Denault,
J.
[TRANSLATION]:—The
plaintiff
Danzas
S.A.,
with
its
head
office
located
in
Switzerland,
and
its
Canadian
subsidiary
are
companies
specializing
in
the
carriage
of
air
freight,
and
they
are
claiming
from
the
defendant
damages
amounting
to
U.S.
$656,952.70,
subject
to
fluctuations
in
the
exchange
rate,
which
they
claim
they
suffered
in
connection
with
the
carriage
of
three
parcels
in
1980
through
the
fault
and
negligence
of
servants
of
the
defendant,
the
R.C.M.P.
and
the
Department
of
National
Revenue,
Customs
and
Excise,
in
what
proved
to
be
a
case
of
international
smuggling.
It
was
alleged
in
the
pleadings
that
Reds
Jewellery,
the
exporter,
a
company
dealing
in
diamonds
in
Switzerland,
sold
to
French
nationals,
allegedly
acting
for
a
Canadian
business
known
as
Buchara
Diamond,
gems
totalling
U.S.
$656,952.70,
delivered
in
three
different
shipments
by
the
airline
Swissair.
The
exporter
made
Danzas
responsible
for
delivering
the
gems
to
their
Canadian
purchaser
in
return
for
payment
which
originally
was
to
be
by
bank
consignment,
then
by
cash
on
delivery
(C.O.D.).
As
payment
for
the
goods,
the
Canadian
subsidiary
accepted
certified
cheques
payable
to
its
Swiss
subsidiary
[sic],
but
these
cheques
were
not
honoured
when
deposited
because
they
were
forgeries.
Because
of
its
contractual
obligations
to
the
shipper
Reds
Jewellery,
the
plaintiff
had
to
reimburse
it
and,
subrogated
in
its
rights,
is
now
claiming
this
amount
from
the
defendant.
In
addition
to
this
brief
sketch
of
events
there
were
many
other
developments,
involving
inter
alia
the
importer
Buchara,
its
customs
broker
Mirabelle
Courtiers
en
Douanes
Ltée
and
a
Customs
officer,
Gérard
Chevrier.
Some
of
the
protagonists
in
this
unfortunate
affair
were
prosecuted
in
the
Court
of
Sessions
of
the
Peace,
in
particular
the
Customs
officer
Gérard
Chevrier,
who
was
convicted
of
smuggling
under
the
Customs
Act.
At
the
same
time,
civil
proceedings
were
brought
against
the
perpetrators
of
the
fraud
practised
on
the
plaintiffs,
but
the
judgment
they
obtained
could
not
be
carried
out
since
the
Customs
officer
Chevrier
was
insolvent,
and
they
brought
the
action
at
bar
against
the
defendant,
alleging
fault
by
the
R.C.M.P.
and
Canada
Customs.
The
evidence
disclosed
that
on
March
17,
1980
the
exporter
gave
the
first
parcel
to
the
plaintiff
for
shipment
to
Canada.
This
shipment
contained
gems
worth
U.S.
$157,340,
to
be
taken
to
Montreal
by
Swissair.
On
March
31,
1980
the
importer
took
possession
of
the
parcel
through
an
individual
to
whom
the
employee
of
the
plaintiff,
Danzas
(Canada)
Ltée,
gave
the
necessary
documents
to
clear
the
parcel
through
Customs
without
obtaining
payment
for
the
value
of
the
goods,
except
for
the
costs
involved,
all
as
the
result
of
a
mistake
by
the
plaintiffs
employee
at
Mirabel.
The
shipper
gave
the
other
two
parcels,
containing
diamonds
valued
at
U.S.
$232,800
and
U.S.
$247,678.35
respectively,
to
the
plaintiff
on
April
2
and
3,
1980.
The
same
airline
took
them
to
Montreal,
where
they
arrived
on
April
9,
1980.
Early
on
the
morning
of
April
11,
1980,
someone
went
to
the
plaintiffs
office,
handed
over
three
certified
cheques,
two
of
which
covered
the
shipments
in
question
and
the
other
that
of
March
31,
1980,
and
in
addition
paid
the
carriage
and
handling
costs.
