r v. 7877994 CANADA INC., 2023 QCCA 1492

Director of Criminal and Penal Prosecutions c. 7877994 Canada inc. 2023 QCCA 1492 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-10-007715-210 (550-36-000009-215) DATE: 28 November 2023 CORAM: THE HONOURABLE ROBERT M. MAINVILLE, J.A. PATRICK HEALY, J.A. GENEVIÈVE COTNAM, J.A. DIRECTOR OF CRIMINAL AND PENAL PROSECUTIONS APPELLANT – prosecutor v. 7877994 CANADA INC.

RESPONDENT – defendant JUDGMENT [ 1 ] The appellant appeals against a judgment of the Superior Court that dismissed an appeal against an acquittal pronounced by the Court of Quebec on a charge of a regulatory offence under the Building Act . [ 2 ] For the reasons of Healy, J.A., with which Mainville and Cotnam, JJ.A. agree, THE COURT: [ 3 ] DISMISSES the appeal without legal costs. ROBERT M. MAINVILLE, J.A. PATRICK HEALY, J.A. GENEVIÈVE COTNAM, J.A.

Mtre Sophie Ouellette Director of criminal and penal prosecutions For the Appellant Mtre Yannick Dompierre RPGL Avocats For the Respondent Date of hearing: 15 December 2022 REASONS OF HEALY, J.A.

I [ 4 ] This is an appeal by leave [1] against a decision of the Superior Court [2] that dismissed an appeal against an acquittal pronounced by the Court of Quebec on a charge under the Building Act that the respondent operated as a contractor without a valid licence. [3] The trial judge concluded that the respondent had proved a defence of due diligence on a balance of probabilities. II [ 5 ] The question in this appeal is whether the decision of the Superior Court is consistent with the principles stated by the Supreme Court in Ville de Lévis v.

Tétrault [4] concerning the defence of due diligence in a penal offence of strict liability. The appellant submits that the Superior Court correctly stated the applicable principles but made an error of law in applying them, and specifically in affirming the conclusion that evidence of good faith and an inadvertent omission could support a defence of due diligence. The appellant relies on Ville de Lévis v. Tétreault to claim that the respondent did nothing to ensure the currency of its operating licence and thus was not diligent but passive.

III [ 6 ] The respondent was charged under the Building Act that it operated as a contractor without a current licence when it sold property on or about 21 May 2014. [5] Its licence to operate lapsed on 5 January 2013 because the annual fee for its renewal was not paid on time. The actus reus of the offence was not disputed. By ordinary post in a letter dated 5 January 2013 the Régie informed the respondent that its operating licence had expired. [ 7 ] Mr. Steve Heafey testified for the respondent.

At the time he was the managing director of the Groupe Heafey, which was concerned in real-estate investment and construction. At that time the Groupe Heafey had some forty subsidiaries, including Les Placements Rivière Gatineau Inc. (“PRG”). On 31 May 2011 the respondent was incorporated in 2011 as a subsidiary of PRG and a subsidiary (Construction Katasa 2010 Inc.) of Groupe Katasa to form a partnership for the construction of a large real-estate project.

On 18 April 2012 the respondent transferred all its shares in the partnership to Construction Katasa 2010 Inc. but did not inform the Régie du batiment (“Régie”) of this transaction as required by

section 67 of the Building Act . Mr. Heafey remained the respondent’s nominal licence-holder while Katasa sought to find a replacement. [ 8 ] In June 2012 Groupe Heafey moved its offices and advised partners and suppliers of its change of address. It also requested Canada Post to forward, for several years, its mail to the new address of its offices. [ 9 ] Mr. Heafey testified that he never received a letter from the Régie to inform him of the date for renewal of the respondent’s licence or a letter to inform him that the respondent’s licence had lapsed. [ 10 ] Mr.

Jean-Pierre Michon testified that when he began work at Katasa in September 2014 he assumed responsibilities relating to licences under the Building Act . He learned that PRG’s operating licence had expired on 5 January 2013 and that all of PRG’s files remained in the offices of Heafey Group. He took steps to have the licence renewed and acquired a new operating licence for Construction Katasa 2010 Inc. on 19 March 2015. [ 11 ] There was also evidence that the Heafey Group had in place before 2014 an administrative arrangement to ensure the continuity of licensed activities as required by law.

At the time of the offence alleged in this case that arrangement had not secured the timely renewal of the respondent’s licence. [ 12 ] The appellant claims that the measures taken by the respondent were not sufficient to prove due diligence on a balance of probabilities as a defence against a charge of conducting construction without a valid licence. [6] IV [ 13 ] In Ville de Lévis v. Tétreault a company was charged with putting a motor vehicle into operation without having first paid the fees required to do so. The driver of that vehicle was also charged with driving without a valid licence.

The Municipal Court in Lévis accepted a defence of due diligence advanced by both defendants. That decision was confirmed by the Superior Court and this Court refused leave to appeal further.

The Supreme Court reversed the acquittals and entered findings of guilt on the basis that no valid defence was proved. [ 14 ] For present purposes the salient observations of the Supreme Court are these: A strict liability scheme responds adequately to the concern to ensure that vehicle operators are aware of their legal obligations and, in particular, of their duty to do what is necessary to ensure that their licences remain valid and to drive only while they are valid. The only issue in dispute thus consists in determining whether the defence of the accused is consistent with the concept of due diligence.

