COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

United States of America v. Johnstone,

2013 BCCA 2

Date: 20130110

Docket:
CA036370

In
the Matter of the

Extradition Act
, S.C. 1999, c. 18, as amended

Between:

The Attorney
General of Canada on behalf of
the United States of America

Respondent

And

Jay Cameron
Johnstone

Applicant

Before:

The Honourable Madam Justice Saunders

The Honourable Madam Justice Neilson

The Honourable Madam Justice Bennett

On judicial review
from: the Minister of Justice, October 6, 2011 and March 23, 2012
(Vancouver Docket Number 24602)

Counsel for the Appellant:

P. Edelmann

Counsel for the Respondent:

D. Strachan
D. Majzub

Place and Date of Hearing:

Vancouver, British
  Columbia

September 18, 2012

Place and Date of Judgment:

Vancouver, British
  Columbia

January 10, 2013

Written Reasons by:

The Honourable Madam Justice Neilson

Concurred in by:

The Honourable Madam Justice Saunders

The Honourable Madam Justice Bennett

Reasons for Judgment of the Honourable
Madam Justice Neilson:

[1]

On October 6, 2011, the Attorney General of Canada, to whom I will
refer as the Minister, ordered that the applicant, Jay Cameron Johnstone, be
surrendered to the United States pursuant to s. 40 of the
Extradition Act
,
S.C. 1999, c. 18 (the
Act
), to face a charge of child-luring in Maricopa
County, Arizona. On March 23, 2012, the Minister declined Mr. Johnstones
application for reconsideration of that order. Mr. Johnstone now applies for judicial
review of each of those decisions, pursuant to s. 57 of the
Act
. He
argues his surrender is unjust and oppressive, and violates his rights under s.
7 of the
Charter
,

because the United States earlier deported him
to Canada with full knowledge he was facing this charge, and the prolonged
proceedings to return him for trial have led to untenable delay and prejudice
to his defence. As well, he maintains the Minister failed to sufficiently
consider the cruel and inhumane conditions he will face in the custodial
facilities of Maricopa County, Arizona. Finally, he says the Minister, in
declining to reconsider his decision, has unreasonably rejected new and
critical evidence of misrepresentations made by the United States in the
extradition proceedings.

Background

[2]

In February 2006, Mr. Johnstone was arrested in Maricopa County for
child-luring. It is alleged he contacted an undercover officer over the Internet
who was posing as a 13-year-old girl, and discussed engaging in various sexual
acts with her. He purportedly arranged to meet with her for that purpose on
February 6, 2006, and was arrested upon his arrival at the meeting place. He
admitted to police he had been in contact with the fictitious teenager, but said
he had abandoned his intention to have sex with her on his way to their
meeting.

[3]

Mr. Johnstone was released on bail and assigned a Public Defender.
A trial date was scheduled for July 27, 2006. On May 1, 2006,
however, he was detained by the United States Immigration and Naturalization
Service (the I.N.S.) because his visa had expired. Following a deportation
hearing, Mr. Johnstone was deported to Canada on June 12, 2006.

[4]

On October 12, 2007, the United States requested
Mr. Johnstones extradition on the child-luring charge. An authority to
proceed was issued on March 19, 2008, and he was arrested on a warrant
issued under the
Act
on May 27, 2008. On August 12, 2008, a
Supreme Court judge ordered his committal.

[5]

On September 10, 2008, Mr. Johnstone made written submissions
to the Minister objecting to surrender on two grounds. First, he argued his
potential sentence in the United States would be substantially more severe than
that for the same crime in Canada, and maintained this disparity represented a
violation of his rights under s. 7 of the
Charter
. Second, he alleged
the State of Arizona had been aware of his pending deportation, and the ensuing
delay in seeking his extradition violated his right to be tried within a
reasonable time pursuant to s. 11(b) of the
Charter
.

[6]

On January 7, 2009, the Minister ordered Mr. Johnstones
surrender to the United States. After the first sentence he found imposition of
a more severe sentence did not justify a refusal to surrender. As to the
argument founded on delay, the Minister observed Mr. Johnstone attributed
the delay to the United States, and s. 11 of the
Charter
did not
apply to the actions of a foreign State. Further, he noted Mr. Johnstone
could raise the issue of delay at his trial. With respect to Mr. Johnstones
allegation that the State had been aware of the I.N.S. proceedings, the
Minister stated:

The Authorities in the United
States have advised that the State is not notified by I.N.S. when a person is
arrested for a visa violation unless there is a warrant for that persons
arrest. As there was no warrant for Mr. Johnstones arrest I.N.S. had no
way to know that he had criminal proceedings pending, and the State had no way
to know that Mr. Johnstone was being deported. Mr. Johnstone was
deported without the States knowledge and before the warrant was issued for
failing to appear at his July trial date. I note that in his letter to me,
Mr. Johnstones father indicates that the prosecutor on the deportation
matter indicated that the Maricopa prosecutors office knew that
Mr. Johnstone was detained by INS. It is not clear to me how Mr. Johnstone
senior is in possession of this information. In any event, I am not in a
position to choose between competing versions of events occurring in the United
States. In my view, to the extent that the knowledge of the prosecutor with
respect to the deportation hearing is relevant, this matter can be raised in
the trial court in the United States.

[7]

On March 24, 2009, Mr. Johnstone applied to the Minister for
reconsideration of the surrender order. He provided a certified recording of
his deportation hearing that demonstrated the I.N.S. had been aware of his
pending charge, and argued the request for his extradition a year and a half
after his deportation was an abuse of process and contravened his right to be
tried within a reasonable time. As well, he submitted it was inappropriate to
order surrender based on the false or erroneous evidence the United States
had earlier provided as to the authorities knowledge of his outstanding charge.

[8]

On April 1, 2009, the Minister agreed to reconsider the surrender order.
Mr. Johnstone provided further submissions on April 15, 2009,
November 2, 2009, February 3, 2010, and September 26 and 27,
2011, expanding on his arguments of delay and misrepresentations by the United
States, and raising a new allegation that conditions in the Maricopa County detention
facilities were so egregious that they amounted to cruel and unusual
punishment.

[9]

The recording of the I.N.S. hearing submitted by Mr. Johnstone
included this exchange:

Immigration Judge [J]: Well, that brings up another question
Mr. [Slalom]. If he is due to show up in Court, are you sure that the
government wants to deport him.

S: Well, if he is deported it doesnt necessarily mean that
he is going to be leaving, he could be under departure controls, he can very
well be turned over to the state.

J: Just checking, just checking Mr. [Slalom]. I dont
want to go forward and deport a man that you then later some Sheriffs office
or somebody is going to come back to the government and say why did you deport
him when you knew that he had a court date.

S: Well, it could very well be that we will turn him over to
the Maricopa Sheriffs department to ensure his appearance at his Court
hearing.

J: I just want to get that on the record so that ...

S: OK

J: ... it doesnt come back to
bite me. Well sir, with that arrest, I am going to deny voluntary departure. I
will order you removed from the United States to Canada [...]

[10]

Mr. Johnstone and his father also provided affidavits stating that,
following his arrest by the I.N.S., Mr. Johnstones electronic monitoring ankle
bracelet, required by his bail conditions, had to be removed and
Mr. Johnstone had contacted the Pre-trial Services Coordinator and made
arrangements for his father to return it to that office in May 2006. As well,
Mr. Johnstone swore that during the I.N.S. hearing, while the courtroom
was cleared due to the nature of his charges, the federal prosecutor stated he
had spoken to the Maricopa County Attorneys Office to obtain details of the
case.

[11]

Mr. Johnstone submitted this evidence demonstrated that both the I.N.S.
and the County Attorneys Office had been fully aware he was being deported
while facing an outstanding charge in Maricopa County, and established that the
earlier information from the United States on this point had been false. He
maintained this cast doubt on the reliability of all information and assurances
provided by the requesting state, and reiterated his position that to extradite
him on the same charge three years later condoned unacceptable delay, was fundamentally
unfair, and amounted to an abuse of process.

[12]

As to the custodial conditions in Maricopa County, Mr. Johnstone argued
that deplorable and inhumane conditions had persisted there for many years, and
his surrender to those conditions would be unjust and oppressive, and a
violation of his rights under s. 7 of the
Charter
. He provided an affidavit
describing the overcrowding, threats of violence and unwanted sexual advances
from other inmates, unacceptable food and hygiene, and constant fear he had experienced
during the eight days he spent in custody there before his release on bail. He
submitted these conditions would be particularly oppressive for him as the
medical facilities for inmates were inadequate and he had a history of serious
cardiac problems, which had led to a six-vessel coronary bypass on
April 28, 2009.

[13]

As well, Mr. Johnstone provided over 100 pages of media reports and
court documents dealing with detention facilities in Maricopa County. These included
a 1997 report from Amnesty International about the use of excessive force on
inmates in Maricopa County; media reports on cases of inmate abuse there
between 1997 and 2008; and a 2008 report from the Goldwater Institute on The
Misplaced Priorities of the Maricopa County Sheriffs Office, which focussed
on the expenses arising from a large number of successful lawsuits involving
abuse of inmates, as well as the revocation in 2008 of the accreditation for
the Countys custodial health care facilities by the National Commission on
Correctional Health Care (the N.C.C.H.C.). As well, the material described
the following developments arising from a 1977 class action,
Graves v.
Arpaio
, brought by pre-trial detainees in Maricopa County for violations of
their civil rights. The action was settled in 1980 by a consent judgment that
established custodial standards for Maricopa County jails and ongoing
monitoring to ensure compliance with those standards. Sheriff Arpaio has since brought
several unsuccessful applications to be relieved from those terms. Most
recently, a 2008 hearing led to the termination of some monitoring
requirements, but a number remain in place. Finally, Mr. Johnstones father provided
a letter enclosing media reports to support his allegation that the United
States was providing misleading statements about improvements in the Maricopa
County custodial health care facilities.

