Dubé,
J.:
—This
unusual
action
is
launched
by
two
residents
of
Swan
River,
Manitoba,
as
a
result
of
the
local
postmaster
having
issued
blank
money
orders
in
exchange
for
cheques
delivered
to
an
accountant
by
the
plaintiffs
intended
for
the
payment
of
their
income
taxes.
The
two
plaintiffs
had
retained
one
Raymond
Stone,
a
public
accountant,
for
the
purpose
of
doing
their
accounting
with
respect
to
their
business
and
to
prepare
their
income
tax
returns.
During
the
years
1970
to
1973,
the
plaintiff
Robert
Keith
Hay
remitted
six
cheques
totalling
$5,261.83
and
the
plaintiff
Wilfred
Gerald
Palaniuk
remitted
seven
cheques
totalling
$3,931.20,
all
cheques
to
the
order
of
the
Receiver
General
of
Canada,
to
the
accountant
Raymond
Stone.
The
latter,
at
various
times,
presented
these
cheques
to
the
local
postmaster
and
asked
him
to
issue
blank
money
orders
in
exchange
for
same.
The
postmaster
received
the
cheques
in
payment
for
the
money
orders,
which
were
issued
to
Raymond
Stone,
without
naming
a
payee.
The
latter
negotiated
all
of
the
said
postal
money
orders
and
appropriated
to
his
own
use
all
of
the
funds
realized
thereby.
All
money
orders
were
in
the
amount
of
$200
or
less.
None
of
the
cheques
issued
were
endorsed
by
the
Receiver
General
of
Canada
or
by
Raymond
Stone.
The
accountant
pleaded
guilty
to
a
charge
of
fraud
and
served
time
in
a
penitentiary.
All
the
above
facts
are
admitted
and
no
witnesses
were
called
at
the
hearing
held
in
Winnipeg,
Manitoba,
on
November
14,
1990.
In
their
very
terse
statement
of
claim
the
plaintiffs
allege
these
facts
and
plead
the
relevant
provisions
of
the
Post
Office
Act,
R.S.C.
1970,
c.
P-14,
the
regulations
enacted
under
that
Act
and
the
Manual
of
Financial
Procedure
issued
by
the
Postmaster
General
of
Canada.
Paragraph
6
of
the
Post
Office
Act,
then
in
force,
authorizes
the
Postmaster
General
to
make
regulations
for
the
efficient
operation
of
the
Canada
Post
Office.
Subsection
6(h)
specifies
"for
the
operation
of
post
offices,
postal
agencies
and
post
routes”.
The
Regulations
governing
postal
employees
and
mail
contractors
in
respect
of
public
money
ana
property,
c.
1290,
with
the
short
title
"Public
Money
and
Property
Safeguards
Regulations”
provide
under
section
2
that
every
postal
employee
shall
properly
safeguard
all
public
money
received
by
him
in
the
exercise
of
his
official
duties.
Under
section
3,
every
postal
employee
shall
segregate
all
public
money
received
by
him.
Section
6
provides
that
every
postal
employee
who
retains
more
public
money
than
he
is
authorized
to
retain,
shall
be
personally
responsible.
Section
8
provides
that
every
postal
employee
who
pays
out
money
on
presentation
of
a
postal
remittance,
cheque
or
Post
Office
Savings
Bank
withdrawal
form
without
requiring
identification
may
be
required
to
reimburse
the
Canada
Post
Office.
Under
section
9,
every
postal
employee
who
accepts
a
cheque
or
other
negotiable
instrument
which
is
found
to
be
of
less
than
face
value
may
be
required
to
reimburse
the
Canada
Post
Office
the
amount
of
the
loss
involved.
The
Manual
of
Financial
Procedure
was
produced
at
the
hearing.
On
the
front
page
is
inscribed
''Issued
by
Order
of
the
Postmaster
General
under
authority
vested
in
him
by
the
Post
Office
Act".
Annexed
to
the
agreed
statement
of
facts,
is
Part
III—Chapter
1
of
the
Manual,
titled
“Post
Office
Funds
and
Values".
The
first
paragraph
reads
as
follows:
1.
These
regulations
cover
the
accepting,
safeguarding,
depositing
and
remitting
of
post
office
funds
and
values.
All
funds
received
in
post
office
transactions
are
to
be
kept
separate
from
other
funds,
and
are
to
be
accounted
for
in
the
cash
account
for
the
term
in
which
they
are
received.
The
other
relevant
paragraphs
are
as
follows.
Under
the
heading
"Funds
which
may
be
Accepted",
paragraph
5(5):
5.
(5)
Other
cheques
may
be
accepted,
but
only
on
the
postmaster's
own
responsibility,
when
presented
by
customers
for
the
purchase
of
postal
values
and
services.