These
cheques,
all
three
of
which
were
dated
April
9,
1980,
were
drawn
on
the
Royal
Bank
of
Canada
Vimont
Branch
in
Laval,
and
were
signed
“S
Langelier”.
They
were
payable
to
“Danzas
Geneva
Airport”,
and
were
sent
on
to
Switzerland
a
few
days
later.
No
check
was
made
by
the
plaintiffs
employee
as
to
the
validity
of
these
cheques,
though
they
had
been
given
precise
instructions
in
this
regard.
Accordingly,
the
person
who
brought
the
three
certified
cheques
totalling
U.S.
$656,952.70
was
given
the
necessary
documents
to
clear
the
goods
through
Customs
and
to
obtain
the
immensely
valuable
packages,
which
were
never
seen
again.
The
goods
were
cleared
through
Customs
without
difficulty
as
a
result
of
the
complicity
of
the
Customs
officer
Gérard
Chevrier,
who,
unknown
to
his
superiors,
placed
his
stamp
"M-328”,
the
date
and
his
initials
on
the
appropriate
form,
thereby
releasing
the
goods
and
allowing
the
bearer
to
obtain
the
ill-fated
parcels.
Unfortunately
for
him,
an
R.C.M.P.
informer
was
a
witness
of
this
irregular
proceeding
and
the
result
was
a
massive
police
operation
which
led
to
his
arrest
and
that
of
certain
accomplices.
In
their
pleadings
and
argument,
the
plaintiffs
attributed
the
responsibility
for
their
loss
to
the
fault
of
Gérard
Chevrier,
a
Customs
officer
and
agent
of
the
defendant,
and
to
his
complicity
in
the
crime.
They
further
alleged
that
the
R.C.M.P.
was
negligent
in
performing
its
legal
duty
to
prevent
the
crime,
submitting
that
it
was
at
fault
in
that
in
the
preceding
months
two
other
carriers
had
been
the
victims
of
fraud
using
the
same
modus
operand'!,
and
that
this
was
known
to
the
R.C.M.P.
In
their
pleadings,
the
plaintiffs
alleged
paragraph
3(1)(a)
of
the
Crown
Liability
Act
for
the
torts
committed
by
the
Customs
officer
G.
Chevrier
and
the
R.C.M.P.
In
presenting
their
evidence,
the
plaintiffs
also
sought
to
attribute
fault
to
the
Customs
Department
taken
as
a
whole,
separately
from
the
fault
of
its
employee,
for
failing
to
supervise
the
latter,
and
negligence
of
the
Department
in
general.
As
the
plaintiffs
have
made
allegations
against
two
separate
Crown
agencies,
namely
Customs
and
the
R.C.M.P.,
the
conduct
of
these
servants
of
the
Crown
will
have
to
be
examined
separately.
The
question
as
regards
Canada
Customs
is
essentially
whether
its
actions
were
such
that
the
Crown
may
be
liable
under
subsection
3(1)
of
the
Crown
Liability
Act,
which
reads
as
follows:
3.
(1)
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,
or
.
.
.
The
wording
of
this
section
itself
shields
the
Crown
from
liability
for
a
criminal
offence
committed
by
its
servant
Gérard
Chevrier,
and
prevents
it
from
incurring
any
liability
in
this
regard.
Additionally,
the
evidence
disclosed
that
the
witness
Georges
Tremblay,
Chevrier's
immediate
superior
since
September
1980,
in
fact
noted
certain
problems
with
his
subordinate's
behaviour
soon
after
his
arrival.
Among
other
things,
he
complained
that
Chevrier
had
had
a
business
card
printed
showing
himself
as
a
"customs
consultant".
He
was
also
suspected
of
giving
preferential
treatment
to
certain
customs
brokers,
including
Mirabel
Courtiers
en
Douanes
Ltée
and
its
president
Mr.
Lefebvre.
This
employee
was
given
a
warning
during
the
holiday
period
in
December
1979.