[14]

The Minister sought further information from the United States in
response to Mr. Johnstones submissions and materials. On October 6, 2011,
he issued a decision rejecting Mr. Johnstones arguments and affirming the order
for his surrender.

[15]

With respect to Mr. Johnstones allegation that the United States
had provided false and misleading information, the Minister stated he accepted
further representations from the United States that the Maricopa County Attorneys
Office had not been aware of Mr. Johnstones deportation until
April 28, 2009 and, had they known of the I.N.S. proceedings, would have
opposed his removal. As to the return of the electronic monitoring bracelet,
the Minister accepted the United States advice that Pre-trial Services did not
have a relationship with the County or United States Attorney, and would have
reported this event solely to the court. Finally, the Minister indicated he was
not prepared to accept Mr. Johnstones allegation that an I.N.S.
representative had been in contact with the County Attorney, as there was nothing
to support this statement. While the Minister agreed the United States had been
mistaken in initially advising that the I.N.S. had no knowledge of
Mr. Johnstones pending charges, he did not find this error provided a
basis for questioning the reliability of other information from the requesting
state. The Minister also observed that if this error was relevant to
Mr. Johnstones defence, he would have an opportunity to raise it at his
trial. He attributed the inconsistency in the information from the United
States to a miscommunication, stating:

The Maricopa County Attorneys
Office is the authority responsible for the prosecution against Mr. Johnstone,
and they confirm that they were not aware of the decision to deport
Mr. Johnstone until after his deportation. In my view, the U.S. prosecutor
would have had nothing to gain in allowing Mr. Johnstones deportation to
take effect prior to the completion of the U.S. criminal proceedings and I
accept that the deportation occurred due to a lack of communication between
U.S. government departments.

[16]

As to Mr. Johnstones claim of abuse of process, the Minister said he
detected nothing in the material before him suggesting bad faith, malicious
purpose, or other misconduct integral to establishing such a claim.

[17]

With respect to Mr. Johnstones allegation of unreasonable delay amounting
to a violation of s. 11(b) of the
Charter
, the Minister stated he found
nothing that would alter the views he set out in the first surrender decision.

[18]

Turning to Mr. Johnstones argument about the conditions in Maricopa
County detention facilities, the Minister listed Mr. Johnstones specific
concerns, noting Sheriff Arpaio was one of the most feared and controversial
law enforcement figures in North America. He acknowledged Mr. Johnstones
account of his custodial experience and his cardiac condition, and discussed the
N.C.C.H.C.s revocation of Maricopa Countys accreditation for failure to
provide adequate health care to inmates. He also referred to the materials
provided by Mr. Johnstone and his father.

[19]

The Minister advised that the United States authorities had provided him
with additional information that indicated numerous efforts were being made to
improve the situation in the Maricopa County detention facilities. He referred
to ongoing discussions between the N.C.C.H.C. and Correctional Health Services
(C.H.S.) in Maricopa County, regarding recertification of the detention
facilities, and a N.C.C.H.C. report of December 22, 2010 indicating the
system was ready for a full accreditation survey that would be conducted in the
fall of 2011. The United States also advised that, in the meantime, C.H.S.
continued to adhere to correctional health standards.

[20]

The Minister also reviewed developments in the
Graves v. Arpaio
class action. He said that since 1995 the monitoring of the Maricopa County
detention facilities and related health care services had been reduced by court
order due to increased compliance by the Maricopa County Sheriffs Office,
although there remained areas in which the facilities failed to meet
constitutional standards. The Minister indicated that a team of medical and
mental health consultants was currently reviewing conditions and issuing
reports every 120 days, which had been sent to Mr. Johnstone. He further
noted that the United States had provided a copy of a
Graves
Notice
that is posted in the Maricopa County detention facilities, and sets out the standards
the Maricopa County Sheriffs Office must meet, and contact numbers for inmates
to report complaints.

[21]

After referring to relevant jurisprudence, the Minister affirmed that
surrender should not be ordered if it would violate principles of fundamental
justice or be unjust or oppressive. He concluded:

Having reviewed all of the materials before me, I am
satisfied that, while conditions in the correctional facilities in Maricopa
County may be difficult, the Maricopa County Sheriffs Office is making serious
efforts to improve their facilities by addressing the issues set out in the
Graves
v. Arpaio
judgment, adhering to the recommendations of health consultants,
and correctional health standards. In that regard, I note that the NCCHC will
be conducting an accreditation survey very shortly to determine whether the
Maricopa County jail system will receive its re-accreditation. Furthermore,
through the
Graves
Notice, inmates are made aware of the standards the
Maricopa County Sheriffs Office must meet and are provided with a mechanism
through which to lodge complaints if these standards are not met.

Canada has entered into an
extradition treaty with the United States and has therefore recognized that the
United States has a fair and fundamentally just judicial system. Persons who
choose to commit offences in the United States cannot expect to escape
prosecution because the conditions of their incarceration may be difficult. In
my view, in the circumstances of this case, Mr. Johnstones surrender
would not be unjust or oppressive, or violate his rights under the
Charter
on
the basis that the custodial situation in the Maricopa County Sheriffs Office
may be harsh.

[22]

The Minister referred to decisions of the Supreme Court of Canada that
had upheld surrender orders for persons who faced lengthy sentences under harsh
conditions in the requesting state. He addressed Mr. Johnstones medical
concerns, set out information from the United States demonstrating the
facilities of the Maricopa County jail system could deal with them, and decided
that an order for surrender would not be shocking to the Canadian conscience,
or be unjust or oppressive notwithstanding [Mr. Johnstones] health
concerns. The Minister concluded by stating he had considered all of
Mr. Johnstones submissions, and remained of the view his surrender was
warranted and would not be unjust or oppressive, or contrary to either the
Charter
or the
Act
.

[23]

On October 7, 2011, Mr. Johnstone applied to this Court for
judicial review of that decision, and a hearing was scheduled for
March 28, 2012. On March 20, 2012, however, Mr. Johnstones
counsel wrote to the Ministers representative advising he had recently
received a copy of a new document that directly contradicted the
representations made to the Minister that the County Attorney had not been
aware of Mr. Johnstones deportation until April 2009. He requested the
Minister again reconsider his surrender due to the ongoing lack of reliability
of representations by the Requesting State and the fact that the Minister has made
his decision on clearly erroneous information.

[24]

The new document, titled Motion to Revoke Bond and Exonerate Bond, is signed
by Eric G. Crocker, Deputy Public Defender, and dated May 9, 2006. It is
styled In the Superior Court of the State of Arizona in and for the County of
Maricopa, and names the State of Arizona as plaintiff and J. Johnstone as
defendant. The document states:

Defendant was out on release
having posted bond in the above-captioned matter. Defendant was subsequently
picked up by federal authorities on an alleged immigration violation. Defendant
now has a federal immigration hold on him that prevents him from being out on
the bond posted in the instant matter. Wherefore, defendant requests the bond
posted be revoked and the assets used to post said bond be exonerated to the
party posting same so that defendant can get credit for time being served
towards the instant matter.

The document indicates the case is assigned to the
Honourable Teresa A. Sanders, a judge of the Superior Court, and states the
original was filed with the Clerk of the Court of Maricopa County on May 9,
2006. It also states copies of the document were mailed or delivered to Judge
Sanders and to Keith Manning, Deputy County Attorney, on the same date.

[25]

On March 23, 2012, the Ministers representative wrote to
Mr. Johnstones counsel to advise the Minister did not consider it
appropriate to accept this late submission. She pointed out the Minister had
earlier reconsidered his decision on surrender and confirmed his previous surrender
order, and the judicial review was imminent.

[26]

On March 28, 2012, following submissions from Mr. Johnstones
counsel, this Court adjourned the judicial review of the Ministers second
surrender order to permit Mr. Johnstone to bring an application for
judicial review of the Ministers May 23, 2012 decision, refusing to
reconsider his decision to order surrender.

[27]

At the conclusion of his argument before us, Mr. Johnstones counsel
advised he had just received a further document that supported his position.
The State Attorney had been aware of Mr. Johnstones pending deportation.
We decided it would be inappropriate to consider this information on these
judicial reviews, and Mr. Johnstone may approach the Minister directly
with that information should he chose to do so.

Issues on
Appeal

[28]

Mr. Johnstone raises three issues on the first judicial review:

1)       Was the
Ministers conclusion that Mr. Johnstones surrender was not contrary to
s. 44(1)(a) of the
Act
or s. 7 of the
Charter
as a
result of his deportation reasonable?

2)       Was the
Ministers conclusion that Mr. Johnstones surrender was not contrary to s. 44(1)(a)
of the
Act
or s. 7 of the
Charter
based on his allegations
of cruel and unusual punishment reasonable?

3)       Did the
Minister sufficiently respond to Mr. Johnstones submissions?

[29]

With respect to the second judicial review, Mr. Johnstone says the
Minister unreasonably refused to reconsider his order for surrender in the face
of new and relevant evidence.

Analysis

A.       The First
Judicial Review

[30]

Under s. 44(1)(a) of the
Act,
the Minister must refuse to
make a surrender order if satisfied that it would be unjust or oppressive
having regard to all the relevant circumstances. There is significant overlap
between that test and the criteria for establishing a violation of a subjects
s. 7
Charter
rights. If surrender is contrary to the principles of
fundamental justice protected by s. 7, it will in all probability also be
unjust or oppressive, and shock the Canadian conscience:
Fischbacher v.
Canada (Minister of Justice)
, 2009 SCC 46 at paras. 38-39, [2009] 3
S.C.R. 170;
Lake v. Canada (Minister of Justice)
, 2008 SCC 23 at paras.
24, 32, [2008] 1 S.C.R. 761.

