Supreme Court of Canada
R. v. N.M. Paterson and Sons Ltd., [1980] 2 S.C.R. 679
Date: 1980-12-18
Her Majesty The Queen Appellant;
and
N.M. Paterson and Sons Limited Respondent.
1980: October 15; 1980: December 18.
Present: Laskin C.J. and Martland, Dickson, Estey, McIntyre, Chouinard and Lamer JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA
Evidence—Criminal procedure—Compellability of witnesses—Corporation charged with offence—Whether an officer of the corporation compellable witness at instance of the Crown—Canada Grain Act, 1970-71-72 (Can.), c. 7, ss. 2(27), (32), 90(1)—Canada Evidence Act, R.S.C. 1970, c. E-10, s. 5.
The respondent was charged with an offence under the Canada Grain Act. At trial, Crown counsel attempted to call, as a witness on behalf of the Crown, Mr. Lyle Ramsdell, the manager of the respondent’s elevator where the alleged offence took place. Defence counsel objected that the witness was not compellable. He relied on the 1967 Manitoba Court of Appeal’s decision in R. v. Ettenhofer Painting & Decorating Ltd., [1967] 1 C.C.C. 386, where it was decided that the president of the corporation could not be called to give evidence against the corporation. It was then stated that the principle of criminal law that an individual accused cannot be compelled to give evidence on the hearing of a charge against him, applies equally to a body corporate. The provincial judge refused to compel Mr. Ramsdell to give evidence and acquitted the respondent for lack of proof. On appeal, the County Court judge held that he was bound by Ettenhofer and dismissed the appeal. Asked to reconsider its decision in Ettenhofer, the Court of Appeal stated that it was satisfied that the Ettenhofer case was based on sound reasoning and should be upheld and it confirmed the acquittal of the respondent. Hence the appeal to this Court.
Held: The appeal should be allowed and a new trial ordered.
Since the Ettenhofer case, the courts of appeal of Ontario, Quebec and British Columbia have reached the opposite conclusion. The contention of the respondent is that by calling the manager as a witness, he being the directing mind and will of the corporation, it is the
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corporation itself which is being called as a witness in the only way in which a corporate accused can be called to testify thus depriving the corporate accused of the privilege to stand mute at its own trial. To support this contention the respondent must bring into play the concept of the directing mind and will whereby the person so identified is as one with the corporation and what can be imputed or attributed to him can be imputed or attributed to the corporation. This concept has been applied in cases where the offence was one in which mens rea is an element. It will also apply where the accused corporation pleads the defence of due diligence.
This however is not such a case. There is no ground on which the concept of “directing mind and will” could be extended to apply to a situation such as the present one with the result that an employee of a corporation would not be compellable to testify on behalf of the prosecution while the same person in the same position and vested with the same authority would be compellable were his employer an individual person. And the fact that the manager is liable himself to be charged under the Act, tends to show that he is, for the purposes of prosecution, a distinct person who could seek for himself the protection of s. 5 of the Canada Evidence Act. Finally, there are fundamental differences between evidence given on examination for discovery of a person produced by a corporation and evidence given at trial by an officer or employee of that corporation. On discovery such an employee or officer is the corporation while at trial the corporation is not a witness. It follows that the cases relied on by the respondent related to the privilege against self-crimination in examinations for discovery are inapplicable.
