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Contempt - Civil Contempt. Canadian Pacific Railway Company v. Teamsters Canada Rail Conference
In Canadian Pacific Railway Company v. Teamsters Canada Rail Conference (Fed CA, 2024) the Federal Court of Appeal allowed an appeal from a finding of civil contempt, here in relation to a railway labour arbitration award.
Here the court considers corporate 'intent' ('directing mind') as it bears on civil contempt:Intent of corporations in civil contempt
[51] Ascribing intent to a corporation, especially a large one, is a difficult task. The directing mind doctrine provides a middle ground between vicarious liability (imposing blanket liability on corporations for the criminal acts of their employees acting in the scope of their employment), and criminal liability only attaching to a corporation if its board of directors directs the criminal act (Canadian Dredge at 675 and 692-693).
[52] The directing mind doctrine has been applied to corporations in the context of civil contempt, usually in the context of closely held corporations: see, for example, Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 807, 2022 W.C.B. 1886 at paras. 1-2; College of Optometrists of Ontario v. SHS Optical Ltd., 2006 CanLII 39463 (ONSC), [2006] O.J. No. 4708 at paras. 2 and 19, aff’d 2008 ONCA 685, [2008] O.J. No. 3933; Red Rhino at para. 28; Canadian Standards Association v. P.S. Knight Co. Ltd., 2021 FC 770, 186 C.P.R. (4th) 102 at paras. 58-59 and 66; Roynat Inc. v. 1664092 Ontario Inc., 2014 ONSC 2778, 114 W.C.B. (2d) 286 at paras. 32-33; Peach Films Pty. Ltd. v. Cinemavault Releasing Inc., 2008 CanLII 48815 (ONSC), 79 W.C.B. (2d) 32 at para. 25; and Trans-High Corp. v. Hightimes Smokeshop and Gifts Inc., 2015 FC 919, 134 C.P.R. (4th) 222 at paras. 3 and 6.
[53] For closely held corporations, intent is simple to establish. The person who committed the act that breached the order will often necessarily be the directing mind of the corporation. In such cases, the intent analysis is typically perfunctory, as a conclusion regarding intention is self-evident from the actions of the senior officers.
[54] Unsurprisingly, there are few examples of large, publicly held corporations being held in contempt. Nevertheless, the directing mind test still applies, and the judge’s refusal to apply it is unsupported by the jurisprudence.
[55] The judge relied on Baxter and Tele-Direct to support the contention that there was no directing mind "“exemption”" available to CP in this case.
[56] The law of civil contempt itself has evolved significantly since Baxter such that it is no longer good law and ought not to have been followed. Baxter predates Canadian Dredge and predicates its conclusion on liability for contempt on the doctrine of vicarious liability (Baxter at 509). The Court in Baxter also found that "“it is no defence [to contempt] for a company to show that its officers were unaware of the terms of a court order”" (at 509). However, and to the contrary, Carey holds that knowledge of the order is a mandatory element of contempt (Carey at para. 34).
[57] The second case relied on by the judge to avoid finding a corporate intent was Tele-Direct. Tele-Direct does not hold that the directing mind doctrine is unavailable to large corporations subject to a contempt allegation. Tele-Direct notes that an injunction enjoins both a corporation and its employees, agents, and all those over whom the corporation exercises control, and that the corporation will be in breach of the injunction if persons acting for it breach the order (at para. 81). However, the simple fact that a corporation is in breach of an order does not speak to whether the corporation can be found in contempt for that breach, given the required mental element in contempt.
[58] Finally, on a principled basis, failing to recognize the directing mind’s application in the law of civil contempt effectively converts the charge into one of vicarious liability. As the Supreme Court held in Bhatnager v. Canada (Minister of Employment and Immigration), [1990] 2 S.C.R. 217, 1990 CanLII 120 (SCC), "“liability in contempt is essentially criminal liability”", and "“in general, vicarious liability is unknown to the criminal law”" (at 229).