[31]

Under s. 57 of the
Act
, a person subject to a surrender order may
apply to the Court of Appeal of the province in which he was committed for
judicial review of that order. Section 57(7) sets out the grounds for such a
review by reference to s. 18.1(4) of the
Federal Courts Act
, R.S.C.
1985, c. F-7. Mr. Johnstones arguments on this review fall within s.
18.1(4)(d), which provides this Court may grant relief if the Minister based
the order of surrender on an erroneous finding of fact that [he] made in a
perverse or capricious manner or without regard for the material before [him].

[32]

Review of a surrender order is governed by a standard of reasonableness,
whether the alleged error relates to the application of the test in
s. 44(1)(a) or to a failure to find a violation of the subjects s. 7
Charter
rights. This deferential standard recognizes the complexity of the Ministers
task, which requires a balancing of multiple competing factors, some of which import
political and international considerations that lie within the Ministers
particular expertise. Appellate review therefore does not extend to an
independent assessment of the relevant factors, but simply addresses whether
the Minister considered them and reached a defensible decision that falls
within a range of reasonable outcomes:
Lake
at paras. 34, 41.

[33]

The central question is whether surrender is in accord with the
principles of fundamental justice. Here, the Minister properly framed his
decision in those terms, finding the surrender order was not unjust or
oppressive, or contrary to the
Charter
. The issue is whether that
conclusion was unreasonable, either because of the consequences arising from
Mr. Johnstones earlier deportation, or because his surrender will consign
him to custodial conditions that are fundamentally unjust and oppressive.

1.       Was
the Ministers conclusion that Mr. Johnstones surrender was not contrary
to s. 44(1)(a) of the Act or s. 7 of the Charter as a result of his
deportation reasonable?

[34]

Mr. Johnstone acknowledges that this Court in
United States of
America v. Gillingham
, 2004 BCCA 226 at para. 139, 184 C.C.C.
(3d) 97, affirmed that a requesting state is not precluded from obtaining
extradition of a person whom it earlier deported. His case therefore does not
rest on his deportation alone, but on its consequences, in particular the delay
it has caused, and what he characterizes as the misrepresentations and
falsehoods offered by the United States in an attempt to explain it.

[35]

Mr. Johnstone submits it was unreasonable to order his surrender
when, six years previously, the United States deported him in full knowledge
that he was facing a criminal charge there. He says the Minister erred in accepting
a conflicting and unreliable explanation for this from the United States, and
in failing to give proper weight to his own evidence, which he says clearly
demonstrates two false statements by the American authorities. First, contrary
to their initial representations,  the I.N.S. knew about his pending criminal
charge when it deported him. Second, the County Attorneys Office was aware of the
I.N.S. proceeding before he left the country. In the result, Mr. Johnstone
argues no satisfactory explanation has been provided by the United States for
his deportation, for the untenable delay in seeking his return, and for the
false information initially provided by the requesting state, which contributed
to further delay. He maintains this demonstrates a fundamental lapse in the
obligations of the United States as an extradition partner, and militates
against surrender.

[36]

Mr. Johnstone further argues the delay has been compounded by the Ministers
unexplained and significant delay in conducting the reconsideration. He says
that in simply affirming his initial views on delay in the first surrender
order, the Minister erred by giving no consideration to the further
two-and-a-half years occupied in reconsidering that order. While Mr. Johnstone
stops short of claiming the Ministers delay constitutes an abuse of process,
he submits it must be considered in assessing whether his surrender shocks the
conscience. He maintains the cumulative delay has irretrievably compromised
trial fairness, and says it was unreasonable for the Minister to conclude these
circumstances, taken as a whole, did not create fundamental unfairness and render
it unfair and oppressive to surrender him.

[37]

I am unable to agree. It is apparent from the Ministers decision that
he considered all of the evidence before him, including that proffered by Mr.
Johnstone and his father. It was for him to assess the weight of that evidence,
and the import of any inconsistencies in it. He found no substance to
Mr. Johnstones contention that the I.N.S. and the County Attorneys
Office had been in direct communication before his deportation. While he accepted
the initial statement by the United States that the I.N.S. did not know about
Mr. Johnstones charges before his deportation was erroneous, he attributed
this to a miscommunication that was not of sufficient magnitude to cast doubt
on the reliability of other information from the United States. The Minister
was not convinced the County Attorney was aware of the I.N.S. proceedings
before Mr. Johnstone was removed. He observed the United States
authorities had nothing to gain by permitting Mr. Johnstones deportation
prior to dealing with his criminal charge. As well, he found nothing to suggest
deliberate falsehood or collusion that would add force to Mr. Johnstones
allegation of bad faith and abuse of process. Finally, the Minister indicated
Mr. Johnstone could raise these circumstances at his trial in the United
States to the extent they were relevant.

[38]

I find no reviewable error in these findings and observations. I am
satisfied they are reasonable conclusions, supported by the evidence before the
Minister. It is not for this Court to re-weigh that evidence and substitute our
view of it.

[39]

As to the impact of delay, two types of delay may have a bearing on
whether it will be oppressive and fundamentally unjust to surrender a person to
a foreign state. The first is delay that has compromised the fairness of the
extradition proceedings. The second is delay so egregious that it is simply
unacceptable and shocks the conscience of Canadians or, alternatively,
constitutes an abuse of process and amounts to violation of the persons rights
under s. 7 of the
Charter
:
Gillingham
at paras. 91-94.

[40]

Mr. Johnstones argument relies on the second residual type of delay. He
does not allege unfairness in the extradition proceedings. Further, although he
maintains trial fairness has been compromised, he provides no details of any specific
prejudice he faces due to delay. Even had he done so, the Minister correctly
observed this issue is best raised at his trial in the United States, where the
sixth amendment to the United States Constitution guarantees the right to a
speedy trial:
Argentina v. Mellino
,

[1987] 1 S.C.R. 536 at 549,
33 C.C.C. (3d) 334.

[41]

Dealing first with the 16-month delay between Mr. Johnstones deportation
and the extradition request, the Minister properly concluded in his first
surrender decision that Mr. Johnstone cannot invoke s. 11(b) of the
Charter
as it does not apply to the activities of a foreign country:
United
States of America v. Allard
, [1987] 1 S.C.R. 564 at 571, 33 C.C.C. (3d) 501;
Mellino
at 547-548. Moreover, delay preceding an extradition request is
analogous to pre-charge delay in Canada, and will only be considered in
exceptional circumstances where there is evidence of prejudice:
Garz v.
United States of America
, 2006 QCCA 222 at paras. 97-99, 215 C.C.C. (3d)
429. As set out above, Mr. Johnstone has produced no such evidence.

[42]

The balance of the delay is comprised of the two-and-a-half years
between Mr. Johnstones request for reconsideration and the second order
for surrender. While the Minister did not expressly consider this delay, for
the following reasons I am satisfied it cannot provide a foundation for setting
aside that order.

[43]

While Mr. Johnstone claims this delay was caused primarily by the need
to clarify erroneous information from the United States, the Ministers
findings that those errors were not deliberate and were effectively
insignificant reduces the force of this argument. Furthermore, it cannot be
ignored that the manner in which Mr. Johnstone has presented his case has
contributed substantially to the delay. Instead of providing all of his
arguments and evidence as submissions on the first surrender order, new issues
and evidence have been submitted in a piecemeal manner, without explanation.
This has required the Minister to make repeated requests for further
information from the United States. The last response was received in August
2011, two months before the second order for surrender. Mr. Johnstones
approach led to an adjournment of this judicial review due to late production
of new evidence. As observed by Madam Justice Ryan in
Canada (Minister of
Justice) v. Reumayr
, 2005 BCCA 391 at para. 129, 199 C.C.C. (3d) 1, a
person facing extradition is entitled to take these steps, but cannot then lay
the blame for the resulting delay at the feet of the Minister or the requesting
state.

[44]

Finally, it is noteworthy that cases involving much longer delays have
resulted in extradition. In
Turchin v.
Étas-Unis dAm
érique,
2007
QCCA 136 at paras. 56-60, 219 C.C.C. (3d) 214, leave to appeal refd [2007]
C.S.C.R. No. 104, Mr. Turchin was extradited to the United States after a
20-year delay between his deportation to Canada and the extradition request.
See also
Hungary v. Dascalu
, 2009 BCCA 132 at paras. 24-25, 244 C.C.C.
(3d) 98, in which there was a five-year delay between an extradition request
and the issue of the authority to proceed.

[45]

In my view, the Minister reasonably concluded nothing in the proceedings
to date provide a foundation for a finding of unacceptable delay that
constitutes an abuse of process or would shock the Canadian conscience. I would
not accede to this ground of appeal.

2.       Was
the Ministers conclusion that Mr. Johnstones surrender was not contrary
to s. 44(1)(a) of the Act or s. 7 of the Charter based on his
allegations of cruel and unusual punishment reasonable?

[46]

Mr. Johnstone reiterates the arguments he made to the Minister,
maintaining the conditions in Maricopa County detention facilities are
oppressive and inhumane as evidenced by his own experience, and the body of
independent evidence he submitted to the Minister. Relying on
Suresh v. Canada
(Minister of Citizenship and Immigration)
, 2002 SCC 1 at para. 56,
[2002]1 S.C.R. 3, he says this evidence establishes he faces a substantial risk
of cruel and unusual punishment to a degree that shocks the conscience and
renders his surrender contrary to the principles of fundamental justice
enshrined in s. 7 of the
Charter
and in Canadas international
treaty obligations. He says that, in ordering surrender, the Minister
unreasonably ignored reliable independent evidence and placed unjustified
weight on assurances by the United States that substandard custodial conditions
in Maricopa County were being addressed. He submits these assurances were not
credible given the Countys appalling record of inmate abuse and the pattern of
misrepresentations by the United States.