Curr v. The Queen, [1972] S.C.R. 889; Marcoux and Solomon v. The Queen, [1976] S.C.R. 763; Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153; R. v. Beamish Construction Co. Ltd., [1967] 1 C.C.C. 301; R. v. Judge of the General Sessions of the Peace for the County of York, Ex parte Corning Glass Works of Canada Ltd., [1971] 3 C.C.C. (2d) 204; Purzon du Canada Ltée and Maranda v. The Queen (1971), 22 C.R.N.S. 1; R. v. Pacific Rim Mariculture Ltd., [1978] 3 W.W.R. 477; Laurentide Finance Company v. The Queen (1978), 7 Alta L.R. (2d) 193; R. v. United Grain Growers Ltd. (1978), 7 Alta L.R. (2d) 111; R. v. Fane Robinson Ltd., [1941] 3 D.L.R. 409; R. v. City of Sault Ste. Marie, [1978] 2 S.C.R. 1299; Lea v. City of Medicine Hat, [1917] 2 W.W.R. 789; Welsback
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Incandescent v. New Sunlight, [1900] 2 Ch. 1; Goodbun v. Mitchell, [1928] 3 D.L.R. 709; Klein v. Bell, [1955] S.C.R. 309; Triplex Safety Glass Co. v. Lancezaye Safety Glass (1934) Ltd., [1939] 2 K.B. 395; Hale v. Henkel, 201 U.S. 43 (1906); Wilson v. U.S., 221 U.S. 361 (1911); Essgee Co. v. U.S., 262 U.S. 151 (1923); U.S. v. White, 322 U.S. 694 (1944); U.S. v. Kordel, 397 U.S. 1 (1970); Bellis v. U.S., 417 U.S. 85 (1974), referred to; R. v. Ettenhofer Painting & Decorating Ltd., [1967] 1 C.C.C. 386; R. v. Bank of Montreal (1963), 36 D.L.R. (2d) 45, disapproved.
APPEAL from a judgment of the Court of Appeal for Manitoba dismissing the appeal of the judgment of the County Court affirming the acquittal of the accused by a provincial court judge. Appeal allowed and new trial ordered.
J.A. Scollin, Q.C., and Bruce McFarlane, for the appellant.
T. Glowacki, Q.C., and R. Dewar, for the respondent.
The judgment of the Court was delivered by
CHOUINARD J.—As phrased by the appellant the issue for determination by this Court “is whether an employee or officer of a corporation can be called as a witness for the Crown to testify during a criminal prosecution involving the corporation”.
The respondent was charged with using a grade name established under the Canada Grain Act, S.C. 1970-71-72, c. 7, in describing grain that did not possess characteristics of grain of that grade.
In the respondent’s view:
…The issue is a fundamental, substantive one. The issue is, whether in the administration of Canadian criminal justice (including federal prosecutions under federal penal legislation creating offences) Crown Counsel has the right to compel an accused to give evidence in Court at the accused’s trial.
The respondent accepts the statement of facts as set out in the appellant’s factum:
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The Respondent, N.M. Paterson and Sons Limited, was charged with an offence under the Canada Grain Act that was alleged to have been committed between the 13th day of June, 1977 and the 15th day of July, 1977. None of the employees of the Corporation were charged in connection with this matter.
On the 2nd of May, 1978, the Information was tried by His Honour Provincial Judge B.P. McDonald in the Town of Morden, in the Province of Manitoba.
At trial, Crown Counsel called a Member of the Royal Canadian Mounted Police as well as the Assistant Commissioner of the Canadian Grain Commission as witnesses for the prosecution. Both witnesses outlined their involvement in this particular matter.
Thereafter, Crown Counsel attempted to call Mr. Lyle Ramsdell as a witness on behalf of the Crown. Prior to swearing the witness, objection was taken to his being called and a discussion ensued between the Bench and Counsel for the Crown and Defence.
Although evidence was not tendered on this particular point, it was common between counsel that the witness Ramsdell was an employee of the Respondent and was, in fact, the “Manager” of the Corporate Respondent’s elevator at Dacotah, Manitoba.
After having heard submissions from Counsel, His Honour Provincial Judge McDonald ruled that Ramsdell was not a compellable witness for the prosecution. Accordingly he did not testify during the course of the proceedings.
The Crown having then closed its case, the Court dismissed the charge for lack of any evidence to support the charge.
An appeal taken by the Crown against this decision was dismissed by His Honour Judge P.D. Ferg on the 2nd of August, 1978.
A further appeal taken by the Crown was dismissed on the 25th of October, 1978 by the Court of Appeal for Manitoba.
The thrust of the respondent’s argument is that Mr. Ramsdell is, in the circumstances of this case, the “directing mind and will of the corporation” as the concept has developed in cases which will be discussed below, and is thus so closely identified with it that to compel him as a witness is equivalent to compelling the accused corporation itself and denying it the privilege against self-crimination.
