Terrasse Jewellers Inc. v. Canada, docket A-334-97

Date: 19980220

Docket: A-334-97

CORAM:      PRATTE J.A.

         MARCEAU J.A.

         LÉTOURNEAU J.A.

BETWEEN:

     TERRASSE JEWELLERS INC.

     LARRY BAILY AND ROSS BROTHERS (1975) INC.

     Appellants

AND:

     HER MAJESTY THE QUEEN

     Respondent

     REASONS FOR JUDGMENT

     (Delivered from the Bench at Montreal, Quebec,

     on Friday, February 20, 1998)

LÉTOURNEAU J.A.

[1]      This appeal is directed against an order of the Trial Division declaring that Rouleau J., who rendered judgment allowing the action brought by the appellants against the respondent, is henceforth "functus officio" in relation to this matter.

[2]      In 1979, the appellants owned and operated jewellery stores in Montreal when a large quantity of their goods was seized and confiscated under the Customs Act, R.S.C. 1970, c. C-40. In March 1983, they sued the respondent, alleging the illegality of that seizure and praying that the goods seized be returned to them or, in the alternative, that they be awarded damages.

[3]      That action was tried at the end of January 1988 before Rouleau J. who, on June 9 of that year, rendered judgment in favour of the appellants. In his reasons for judgment, he found

"that there is cogent evidence to support the position that a portion of the goods seized by the Defendant's servants, and still in their possession, or destroyed by them, was not properly seized and confiscated under the Customs Act."

He also found that it was

"an impossible task from the evidence to determine exactly what percentage of the seized goods fell outside the ambit of the Customs Act."

Finally, after referring to the evidence, he concluded:

"... I conclude and find as a fact that 25% of the inventory seized and still detained by the Defendant's servants should not have been confiscated pursuant to the Customs Act and the Plaintiffs are entitled to its return, or payment of equivalent amount by way of damages. [...] These goods were not properly the subject of a Customs Act seizure and hence must be returned to the Plaintiffs..."

Rouleau J. accordingly rendered judgment in the following terms:

"The Plaintiffs are entitled to a return of or compensation for the following goods which were unlawfully seized and/or detained excluding any goods which were returned to the Plaintiffs by the Defendants. These include:

1)      any goods forwarded to Mr. Leblanc and which where not included in the informations which lead to pleas of guilty under the Precious Metals Marking Act;

2)      25% of the value of the goods still remaining in the custody of the Defendant.

The Plaintiffs are entitled to their costs and simple interest on any sums paid to them at 6% per annum calculated from September 1982.

The assessment of damages should be determined by the trial Judge; as to the amounts owing to each Plaintiff, this falls to be determined by reference pursuant to Rule 500 of the Federal Court Rules."

[4]      Subparagraph 1) of the first paragraph of the judgment does not concern us. It has been executed to the appellants' satisfaction. However, the same cannot be said of subparagraph 2).

[5]      Following the judgment, an expert retained by the respondent appraised the replacement value of "the goods still remaining in the custody of the Defendant" at the sum of $720,000.00. That appraisal was accepted by the appellants.

[6]      At the time, the parties, who contemplated the possibility that subparagraph 2) of the judgment be executed in kind, by the return of part of the jewellery seized rather than by the payment of a sum of money, encountered a difficulty. They agreed that the appellants were entitled to obtain goods having a total value of $180,601.00. However, the appellants considered that at least 50% of the jewellery "in the custody of the Defendant" had by that time become unsaleable. For that reason, they insisted on their right to select, from the goods seized, the items that they considered to be still saleable. As the respondent was not ready to concede that right, the appellants presented a motion to Rouleau J.

"for directions in relation to the judgment herein ordering return of or compensation for in respect of 25% of the jewellery seized under the Customs Act, namely:

- whether the Plaintiffs collectively may select from the jewellery purportedly seized in this matter under the Customs Act and held by Defendant at Plaintiffs' selection, items totalling not more than 25% by value in accordance with the appraisals of the said jewellery effected on behalf of the Crown;

- the whole with liberty to apply in the event that any such selection should not exhaust Plaintiffs' recourse in respect of return of or compensation for seized jewellery, or of any difficulties arising in relation to any such selection, as well as in respect of the other relief awarded Plaintiff under the said judgement."

On December 9, 1989, Rouleau J. granted that motion in the following terms:

Direction

The Plaintiffs shall be allowed 25% in value of the seized jewellery and may select from the entire lot that which they deem more saleable. The Defendant is hereby given until Monday noon of Dec. 11/89 to agree to comply.