[47]

I earlier summarized the evidence presented by Mr. Johnstone, the
responsive material provided by the United States, and the Ministers decision
on this point at paras. 12-13 and 18-22 of this judgment. In essence, the
Minister accepted that while conditions in Maricopa County detention facilities
were difficult, surrender orders had been upheld in other cases in which the
person sought faced a lengthy sentence under harsh conditions. As well, he was
satisfied that recent information indicated serious efforts were underway to
impede custodial conditions in Maricopa County. He also observed that Canada
has an extradition treaty with the United States and thus recognizes the
American justice system is fundamentally fair and just. He concluded that
surrendering Mr. Johnstone to that system would not shock the conscience or be
contrary to s. 7.

[48]

I am satisfied that was a reasonable decision on the jurisprudence and
the evidence available to the Minister. It is clear he was aware of the
widespread criticism of conditions in Maricopa County jails. The Minister was
not required to expressly refer to each document submitted by Mr. Johnstone,
some of which described events occurring over 15 years ago. He properly chose
to rely on the most recent information, which came from credible and
independent sources and described initiatives and improvements since Mr.
Johnstones incarceration in Maricopa County in 2006.

[49]

As to the authorities, the Minister correctly noted that the Supreme
Court in
United States of America v. Burns
, 2001 SCC 7 at
paras. 60, 67-69, [2001] 1 S.C.R. 283, affirmed that the potential
punishment reasonably anticipated in the requesting state was relevant to
whether surrender would shock the conscience or violate the principles of fundamental
justice. The Court also observed, however, that the term shocks the conscience
emphasizes the exceptional nature of circumstances that will constrain the
Ministers discretion to order surrender, and refers to punishment so extreme
that it becomes the controlling factor in the extradition analysis.

[50]

I note that other Canadian authorities to which the Minister referred
have described torture, the death penalty, stoning an individual to death, and
extrajudicial punishment unsanctioned by a law of general application as examples
of exceptional circumstances that would shock the Canadian conscience:
Kindler
v. Canada (Minister of Justice)
, [1991] 2 S.C.R. 779 at 832, 67 C.C.C. (3d)
1;
Gwynne v. Canada (Minister of Justice)
(1998), 103 B.C.A.C. 1 at
paras. 34-37, 50 C.R.R. (2d) 250, leave to appeal refd, [1998] SCCA No. 95;
Burns
at paras. 67-69. In my view, the Minister could reasonably conclude on the
evidence before him that the conditions in Maricopa County detention facilities
did not reach that level of inhumanity.

[51]

The Ministers decision is supported by two decisions of this Court that
found harsh custodial conditions in the requesting state did not justify
refusing surrender. In
Gwynne
, Mr. Gwynne had escaped from a prison
in Alabama where he was serving a 120-year sentence, and the United States
sought his extradition to serve the remainder of that sentence. The Court
considered whether the harsh sentence faced by Mr. Gwynne in the degrading,
dangerous, and apparently endemic prison conditions in Alabama demonstrated
his extradition would shock the conscience and be contrary to principles of fundamental
justice. Mr. Justice Goldie, writing for the majority, was not persuaded
surrender was unreasonable. He concluded that while the conditions
Mr. Gwynne described were subjectively shocking, safeguards of his
constitutional rights in the United States were in place, albeit working
fitfully. As well, Mr. Justice Goldie observed that Mr. Gwynnes argument
invited the Court to examine and condemn the criminal justice system of the
United States, a prospect that he found to be a singularly unsuitable task
for the Court. He accordingly concluded that although the evidence presented
subjectively abhorrent custodial conditions, these were not contrary to the
principles of fundamental justice. Southin J.A. dissented, holding the Alabama
prison conditions, combined with the harsh sentence, were unacceptable.

[52]

In
United States of America v. Reumayr
, 2003 BCCA 375, 176 C.C.C.
(3d) 377, leave to appeal refd, [2005] S.C.C.A. No. 474, the person sought relied
on reports from human rights organizations to argue the degrading and
dehumanizing conditions in United States federal prisons would violate Canadian
principles of fundamental justice. Mr. Justice Mackenzie, writing for the
Court, referred to
Gwynne
and, while accepting custodial conditions in American
federal prisons could be criticized, observed that a decision by the Minister
that they were so shocking as to be unacceptable would have profound
implications for the extradition relationship between Canada and the United
States. He found the Ministers analysis appropriate, and declined to set aside
the order for surrender.

[53]

I would not give effect to this argument.

3.       Did
the Minister sufficiently respond to Mr. Johnstones submissions?

[54]

Under this heading Mr. Johnstone seeks to advance a stand-alone
complaint that the reasons for surrender given by the Minister were inadequate.
Relying on
Baker v. Canada (Minister of Citizenship and Immigration)
,
[1999] 2 S.C.R. 817 at para. 43, 174 D.L.R. (4th) 193, and
United States of
America v. Taylor
, 2003 BCCA 250 at paras. 15-16, 175 C.C.C. (3d) 185, he
submits his surrender was clearly a significant decision and the Minister was
obliged to provide reasons that were responsive to his submissions, explain why
he rejected them, and demonstrate that he had considered all relevant
circumstances as required by s. 44(1)(a) of the
Act
.
Mr. Johnstone says the Ministers decision fails to meet these criteria
and is simply conclusory. The order for surrender was thus made without regard
to the material before [him], contrary to s. 18.1(4)(d) of the
Federal
Courts Act
, and the matter must be remitted to the Minister for further
consideration.

[55]

I am unable to agree. First, the Supreme Courts decision in
Newfoundland
and Labrador Nurses Union v. Newfoundland and Labrador (Treasury Board)
,
2011 SCC 62, [2011] 3 S.C.R. 708 [
N.L.N.U.
], has shed significant doubt
as to whether adequacy of reasons is a stand-alone basis for setting aside a
decision on a judicial review undertaken on a standard of reasonableness.
Instead, Justice Abella, writing for the Court, held at para. 14 that, rather
than conducting two discrete inquiries, the reviewing court should adopt a
more organic exercise and review the reasonableness of the outcome and the adequacy
of the reasons together.

[56]

Here, the link between these two issues is evident in my analysis on the
first two issues raised by Mr. Johnstone, which, of necessity, involved an
examination of the Ministers reasons to ensure he had addressed all relevant
circumstances as required by s. 44(1)(a). I am satisfied that examination
revealed the Ministers decision met the standard affirmed by Justice Abella at
para. 16 of
N.L.N.U.
: his reasons are sufficient to allow this Court to
understand why he made his decision to surrender Mr. Johnstone, and to
determine whether that decision fell within the range of reasonable outcomes.

[57]

In
Lake
at para. 46, Justice LeBel affirmed the Minister must
provide reasons sufficient to allow the person to understand why he is being
surrendered, and to permit appellate review. The reasons need not be
comprehensive or analyze every factor, but they must demonstrate the Minister
considered the individuals submissions, and explain why he rejected them. The
Ministers reasons unquestionably met this standard.

[58]

I am satisfied the Minister considered all of the material provided to
him, and reasonably concluded that surrender was justified. I would therefore
dismiss Mr. Johnstones application for judicial review of the second
order of surrender.

B.       The
Second Judicial Review

[59]

Mr. Johnstone maintains it was unreasonable for the Minister to
refuse reconsideration in the face of the Motion to Revoke Bond and Exonerate
Bond that he sent to the Minister on March 20, 2012. Mr. Johnstone
says this document clearly contradicts earlier statements from the United
States to the effect the County Attorney was unaware of his deportation proceedings,
and adds to the continuing pattern of misleading representations made by the
requesting state. He says the Ministers refusal to reconsider his decision in
light of this new information exemplifies his unreasonable approach.

[60]

Section 43(1) of the
Act
states the general rule that the
Minister may accept submissions from the person sought for 30 days after
committal. Section 43(2), however, gives the Minister broad discretion to
receive later submissions in circumstances that the Minister considers appropriate.

[61]

The order committing Mr. Johnstone was made four years ago. The Minister
earlier exercised his discretion in Mr. Johnstones favour by agreeing to
reconsider the first surrender order. This led to a prolonged exchange of
submissions and responses. Further, the Minister did not strongly oppose
Mr. Johnstones application to adjourn the hearing of the first judicial
review on March 28, 2012 to enable Mr. Johnstone to apply for further
reconsideration.

[62]

Given this history, I am not persuaded it was unreasonable for the
Minister to refuse further reconsideration on March 23, 2012. Mr. Johnstone
has had ample opportunity to put forward his case over the last four years but,
as mentioned previously, he has done this in a piecemeal and incomplete manner
without any explanation for this approach. Moreover, the bond document by
itself is not conclusive. It simply states Mr. Johnstone is on an immigration
hold. There is nothing to say what transpired in the proceeding thereafter and
what, if any, role the County Attorneys Office played in it. It is a
reasonable inference that the bond holder was someone known to Mr. Johnstone
who might have provided this information but, without explanation, failed to do
so.

[63]

Finally, as earlier described, the alleged misrepresentations as to the
County Attorneys knowledge of Mr. Johnstones deportation do not go to a
question of substance in this proceeding. As the Minister observed, that office
had nothing to gain by permitting his deportation, and any errors and
miscommunications by the United States authorities in trying to explain why it
happened do not appear to be rooted in malice or bad faith. To the extent these
communications, and the bond document, are relevant, Mr. Johnstone may raise
them at his criminal trial in Arizona.

[64]

I would accordingly dismiss the second judicial review.

Conclusion

[65]

The judicial review of the second order for surrender, and the judicial
review of the decision declining reconsideration, are both dismissed.