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Counsel for the respondent write in their factum:
…To the extent that the prosecuting authorities may seek to call as witnesses mere employees of corporations, as distinct from persons who are (as in this case) the Chief Executive Officer or Manager, in actual control of the operation giving rise to the alleged offence, the Respondent has no quarrel with them. Just as Crown Counsel has the right to call employees of an accused human person, so Crown Counsel has the right to call employees of accused corporations. But, it is submitted, Crown Counsel has wrongly sought to cross the line in the present case when it seeks to call a Chief Executive Officer or Manager of the Respondent’s grain elevator in question. Crown Counsel sought to call this accused, the Paterson corporation, in the only way that the corporation could be called at its own trial.
There is some confusion, both in the arguments developed before this Court and in some of the cases cited, with respect to the privilege against self-crimination as it applies to an accused as opposed to a witness.
As was reiterated by Laskin J., as he then was, speaking for a majority of the Court in Curr v. The Queen, at p. 908:
An accused person remains under the law of Canada a non-compellable witness for the prosecution.
The manner in which the privilege applies to a witness on the one hand and to an accused on the other was clearly stated by Dickson J., speaking for the Court, in Marcoux and Solomon v. The Queen, at pp. 768-769:
The privilege, historically and comprehensively analyzed in 8 Wigmore on Evidence (McNaughton revision 1961) art. 2250, pp. 284 et seq., developed in revulsion from the system of interrogation practised in the old ecclesiastical courts and the Star Chamber, i.e. summoning a person, without giving him warning of the charge against him, and examining him on oath. The general rule evolved that no one was bound to answer any question if the answer would tend to expose him to a criminal charge. As applied to witnesses generally, the privilege must be expressly claimed by the witness when the question is put to him in the witness box, Canada Evidence Act, R.S.C. 1970, c. E-10, s. 5. As applied to an accused, the privilege is the right to stand mute. An
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accused cannot be asked, much less compelled, to enter the witness box or to answer incriminating questions. If he chooses to testify, the protective shield, of course, disappears.
In this case the privilege invoked is, clearly, that of the accused to stand mute. Indeed the respondent’s submission is that Mr. Ramsdell is not compellable since to compel him would be compelling the accused corporation.
Therefore, the true question in my view is whether there exists under the criminal law of Canada a rule whereby an officer or employee of a corporation, determined to be the “directing mind and will” of the corporation, is not compellable as a witness on behalf of the prosecution in a case where the corporation is the accused, on the basis that to rule otherwise would amount to a denial of the privilege of an accused against self-crimination.
It may have been arguable in this case whether Mr. Ramsdell could be described as the “directing mind or will” of the respondent corporation with respect to the respondent’s elevator at Dacotah, Manitoba, where the offence is alleged to have been committed. It is common ground that Mr. Ramsdell was the manager of that elevator. The respondent relies on s. 2(27) of the Canada Grain Act which defines “manager” as meaning “in respect of an elevator, the chief executive officer employed at the elevator by the operator or licensee of the elevator”.
By s. 2(32) “operator” means, “in respect of an elevator, the person in possession of the premises constituting the elevator, either as owner or lessee thereof or as being entitled under a contract with the owner or lessee thereof or as being entitled under a contract with the owner or lessee to operate the elevator for his own benefit and advantage”.
Not all managers can be said to represent the directing mind and will of the corporation. In Tesco Supermarkets Ltd. v. Nattrass, Lord Reid writes at p. 171:
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Reference is frequently made to the judgment of Denning L.J. in H. L. Bolton (Engineering) Co. Ltd. v. T.J. Graham & Sons Ltd., [1957] 1 Q.B. 159. He said, at p. 172:
“A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such.”
In that case the directors of the company only met once a year: they left the management of the business to others, and it was the intention of those managers which was imputed to the company. I think that was right. There have been attempts to apply Lord Denning’s words to all servants of a company whose work is brain work, or who exercise some managerial discretion under the direction of superior officers of the company. I do not think that Lord Denning intended to refer to them. He only referred to those who “represent the directing mind and will of the company, and control what it does”.