The
witness
also
asked
the
Security
Services
to
conduct
an
investigation,
because
it
had
been
noticed
that
certain
incoming
shipments
arrived
at
Customs
on
Monday
morning
without
the
documents
first
going
through
the
time
stamp,
so
that
it
was
impossible
to
know
when
they
were
stamped.
However,
the
witness
could
not
say
specifically
whether
these
cases
always
originated
with
the
same
Customs
officer
Chevrier.
In
summary,
the
witness
said
that
the
latter’s
competence
was
not
in
question,
but
there
were
certain
problems
with
his
conduct
which
could
not
be
exactly
described:
however,
he
was
never
suspected
of
smuggling.
At
the
time
of
the
events
of
April
11,
1980,
nothing
had
so
far
been
shown
by
the
Security
Services
investigation.
The
behaviour
of
the
supervisor
Tremblay
to
his
subordinate
indicated
no
negligence
and
showed
that
he
had
acted
correctly
in
dealing
with
the
problems,
giving
the
subordinate
a
warning
and
ordering
an
investigation
into
a
situation
which
concerned
him
and
in
which
the
Customs
officer
might
be
involved.
With
regard
to
the
R.C.M.P.
specifically,
plaintiff
alleged
that
it
had
failed
in
its
duty
to
prevent
crime,
a
duty
specified
in
section
18
of
the
Royal
Canadian
Mounted
Police
Act,
which
reads
as
follows:
18.
It
is
a
duty
of
members
of
the
force
who
are
peace
officers,
subject
to
the
orders
of
the
Commissioner,
(a)
to
perform
all
duties
that
are
assigned
to
peace
officers
in
relation
to
the
preservation
of
the
peace,
the
prevention
of
crime,
and
of
offences
against
the
laws
of
Canada
and
the
laws
in
force
in
any
province
in
which
they
may
be
employed,
and
the
apprehension
of
criminals
and
offenders
and
others
who
may
be
lawfully
taken
into
custody
.
.
.
Section
53
of
that
Act
also
provides
that
members
of
the
R.C.M.P.
are
servants
of
the
Crown.
The
R.C.M.P.
was
accordingly
charged
with
having
failed
to
perform
its
function
of
preventing
crime,
particularly
with
reference
to
the
plaintiffs.
The
statement
of
claim
alleged
the
following
in
this
regard:
25.
In
the
months
preceding
the
fraud
against
the
plaintiffs,
two
other
carriers
at
Mirabel
were
victims
of
fraud
committed
in
the
same
circumstances
and
with
the
same
modus
operandi,
and
this
was
specifically
known
to
members
of
the
RCMP.
26.
The
said
members
of
the
RCMP
knew,
or
could
not
have
been
unaware
of,
the
perpetrators
of
the
fraud,
their
actions
and
their
plans
for
future
criminal
offences
in
general,
and
against
carriers
and
customs
agents
in
particular.
27.
In
spite
of
the
foregoing,
the
said
members
of
the
RCMP
did
nothing
to
prevent
the
crime
perpetrated
against
the
plaintiffs,
thereby
failing
in
their
legal
duty
to
prevent
crime.
The
plaintiffs
in
fact
presented
evidence
of
the
existence
of
not
two
but
three
frauds
committed
before
April
11,
1980,
and
involving
Lufthansa,
Pan-
alpina
and
C.P.
Air.
In
all
justice
to
the
parties,
however,
it
should
be
mentioned
that
in
the
Panalpina
and
C.P.
Air
cases
the
frauds
involving
them
were
not
brought
to
the
attention
of
the
R.C.M.P.
until
after
the
events
of
April
11,
1980
involving
Danzas,
and
cast
no
blame
on
the
latter
since
it
was
unaware
of
their
existence.
The
Lufthansa
case
involved
an
importer
known
as
Rossignol
Diffusion,
and
the
only
connection
that
could
be
made
with
the
protagonists
in
the
case
at
bar
is
that
both
cases
involved
Mirabelle
Courtiers
en
Douanes
Ltée.