The Honourable Madam Justice Neilson

I Agree:

The
Honourable Madam Justice Saunders

I Agree:

The Honourable Madam Justice
Bennett


COURT OF APPEAL FOR
BRITISH COLUMBIA

Citation:

Hiscott
v.
Canaccord
Capital Corporation,

2013
BCCA
23

Date: 20130111

Docket:
CA038974

Between:

Mark
Hiscott

Appellant

(Plaintiff)

And

Canaccord
Capital Corporation and
Alan Ferguson Hackett

Respondents

(Defendants)

(Correction:

On the front page the correct date 20130111
was inserted on January 24, 2013.)

Before:

The Honourable Chief Justice Finch

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Groberman

On appeal from: Supreme
Court of British Columbia, March 25, 2011
(
Hiscott
v.
Canaccord
Capital Corporation
, 2011
BCSC
369,
Vancouver No.
M083758
)

Oral Reasons for Judgment

Counsel for the Appellant:

J.P. Gustafson

Counsel for the Respondent:

D. Mitchell

Place and Date of Hearing:

Vancouver, British
  Columbia

January 10, 2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 11, 2013

[1]

GROBERMAN
J.A.
:
Mr.
Hiscott
appeals from a trial
judgment of the Supreme Court dismissing his claim as against
Canaccord
Capital Corporation. Mr.
Hiscotts
claim concerned the actions of Mr. Hackett, who acted as his investment
advisor. He claimed that Mr. Hackett had acted improperly in managing Mr.
Hiscotts
investments. He contended that
Canaccord
was liable either vicariously, as Mr. Hacketts
employer, or on the basis of negligence in failing to properly supervise Mr.
Hacketts activities.

[2]

The trial judge found
that while Mr. Hackett had breached his duties to Mr.
Hiscott
,
Mr.
Hiscott
had suffered no damage as a result of the
breaches. She found, further, that
Canaccord
would
not have been liable for Mr. Hacketts breaches of fiduciary duty because he
was not acting in his capacity as an employee of
Canaccord
at material times. Finally, she rejected the claim that any failure on the part
of
Canaccord
to supervise Mr. Hackett caused damage
to Mr.
Hiscott
.

[3]

Both
Canaccord
and Mr. Hackett were named as respondents in this appeal. After the appeal was
brought, however, a consent order was made in the court below finding Mr.
Hackett liable to Mr.
Hiscott
for $5,000,000 on a
promissory note. In the result, Mr.
Hiscott
is no
longer pursuing the appeal as against Mr. Hackett, who, we are advised, died
last year.

Factual Background

[4]

The trial judge had
significant reservations in respect of the evidence of Mr.
Hiscott
.
Although she summarized his evidence in order to provide the background of the case,
she declined to make clear findings of fact except where they were essential to
her reasons. I will attempt to summarize the facts that appear to have formed
the basis of her judgment.

[5]

In 1973, when he was
about 18, Mr.
Hiscott
began working in the back shop
at a golf club of which Mr. Hackett was a member. The two developed a
friendship, and Mr. Hackett helped Mr.
Hiscott
obtain
a scholarship to attend the University of British Columbia. Mr.
Hiscott
graduated with a degree in physical education in
1980, and moved to California. In 1988, he returned to British Columbia and
attempted to start an athletic centre in Whistler. When that venture did not
succeed, Mr. Hackett put him in touch with a company called
Sportsight
,
which hired Mr.
Hiscott
to market its technology. Mr.
Hiscott
worked for
Sportsight
in the United States from 1990 to 1992, when his employment was terminated.

[6]

Mr.
Hiscott
alleges that, as part of his termination package, he was given 300,000 shares
in
Sportsight
. He also claims to have received an
additional 30,000 shares to reimburse him for certain business expenses. Some
doubt was cast on Mr.
Hiscotts
assertions that he
had acquired
Sportsight
shares. The judge did not
find it necessary to resolve that issue. Her analysis proceeded on the
assumption that Mr.
Hiscott
did, in fact, acquire
them. It appears that the
Sportsight
shares were
worth approximately $0.50 each at the date when Mr.
Hiscott
purports to have received them.

[7]

Mr.
Hiscott
sought advice from Mr. Hackett, who was an investment advisor. Mr. Hackett had
recently taken up employment with
Canaccord
Capital
Corporation. According to Mr.
Hiscott
, his initial
plan was to retain the
Sportsight
shares until they
reached a value between $2.50 and $3.00 per share.

[8]

Mr.
Hiscott
and Mr. Hackett testified to the effect that Mr. Hackett proposed that they
open a joint investment account, with Mr.
Hiscott
depositing his shares, and Mr. Hackett contributing assets of equal value to
the account. Mr. Hackett and Mr.
Hiscott
would then
jointly manage the account. According to Mr.
Hiscott
,
the idea was that he would assist in finding investment opportunities through
his acquaintances (particularly in baseball) and Mr. Hackett would, in his
discretion, manage the fund on a day-to-day basis using his professional
expertise.

[9]

The two testified that
they agreed to open a joint investment account. Initially, they say, the
agreement was verbal, but in 2006, it was reduced to writing in a document
entitled Agreement and Declaration of Trust. The written agreement indicates
that it is made effective February 1, 1993.

[10]

It appears that Mr.
Hiscott
met frequently with Mr. Hackett, particularly
between 1993 and 1996. He says he attended at Mr. Hacketts office an average
of two to three times per week, and estimates that he attended at that office
at
Canaccord
up to 200 times between 1993 and 2006.

[11]

The two men gave evidence
that during their meetings, they would discuss trades, and Mr.
Hiscott
would provide information about companies that he
was familiar with. Mr. Hackett would go over stock charts with Mr.
Hiscott
. From time to time, Mr. Hackett would give Mr.
Hiscott
lists showing the stocks they purportedly held in
their joint account, a list of assets bought and sold, and an account balance.

[12]

Mr. Hackett purported to
have added significant assets to the fund, the value of which far exceeded the
value of the shares deposited by Mr.
Hiscott
. Despite
the fact that Mr.
Hiscott
had no source of income,
Mr. Hackett is said to have accepted promissory notes from him to account for
the additions to the fund. The total amount represented by the notes exceeded
$600,000. Eventually, Mr. Hackett cancelled each of the notes, apparently on
the basis that the growth in the investment fund covered them, though it does
not appear that any detailed accounting was provided.

[13]

Mr. Hackett represented
to Mr.
Hiscott
that the funds were growing at an incredible
rate. As early as 1993, and continuing until 2006, Mr. Hackett paid Mr.
Hiscott
amounts purporting to represent income from the
fund. The total of the payments was about $1.4 million. Even so, in 2006, when
Mr.
Hiscott
sought to be paid out a large portion of
his purported stake in the fund, Mr. Hackett advised him that his share was
$5,000,000, and he provided Mr.
Hiscott
with a
promissory note in that amount.

[14]

In 2007, on learning that
at least one of Mr. Hacketts former clients was suing him, Mr.
Hiscott
became concerned, and contacted
Canaccord
,
seeking to be paid by the company. The company denied having any record of Mr.
Hiscott
being a
client,
or of any
account in his name.

[15]

Eventually, Mr. Hackett
told Mr.
Hiscott
that he had not invested the joint
fund with
Canaccord
, but instead had invested the
money offshore with mysterious characters named James and John in order to
obtain higher returns.

[16]

The trial judge made the
following findings with respect to the investment fund:

[31]
In my view, the investment is a chimera, a shared fantasy, or a delusion of Mr.
Hackett and Mr.
Hiscott
. I accept Mr. Hacketts
evidence that as soon as, or very shortly after, he received the shares in
Sportsight
from Mr.
Hiscott
, the
funds, whatever they may have been, were invested offshore with two gentlemen
known as James and John.

[33]
Mr. Hackett has for several years maintained the belief that the investment
exists and that he will be paid by James and John. Remarkably, he continues to
maintain this belief even after numerous deadlines have passed without payment
from James and John. The only rational conclusion is that James and John have
disposed of whatever was invested.

[34]
The lists of shareholdings that Mr.
Hiscott
prepared
are simply lists of shares. There is no documentary evidence and no rational
basis to believe that those shares were held in the fund. Accordingly, I have
concluded that the fund is a fiction. Whatever Mr.
Hiscott
gave to Mr. Hackett to invest was lost in 1992 or 1993 when it was sent to
James and John to invest.

[17]

It appears that the judge
may have intended to refer to Mr. Hackett rather than Mr.
Hiscott
 in the first line of paragraph 34. In particular,
it would appear that the judge was referring to a document prepared by Mr.
Hackett in 2007, for the purposes of the litigation, entitled Stocks that A.
Hackett agreed to purchase and was authorized to purchase for M.
Hiscott
.

Did Mr.
Hiscott
Suffer Loss as a Result of Mr. Hacketts Breaches of Duty?

[18]

The judge had no
difficulty in finding that Mr. Hackett had breached his fiduciary obligations
to Mr.
Hiscott
as a financial advisor, and also
breached the provisions of the trust agreement that the two had entered into.
She found, however, that Mr.
Hiscott
had suffered no
damages in the result.

[19]

The judge was sceptical
with respect to the amount invested by Mr.
Hiscott
.
She noted that there was no documentary evidence that he received more than
30,000 shares. For the purposes of her analysis, however, she assumed that the
investment was as much as suggested by Mr.
Hiscott

330,000 shares in
Sportsight
. The total value of that
investment in 1993 would have been $165,000.

[20]

In the judges view, Mr.
Hackett unwisely and improperly invested the money offshore shortly after Mr.
Hiscott
deposited his shares. The money was lost almost
immediately.

[21]

In attempting to quantify
any loss to Mr.
Hiscott
, the trial judge noted that
the increase in the Toronto Stock Exchange index between 1993 and 2007 would
have made the value of a $165,000 investment in 1993 approximately $577,500 in
2007. Instead, Mr. Hackett had paid Mr.
Hiscott
in
excess of $1.4 million over the years.