I think that is right for this reason. Normally the board of directors, the managing director and perhaps other superior officers of a company carry out the functions of management and speak and act as the company. Their subordinates do not. They carry out orders from above and it can make no difference that they are given some measure of discretion. But the board of directors may delegate some part of their functions of management giving to their delegate full discretion to act independently of instructions from them. I see no difficulty in holding that they have thereby put such a delegate in their place so that within the scope of the delegation he can act as the company. It may not always be easy to draw the line but there are cases in which the line must be drawn.
In that case, quoting from the headnote:
The defendants, a body corporate owning supermarket stores, were charged with an offence under the Trade Descriptions Act 1968. They sought to raise a
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defence under section 24(1) on the grounds that the commission of the offence was due to the act or default of another person, namely, the manager of the store at which it was committed, and that they had taken all reasonable precautions and exercised all due diligence to avoid the commission of such an offence.
The relevant portions of s. 24(1) read:
24(1): In any proceedings for an offence under this Act it shall, …be a defence for the person charged to prove—(a) that the commission of the offence was due to… the act or default of another person, …and (b) that he took all reasonable precautions and exercised all due diligence to avoid the commission of such offence.
…
It was held that the manager of the store was “another person” within the meaning of the enactment. Lord Reid writes at pp. 174-175:
…I have said that a board of directors can delegate part of their functions of management so as to make their delegate an embodiment of the company within the sphere of the delegation. But here the board never delegated any part of their functions. They set up a chain of command through regional and district supervisors, but they remained in control. The shop managers had to obey their general directions and also take orders from their superiors. The acts or omissions of shop managers were not acts of the company itself.
As already mentioned under the Canada Grain Act the manager of an elevator is “the chief executive officer employed at the elevator by the operator or licensee of the elevator”. In my view it does not necessarily follow that he becomes thereby “an embodiment of the company” and is not simply part of a “chain of command”, nor that he has been granted “full discretion to act independently of instructions” from above.
However, no issue has been raised by the appellant as to whether the manager, Mr. Ramsdell, could be properly described as representing the “directing mind and will” of the respondent corporation and I will now turn to the judgments under review.
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Judge McDonald of the Provincial Judges’ Court relied on R. v. Ettenhofer Painting & Decorating Ltd. and on R. v. Bank of Montreal, in ruling “that the witness (Mr. Ramsdell) is not properly subpoenable, and cannot be called by the Crown”.
In the Ettenhofer case it was decided that Mr. Ettenhofer, who was the president of the corporation and one of its directors, could not be called to give evidence against the corporation. Monnin J.A., speaking for the Court, said at p. 387:
There is a well known and sound principle of criminal law that an individual accused cannot be compelled in law to give evidence or produce written evidence on the hearing of a charge against him. I take it that this principle applies equally to a body corporate as to an individual.
In the Bank of Montreal case Hutcheson J. of the Supreme Court of British Columbia issued a writ of prohibition to prevent the calling of the Bank’s district superintendent as a witness to give evidence on behalf of the prosecution and produce documents.
On appeal to the County Court, from Judge McDonald’s decision, Ferg Co. Ct. J. was of the opposite view:
…For it is not the Corporation that is being called as a witness to ostensibly incriminate itself, but only an employee of that corporation, an employee of the corporate accused, the corporate entity. As noted, the employee witness is himself protected from self incrimination by the Canada Evidence Act, but we cannot let it rest there of course.
And later on he adds:
…It has always been my opinion, for what it is worth, that officers or employees of corporations have always been regarded as persons distinct and separate and apart from the corporate person or the corporate entity.
However, considering himself bound by the decision of the Court of Appeal in Ettenhofer, he dismissed the appeal.
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The Court of Appeal for Manitoba, speaking through O’Sullivan J.A., dismissed the appeal and affirmed the Ettenhofer decision:
With respect, I do not think that the Ettenhofer case should be so lightly dismissed. I am satisfied that it was based on sound reasoning and should be upheld.
There are today many one-man corporations. If a corporation’s sole shareholder can be compelled to give evidence against it, there is an end of the right of standing mute in any matter involving the corporation in alleged crimes or offences.
