order with the registry, the judge summarily concluded that there was no impropriety within the meaning of

article 54.1 C.C.P. Analysis [ 10 ] The relevant provisions of the Criminal Code , which address compensation orders, are: 738.

(1) Where an offender is convicted or discharged under

section 730 of an offence, the court imposing sentence on or discharging the offender may, on application of the Attorney General or on its own motion, in addition to any other measure imposed on the offender, order that the offender make compensation to another person as follows: (

a) in the case of damage to, or the loss or destruction of, the property of any person ― as a result ― of the commission of the offence or the arrest or attempted arrest of the offender, by paying to the person an amount not exceeding the replacement value of the property as of the date the order is imposed, less the value ― of any part of the property that is returned to that person as of the date ― it is returned, where the amount is readily ascertainable; ... 741.

(1) Where an amount that is ordered to be paid under

section 732.1, 738 , 739 or 742.3, is not paid without delay, the person to whom the amount was ordered to be paid may, by filing the order, enter as a judgment the amount ordered to be paid in any civil court in Canada that has jurisdiction to enter a judgment for that amount, and that judgment is enforceable against the offender in the same manner as if it were a judgment rendered against the offender in that court in civil proceedings. ... 741.2 A civil remedy for

an act or omission is not affected by reason only that an order for compensation under

section 738 or 739 has been made in respect of that act or omission. [ 11 ] While it true that the Supreme Court, in Zelensky [5] (on which the trial judge relied in part), stated that the power of judges in criminal matters to make compensation orders was part of the sentencing process, it did so in a ruling on the constitutional validity of the former

section 653 Cr. C. , which has been replaced by

section 738. It found that this provision was a valid exercise of the federal jurisdiction over criminal law [6] precisely because the compensation order was part of the sentencing. [ 12 ] Later, however, in R. v. Fitzgibbon , [7] the Supreme Court recognized that a compensation order comprises two aspects: the criminal and the civil. In that case, the issue was whether subsection 49(1) of the Bankruptcy Act [8] prevented a judge in criminal matters from making such an order against an undischarged bankrupt.

It was in that context that the Court noted the double aspect of the compensation order scheme: It is not without significance that s. 653 of the Criminal Code itself maintains the distinction between the criminal and the civil aspects of compensation orders. Subsection 653(1) allows for the imposition of such an order as part of the sentence in the criminal courts. Subsection 653(2) provides for the enforcement of the payment of that order in the civil courts.

These two separate subsections seem to be designed to recognize the essential distinction between the civil and criminal aspects of these orders. [9] [ 13 ] These judgments should not be interpreted as stating a rigid rule that civil law can never apply to a compensation order prior to its being filed with the court of competent civil jurisdiction in compliance with subsection 741(1) Cr. C. Rather, it appears, particularly in light of Fitzgibbon , that the very existence of the option to enter the judgment under subsection 741(1) reveals that there is as much of

a civil aspect to the compensation order scheme as there is a criminal one. [ 14 ] Canadian and Quebec case law supports this point of view. [ 15 ] On the one hand, when a compensation order is included as a condition in a probation order, failure to comply with that condition opens the offender up to a charge under

section 733.1 Cr. C . This was the case here, since the first reimbursement order was an obligation imposed in the probation order made on January 29, 1996. [10] The appellant did not follow through on it and was indicted on January 12, 1998, on one count of breaching the probation order. [11] [ 16 ] The appellant then pleaded guilty to that charge and, in another criminal judgment rendered on March 12, 1998, a compensation order was made against him, not as a condition to a probation order but in direct consequence of paragraph 738(1)(

a) Cr. C. [12] [ 17 ] When an order made under

section 738 Cr. C. is at issue, civil proceedings under subsection 741(1) Cr. C. are the only way to ensure the enforcement of the order. [13] The Criminal Code does not create an offence in the event of non-compliance.

Section 127 Cr. C. , which sets out an offence for disobeying an order made by a court does not apply to an order " ... for the payment of money ... ". [ 18 ] On the other hand, this Court has recognized the possibility of resorting to civil proceedings to guarantee the enforcement of a compensation order during an appeal staying its execution even before the order is filed under subsection 741(1) Cr. C. [ 19 ] In Oerlikon Aerospatiale v.