[59] I close on two cases relied on by Teamsters in support of the judge’s analysis of contempt: Amalgamated Transit Union and Viterra. They are instructive cases, but do not support the argument that a finding of intention was unnecessary. Both involved mandatory orders, but illustrate how evidence of intent can be established in those circumstances.
[60] In Amalgamated Transit Union, an arbitration award directed that an employee be reinstated. The defendant city had not reinstated the employee, and the Court was able to infer that the non-reinstatement was intentional. Given the simplicity of the order, the length of time that had passed, the city’s control over its implementation and the absence of any intervening factors, the only reasonable inference that could be drawn was that the city did not intend to comply with the order. There was no reasonable possibility that the failure to reinstate the employee was the result of "“a slip or a mistake or some sort of oversight”" (at para. 31).
[61] Similarly, in Viterra, Viterra was found in contempt of an order directing that it stop employees from working more than 48 hours per week. The evidence established that employees had been allowed to work, had been paid hours in excess of the proscribed 48 hour maximum and that the corporation had made little or no effort to comply for more than two years. In these circumstances the Court readily inferred that Viterra’s management never intended to comply with the order. To ensure compliance, all Viterra needed to do was tell its employees that they were not permitted to work more than 48 hours and would not be paid for any hours beyond the maximum. Presumably, had that occurred, employees would not have worked more than the maximum hours permitted since they would not be paid. In those circumstances, the breach could not have occurred had Viterra not intended for it to occur. . Canadian Pacific Railway Company v. Teamsters Canada Rail Conference
In Canadian Pacific Railway Company v. Teamsters Canada Rail Conference (Fed CA, 2024) the Federal Court of Appeal allowed an appeal from a finding of civil contempt, here in relation to a railway labour arbitration award.
Here the court usefully explains the mental element (intent) of civil contempt:Strict liability, absolute liability, and mens rea offences
[28] The point of departure for the analysis begins with an understanding of the differences between mens rea offences (or "“true criminal offences”"), strict liability offences, and absolute liability offences. The guiding authority on this remains: R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299, 1978 CanLII 11 (SCC) at 1325-1326 [Sault Ste. Marie]:(i)true criminal offences, "“in which mens rea, consisting of some positive state of mind such as intent, knowledge, or recklessness, must be proved by the prosecution”";
(ii)strict liability offences, "“in which there is no necessity for the prosecution to prove the existence of mens rea; the doing of the prohibited act prima facie imports the offence, leaving it open to the accused to avoid liability by proving that he took all reasonable care”";
(iii)absolute liability offences, in which "“it is not open to the accused to exculpate himself by showing that he was free of fault”". [29] It is readily apparent that the analysis of the Federal Court cannot be rationalized with Sault Ste. Marie or any orthodox understanding of civil contempt. Contempt is not a strict liability offence. Contempt is not an absolute liability offence. As Carey makes clear, the mental element in civil contempt is "“required”" (at para. 43). The reason for this lies in the penalties and consequences of a finding of contempt.
[30] While the Federal Court stated that contempt was not a strict liability offence, it simultaneously discarded the directing mind inquiry and rejected reasonable excuse or due diligence as defences. In effect, the Federal Court treated contempt as an offence of absolute liability. This error is sufficient to warrant the granting of the appeal: an alleged contemnor’s reasonable efforts (or due diligence, understood broadly) forms part of the evidentiary inquiry into intent. Here, the reasons and factual findings of the Federal Court do not reveal any evidentiary pathway which leads to a conclusion of intent. In fact, the Federal Court’s findings lead to the opposite conclusion—that CP had no intent.
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The mental element of civil contempt
[32] In criminal contempt, the mens rea rests on the "“element of public defiance”", such as flaunting disobedience or disrespect for the authority of the courts (Carey at para. 31). In civil contempt, on the other hand, the alleged contemnor must only have intentionally done the act that breached the order at issue; no element of public defiance is required (Carey at para. 35). In short, criminal contempt requires certain attributes of contumacious intent; civil contempt does not. I note, parenthetically, that the words "“mens rea”" were not used by Cromwell J. in Carey, likely so as to not confuse the mental elements in civil and criminal contempt.