Failure on the Defendant's part to permit the selection by the Plaintiffs forthwith will negate this direction and the Court would be prepared to entertain an application for recovery in damages of 25% of the total sum of $720,000.00 plus simple interest at 6% per annum.

[7]      Following this "Direction", the representatives of both parties met at the Customs Warehouse on the 14^th and 19^th of December, 1989, and the 4^th of January 1990; on those occasions, the appellants selected jewellery having a total value of $108,601.00. After that, the appellants did not attend any further at the Customs Warehouse to pursue their selection of jewellery. They apparently considered that the remainder of the jewellery was unsaleable. On March 5, 1990, counsel for the respondent wrote to the appellants asking them to continue the selection of the jewellery. That letter's final paragraph read as follows:

"Would you therefore advise of your client's intention to resume the selection of the jewellery, in default of which we shall move the Court to have the remainder of the jewellery owing to your clients selected by Revenue Canada."

The appellants never complied with the respondent's request, the respondent's threat, on the other hand, was never carried into execution. It was later discovered that the jewellery had been stolen between January 27 and April 27, 1990.

[8]      More than five years later, the appellants filed a notice of motion for an order declaring that the respondent was indebted to the appellants, under the judgment of June 9, 1988, in an amount of $71,399.00 together with interest on the sum of $108,699.00 at 6% per annum from September 8, 1982 to January 1990 and on the sum of $71,399,00 from September 1982.

[9]      On October 30, 1996, Rouleau J. made an order adjourning that motion sine die and directing that another application be made to the Court to determine whether he was "functus with respect to hearing further application in this matter". Pursuant to that direction, the appellants filed a notice of motion for an order "that Mr. Justice Rouleau is not functus officio in the present matter". That motion was heard by another judge who declared that Rouleau J. was functus. That is the order against which this appeal is brought.

[10]      I think the learned motions judge was right in declaring that Rouleau J. was functus officio in relation to the dispute between the parties.

The Purpose and Object of the June 1988 Judgment

[11]      It is clear from the reasons for judgment filed by Rouleau J. in June 1988 that the appellants were seeking a return of the goods seized and, in the alternative, damages by way of compensation. The following excerpts from these reasons, some of which have already been mentioned in the summary of the facts and procedural history, are illustrative of both the appellants' and the learned judge's frame of mind

p. 1      "The Plaintiffs therefore claim that some of the goods seized have been wrongfully detained and confiscated and should be returned or in the alternative damages by way of compensation."

p. 26      "I nevertheless find that there is very cogent evidence to support the position that a portion of the goods seized by the Defendant's servants, and still either in their possession, or destroyed by them, was not properly seized and confiscated under the Customs Act."

p. 27      "I am satisfied that the 1982 agreement shows unequivocally that a portion of the goods should not have been confiscated under the Customs Act, and the Defendant's servants were fully aware of this."

p. 28      "The Plaintiffs are entitled to its return, or payment of equivalent amount by way of damages."

p. 28      "These goods were not properly the subject of a Customs Act seizure and hence must be returned to the Plaintiffs."

Indeed, Rouleau J. went at great length, as can be seen at pp. 25-28 of his reasons for judgment, to refute the Defendant's argument that the Plaintiffs could not claim a return of the goods because they had not followed the procedure outlined under s. 153 or 160 of the Customs Act. He concluded that the case before him did not fall neatly into either of the categories described in sections 153 and 160. He even saw in the Defendant's willingness to return a portion of the goods an indication that they had not been seized and forfeited as required by s. 153.

[12]      Hence, his conclusion that

"the Plaintiffs are entitled to a return of or compensation for the following goods which were unlawfully seized and/or detained."

[13]      That the appellants were seeking the return of the illegally seized goods is also evidenced by the motion for directions in relation to the judgment that they presented in December 1989. They sought to be authorized to choose their 25% of the jewellery illegally seized, at their own selection, from all the jewellery seized and held by the Defendant. They also requested, in the alternative, the liberty to apply to the Court for additional instructions in the event that the selection should not exhaust their recourse in respect of return or compensation or in the event that the selection gave rise to any difficulties. It is worth noting that the evidence before Rouleau J., at the time, was that the jewellery from which the Plaintiffs could select had a remaining sale value quite sufficient to satisfy the 25% in value that the Plaintiffs had been allowed to take in kind from the material seized. I hasten to add for the sake of clarity that the 25% in value referred to in the decision of Rouleau J. is not an award of money in compensation for the loss of the illegally seized goods, but is merely a practical means of putting a cap on a return of goods which could not otherwise be conveniently identified. In other words, the decision ordered the return of the jewellery seized up to 25% in value of all the material seized.

