Regulatory law: a mistake of law is not a valid defence to a strict liability offence
As was decided by the Supreme Court of Canada in a judgement rendered in November 2013, “ignorance of the law is no excuse”. According to the Court, a mistake in the application of a given statute, even if complex by nature, does not generally constitute a valid defense. The Supreme Court’s decision, however, seems to imply that a defense based on the complexity of a statute may hold up in certain circumstances, but postpones all debate concerning this topic to a later time. (La Souveraine, Compagnie d’assurance générale v. Autorité des marchés financiers, 2013 SCC 63).
THE FACTS
In 2004, the Albertain insurance company, La Souveraine, a company registered with the Autorité des marchés financiers under the Act respecting insurance, delivered an insurance policy insuring recreational vehicles at various dealerships across Canada. At the time, La Souveraine employed a broker based in Winnipeg, who was not registered with the Autorité des marchés financiers.
Following the issue of the statements of offence in January 2005, the Autorité des marchés financiers chose to investigate the broker in question. La Souveraine, admitted to said broker not being registered under the Act respecting insurance, but justified this by invoking the fact that the company had its head office in Ontario, that the policy had been negotiated and issued in Ontario and that all premiums were paid directly to the broker, rather than to the dealership.
In January 2006, without having replied to the arguments invoked by la Souveraine in its last letter, the Autorité des marchés financiers issued 56 statements of offence against the insurance company for having allowed an unregistered broker to deliver a master insurance policy to Quebec dealerships and consequently, for having acted in violation of the Act respecting insurance.
La Souveraine, having received no response from the Autorité des marchés financiers before the issuing of the statements of offence and having received a erroneous interpretation of the law from its legal advisors, argues that it was justified in believing that its broker’s operations were legal. According to la Souveraine, its mistake was a mistake of fact.
THE SUPREME COURT OF CANADA’S DECISION
The Supreme Court of Canada declares la Souveraine to be liable for the offences committed by its broker and bases its decision on the following principals :
1. The offences in question are strict liability offences.
2. A strict liability offence is an offence that does not require proof of a guilty mind or of a willful intent to break the law (mens rea).
3. In the case of a strict liability offence, the accused’s fault is presumed, unless the accused succeeds in rebutting the presumption of the existence of a mens rea by demonstrating his due diligence or a mistake of fact.
4. An accused can successfully invoke a mistake of fact as a defense if he can demonstrate that he has taken all reasonable steps in order to avoid making said mistake.
5. The accused makes a mistake of law, rather than a mistake of fact, if he misinterprets his legal situation, all while applying facts that are actually true.
6. A mistake of law is generally not a valid defence, unless it is proven that the mistake was an officially induced error.
7. Erroneous advice given by legal advisors cannot justify a mistake of law.
8. The passive nature of an official, for example silence, cannot justify a mistake of law.
THE LESSONS TO BE LEARNED
1. No matter how reasonable a mistake of law may be, it cannot – unlike a mistake of fact or an officially induced error – serve as a valid defense in the case of a strict liability offence.
2. The Autorité des marchés financiers is not required by law to reply to those to whom the law applies or to inform them about their rights and obligations.
Dube Légal inc., Montréal regulatory law lawyers.