We are not called on in this case to draw the line as to which officers of a corporation are compellable and which are not. The Canada Grain Act, by section 2(27) defines “manager” as “the chief executive officer employed at” an elevator. I think one of the purposes of this section is to identify the corporation with its elevator managers so as to deem such managers to be directing minds and wills of a corporation. In my opinion, such a “chief executive officer” is not compellable to give evidence against his corporation.
In R. v. Beamish Construction Co. Ltd., Jessup J. of the Ontario High Court declined to extend the privilege against self-crimination to the employees of corporations “notwithstanding that they might be regarded as the directing minds and wills of their employers”. Although expressing some doubt as to the correctness of his rulings and the hope that “the question may be dealt with by the Court of Appeal”, he held that the sales manager of a corporation, the general manager who subsequently became vice-president and a director and later president, as well as the president and a director and later vice-president of another corporation, were compellable witnesses. The judgment of Jessup J. was confirmed by the Court of Appeal, but the Court did not pronounce itself on this issue.
Since the Ettenhofer cast was decided in 1967, the Courts of Appeal of Ontario, Quebec and British Columbia have reached the opposite conclusion.
In R. v. Judge of the General Sessions of the Peace for the County of York, Ex parte Corning
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Glass Works of Canada Ltd., the Court of Appeal for Ontario held that six employees and officers of a corporation were compellable witnesses to give evidence against it. Leave to appeal to this Court was refused.
In Purzon du Canada Ltée and Maranda v. The Queen et al., the Quebec Court of Appeal would not follow the Ettenhofer and the Bank of Montreal cases which it distinguished, and the Court ordered the production of the minute book of the corporation.
In R. v. Pacific Rim Mariculture Ltd., the British Columbia Court of Appeal followed Corning Glass, supra, and ruled that the “president and director of the respondent company and the directing mind of that company” was a compellable witness on behalf of the prosecution.
The Corning Glass and the Pacific Rim Mariculture decisions have been followed in Alberta by Miller J. of the Supreme Court, Trial Division, in Laurentide Finance Company v. The Queen, and by District Court Judge Rowbotham in R. v. United Grain Growers Ltd.
The underlying dilemma is well summarized by Jessup J. in the Beamish case, supra, when he says at pp. 340-341:
The privilege of an accused against self-incrimination is an ancient common law right which has not been altered by the Canada Evidence Act, R.S.C. 1952, c. 307. The question is whether an employee who is regarded as the directing mind and will of a corporation and its alter ego is to be privileged against incriminating his employer when he would not have such privilege if he were the employee of a natural person. On the one hand, corporations, which are now capable of criminal responsibility in offences involving mens rea but were not at the time the rule against self-incrimination was laid down, are to be denied an ancient privilege of the common law and on the other hand they are to enjoy an immunity from incrimination by their servants which is not available to natural persons.
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The contention of the respondent, as we have seen, is that by calling the manager as a witness, he being the directing mind and will of the corporation, it is the corporation itself which is being called as a witness in the only way in which a corporate accused can be called to testify thus depriving the corporate accused of the privilege to stand mute at its own trial.
To support this contention, the respondent must bring into play the concept of the directing mind and will whereby the person so identified is as one with the corporation and what can be imputed or attributed to him can be imputed or attributed to the corporation.
This concept has been applied in cases where the offence was one in which mens rea is an element. Indeed that is the only way in which mens rea can be established against a corporation. See R. v. Fane Robinson Ltd., where Ford J. found at p. 415:
In my opinion George Robinson and Emile Fielhaber were the acting and directing will of Fane Robinson Ltd. generally and in particular in respect of the subject-matter of the offences with which it is charged, that their culpable intention (mens rea) and their illegal act (actus reus) were the intention and the act of the company and that conspiracy to defraud and obtaining money by false pretences are offences which a corporation is capable of committing.
As appears from R. v. City of Sault Ste. Marie, this concept will also apply where in a proper case the accused corporation pleads the defence of due diligence. See also the Tesco Supermarkets case, supra, where the determination to be made was whether the manager to whose fault the offence was attributable could be said to be “another person” within the meaning of the exculpatory clause.