[14]      In early December 1989, when counsel for the appellants requested a speedy hearing of the motion for directions, he, at the time, reasserted the wish of their clients to have the goods returned to them in conformity with the judgment. He wrote:

"On the other hand, if the Plaintiffs obtain the return of 25% by value..., this will amount to a practical solution of the claim for return of jewellery under the judgment." (My emphasis)1

[15]      It is in this context that Rouleau J. instructed that the Plaintiffs be authorized to select from the entire lot that which they deem more saleable. Time was obviously of the essence of an effective and remedial return of the goods as evidenced by the direction which required the Defendant to permit a selection by the Plaintiffs "forthwith". Indeed, the motion for direction was presented shortly before Christmas and the Plaintiffs were anxious to quickly obtain the return of their jewellery as the sale of such material was then at its peak. The Defendant shared the same eagerness as it was entitled to keep and forfeit 75% of the material seized.

[16]      In the second paragraph of his direction, Rouleau J. stated that

"failure on the Defendant's part to permit the selection by the Plaintiffs forthwith will negate this direction and the Court would be prepared to entertain an application for recovery in damages of 25% of the total sum of $720,000.00 plus simple interest at 6% per annum."

[17]      This again makes it clear that a return of the goods that were illegally seized and detained was, in the learned judge's mind, what he had authorized in his judgment and that compensation or damages was simply an alternative in case a return of the goods would be impossible after all these years. Indeed, it is, for obvious reasons, usual and normal practice to order a return of the goods seized to its legitimate possessor or owner when the seizure is found to be illegal. Otherwise, to conclude that the distrainee has the right, at his election, to seek monetary compensation instead would, in effect, be tantamount to placing the distrainor in the invidious position of being deemed to have unwillingly purchased the goods. I cannot believe that this is what Rouleau J. intended.

---

The Moment the Judge Became Functus Officio

[18]      At the time directions were sought from Rouleau J., there were obviously difficulties with the implementation of his judgment and the learned judge still possessed the necessary authority to issue directions or orders for the proper and effective implementation of his decision. The direction he issued was designed precisely to give effect to the object and purpose of his judgment and the method he selected, at the request of the Plaintiffs, was appropriate to carry out such object and purpose.

[19]      The evidence reveals that the Defendant complied fully with the direction issued by Rouleau J., but that it is the Plaintiffs who, after having on three occasions retrieved jewellery in the amount of $108,601.00, ceased without reasons to make selections and seek the return of goods, notwithstanding numerous unanswered requests made to them by the Defendant to proceed to the selection in compliance both with the judgment and the direction subsequently issued to the parties. In my view, the judgment was satisfied when the appellants ostensibly renounced to seek, and abandoned their right to, the return of the additional goods they were entitled to repossess. In so doing, they waived any rights to the execution of the balance of the judgment and Rouleau J. then became functus officio.

[20]      I would add that, if s. 540 of the Quebec Code of Civil Procedure, which contains the principles governing the voluntary execution of a judgment, were to apply through the gap rule (r. 5) of the Federal Court Rules, the conclusion would be the same. Under that section, the execution of a judgment ordering the return of a movable is effected by the delivery of the movable in "a manner that the party entitled thereto may become seized or take possession of it". In the present instance, all the jewellery was delivered to the appellants, in conformity with the judgment, in a manner that they could become seized or take possession of their share. The execution of the judgment was then effected.

[21]      For these reasons, the appeal will be dismissed with costs.

     "Gilles Létourneau"

     J.A.

[22]

     Date: 19980220

Docket: A-334-97

(T-813-83)

CORAM:      PRATTE J.A.

         MARCEAU J.A.

         LÉTOURNEAU J.A.

BETWEEN:

     TERRASSE JEWELLERS INC.

     LARRY BAILY AND ROSS BROTHERS (1975) INC.

     Appellants

     - and -

     HER MAJESTY THE QUEEN

     Respondent

     REASONS FOR JUDGMENT

     (Delivered from the Bench at Montreal, Quebec,

     on Friday, February 20, 1998)

PRATTE J.A.

[1]      I agree with my brother Létourneau and only wish to add a few words.