[33] In Carey, Cromwell J. was also careful to note that there are two discrete types of intentional acts that can ground a finding of civil contempt; one where the alleged contemnor has "“intentionally done the act that the order prohibits”", the other where the alleged contemnor "“intentionally failed to do the act that the order compels”" (Carey at para. 35, emphasis added). As will be discussed below, the distinction between the two types of actions or orders (whether the action or order is prohibitory or mandatory) is reflected in the jurisprudence of civil contempt and guides its application. (For a further discussion of the difference between the two types of orders see R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196.)
[34] To summarize, the fact that an order has been breached does not establish the offence. The mental element of intent must still be made out. However, as I will explain, and as the case law demonstrates, depending on the nature of the order and the act that breaches it, the breach of the order itself may provide an evidentiary springboard to support a conclusion on intent.
[35] Intent in civil contempt, like in many criminal offences, can sometimes be inferred from the contemnor’s conduct, without direct evidence of the contemnor’s state of mind (Viterra at paras. 132-133). Intent in civil contempt can also be satisfied by evidence of deliberateness, recklessness, or wilful blindness (Doucette at para. 30; Fuzion Technology at para. 63; see also Sakab Saudi Holding Company et al. v. Al Jabri et al., 2024 ONSC 1347, 2024 CarswellOnt 3027 at para. 93). I note, parenthetically, that the Federal Court judge found no such conduct on the part of CP and in fact made findings to the contrary. I will return to this point later in these reasons.
[36] As Carey indicates, the intention analysis may take different shape when dealing with a mandatory order as compared to a prohibitory order.
[37] Since a prohibitory order requires the person or party to refrain from doing something, when the prohibited act is committed, a compelling inference arises that the person intended to commit the act. Put another way, the nature of the breach or the act itself provides an evidentiary foundation for a finding of intention. This was the type of order at issue in Carey. The contemnor in Carey was subject to an order enjoining him from returning money held in trust to a client. The contemnor nevertheless returned the money. The prohibitory nature of this order allowed the Court to find that he "“decid[ed] to give the money back”" and therefore intended the act, without much analysis on the point (Carey at para. 60).
[38] Similar inferences were drawn in other cases dealing with contempt of prohibitory orders: Bell Canada v. Red Rhino Entertainment Inc., 2019 FC 1460, 161 W.C.B. (2d) 507 at para. 18 [Red Rhino]; Boutin v. Boutin, 2022 ONSC 3229, 2022 W.C.B. 639 at paras. 122-124; XY, LLC v. Canadian Topsires Selection Inc., 2014 BCSC 2629, 124 W.C.B. (2d) 246 at para. 20; Alston v. the Municipal District of Foothills No. 31, 2021 ABQB 951, [2022] A.W.L.D. 3262 at para. 12; and Slater Vecchio LLP v. Arvanitis, 2021 BCSC 428, 172 W.C.B. (2d) 103 at para. 33. In all of these cases, the requirement of intent was satisfied as a logical, evidentiary inference from the commission of the prohibited act. While the onus is on the moving party to establish all three elements of the offence, in cases of prohibitory orders, proof of the actus reus may cause a tactical burden to arise on the part of the defendant.
[39] Therefore, a finding that the actus reus has been made out for contempt of prohibitory orders will often allow the court to find that the mental element for the offence has also been made out. However, this is not an automatic finding of liability: it is an evidentiary inference that arises from the nature of the order and conduct in question. Intent remains a requirement, but the requirement can be discharged as a matter of evidence. Here, the Federal Court conflated proof of the actus reus with proof of the necessary intent. This was in error. The offence of civil contempt is not, and cannot be, an offence of strict or absolute liability.