The
facts
in
this
case
occurred
in
November
1979
and
concerned
the
import
of
gems
which
were
paid
for
through
a
bank
in
the
Caribbean
which
proved
to
be
non-existent.
The
Lufthansa
employee
in
Montreal
informed
the
R..C.M.P.
(Ross
Graham),
who
then
contacted
Det.
Sgt.
Keays
of
the
Montreal
Urban
Community,
who
was
already
investigating
the
activities
of
the
import
firm
Rossignol
Diffusion.
However,
Lufthansa
filed
no
official
complaint
and
did
not
meet
with
anyone
in
the
R.C.M.P.
to
give
it
further
details
of
the
matter.
In
fact,
the
R.C.M.P.
heard
nothing
more
of
the
matter
until
the
events
of
April
11,
1980,
which
suggested
a
connection
and
indicated
that
the
same
international
smuggling
ring
was
involved.
The
plaintiffs
presented
evidence
of
another
event
in
an
attempt
to
establish
that
the
R.C.M.P.
had
been
negligent.
On
March
15,
1980
the
R.C.M.P.
received
a
request
for
information
from
Interpol,
acting
on
behalf
of
German
firms
which
had
sold
gems
at
a
commercial
fair
in
early
March
1980,
and
had
some
doubts
regarding
the
importer
Buchara.
Before
shipping
the
gems
on
or
about
March
18
and
19,
1980,
the
firms
wanted
information
on
this
company,
which
had
purchased
approximately
$1
million
in
gems
and
which
they
were
trying
to
contact
without
too
much
success.
Mention
was
also
made
of
Robert
Lefebvre,
the
president
of
the
customs
brokerage
firm.
On
March
17,
1980,
Cpl.
Desforges
of
the
R.C.M.P.
sent
them
an
initial
series
of
items
of
information,
followed
by
a
telex
on
March
19,
1980.
Doubts
were
expressed
at
that
time
concerning
the
activities
of
these
businesses,
and
it
was
suggested
that
a
trap
be
set
for
them
with
a
view
to
intercepting
the
goods
and
arresting
the
offenders
if
necessary.
The
German
firms
preferred
not
to
send
the
packages
and
the
matter
was
dropped.
On
March
17,
1980,
however,
during
the
investigation
of
this
import
firm,
the
R.C.M.P.
issued
a
lookout
notice
or
"observation
request”
(Exhibit
P-3)
to
all
Customs
officers.
The
purpose
of
this
document,
which
is
regularly
issued
when
it
is
suspected
that
a
customs
offence
is
about
to
be
committed,
was
to
warn
Customs
officers
against
a
possible
importation
of
gems
and
diamonds
worth
approximately
$1
million
by
the
Buchara
company
using
false
invoices.
The
document
stated
that
the
observation
request
extended
to
March
21,
1980.
Counsel
for
the
plaintiff
blamed
the
R.C.M.P.
for
not
distributing
this
lookout
notice
to
airlines
and
customs
brokers,
especially
to
the
plaintiffs.
Questioned
on
this
point,
Cpl.
Desforges
stated
that
the
German
firms'
request
for
information
related
only
to
the
"soundness”
of
Buchara
and
that
a
possible
customs
offence
was
suspected
at
the
time.
In
view
of
this
Cpl.
Desforges
saw
no
need
to
send
this
notice
to
customs
brokers
or
forwarding
agents
and
even
considered
that
it
might
affect
the
success
of
his
investigation
if
he
did
so.
It
should
be
noted
in
this
connection
that
the
evidence
did
not
show
that
any
customs
officer
besides
Chevrier
was
aware
of
the
notice
and
failed
to
inform
his
employer
or
the
R.C.M.P.
On
the
contrary,
the
evidence
showed
that
the
accomplice
Chevrier
took
away
the
customs
declaration
form
and
put
his
stamp
on
it,
thereby
enabling
the
goods
to
be
cleared
through
Customs.
Some
explanation
must
be
given
here
of
the
course
of
events
in
clearing
Customs,
which
were
discussed
at
length
at
the
hearing.