[2]      The principle of functus officio prevented Rouleau J. from changing his judgment of June 9, 1988. It did not prevent him, however, from determining, as he did in his December 8, 1989 Direction, questions that he could have answered in his judgment but had left unresolved. In order to decide whether he was functus so as to be unable to grant the appellants' motion for an order directing the respondent to pay them a monetary compensation for the seized goods, it is therefore necessary to know precisely what he had decided by his judgment.

[3]      According to the first sentence of that judgment,

"The Plaintiffs are entitled to a return of or compensation for the following goods which were unlawfully seized..."

The first question that arises is whether that sentence awarded the appellants the alternative right to claim, at their option, either compensation or return of the goods. If the judgment is interpreted as giving such an alternative right to the appellants, it is clear that they could not be deprived of their right to claim compensation either by the Direction of December 8, 1989 (since the Direction could not change what had been previously decided) or by the theft or destruction of the jewellery (which could not possibly affect the right to compensation). In my opinion, however, the judgment is not susceptible of such interpretation.

[4]      The first sentence of the judgment gave the appellants the same rights with respect to two categories of goods: those mentioned in subparagraphs 1) and 2). With respect to the goods referred to in subparagraph 1) (i.e. "any goods forwarded to Mr. Leblanc..."), the judge clearly intended to give the appellants the right to claim compensation only if the return of the goods became impossible. Indeed, the goods referred to in that subparagraph were certain and determinate things which, once found to have been illegally seized and confiscated, were in effect declared to be owned by the appellants and illegally detained by the respondent. Those things, then, had to be returned to their owners who could claim compensation if, without their fault, the return became impossible.

[5]      If follows that the judgment gave the appellants, with respect to the goods referred to in subparagraph 2), the same right to claim compensation only if the appellants, without their fault, could not obtain the return of the jewellery.

[6]      It is clear that, after the theft, the appellants could no longer obtain the return of the jewellery. It is also clear, however, that this unfortunate situation was due to the appellants' refusal to comply with Rouleau J.'s Direction and select the items of jewellery that they wished to have. In these circumstances, Rouleau J. could not, in my view, order the payment of damages without modifying the judgment he had previously rendered. In other words, he was functus with respect to that matter.

     "Louis Pratte"

     J.A.

[7]

     Date: 19980220

Dossier: A-334-97

(T-813-83)

CORAM:      LE JUGE PRATTE

         LE JUGE MARCEAU

         LE JUGE LÉTOURNEAU

ENTRE:

     TERRASSE JEWELLERS INC.

     LARRY BAILY AND ROSS BROTHERS (1975) INC.

     Appelants

     - et -

     SA MAJESTÉ LA REINE

     Intimée

     MOTIFS DU JUGEMENT

     (Prononcés à l'audience à Montréal, Québec,

     le vendredi 20 février 1998)

LE JUGE MARCEAU

[1]      With a view to preserving the bilingual context in which this case was presented, I thought of writing and reading my short dissenting reasons in French.

[2]      Je regrette de ne pouvoir concourir avec mes collègues, mais ma façon de voir, je le dis avec égards, diffère fondamentalement de la leur. Je vais donc tenter de m'en expliquer le plus clairement possible, d'autant plus que des questions de principe se soulèvent, mais je le ferai brièvement et sans insister, mon but n'étant que d'appuyer ma dissidence.

[3]      Les faits ont été fort bien décrits; ce serait inutile de les reprendre, d'autant plus que seuls les plus marquants sont vraiment essentiels à mon propos. Aussi, j'en viens tout de suite aux points que je veux faire valoir.

[4]      Le juge de première instance, dont l'ordonnance est devant nous, a interprété la "directive" du juge du procès donnée le 8 décembre 1989 suite à la "requête pour directions" ("motion for Directions (Rule 473)) des appelants comme ayant l'effet d'ordonner que le remède auquel ces derniers avaient droit en satisfaction du jugement du 9 juin 1988 serait uniquement de pouvoir choisir parmi les bijoux saisis et confisqués un certain nombre dont la valeur serait égale à 25% de la valeur totale attribuée à l'ensemble. Cette interprétation est naturellement la pierre angulaire de tout le raisonnement. En ordonnant ainsi, le juge du procès aurait vidé son mandat et se serait dessaisi complètement et définitivement. La façon d'exécuter le jugement était maintenant arrêtée, les parties ne pouvaient attendre rien d'autre de lui à moins que la Couronne ne refuse de se conformer immédiatement. Les appelants ne peuvent aujourd'hui s'en prendre qu'à leur retard inexplicable à agir si elles n'ont pas eu satisfaction complète, mais, de toute façon, ça ne regarde pas le juge du procès.

