Celeste Spyglass - v. -, 2010 SKPC 164

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2010 SKPC 164 Date: November 25, 2010 File: NB074-10 Location: North Battleford _____________________________________________________________________________ Between: Celeste Spyglass - and - Randi McCabe Celeste Spyglass For the Plaintiff Randi McCabe For the Defendant _____________________________________________________________________________ JUDGMENT V. H. MEEKMA, J _____________________________________________________________________________ INTRODUCTION [ 1 ] The plaintiff sues the defendant for the value of a dog and one of its pups.

The plaintiff gave the male dog to the defendant on the understanding that the plaintiff would be given first pick of the first litter sired by the dog and, further, that if the defendant ever decided not to keep the dog, she would offer it back to the plaintiff. The dog belonged to a third party who had no knowledge of the

transaction. The issue is whether this is an illegal contract which is not enforceable. FACTS [2] The dog, a pit bull cross, was originally purchased by a third individual, Clayton McCarthy. He was employed out of town,so arranged to pay the plaintiff, Celeste Spyglass, to care for the dog. He then had difficulty paying the plaintiff, so agreed that theplaintiff could have the dog.

A year later, the plaintiff became pregnant and again returned the dog to McCarthy, who at that time wasliving in a trailer in his sister’s yard. [3] Approximately one month later, in July 2008, the dog escaped from his leash and was impounded while McCarthy wasaway. The dog pound contacted the plaintiff, having obtained her contact information from the veterinarian who had treated the dogwhile it was in her care.

The plaintiff paid the charges at the dog pound and collected the dog. [4] Some further time expired (according to the defence witnesses, four days, and according to the plaintiff’s witnesses, sixmonths) before the plaintiff went to the defendant with the deal subject of this action. The plaintiff asked the defendant not to tellClayton McCarthy that the defendant had the dog. The defendant called Clayton McCarthy’s sister, Catha, because she knew the dog hadbeen in Catha’s yard, to ask what was going on. Catha told the defendant that she could keep the dog because Clayton could not care forit.

No one consulted Clayton. Later, however, the defendant offered to return the dog to Clayton, but Clayton agreed to leave the dogwith her. The defendant has had the dog ever since. [5] The defendant gave Catha McCarthy first pick of the dog’s first litter, but not free of charge. Clayton testified that he did notknow about the agreement made between the plaintiff and the defendant until he heard about it in Court, but he thought that either he orthe plaintiff should have received first pick of the litter, rather than his sister.

As well as selling its pups, the defendant subsequentlyadvertised the dog for sale for $1,000.00, but has never offered to return it to the plaintiff. ANALYSIS [6] There is a longstanding basic principle in common law that an illegal contract is unenforceable. Courts have been vigilant inpreventing abuse of their process and may refuse to give effect to illegal contracts. The history of the Doctrine of Illegality is outlined inthe dissenting decision of Bastarache J. in Continental Bank Leasing Corp. v. Canada, (SCC), [1998] S.C.J. No. 63, [1998] 2 S.C.R. 298, 163 D.L.R. (4th) 385 (S.C.C.): (

b) The Doctrine of Illegality 64 Under the doctrine of illegality, a contract prohibited by statute or for an illegal purpose will be declared void even if it conforms toall other requirements of a valid transaction. A classic case concerning statutory illegality is Cope v. Rowlands (1836), 2 M. & W. 149,150 E.R. 707, where Parke B. held (at p. 710): ...where the contract which the plaintiff seeks to enforce, be it express or implied, is expressly or by implication forbidden by thecommon or statute law, no court will lend its assistance to give it effect.

It is equally clear that a contract is void if prohibited by astatute, though the statute inflicts a penalty only, because such a penalty implies a prohibition. 65 It should follow, therefore, that the absolute prohibition of a contract by a statute renders the contract void and of no effect. However,as G. H. L.

Fridman points out in The Law of Contract in Canada (3rd ed. 1994), at p. 348: It might be thought . . . that the doctrine was clear and uncomplicated, that whenever a statute prohibited a certain course of conduct, orrequired a particular course of conduct, the failure to observe which resulted in a penalty of some kind, a contract which infringed thestatutory prohibition or requirement would be illegal and therefore void.

This situation is not as straightforward as that. . . . in someinstances a statute while involving illegality, in the sense of prescribing penalties for certain conduct, will not have the effect ofrendering void a contract entered into in breach of the statute. 66 In fact, the rigidity of the doctrine of illegality first gave rise to exceptions which dealt with the return of property transferred under anillegal contract (Fridman, supra, at p. 424). This development was nevertheless considered insufficient. In Sidmay Ltd. v. WehttamInvestments Ltd. (1967), (ON CA), 61 D.L.R. (2d) 358 (Ont.