[40] Mandatory orders are different in kind: there are myriad circumstances that might preclude or limit compliance with a mandatory order. The actus reus alone does not, generally, give rise to the same evidentiary inference. The point was made clearly in Doucette at paragraphs 36-37:To use analogies from criminal law, contempt is not an absolute, or even a strict liability offence. [...]
Where the contempt alleged is failure to comply with a court order, it is not enough to prove that the respondents were aware of an order and failed to comply. The law is clear that where the complainant is unable to prove the requisite intent beyond a reasonable doubt, the offence is not made out. Where the contempt in question relates to the more common prohibitory order, proof of knowledge and breach of the order may well be sufficient to permit the Court to draw the inference or conclusion that the breach was deliberate or reckless. That same inference is not so easily drawn when the contempt alleged is of a mandatory order. Where an individual or organization is ordered to perform a specific duty or act, a myriad of circumstances might prevent a person or organization from doing what they have been ordered to do. I have concluded above that evidence of frustration of efforts to comply or impossibility of compliance is properly to be considered when deciding whether the alleged contemnor(s) intentionally or deliberately failed to do as ordered. [41] In Envacon the Alberta Court of Appeal agreed with the reasoning in Doucette and wrote at paragraphs 36-39:We do not read Carey as changing the law that requires courts to look at reasonable excuse as an aspect of the test for finding contempt. […] We also reject the suggestion that Carey changed this approach and that reasonable excuse is only to be considered with respect to the penalty after a finding of contempt.
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Indeed, Cromwell J, writing for the Court in Carey at para 37, acknowledged that in some cases, an alleged contemnor who tries diligently to obey an order but fails may avoid a finding of contempt (citations omitted and emphasis added):[W]here an alleged contemnor acted in good faith in taking reasonable steps to comply with the order, the judge entertaining a contempt motion generally retains some discretion to decline to make a finding of contempt .... While I prefer not to delineate the full scope of this discretion, given that the issue was not argued before us, I wish to leave open the possibility that a judge may properly exercise his or her discretion to decline to impose a contempt finding where it would work an injustice in the circumstances of the case. In such cases, the alleged contemnor in effect has a reasonable excuse for failing to comply. That excuse goes to the finding of contempt, and not to the remedy or penalty. [42] Envacon and Doucette articulate the correct analytical pathway to finding the requisite intent in civil contempt. In those cases, the Courts acknowledge that for prohibitory orders, the inference of intent may be readily drawn where proof of knowledge and breach of the order have been made out. For mandatory orders, the analysis includes consideration of factors that may have prevented an alleged contemnor from doing what they had been ordered to do.
[43] The Federal Court did not distinguish between the types of orders and the implications for how the requirement of intent is fulfilled. To the contrary, the Federal Court took pains to distinguish the cases. The judge found that Envacon did not apply because it was decided under the Alberta Rules of Court, which allow a court to make a finding of contempt where the alleged contemnor has failed to comply with an order "“without reasonable excuse”". Since no such language appears in the Federal Courts Rules, the judge considered Envacon irrelevant. However, Carey was decided under Ontario law, which also lacks express "“without reasonable excuse”" language, and the Court in Envacon concluded that the words "“without reasonable excuse”" did not create a different test than that described in Carey or efface the requirement for intent.
[44] It is of no consequence whether an alleged contemnor’s reasonable efforts to comply are considered as tactical "“defences”" that can negate a prima facie finding of intent, or as factors to consider in assessing whether or not there is sufficient evidence to find intent beyond a reasonable doubt. In addition, reasonable efforts to comply are factors that may allow a court to exercise its discretion to decline to find contempt, despite all factors being made out (as highlighted in Carey at paras. 36-37). I agree with the Alberta Court of Appeal in Envacon that efforts to comply bear on the finding of guilt and are not discretionary factors speaking only to remedy.
[45] To conclude, the distinction between prohibitory and mandatory orders is important. The distinction guides the analysis of the evidence and how a finding of intent is to be established. However, the point in this appeal is that intent must, in all cases, be found. Here the judge found none, but still entered a conviction for contempt.
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