[22]

The judge also noted that
assuming that Mr.
Hiscott
had kept the
Sportsight
shares, and sold them when they reached
$3.00/share (a value which they reached only briefly), he would have realized
only $990,000.
Canaccord
notes, in its factum, that
Mr.
Hiscotts

Sportsight
shares had, in fact, declined in the first year of the investment, and that at
the end of 1994, 330,000 shares would have been worth only about $100,000. By
that time, Mr. Hackett had paid Mr.
Hiscott
$125,000
from the purported investment fund.

[23]

I find no error in the
judges finding that Mr.
Hiscott
suffered no damages
as a result of Mr. Hacketts breaches of trust and fiduciary duty. Mr.
Hiscott
received an outstanding return on his investment,
as Mr. Hackett paid him over $1.4 million over the course of 12 years on an
investment that did not exceed $165,000.

[24]

Mr.
Hiscott
bases his claim that he suffered damage on the proposition that he is entitled
to be paid one half of the value of the fund that Mr. Hackett claimed existed
in 2006. The trial judge, however, unequivocally found that the fund did not
exist, and was a chimera, a shared fantasy, or a delusion. In my view, the
evidence amply supported the trial judges view. It is inconceivable that Mr.
Hiscotts
investment, even if it had been as high as
$165,000 in 1993, would have grown beyond $1.4 million had it been properly
invested according to the alleged Agreement and Declaration of Trust.

[25]

Accordingly, I would not
interfere with the judges determination that Mr.
Hiscott
suffered no loss as a result of Mr. Hacketts breaches of duty.

Would
Canaccord
be
Vicariously
Liable for Damages?

[26]

I would also uphold the
judges determination that even if Mr.
Hiscott
had
suffered a loss,
Canaccord
would not have been
vicariously liable to Mr.
Hiscott
for Mr. Hacketts
breaches of duty.

[27]

The judge found that Mr.
Hackett, in entering into an agreement to invest jointly with Mr.
Hiscott
, was acting outside the scope of his employment. It
is apparent from the evidence that Mr. Hackett was not allowed, in the course
of his employment, to enter into arrangements such as the one he is alleged to
have entered into with Mr.
Hiscott
.

[28]

As Mr.
Hiscott
points out, however, the mere fact that Mr. Hackett
was not authorized to act as he did does not exclude the possibility of
vicarious liability. Mr.
Hiscott
relies particularly
on the case of
Bazley
v. Curry
, [1999]
2
S.C.R.
534. In that case, the Supreme Court of
Canada was dealing with a claim brought by a person who, as a child, had been
sexually abused at a residential care facility by an employee of the facility.
The Court found that the foundation that operated the facility could be
vicariously liable for the tort of its employee in the circumstances. The
plaintiff relies, particularly, on paragraph 41 of the judgment of
McLachlin
J. (as she then was) speaking for a unanimous
Court:

[41]
Reviewing the jurisprudence,
and considering the policy issues involved, I conclude that in determining
whether an employer is vicariously liable for an employees unauthorized,
intentional wrong in cases where precedent is inconclusive, courts should be
guided by the following principles:

(1)
They should openly confront the question of whether liability should lie
against the employer, rather than obscuring the decision beneath semantic
discussions of scope of employment and mode of conduct.

(2)
The fundamental question is whether the wrongful act is
sufficiently related
to conduct authorized by the employer to justify the imposition of vicarious
liability. Vicarious liability is generally appropriate where there is a
significant connection between the
creation or enhancement of a risk
and
the wrong that accrues
therefrom
, even if unrelated
to the employers desires. Where this is so, vicarious liability will
serve the policy considerations of provision of an adequate and just remedy and
deterrence. Incidental connections to the employment enterprise, like time
and place (without more), will not suffice. Once engaged in a particular
business, it is fair that an employer be made to pay the generally foreseeable
costs of that business. In contrast, to impose liability for costs
unrelated to the risk would effectively make the employer an involuntary
insurer.

(3)
In determining the sufficiency of the connection between
the employers
creation or enhancement of the risk
and the wrong complained of, subsidiary
factors may be considered. These may vary with the nature of the
case.  When related to intentional torts, the relevant factors may
include, but are not limited to, the following:

(a)
the
opportunity that the enterprise afforded the
employee to abuse his or her power;

(b)
the
extent to which the wrongful act may have
furthered the employers aims (and hence be more likely to have been committed
by the employee);

(c)
the
extent to which the wrongful act was related to
friction, confrontation or intimacy inherent in the employers enterprise;

(d)
the
extent of power conferred on the employee in
relation to the victim;

(e)
the
vulnerability of potential victims to wrongful
exercise of the employees power.

[29]

Mr.
Hiscott
claims that he believed at all material times that Mr. Hackett was acting in
his capacity as an employee of
Canaccord
, and that he
was investing with
Canaccord
. The trial judge,
however, did not accept Mr.
Hiscotts
assertions:

[41]
Mr.
Hiscott
says that he was a naive investor. He
says that he genuinely believed that his investment was with
Canaccord
, and that his account was opened and operated in
a perfectly normal fashion. I do not accept this evidence. Mr.
Hiscott
has a university degree and business experience. He
was the general manager of two fitness facilities in California, and the
general manager and part owner of a large fitness and recreation facility in
Whistler. He was a part owner with his brother of Planet Ice in Coquitlam. He
started a business called All Star Baseball Academy. He promoted
Sportsight
.

[42]
Yet, despite all of this, Mr.
Hiscott
says that he
was not concerned that he received no account opening documents and no
statements for the account which he thought that he had with
Canaccord
. He signed promissory notes in favour of
Mr. Hackett, and Mr. Hackett signed promissory notes in favour of
Mr.
Hiscott
, apparently to record their
investment. Moreover, although Mr.
Hiscott
received funds from time to time from Mr. Hackett, he did not file a tax return
since at least 1993. The payments that he received came directly from Mr.
Hackett rather than from
Canaccord
. Mr.
Hiscott
maintains that he saw nothing unusual in all of
this. In light of this evidence, I do not accept that Mr.
Hiscott
thought that this was a normal investment.

[43]
Mr. Hackett quite candidly said that he did not disclose his activities to
Canaccord
and that he did not open an account at
Canaccord
because there was no way that
Canaccord
would permit him to have a joint account or to
invest with a client. Mr. Hackett acknowledged that, had Mr.
Hiscott
thought that the account was at
Canaccord
,
he may not have disabused Mr.
Hiscott
of that
mistaken belief. He thought that he might have told Mr.
Hiscott
as early as 1999 that the account was offshore.

[44]
In my view, Mr.
Hiscott
was not at all concerned
about whether he had an account at
Canaccord
until
2006 or 2007, which is when he realized that Mr. Hackett was in
difficulty. At that point, he turned to
Canaccord
with the hope that it would accept some responsibility. Mr. Hackett and
Mr.
Hiscott
apparently documented their agreement in
a document entitled Agreement and Declaration of Trust, which was signed in
June 2006. In 2007, they signed a document entitled Acknowledgement,
which was incorrectly dated January 23, 2006.  Neither of these documents
suggests that the investment was made through
Canaccord
.

[45]
In light of all of the evidence, it is my view that Mr.
Hiscott
was not a client of
Canaccord
. Accordingly, it does
not owe him the duties that it owes to a client.

[30]

On this appeal, Mr.
Hiscott
attempts to persuade the court that he was more
naïve than the trial judge found. In my view, the trial judges assessment of
his level of sophistication as a businessman and investor was one that was open
to her on the evidence.

[31]

Mr.
Hiscott
also emphasizes that certain pieces of evidence from which he might reasonably have
drawn the inference that Mr. Hackett was acting in the course of his employment
in accepting his investment. He emphasizes that his meetings with Mr. Hackett
were at his office, and that employees of
Canaccord
witnessed certain documents. The trial judge did not ignore that evidence, but
assessed it in light of the totality of the circumstances.

[32]

The judge evidently
considered that Mr.
Hiscott
was, at material times,
unconcerned with the question of whether Mr. Hackett was acting as an employee
of
Canaccord
at the time of the investments. Further,
she found that had Mr.
Hiscott
been at all concerned
with the question, there was ample evidence from which he could have discerned
that the investments that he was making were not being made in the normal
course of Mr. Hacketts business, and that he was not acting in the course of
his employment with
Canaccord
. These findings were in
accordance with the evidence, and were open to the trial judge.

[33]

Given the trial judges
findings of fact, it cannot be said that Mr. Hacketts employment with
Canaccord
created or enhanced the risk that he would engage
in irregular practices in relation to Mr.
Hiscotts
investments. Mr.
Hiscott
knew, or should have known,
that Mr. Hackett was not acting as an employee of
Canaccord
when he entered into a joint investment scheme with him. Nothing that
Canaccord
did compelled or encouraged Mr.
Hiscott
to engage in investment relations with Mr. Hackett.

[34]

At its highest, Mr.
Hiscotts
argument is that his estimation of Mr. Hacketts
business acumen was enhanced by the knowledge that he was employed with
Canaccord
. Standing alone, that is an insufficient basis on
which to found vicarious liability.

Was there a Failure to Supervise Mr.
Hackett

[35]

Mr.
Hiscott
finally argues that
Canaccord
is liable to him for
its failure to supervise Mr. Hackett. I need not address this contention at any
length. The judge analyzed the various alleged failures by
Canaccord
to supervise Mr. Hackett. She found each of the alleged failures to have been
unproven, non-negligent, or unconnected to the investment scheme entered into
by Mr.
Hiscott
and Mr. Hackett. Mr.
Hiscott
has not succeeded in persuading me that the trial
judge made any reversible error in respect of her analyses.

Disposition

[36]

As acknowledged by
the appellant, the appeal as against Mr. Hackett should be dismissed as
abandoned. I would also dismiss the appeal as against
Canaccord
.

[37]

FINCH
C.J.B.C.
: I agree.