The
responsibility
remains
with
the
postmaster
in
the
acceptance
of
cheques
allegedly
certified
by
a
bank
and
it
is
therefore
suggested
that
the
precautions
outlined
in
paragraph
8
below
be
taken
where
considered
necessary.
Under
the
heading
"Identification
of
Persons
Presenting
Cheques",
paragraph
12(2)(b):
12.
(2)
When
a
person
is
not
known
to
the
paying
officer
he
may:
(b)
produce
documents
to
establish
his
identity.
If
he
cannot
fulfil
the
conditions
outlined
in
sub-paragraphs
(1)
and
(2)
(a)
above,
he
is
to
be
requested,
tactfully,
to
establish
his
identity
by
producing
documents
which
require
and
bear
the
owner's
signature
and
which
ordinarily
would
only
be
in
the
hands
of
the
person
owning
them.
The
person
presenting
such
documents
must
endorse
the
cheque
in
the
presence
of
the
paying
officer
who
is
to
compare
the
endorsement
on
the
cheque
with
the
signature
on
the
document
presented
for
identification
and
record
the
nature
of
the
identification
accepted
on
the
back
of
the
cheque
beside
his
initials.
Under
the
heading
"Cheques
Presented
by
Persons
Other
than
Payees",
paragraphs
14.(1)
and
14.(4):
14.
(1)
When
a
cheque,
certified
or
uncertified,
including
Governments
of
Canada,
Provincial
Government
or
Crown
Corporation
cheques,
is
presented
by
a
person
other
than
the
payee,
the
paying
clerk
is
not
to
pay
it
unless
it
bears
the
endorsement
of
the
payee.
The
signature
of
the
person
to
whom
payment
is
to
be
made
must
also
appear
as
endorsement.
(4)
If
the
postal
officer
authorizes
payment
of
a
cheque
and
it
is
subsequently
proved
to
have
been
fraudulently
negotiated,
he
may
be
held
financially
accountable
for
the
loss.
Under
the
heading
“Acceptance
of
Cheques",
paragraph
15.(1)
and
15.(4):
15.
(1)
If
the
postmaster
decides
to
accept
a
cheque
from
a
customer,
the
customer
is
to
make
it
payable
to
the
Receiver
General
for
Canada,
or
to
endorse
it
as
“Payable
to
the
Receiver
General
for
Canada".
(4)
If
a
cheque
drawn
in
favour
of
the
Receiver
General
for
Canada
is
accepted
in
payment
of
postal
values
or
services,
it
must
not
exceed
the
amount
of
the
value
of
services
purchased.
This
does
not
in
any
way
change
the
instructions
in
paragraph
5
(5)
concerning
responsibility
for
acceptance
of
cheques.
The
main
argument
advanced
by
counsel
for
the
plaintiffs,
is
that
the
regulations
of
the
Manual
constitute
statutory
obligations:
where
a
breach
of
a
statutory
obligation
is
established,
there
is
a
prima
facie
presumption
of
negligence
and
the
onus
is
upon
the
defendant
to
rebut
such
a
presumption.
The
plaintiffs
rely
primarily
on
a
1964
Supreme
Court
of
Canada
decision,
Sterling
Trusts
Corp
v.
Postma,
[1965]
S.C.R.
324;
48
D.L.R.
(2d)
423.
In
this
motor
vehicle
negligence
case
Judge
Cartwright
said
as
follows
(at
pages
329-30):
I
do
not
find
it
necessary
in
this
case
to
attempt
to
choose
between
these
two
views
as
to
how
this
cause
of
action
should
be
described.
I
think
it
plain
that
once
it
has
been
found
(i)
that
the
respondents
committed
a
breach
of
the
statutory
duty
to
have
the
tail-light
lighted,
and
(ii)
that
that
breach
was
an
effective
cause
of
the
appellants
injuries,
the
respondents
are
prima
facie
liable
for
the
damages
suffered
by
the
appellants.
I
wish
to
adopt
two
observations
made
in
the
House
of
Lords
in
Lochgelly
Iron
and
Coal
Co.
Ltd.
v.
M'Mullan,
[1934]
A.C.
1
as
applicable
to
the
case
at
bar.
At
p.
23,
Lord
Wright
said:
In
such
a
case
as
the
present
the
liability
is
something
which
goes
beyond
and
is
on
a
different
plane
from
the
liability
for
breach
of
a
duty
under
the
ordinary
law,
apart
from
the
statute,
because
not
only
is
the
duty
one
which
cannot
be
delegated
but,
whereas
at
the
ordinary
law
the
standard
of
duty
must
be
fixed
by
the
verdict
of
a
jury,
the
statutory
duty
is
conclusively
fixed
by
the
statute.
.
.
At
p.
9,
Lord
Atkin
said:
I
cannot
think
that
the
true
position
is,
as
appears
to
be
suggested,
that
in
such
cases
negligence
only
exists
where
the
tribunal
of
fact
agrees
with
the
Legislature
that
the
precaution
is
one
that
ought
to
be
taken.