When
goods
arrive
at
Mirabel,
certain
information
is
fed
into
the
computer
so
that
their
movement
can
in
due
course
be
checked:
in
particular,
the
names
of
the
exporter
and
importer,
the
nature
of
the
goods
and
above
all
the
cargo
number
are
entered.
This
entry
in
the
computer
is
eventually
cancelled
by
a
Customs
entry,
indicating
that
the
Customs
duties
have
been
paid.
The
forwarding
agent
(Danzas)
informs
the
importer
or
his
Customs
broker
that
the
goods
have
arrived,
and
receives
for
export
the
value
of
the
goods
sold,
in
cash,
by
certified
cheque
or
by
bank
draft,
plus
the
costs
of
carriage
and
handling.
He
then
gives
the
yellow
copy
of
the
cargo
manifest,
specifically
the
customs
clearance
authorization,
to
the
importer
or
customs
broker,
who
in
turn
fills
out
another
document,
the
customs
clearance
form
as
such,
on
which
he
indicates
the
value
of
the
goods
accompanied
by
purchase
invoices.
The
customs
broker,
if
an
importer
has
retained
his
services,
sends
these
documents
to
Canada
Customs,
where
the
entry
time
is
marked
by
a
time
stamp
and
they
are
placed
in
baskets
to
which
each
Customs
officer
comes
in
turn,
and
taken
from
there
to
be
examined
in
order
to
avoid
preferential
treatment
or
fraud.
After
examination,
the
Customs
officer
collects
the
duties
relating
to
importation
of
the
item,
affixes
his
stamp
to
release
the
document,
and
places
it
back
in
the
basket
for
collection
by
the
broker:
the
latter
comes
to
pick
it
up
and
goes
to
take
delivery
of
the
item.
In
the
case
at
bar,
the
evidence
disclosed
in
particular
that
on
the
Customs
declaration
accompanying
the
package
of
March
31,
1980,
the
customs
broker
whose
duty
it
was
to
declare
the
value
of
the
goods
apparently,
though
the
relevant
documents
have
not
been
produced
in
this
regard,
valued
the
item
at
$157
instead
of
$157,000,
which
caused
the
defendant
a
significant
loss
of
Customs
duties
and
sales
taxes.
Moreover,
the
document
apparently
went
directly
from
the
broker
to
Customs
officer
Chevrier,
without
going
through
the
baskets
to
which
Customs
officers
ordinarily
came.
The
cargo
manifests
for
the
shipments
of
April
11,
1980
never
went
to
the
Customs
Department
strictly
speaking,
as
they
were
not
put
through
the
time
stamp:
Customs
officer
Chevrier
stamped
them
outside
his
work
area,
in
a
bathroom.
In
fact,
therefore,
none
of
the
Customs
officers
to
whom
lookout
notices
had
earlier
been
issued
saw
the
forms
relating
to
the
Bu-
chara
company.
So
far
as
the
individuals
involved
in
the
case
at
bar
are
concerned,
the
evidence
disclosed
that
though
certain
doubts
may
have
existed
about
them,
the
information
available
at
the
time
in
question,
that
is
before
April
11,
1980,
was
not
such
as
to
arouse
suspicion
that
an
international
smuggling
ring
existed,
and
above
all
indicated
no
connection
between
the
various
individuals.
An
investigation
into
the
Buchara
company
had
already
been
requested
on
March
15,
1980,
and
it
was
found
to
be
a
clothing
boutique
which
operated
a
store
in
Greenfield
Park,
a
suburb
of
Montreal.
The
store
was
now
empty,
except
for
a
telex
which
it
shared
with
another
company.
As
regards
Robert
Lefebvre
and
his
company
Mirabelle
Courtiers
en
Douanes
Ltée,
all
the
witnesses
heard,
their
competitors
and
the
Customs
representatives
stated
that
their
credit
was
not
good
and
that
they
were
required
to
pay
by
cash
or
certified
cheque
for
carriage
fees
or
customs
duties.
They
were
also
suspected
of
customs
offences,
though
no
charge
had
been
laid.