Ouellette , [14] the respondent, convicted of fraud against the appellant's in an amount in excess of $950,000, had been sentenced, inter alia , to compensate the appellant for its loss.

He appealed from the verdict and sentence, as well as from the application of the compensation order, thereby staying its execution. [15] The appellant, fearing that it would be deprived of the possibility of enforcing the compensation order should the Court of Appeal uphold the conviction and sentence, sought an interlocutory injunction to prohibit the respondent, his wife, and various businesses under their control from disposing of certain assets and deposit certificates, up to the amount of the order and the interest thereon.

In a majority ruling, the Court set aside the Superior Court judgment and delivered the requested injunction. With respect to the compensation order set out in the Criminal Code , Baudouin J.A. observed that [ translation ] " ... in some ways, [it is] a criminal measure with civil effects". [16] [ 20 ] Indeed, it is noteworthy that, not only was the Crown not called at trial, but it never made its presence known from the time of the sentencing on March 12, 1998, to the time the compensation order was filed on December 9, 2009.

It is not hard to see that the Crown lost interest in the case because the criminal law was unable to ensure the enforcement of the compensation order. [ 21 ] Consequently, the Court finds that not only is it possible to invoke civil law to assess the legal consequences of the respondent's failure to file the March 12, 1998 order, but also that this is the correct manner of proceeding to determine the issue in dispute. [ 22 ] To do so, reference must be made to the rules governing extinctive prescription.

Two possibilities must be considered: the ten- year prescription period applicable to the rights resulting from the March 12, 1998 judgment (article 2924 C.C.Q. ) or the three-year prescription period set out in

article 2925 C.C.Q. Since the order was not filed with the Court of Quebec until December 9, 2009, the remedy is prescribed in either case. [ 23 ] Although this issue is not absolutely necessary to resolve the appeal, the Court is of the view that the prescription that would have applied to this case is that of

article 2925 C.C.Q. [ 24 ] In Barreau du Québec v. Greenbaum , [17] this Court decided that the right to apply for the homologation of a disciplinary council's decision under

section 156 of the Professional Code [18] is prescribed by ten years. Even though it was considering a decision by an administrative tribunal, the Court ruled that it was a "judgment" within the meaning of

article 2924 C.C.Q. The basic reason cited by the Court was that the judgment was res judicata and the homologation's only purpose was to make it enforceable. Yet, it was decided that there was no res judicata between the criminal judgment making a compensation order pursuant to

section 738 Cr. C. and the civil jurisdiction that hears an application for the reimbursement of the victim. Thus, the order under

section 738 is not a bar to the civil remedy available to recoup the loss. [19] In the opposite situation, the existence of a civil judgment cannot preclude the granting of a compensation order by the criminal court. [20] [ 25 ] Consequently, as long as the person to whom the amount must be paid has not filed under subsection 741(1) Cr. C. , the three- year prescription of

article 2925 C.C.Q. applies. [ 26 ] As the Supreme Court explains in Fitzgibbon , [21] prior to its filing under subsection 741(1) Cr. C. , the compensation order is "an order against the person by which the court recognizes an acknowledged indebtedness, ... " [22] . It therefore confers a valid claim on the person benefiting from the order against the offender. This right is prescribed by three years unless the creditor acted prior to the expiration of the prescribed time period. [ 27 ] In this case, the compensation order dated March 12, 1998, gave the appellant six months to pay.

The three-year prescription period began to run from the expiration of that period on September 13, 1998. The respondent's claim had therefore been prescribed for over eight years when, on December 9, 2009, the respondent filed the March 12, 1998 compensation order. Consequently, the trial judge should have granted the appellant's motion in opposition to the garnishment and annulled the garnishment.

FOR THESE REASONS, THE COURT: [ 28 ] ALLOWS the appeal; [ 29 ] SETS ASIDE the trial judgment; [ 30 ] ANNULS the garnishment of January 17, 2010, in the hands of the impleaded party, the garnishee; [ 31 ] RELEASES the appellant from the garnishment;

[ 32 ] With costs both at trial and on appeal. JULIE DUTIL, J.A. LORNE GIROUX, J.A. JEAN BOUCHARD, J.A. Mtre Gilles Boivin Simard, Boivin For the appellant Mtre Emmanuel Boilard-Sauvageau Thibault & Associates For the respondent Date of hearing: June 7, 2011