C.A.), aff'd on other grounds, (SCC),[1968] S.C.R. 828, Laskin J.A. (as he then was) held that the court must take into account the harmful effect on the parties for whose

protection the law making the bargain illegal exists before deciding to enforce or rescind the bargain. This approach was also adopted byKrever J. (as he then was) in Royal Bank of Canada v. Grobman (1977), (ON SC), 18 O.R. (2d) 636 (H.C.), at pp.652-53. 67 The doctrine of illegality was recently examined by the Federal Court of Appeal in Still v. Minister of National Revenue (1997), (FCA), 221 N.R. 127. Robertson J.A. noted at the outset that the doctrine of illegality is divided into two categories:common law illegality and statutory illegality.

With regard to statutory illegality, he noted that the classic approach affirmed in Neider v.Carda of Peace River District Ltd., (SCC), [1972] S.C.R. 678, had given rise to many avoidance techniques in thecourts, particularly where the illegality resulted from the performance of the contract rather than its formation.

On the issue of formation,Robertson J.A. was prepared to expand the modern approach to illegality further, stating, at p. 139, that "a finding of illegality isdependent, not only on the purpose underlying the statutory prohibition, but also on the remedy being sought and the consequenceswhich flow from a finding that a contract is unenforceable". [7] A Court must consider facts rendering a contract illegal, whether or not the Doctrine of Illegality was specifically pleaded.(Continental Bank, supra, para. 85) [8] Bastarache J. also discussed the Doctrine of Illegality with respect to acts contrary to public policy: 86 ...

The development of the law in this area can be traced to Holman v. Johnson (1775), 1 Cowp. 341, 98 E.R. 1120, where LordMansfield stated, at p. 1121: The principle of public policy is this; ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of actionupon an immoral or an illegal act. If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causâ, orthe transgression of a positive law of this country, there the Court says he has no right to be assisted.

It is upon that ground the Courtgoes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. 87 Since Holman, the courts have examined many transactions which involve what the courts considered to be immoral or illegal acts.The public policy in the present case is similar to the public policy recognized in the case law where the courts have refused to uphold acontract to commit a crime. To enforce a contract of this type is to recognize that it is valid to agree to circumvent the law for economicgain.

As Cheshire, Fifoot and Furmston's Law of Contract (13th ed. 1996), explains, at p. 375: "An allied rule of public policy is that noperson shall be allowed to benefit from his own crime." [9] The statutory basis for the illegality of the contract which the plaintiff seeks to enforce can be found in s. 322(1)(

a) of theCriminal Code of Canada which describes the offence of theft as follows: 322(1) Every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right convertsto his use or to the use of another person, anything, whether animate or inanimate, with intent, (

a) to deprive, temporarily or absolutely, the owner of it, or a person who has a special property or interest in it, of the thing or of hisproperty or interest in it; [10] “Conversion” includes the disposal of goods by selling or delivering them to a third party. The plaintiff’s delivery of the dogto the defendant without the knowledge and consent of the true owner was a theft by conversion. The secrecy supports intent to deprivethe rightful owner of the dog. As such, the contract is illegal as it is in breach of a statute, i.e., the Criminal Code of Canada, the purposeof the

section being to protect and preserve property to its rightful owner and prevent his being deprived of it without his consent. [11] The remedy sought by the plaintiff would not benefit the true owner, Clayton McCarthy, but the plaintiff, who had no claimto the dog at the point in time where she disposed of it. There is no unjust enrichment to the defendant in finding the contractunenforceable, as she offered to return the dog to the true owner and he agreed that she could keep it.

Clayton McCarthy is the only partywho could pursue any claim against the defendant and he has opted not to do so. [12] In the Alberta decision of Kirby J. in LaRose v. Fleuty, (AB Q.B.), a plaintiff’s claim to a raffle prize wasdismissed on the basis that the raffle was illegal by virtue of the prohibiting

section of the Criminal Code as the corporation conductingthe raffle was not a charitable organization as required by the section. [13] Applying the modern approach to the Doctrine of Illegality, I find that the contract between the plaintiff and the defendantwas illegal and is unenforceable.

CONCLUSION [ 14 ] The plaintiff’s claim is dismissed. _________________________________________ V. H. Meekma, J