The
very
object
of
the
legislation
is
to
put
that
particular
precaution
beyond
controversy.
I
have
used
above
the
expression
that
once
it
is
found
that
the
breach
of
the
statute
was
committed
and
was
an
effective
cause
of
the
collision
the
respondents
are
prima
facie
liable
to
the
appellants.
The
plaintiffs'
contention
is
that
the
postmaster
breached
his
statutory
duties
under
the
Manual,
and
more
particularly
under
paragraph
14(1),
when
he
cashed
a
cheque
presented
to
him
by
a
person
other
than
the
payee,
without
the
endorsement
of
the
payee,
the
payee
being
the
Receiver
General
of
Canada.
The
plaintiffs
also
argue
that
the
postmaster
under
the
aforementioned
regulations
had
no
authority
to
issue
a
blank
money
order
to
a
person
other
than
the
payer
or
the
payee
of
the
cheques.
On
the
other
hand,
the
defendant
contends
that
the
Manual
of
Financial
Procedure
does
not
constitute
a
regulation
in
the
sense
that
it
is
merely
a
set
of
procedures
to
be
followed
by
the
employees,
not
regulations
established
for
the
benefit
of
the
public.
I
cannot
accept
that
argument.
These
"regulations"
are
described
as
such
in
paragraph
1
reproduced
above.
The
Manual
is
issued
by
order
of
the
Postmaster
General
of
Canada
"under
authority
vested
in
him
by
the
Post
Office
Act".
Surely,
these
regulations
are
not
merely
for
the
benefit
of
the
post
office
or
the
post
office
employees.
They
were
put
in
place
for
the
protection
of
the
public
as
well.
In
my
view,
a
post
office
employee
who
does
not
abide
by
these
regulations
in
the
execution
of
his
duties
is
prima
facie
negligent.
If
that
negligence
is
the
cause
of
the
loss
sustained
by
the
plaintiffs,
as
it
surely
is
in
this
case,
then
not
only
is
he
personally
responsible
towards
his
employer
but
his
employer
becomes
responsible
to
the
affected
parties
under
the
Crown
Liability
Act,
R.S.C.
1970,
c.
C-38.
Section
3
of
that
Act
reads
as
follows:
3.
The
Crown
is
liable
in
tort
for
the
damages
for
which,
if
it
were
a
private
person
of
full
age
and
capacity,
it
would
be
liable
(a)
in
respect
of
a
tort
committed
by
a
servant
of
the
Crown,
The
Crown
may
rebut
the
prima
facie
presumption,
which
Crown
counsel
attempted
to
do
as
an
alternative
defence.
He
claims
the
accountant
was
the
agent
of
the
plaintiffs
and
that
in
such
a
small
community
the
postmaster
was
bound
to
know
the
parties
involved
and
to
assume
that
he
was
merely
complying
with
the
request
of
the
plaintiffs
when
he
cashed
their
cheques
and
issued
the
blank
money
orders.
There
is
nothing
in
the
admitted
statement
of
facts
to
support
such
a
contention.
On
that
score,
the
statement
merely
recites
that
the
plaintiffs
engaged
the
accountant
for
the
purpose
of
doing
their
accounting
with
respect
to
their
busienss
and
to
prepare
income
tax
returns,
and
that
the
cheques
delivered
to
the
accountant
by
the
plaintiffs
were
cheques
"which
the
plaintiffs
intended
for
the
payment
of
income
taxes".
The
Court
does
not
know
what
else
transpired
between
the
plaintiffs
and
the
accountant
and
between
the
accountant
and
the
postmaster.
Counsel
for
the
defendant
also
refers
to
section
56
of
the
Bills
of
Exchange
Act,
R.C.S.
1970,
c.
B-5,
which
defines
a
holder
in
due
course.
I
fail
to
see
where
that
definition
would
come
to
the
assistance
of
the
postmaster
who
cashed
cheques
presented
by
the
accountant,
neither
a
payer
nor
a
payee,
and
issued
to
him
blank
money
orders
without
any
authorization
from
either
the
payer
or
the
payee.
Consequently,
I
must
find
the
Crown
liable
in
tort
for
the
negligence
committed
by
the
postmaster
and
grant
judgment
in
the
amount
of
$5,261.83
for
the
plaintiff
Robert
Keith
Hay,
and
in
the
amount
of
$3,931.20
for
the
plaintiff
Wilfred
Gerald
Palaniuk,
with
costs.
The
other
plaintiffs
who
commenced
this
action
were
not
represented
in
Court
and
were
not
part
of
the
agreed
statement
of
facts.
No
interest
was
claimed
in
the
statement
of
claim
and
in
view
of
section
36
of
the
Federal
Court
Act
none
will
be
granted.
Judgment
for
the
plaintiffs.
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