This however is not such a case. It is not a case where mens rea must be established and can only be established by imputing or attributing to a corporation the mind and will of its officers or employees. Neither is it a case where the corporation pleads due diligence and must prove the act which forms the basis of the offence was not that
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of the corporation but that of another person. I fail to see on what ground the concept of “directing mind and will” could be extended to apply to a situation such as the present one with the result that an employee of a corporation would not be compellable to testify on behalf of the prosecution while the same person in the same position and vested with the same authority would be compellable were his employer an individual person.
To emphasize the proximity of the manager to the corporation, reference was made by the respondent to s. 90(1) of the Canada Grain Act, stressing that the “manager” is liable himself to be charged under the Act. Section 90(1) is as follows:
90. (1) Any manager of an elevator, or any other employee or agent of the operator or licensee of an elevator, who does any act or thing directed to the commission of an offence under this Act by the operator or licensee of the elevator is himself a party to and guilty of the offence.
In my opinion, the fact that the manager like any other employee or agent of the operator who does any act or thing directed to the commission of an offence is himself a party and guilty of the offence, rather tends to show that the manager is, for the purposes of prosecution, a distinct person who could of course, as acknowledged by the appellant, seek for himself the protection of s. 5 of the Canada Evidence Act.
Finally, I believe that Arnup J.A. in Corning Glass, supra, has aptly distinguished evidence given on an examination for discovery by a person produced by a corporation and evidence given at trial by an employee or officer of that corporation. On discovery, such an employee or officer is the corporation (Lea v. City of Medicine Hat, Welsback Incandescent v. New Sunlight, Goodbun v. Mitchell).
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Arnup J.A. states at pp. 208-209:
In my view, there are fundamental differences between evidence given on examination for discovery of a person produced by a corporation for that purpose and evidence given at trial by a witness who is an officer or employee of that corporation. On discovery, the witness literally speaks for the corporation. He has been described, as long ago as 1902, as the “mouthpiece” of the corporation: Morrison v. Grand Trunk R. Co. (1902), 5 O.L.R. 38, 2 C.R.C. 398. The term was adopted, with reference to a servant of the corporation, by Roach, J., in Fisher v. Pain et al., [1938] O.W.N. 74 at p. 76, [1938] 2 D.L.R. 753n. As pointed out by Grant, J., if such a witness does not know the answer to a relevant question, he must inform himself from others employed by the corporation or from its records. Conversely, he may be examined only as to matters coming to his knowledge as an officer of the corporation. Knowledge which he has acquired otherwise than as such officer cannot be explored: Fisher v. Pain, supra.
At the trial, a witness subpoenaed to give evidence, who happens to be a servant, officer or even president and controlling shareholder of a corporate accused, is not called upon to speak “for” the corporation. He is not its “mouthpiece”. He is required to testify as to all relevant facts within his knowledge, whether those facts were acquired by him during his employment or term of office or were acquired in circumstances completely unrelated to the corporation. He is in no different position from a witness who had been in complete charge of the corporation’s affairs for many years, but has retired before the charge against it was laid. Both must tell what they know, so far as it is relevant and admissible. Both are entitled to all the protection that is available to any witness, and in particular, the protection against self-incrimination found in both the Canada Evidence Act, R.S.C. 1952, c. 307, and the Ontario Evidence Act, R.S.O. 1960, c. 125.
At trial the corporation is not a witness. It is not being “self-incriminated” because one of its managers is giving damaging evidence in the witness-box.
With this I agree. It follows that the cases relied on by the respondent relating to the privilege against self-crimination in examinations for dis-
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covery are inapplicable, viz. Klein v. Bell and Triplex Safety Glass Co. v. Lancezaye Safety Glass (1934) Ltd.
In concluding I note that the view I have taken is in accord with the jurisprudence of the Supreme Court of the United States. See Hale v. Henkel; Wilson v. U.S.; Essgee Co. v. U.S.; U.S. v. White; U.S. v. Kordel; Bellis v. U.S.
For the foregoing reasons, I would allow the appeal and order a new trial.
Appeal allowed.
Solicitor for the appellant: R. Tassé, Ottawa.
Solicitors for the respondent: Pitblado & Hoskin, Winnipeg.
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