[5]      Je dis d'abord que l'interprétation du juge des requêtes, que mes collègues approuvent, m'apparaît difficilement fondée quant à ses termes, voire même impossible en droit.

[6]      Elle m'apparaît, en effet, non fondée sur le plan littéral et sémantique. Dès lors que l'on s'emploie à lire les termes utilisés par le juge dans le contexte de la demande qui était devant lui et à laquelle il donnait nécessairement suite, ces termes ne sauraient se prêter à une interprétation qui lui donnerait la portée qu'on veut leur attribuer. Il s'agissait uniquement de résoudre une mésentente entre les parties et d'autoriser les appelants à procéder eux-mêmes au choix de bijoux susceptibles d'être repris par eux en satisfaction de tout ou partie du jugement, et rien ne permet de penser que le juge ait voulu faire plus, à supposer qu'il le pût.

[7]      L'interprétation suggérée m'apparaît même impossible légalement parce qu'elle prête au juge du procès l'intention de modifier de façon substantielle son jugement final du 9 juin 1988 qui donnait aux appelants le droit à 25% de la valeur des bijoux payable soit en nature, soit en argent, et une telle atteinte à son jugement initial lui était prohibée parce qu'à cet égard, justement, il était dessaisi. Je me dois de souligner ici que mon interprétation du jugement, je la tire de ce que l'action en était une en dommages causés par la négligence de la Couronne, qu'à plus d'une reprise le juge confirme, dans ses motifs, le droit des demandeurs à compensation monétaire et que sa conclusion formelle est que les demandeurs "are entitled to a return of or compensation for...," "2) 25% of the value of the goods still remaining in the custody of the Defendant..." et "the assessment of damages should be determined by the trial judge."

[8]      Je dis ensuite, pour raisonner à l'impossible, que même interprétée comme le veulent le juge de première instance et mes collègues, la "directive" du 8 décembre, à mon humble avis, ne dessaisissait pas définitivement le juge du procès quant à l'exécution de son jugement. Un juge mandaté pour disposer d'une cause ne peut être dit avoir conduit son mandat à terme, je pense, s'il laisse l'exécution de son jugement à des aléas ou à des conditions tout-à-fait prévisibles dont la réalisation ou la non-réalisation peuvent rendre inopérante sa volonté quant au remède imposé. L'exécution en nature aurait été soumise ici à deux telles conditions, soit que les appelants utilisent de fait la possibilité qui leur était donnée de choisir, et que les bijoux restent disponibles jusqu'à pleine satisfaction. Même en l'absence de réserve expresse, je soumets que le juge restait saisi pour disposer des aléas prévisibles qui pouvaient s'opposer à l'exécution de sa volonté telle qu'il l'avait manifestée.

[9]      Je suis, moi aussi, fort ébranlé par l'incurie apparente des appelants, et peut-être qu'ils devront éventuellement en répondre s'ils ne peuvent s'en expliquer, encore qu'il faille bien voir qu'en définitive leur retard n'est pas la cause première de la disparition des bijoux. Mais, pour le moment, il m'apparaît indubitable que le comportement des appelants à cet égard ne saurait ni directement, ni indirectement influer sur le problème de savoir si le juge du procès est functus officio ou non.

[10]      Je crois donc que cet appel est bien fondé, que le juge des requêtes a eu tort de déclarer que le juge du procès s'était dessaisi définitivement de la cause par sa directive du 8 décembre et, qu'au contraire, cette Cour devrait déclarer que le juge du procès n'est pas functus officio.

     "Louis Marceau"

     j.c.a.

FEDERAL COURT OF APPEAL      Date: 19980220      Docket: A-334-97      (T-813-83) BETWEEN:      TERRASSE JEWELLERS INC.      LARRY BAILY AND      ROSS BROTHERS (1975) INC.      Appellants      - and -      HER MAJESTY THE QUEEN      Respondent           REASONS FOR JUDGMENT

COUR D'APPEL FÉDÉRALE      Date: 19980220      Dossier: A-334-97      (T-813-83) ENTRE:      TERRASSE JEWELLERS INC.      LARRY BAILY AND ROSS BROTHERS (1975) INC.      Appelants      - et -      SA MAJESTÉ LA REINE      Intimée           MOTIFS DU JUGEMENT

__________________

¹      Appeal Book, vol. 1, p. 110.