In Mr. Tétreault’s case, the judgments of the courts below confused passivity with diligence. The accused did no more than state that he expected to receive a renewal notice for his licence and that he had confused the licence expiry date with the due date for paying the fees required to keep the licence valid. He proved no action or attempt to obtain information. The concept of diligence is based on the acceptance of a citizen’s civic duty to take action to find out what his or her obligations are. Passive ignorance is not a valid defence in criminal law. Consequently, the acquittals are unfounded in this case.

The Municipal Court should have found the respondent guilty as charged and imposed the fine prescribed by law. [7] [ 15 ] In the present case the appellant submits that the trial court and the Superior confused passivity with diligence. [ 16 ] There could be no viable defence of due diligence unless it is proved to have existed at a time that is material to the time at which

the actus reus of the offence occurred. If diligence in renewing the respondent’s licence lies in proof of measures taken after the actus reus occurred, it affords no defence because it discloses no measures undertaken to avert the alleged conduct. [ 17 ] The evidence in this case of measures taken to ensure the timely renewal of the respondent’s licence was primarily, but not exclusively, that the respondent had undertaken with Canada Post to have its mail redirected to its new address and that an administrative arrangement was in place in the Heafey Group to manage the licensing obligations of its companies.

That arrangement did not secure the renewal of the respondent’s licence before its expiry because all shares in the respondent had already been transferred to Katasa. These are the indications of affirmative action by the respondent to ensure the timely renewal of its licence. [ 18 ] Both the trial court and the Superior Court accepted the defence of due diligence with reference to a cluster of circumstances that explain the respondent’s failure to renew its licence.

The Superior Court summarised these as follows: [123] Selon la première juge, de nombreux facteurs ont contribué à la preuve prépondérante établissant la diligence raisonnable de l’intimée, dont (1) la vente des actions par PRG à Katasa en avril 2012, (2) le déménagement de PRG en juin 2012, (3) le maintien en poste du même répondant, (4) la demande de suivi de courrier auprès de Poste Canada, (5) le nombre de compagnies possédant adéquatement leur licence pour mener à bien ce projet immobilier d’envergure (6) l’absence de réception de l’avis de renouvellement et (7) le système de vérification des licences. [124] En conséquence, la conclusion portant sur la démonstration prépondérante d’une défense de diligence raisonnable dans le domaine réglementé de la construction était supportée par la preuve qu’avait retenue la première juge, et l’appelant n’a pas réussi à démontrer d’erreurs de nature à influer sur le verdict. [ 19 ] This combination of circumstances explains in large measure how the respondent failed to renew its licence.

The trial court and the Superior Court concluded that this was sufficient proof of affirmative action by the respondent to establish due diligence. On this basis, according to Ville de Lévis v. Tétreault , the failure to renew cannot be characterised as passive inaction or ignorance. The respondent’s unquestioned good faith and inadvertent omission support the characterisation of its actions before the expiry of the licence as a positive undertaking to maintain a valid licence.

The respondent aptly describes the circumstances leading to the inadvertent omission to renew the licence as an “imbroglio.” If there were no evidence of positive action taken by the respondent to ensure regulatory compliance, a defence of due diligence would fail. [ 20 ] As noted in this case, construction in Quebec is governed by rigorous standards of compliance to enhance the protection of the public. It is this objective that reinforces the Supreme Court’s observation in Ville de Lévis v.

Tétreault that passive inaction, however blameless it might be, cannot be confused with due diligence to maintain a valid licence. [ 21 ] The respondent was a contractor in a large enterprise with many years of experience, including years of experience in matters of regulatory compliance, and engaged in an undertaking of broad scope. Much attention was given in this case to the relevance of good faith and inadvertence. The relevance of these factors is that they enhance the evidence of affirmative action taken by the respondent to ensure regulatory compliance.

Evidence of affirmative action by a party to avert non-compliance is a necessary condition of the defence of due diligence as stated in Ville de Lévis v. Tétreault and applied by the trial court and the Superior Court in this case. [ 22 ] The appellant submits that the affirmative action undertaken by the respondent was insufficient to be characterised as due diligence and distinguished from passive inaction or ignorance. This submission is that the respondent did nothing to ensure timely compliance.

Although construction is regulated in Quebec by rigorous standards of strict liability, due diligence cannot be assimilated to an obligation of result. It can be found in evidence of affirmative action undertaken to comply. Whether such action is sufficient in any case is a question of degree for the trier of fact [8] and appellate courts must show deference to the answer unless there is palpable and overriding error in the assessment of the evidence. [9] [ 23 ] The Superior Court found no error in the conclusions of the trial court and there is no basis for intervention by this Court on further appeal.

V [ 24 ] I propose to dismiss the appeal without legal costs. PATRICK HEALY, J.A. No person may act as a building contractor, hold himself out to be such or give cause to believe that he is a building contractor, unless he holds a current licence for that purpose. No contractor may use, for the carrying out of construction work, the services of another contractor who does not hold a licence for that purpose.