[38]

SAUNDERS
J.A.
: I agree.

[39]

FINCH
C.J.B.C.
: The appeal is
dismissed.

The
Honourable Mr. Justice Groberman


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Khosah v. Canada Life Assurance Company,

2013 BCCA 25

Date: 20130111

Docket: CA039442

Between:

Surinderjeet
Khosah

Appellant

(Plaintiff)

And

The Canada Life
Insurance Company and in French,

La Compagnie DAssurance
du Canada Sur La Vie

Respondent

(Defendant)

Before:

The Honourable Mr. Justice Low

The Honourable Madam Justice D. Smith

The Honourable Madam Justice A. MacKenzie

On appeal from: Supreme
Court of British Columbia, September 29, 2011
(
Khosah v. Canada Life Assurance Company
, Vancouver Registry No.
S083168)

Oral Reasons for Judgment

Counsel for the Appellant:

G.J. Collette and
  N.W. Peterson

Counsel for the Respondent:

E.B. Lyall, Q.C. and
  T.J. Gilmor

Place and Date of Hearing:

Vancouver, British
  Columbia

January 11, 2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 11, 2013

[1]

A. MACKENZIE J.A.
:  The issue on this appeal is whether the
appellants deceased husband, Mr. Khosah, obtained temporary insurance
coverage from the respondent, the Canada Life Assurance Company (Canada
Life), while it processed Mr. Khosahs application for reinstatement of a
term life insurance policy that had lapsed due to non-payment of premiums.

[2]

Canada Life denied
Mr. Khosahs application for reinstatement of his life insurance policy. However,
Mr. Khosah died shortly before Canada Life informed Ms. Khosah of
this decision and Canada Life refused Ms. Khosahs claim for the proceeds
of the lapsed policy. Ms. Khosah then sued Canada Life, arguing that she
was entitled to benefit under a policy of temporary life insurance and seeking
an order that the proceeds be paid to her. In an oral decision after a summary
trial, Mr. Justice Sewell dismissed her action:
Khosah v. Canada Life
Assurance Company
(29 September 2011), Vancouver S083168 (B.C.S.C.).

[3]

Ms. Khosah appeals
essentially on the ground the trial judge erred in his identification and
application of principles of contract law as applied to contracts of insurance.

[4]

For the reasons below, I would
dismiss the appeal on the basis there was no offer and acceptance as required
to create a contract for temporary insurance.

Background

[5]

In March 2003, Mr. Khosah
applied to Canada Life for term life insurance. His insurance broker, Jaswinder
Singh Parmar, assisted him with this application. Mr. Khosah did not apply
for temporary insurance at that time. The judge noted Mr. Parmar did not
suggest Mr. Khosah apply for temporary insurance because Mr. Khosah
was dealing with other insurers and would not have wanted to pay the one
months premium in advance in order to obtain temporary insurance.

[6]

In April 2003, Canada Life issued
a life insurance policy to Mr. Khosah for $1,000,000 (the Policy), under
which Ms. Khosah was a beneficiary. The monthly premiums of $146.70 were
automatically debited from Mr. Khosahs business bank account pursuant to
a preauthorized payment plan with Canada Life.

[7]

In June 2005, without informing
Mr. Khosah, Mr. Khosahs business partner cancelled the preauthorized
payment plan while Mr. Khosah was on a prolonged trip to India. In a
letter dated July 7, 2005, Canada Life informed Mr. Khosah his bank had
returned his preauthorized payment for June 29, 2005. Canada Life requested a
replacement cheque by July 30, 2005. As Mr. Khosah was out of the country,
he did not receive this letter, did not send a replacement premium to Canada
Life, and the Policy lapsed.

[8]

The Policy provided the following
with respect to reinstatement:

If this policy has lapsed, you
may apply to reinstate it within three years after the first unpaid premium was
due, provided application is made before the Final Expiry Date [April 29, 2048]
of the policy.

To reinstate this policy you
will have to:

(1)        Provide
us with a reinstatement application and proof, satisfactory to us, of the life
insureds continued insurability on the same Health and Rate Class basis in
effect for this policy on the date of lapse.

(2)        Pay
all overdue premiums together with compound interest at an appropriate rate
then set by us.

The reinstated policy will
come into force at the date on which we have approved the application for
reinstatement and all of the preceding terms of this provision have been
satisfied.

[9]

On August 4, 2005, Canada Life
sent a notice of lapse to Mr. Khosah, notifying him that the Policy had
lapsed. It advised that if payment of $586 was received by August 22, 2005,
Canada Life would reinstate the Policy without evidence of insurability. The
notice of lapse also informed Mr. Khosah of the option of paying $1,357.59
to keep the Policy in force until its next anniversary date, rather than making
payments on a monthly basis. Canada Life did not receive any payments by August
22, 2005.

[10]

When Mr. Khosah returned from
India and learned of the lapsed Policy, his wife provided Mr. Parmar with
a new preauthorized payment form and a cheque payable to Canada Life for
$1,941.59. The parties agree this was likely intended to be the sum of the two
payment amounts set out in the notice of lapse, with a discrepancy of $2. This
total amount was substantially greater than what Mr. Khosah owed Canada
Life for the outstanding arrears.

[11]

On October 18, 2005, Canada Life
received the cheque and put the funds into a suspense account. However, it
did not inform Mr. Khosah or Ms. Khosah it was simply holding the
funds, rather than applying them to Mr. Khosahs debt.

[12]

The judge found that Canada Life
treated the receipt of the cheque and the preauthorized payment form as a
request to reinstate the lapsed Policy. On October 26, 2005, Canada Life sent
Mr. Khosah a letter enclosing a contract change form entitled Individual
Life Insurance Application for Policy Change (the Application). The judge
described the Application as an omnibus form designed to be used to cover a
variety of changes to an account, including reinstatement of a policy. The
instructions in the Application specify which sections of the Application the
applicant is required to complete for different types of policy changes. With
respect to reinstatement of a policy lapsed between 54 days and 6 months, the
instructions direct the applicant to complete sections 1 (1.1, 1.2, 1.3), 2
(2.1), 6, 12 and 13. While some policy changes require the applicant to fill
out the Temporary Insurance Agreement section (the TIA), this is not required
for an application for reinstatement.

[13]

Canada Lifes letter to
Mr. Khosah instructed him to complete sections 1, 2, 6, 7, 11 and 12 of
the Application. Section 7.11 sets out the conditions to qualify for temporary
insurance and states that temporary insurance is not applicable to a group
conversion, to the exercise of guaranteed insurability options, if the total
underwriting risk is $5,000,000 or greater, or if the actual age of the proposed
insured is 71 or over. It then contains three health questions and states
temporary insurance is not available if the applicant answers yes to any of
the questions. Section 7.11 also asks the applicant to refer to the Date
coverage begins section of the TIA for the conditions that must be met for
temporary insurance coverage to come into effect. Among other conditions, the
TIA provides that coverage is not in effect until payment of the first monthly
premium has been received. Finally, section 7.11 states, Always complete the
Temporary
insurance agreement
and give it to the owner.

[14]

Mr. Khosah, with the
assistance of Mr. Parmar, filled out what he thought to be the
relevant sections of the Application, including section 7, and returned
the Application to Canada Life. He did not forward any further payment to
Canada Life.

[15]

In January 2006, Mr. Khosah
forwarded the necessary medical documentation for the reinstatement
application. Canada Life processed the application and on February 8, 2006,
decided to deny reinstatement. Canada Life informed Mr. Khosah of its
decision by a letter sent to him on February 16, 2006; unfortunately,
Mr. Khosah had died on February 13, 2006.

[16]

Ms. Khosah brought a claim
against Canada Life, arguing Mr. Khosah was covered by a temporary
insurance policy of $1,000,000 and seeking an order that it be paid to her. The
parties proceeded by way of summary trial.

Judgment at Trial

[17]

The sole issue at trial was
whether Mr. Khosah was insured under a temporary insurance agreement.

[18]

The judge found the critical
question was one of contract formation, rather than the interpretation of an
existing contract. Specifically, the issue was whether Mr. Khosah had
entered into a contract with Canada Life for temporary insurance.

[19]

The judge noted the creation of a
contract requires offer and acceptance and whether there has been offer and
acceptance must be determined objectively. He concluded there was no offer or
acceptance in this case.

[20]

The judge first explained what
would constitute offer and acceptance of a temporary insurance agreement:

[39]      In my view, the
plaintiff has established neither offer nor acceptance in this case. I do note
that there is one unique characteristic of a temporary insurance agreement that
distinguishes it from the other types of insurance contemplated in the
Application. It seems quite clear that a temporary insurance agreement would
come into existence upon compliance with the requirements of the temporary
insurance agreement section of the Application by a person who qualified for
temporary insurance. One such requirement was that the person answered no to
the three questions posed in section 7 of the Application.

[40]      Therefore the
Application, in my view, constitutes an offer by Canada Life to provide
temporary insurance to qualified persons. The completion of the Application,
including the temporary insurance agreement section, and compliance with the
other conditions to obtain temporary insurance by a qualified applicant would
have constituted acceptance of that offer.

[21]

The judge found that while the
Application constitutes an offer to provide temporary insurance to qualified
persons, it did not constitute an offer of temporary insurance to
Mr. Khosah because he was applying for reinstatement of a lapsed policy
and the Applications instructions do not contemplate completion of the TIA
section on such an application.

[22]

The judge also noted that the
October 26, 2005, letter from Canada Life to Mr. Khosah directed
Mr. Khosah to complete section 7 of the Application and, read alone,
section 7.11 seems to suggest the only condition to the creation of a temporary
insurance agreement is a negative answer to the three health questions
contained in that section. However, the judge found that because section 7.11
is phrased in the negative, it sets out the circumstances in which temporary
insurance is not available; it does not make an offer to provide temporary
insurance. Further, the judge noted section 7.11 directs the insurance broker
to complete the TIA and provide it to the owner, indicating something more than
answering no to the three health questions is required to qualify for
temporary insurance.