Robert
Lefebvre
had
no
criminal
record,
except
for
impaired
driving.
Customs
officer
Gérard
Chevrier
had
never
been
investigated
by
the
R.C.M.P.,
and
was
regarded
by
his
colleagues
as
an
individual
who
took
as
much
sick
leave
as
he
could
and
who
sometimes
performed
services
for
brokers.
Considered
after
the
events
of
April
11,
1980,
all
these
facts
may
throw
a
new
light
on
the
matter
and
suggest
that
it
should
have
been
foreseen.
The
Act
imposes
on
the
R.C.M.P.
a
duty
to
prevent
crime.
The
evidence
at
the
hearing
indicated
that
it
had
carried
out
this
duty.
It
acted
promptly
to
send
the
information
requested
of
it
in
March
1980,
and
as
a
cautionary
measure
issued
a
lookout
notice
to
Customs
officers.
Once
an
informer
told
it
of
what
had
happened
on
April
11,
1980,
the
R.C.M.P.
in
the
next
few
days
warned
customs
brokers
and
intercepted
any
packages
received
for
Buchara.
It
also
launched
its
police
operation
as
soon
as
the
information
was
received,
in
order
to
prevent
further
offences,
but
the
game
was
over
as
far
as
the
plaintiffs
were
concerned.
As
regards
its
other
duties
under
paragraph
18(a)
of
the
Act,
namely
the
arrest
of
criminals
and
offenders,
it
immediately
placed
wiretaps
on
the
suspects,
undertook
electronic
eavesdropping
and
other
usual
procedures
which
eventually
led
to
their
arrest
in
May
1980.
For
it
to
be
established
that
the
Crown
was
at
fault
with
respect
to
the
plaintiffs,
it
must
be
shown
that
there
was
a
legal
duty
to
them
and
that
one
of
the
Crown's
servants
failed
in
that
duty.
In
Keystone
Camera
Corporation
of
Canada
Limited
v.
R.,
[1982]
1
F.C.
487,
Cattanach,
J.
had
occasion
to
discuss
the
true
function
of
Canada
Customs
and
concluded
that
the
purpose
of
the
Customs
Act
is
to
furnish
revenue
to
the
Crown,
not
services
to
the
public.
As
regards
the
R.C.M.P.,
section
18
of
its
Act
imposes
on
it
a
duty
to
the
general
public
to
preserve
the
peace
and
prevent
crime.
A
close
analysis
of
the
facts
at
the
time
in
question
indicates
that
it
committed
no
fault
of
omission
or
commission
with
respect
to
the
plaintiffs
in
particular.
There
is
therefore
no
need
to
examine
the
copious
evidence
presented
regarding
the
worthless
certified
cheques
accepted
by
the
plaintiffs
in
payment
for
the
goods
delivered,
without
their
being
checked.
The
impact
of
this
point
is
only
relevant
in
analysing
how
responsibility
should
be
distributed
between
the
parties.
In
the
case
at
bar,
as
mentioned
above,
the
plaintiffs
initiated
court
actions
against
the
perpetrators
of
the
offence
to
recover
the
money
paid
to
the
exporter,
but
were
unsuccessful
as
they
were
insolvent.
They
are
trying
to
exercise
their
remedy
against
the
Crown,
but
they
should
not
lose
sight
of
the
fact
that
the
latter
was
not
an
insurer
and
had
no
obligation
of
warranty
towards
them.
In
short,
the
plaintiffs
were
unquestionably
the
victims
of
an
international
smuggling
ring,
against
which
it
was
difficult
for
them
to
take
precautions,
but
on
the
other
hand
they
contributed
to
their
loss
through
the
negligence
of
their
own
employees
and
their
lack
of
care.
The
circumstances
of
this
case
do
not
establish
negligence
by
servants
of
the
Crown
in
the
performance
of
their
duties
so
as
to
require
the
latter
to
assume
part
of
the
responsibility.
For
these
reasons,
the
action
of
the
plaintiffs
is
dismissed
with
costs.
Appeal
dismissed.
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