[23]

In the event he was wrong that
Canada Life made no offer of temporary insurance to Mr. Khosah, the judge
considered whether Mr. Khosah accepted any offer of temporary insurance.
He concluded there was no acceptance in this case because Mr. Khosah did
not fill out the TIA section of the Application and he did not pay the required
first monthly premium of the policy for which he was applying. Although
Ms. Khosah sent $1,941.59 to Canada Life in October 2005, the judge found
there was no evidence that this payment was intended to be made, or later
designated, as payment of the first monthly premium.

[24]

Finally, the judge found
Mr. Khosah did not have a reasonable expectation that he was covered by
$1,000,000 in temporary life insurance as there was no evidence Mr. Khosah
ever intended to obtain temporary insurance. He did not complete the TIA
section of the Application and did not indicate his earlier payment of arrears
was meant to constitute the payment of the premium required to obtain temporary
insurance.

[25]

The judge referred to
Elite
Builders Ltd. v. Maritime Life Assurance Co
., [1986] 3 W.W.R. 32, 68
B.C.L.R. 273 (C.A.), leave to appeal refd, [1986] 1 S.C.R. viii, citing
Smith
v. Westland Life Ins. Co.
, 539 P.2d 433, 123 Cal. Rptr. 649 (S.C. 1975). In
Smith
, the California Supreme Court held that a person has a reasonable
expectation of temporary insurance if he or she pays the premium at the time he
or she applies for insurance and receives a receipt in return which states the
coverage is to be effective as of the date of the application. The judge
distinguished
Smith
from the present case on the basis there was no
evidence Canada Life requested that Mr. Khosah pay any premium in
connection with the Application and did not issue a receipt.

[26]

As there was no insurance
agreement in place, the judge dismissed Ms. Khosahs claim under a policy
for temporary insurance.

Issues on Appeal

[27]

Ms. Khosah alleges the trial
judge erred:

(1)        in finding that the
fundamental issue in this case concerns a question of offer and acceptance and
not interpretation of a binding agreement;

(2)        in failing to apply
the correct principles of interpretation applicable to contracts of insurance;

(3)        in his formulation
and application of the doctrine of reasonable expectations; and

(4)        in his
identification and application of the principles governing offer and
acceptance.

Ms. Khosah seeks judgment for $1,000,000 and
prejudgment interest.

Discussion

[28]

Ms. Khosahs first and fourth
grounds of appeal relate to the judges conclusion that no temporary insurance
agreement came into existence, so I will address those grounds together.

Did the judge err in finding
there was no offer and acceptance?

[29]

Ms. Khosah first submits the
critical issue in this case involves contractual interpretation, not contract
formation, as a contract between the parties clearly existed. Thus, she says
the judge erred in applying principles of contract formation, rather than
principles of contractual interpretation in the context of insurance contracts.

[30]

Ms. Khosah advances three
arguments in support of this position: 1) the parties were in a
continuing contractual relationship under the original Policy and
Mr. Khosah was simply executing a contractual right under the Policy in
completing and signing the Application; 2) under the Policy, a
reinstatement application is part of the contract between the parties; and
3) even if the Application could be viewed as an offer to enter into a new
and separate contract from the original Policy, Canada Lifes sending of the
Application to Mr. Khosah and Mr. Khosahs completion and signing of
the Application constituted a binding agreement between the parties.

[31]

I agree with Canada Life that coverage
under the original Policy, and any accompanying obligations, terminated in
accordance with its own terms because Mr. Khosah failed to pay outstanding
premiums within the grace period. The relevant clause in the Policy states:

If you do not pay a premium on
or before its due date, we will keep your policy in force for thirty-one days
beyond that date. This is the grace period. If you do not pay the premium by
the end of the grace period, your policy lapses and all insurance coverage
terminates.

[32]

As coverage was terminated, the
judge properly considered whether a new contract of temporary insurance came
into existence: see
Paul v. CUMIS Life Insurance Company,
2012 BCCA 35
at paras. 11, 17, 29 B.C.L.R. (5th) 225.

[33]

Ms. Khosahs alternative
submission is that if the judge did not err in proceeding under a contract
formation analysis, a valid offer and acceptance were made out. She argues the
rules of contract construction apply to the issue of contract formation and
thus, if an offer is ambiguous, the ambiguity should be resolved against the
party who made the offer. Applying this principle, Ms. Khosah says Canada
Lifes letter of October 26, 2005, and the accompanying Application constituted
an offer for temporary insurance.

[34]

Ms. Khosah further submits
Mr. Khosah unequivocally accepted the offer for temporary insurance when
he signed the Application and returned it to Canada Life.

[35]

In my view, basic principles of
contract formation dispose of this argument. The critical features of a
contract of insurance, as with any contract, are an offer and an acceptance. In
Redfern Resources Ltd. (Re)
, 2012 BCCA 189, 32 B.C.L.R. (5th) 303, this
Court adopted this summary of the principles governing the formation of a
contract:

[72]      The creation of a
contractual relationship is described by G.H.L. Fridman in
The Law of
Contract in Canada,
6th ed. (Toronto: Carswell, 2011) at 25 as follows:

the
common law requires a clear manifestation of agreement. The mechanism of that
agreement is contained in the notions of offer and acceptance. Without an offer
and its acceptance, there is no contract. If either or both is missing, there
is no proof that the parties were ever
ad idem
, that is, had reached a
stage in their negotiations in respect of which it could be said that they had
shown not only an intent to be bound together, but the nature, extent, and
manner of their being bound so as to give rise to a legally recognizable and
enforceable contract. The parties will not be bound
unless
they intend
to be bound, nor will they be bound
until
they intend to be bound. Their
intentions in these respects are indicated by the features of offer and
acceptance.

[Footnotes omitted; emphasis in original.]

Canada Life is correct that the evidence does not
support a finding that a reasonable person in Mr. Khosahs position would
have understood he had been offered a contract for temporary insurance. As
Canada Life points out, there was no evidence to suggest Mr. Khosah
believed he qualified for temporary insurance, Canada Lifes letter to
Mr. Khosah did not mention temporary insurance, the instruction section of
the Application does not instruct applicants for reinstatement to complete the
TIA, and Mr. Khosah and Mr. Parmar never discussed temporary
insurance.

[36]

As Canada Life also says, the
judge correctly noted that s. 7.11 is not, on its own, an offer of temporary
insurance as it refers to the TIA for other conditions to be met before
temporary insurance coverage can come into effect, including payment of a
premium, and it directs the insurance broker to sign the TIA and provide it to
the owner. Thus, merely answering no to the three health questions in section
7.11 is not enough for an applicant to qualify for temporary life insurance.
Canada Lifes receipt of the earlier cheque from Ms. Khosah did not give
rise to an offer of temporary insurance as that cheque was intended to cover
payments required to reinstate the lapsed Policy. With respect to s. 11, the
application was not accompanied by any premium payment as required. Mr.
Khosahs earlier payment was not clearly designated to satisfy the requirement
for temporary insurance.

[37]

With respect to acceptance, in my
view, the judge also correctly concluded there was no unequivocal acceptance as
Mr. Khosah did not complete the TIA and no premium was paid. As Canada Life
says, the cheque forwarded by Mr. Khosah in October 2005 was sent for the
purpose of paying the amount required to reinstate the policy; there was no
evidence to suggest it was intended to represent a premium for temporary
insurance.

[38]

I agree with Canada Life that the
result is the same if the completed Application is viewed as an offer by
Mr. Khosah to purchase insurance. Canada Life correctly submits it cannot
be interpreted as an offer to purchase
temporary
insurance as
Mr. Khosah did not request temporary insurance and did not pay the
required premium. Nor did Canada Life accept any offer to purchase temporary
insurance as the TIA was not completed or provided to Mr. Khosah and
Canada Life did not give Mr. Khosah a receipt.

[39]

Ms. Khosah relies on the principle
of
contra proferentem,
but it

is not relevant here because there
is no ambiguity that cannot be resolved by the application of basic principles
of contract law. Without ambiguity,
contra proferentem
does not apply:
Progressive
Homes Ltd. v. Lombard General Insurance Co. of Canada,
2010 SCC 33, [2010]
2 S.C.R. 245 at para. 24.

[40]

I would conclude the trial judge
did not err in finding no offer and acceptance as required to create a contract
of temporary insurance. In my view, his conclusion is well supported by the law
of contract as applied to the evidence before him. The Application was simply a
request to reinstate the expired Policy which Canada Life declined for medical
reasons.

[41]

I would agree with Canada Life
that Ms. Khosahs case is essentially founded upon Mr. Parmars
mistake in filling out three boxes in s. 7.11 of the Application. It is also
based on Canada Lifes October 26, 2005 letter which mistakenly requested
completion of s. 7. However, as the judge pointed out, s. 7 is not the TIA (para.
46). The cover letter did not instruct Mr. Khosah to complete the TIA section,
and did not ask for a premium for temporary insurance
.
A temporary
insurance agreement was never requested, offered, accepted, paid for, completed
or delivered. Thus, the trial judge correctly dismissed Ms. Khosahs
action.

[42]

For the reasons above, I find it
unnecessary to address the other grounds of appeal. In particular, I would
observe that the doctrine of reasonable expectations, on which Ms. Khosah
also relies, has no application in the absence of an insurance contract:
Elite
Builders Ltd. v. Maritime Life Assurance Co.
at 280.

[43]

It follows that I would dismiss
Ms. Khosahs appeal.

[44]

LOW J.A.
: I agree.

[45]

D. SMITH J.A.
: I agree.

[46]

LOW J.A.
: The appeal is dismissed.

The
Honourable Madam Justice MacKenzie