Date: 20021209
Docket: T-2316-00
Neutral citation: 2002 FCT 1273
EDMONTON, ALBERTA, MONDAY, THE 9TH DAY OF DECEMBER, 2002
Present: THE HONOURABLE MADAM JUSTICE HANSEN
BETWEEN:
CADNET Productions Inc.
AN CANADIAN INCORPORATED BUSINESS
and William Robert Bell
Plaintiffs
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER
[1] In this proceeding, the plaintiffs seek damages for alleged illegal collection actions undertaken by the Overpayment Recovery Unit of Human Resources Development Canada ("HRDC") in the course of attempts to recover an overpayment of employment insurance benefits. William Bell is the president of the corporate plaintiff. Cadnet Productions Inc. was incorporated in 1995. The alleged illegal collection actions relate to two Third Party Demands issued in June 1999 and November 2000. In their Amended Statement of Claim, the plaintiffs also ask for declarations that "the defendant has no right to associate the personal debt of the Plaintiff to an incorporated company" and that "the defendant has no right to disrupt the business operations of the Plaintiff by freezing the bank accounts on two occasions".
[2] In 1997, HRDC initiated collection action for the recovery of an overpayment of employment insurance benefits in the amount of $10,512 paid to Mr. Bell for 1993. Mr. Bell took issue with the amount claimed and a subsequent review resulted in the amount being reduced to $5,256. In March 1998, Mr. Bell appealed the decision to the Board of Referees. This appeal was dismissed. Mr. Bell testified that he launched a further appeal, however, there is no evidence that this ever occurred. Although Mr. Bell continues to dispute the amount owing due to the overpayment, the amount of the debt is not an issue in this proceeding.
[3] In 1998, the collections officer assigned to Mr. Bell's file made a number of telephone calls to Mr. Bell in an attempt to establish an arrangement for the repayment of the debt. At various times, Mr. Bell indicated that he was not drawing a salary and his company was experiencing financial hardship. He also advised the collections officer that he thought he would be able to start making payments in September 1999. However, no payments were received. Nor did Mr. Bell provide a financial statement as requested by the officer.
[4] As a result of a number of searches, the officer became aware of the corporate plaintiff and that the corporate plaintiff and Mr. Bell had accounts at the Vancity Credit Union. On June 16, 1999, the officer sent a Third Party Demand to Vancity Savings. The Third Party Demand directs Vancity Savings to remit the full amount of the indebtedness or 50% of the bank account of "William R. Bell DBA Cadnet Productions Inc.". "DBA" is an abbreviation for "doing business as".
[5] Mr. Bell became aware of the Third Party Demand when his spouse attempted to make a deposit to the corporate plaintiff's account. She testified she was informed by the teller that the account was "frozen". Mr. Bell immediately telephoned HRDC to complain about the action that had been taken. He stated that he was not the sole owner of the business and demanded that the "freeze" be lifted immediately. The officer who took the call contacted Vancity and was informed that when an account has "Inc" it generally means there is more than one partner and that the demand would not be honoured. The officer telephoned Mr. Bell to tell him that no funds would be deducted because Cadnet was a company. Mr. Bell reiterated his complaint that the garnishee was illegal and that he had incurred expenses due to the freeze on the account and wanted to be compensated for his losses. A number of further calls were exchanged between Mr. Bell and HRDC. In particular, on June 23, 1999, the Chief of the Overpayment Unit telephoned Mr. Bell. She acknowledged that the garnishee had been issued incorrectly and that a letter of apology would be sent. A letter of apology was received by Mr. Bell.
[6] The officer who issued the Third Party Demand testified that at the time she understood that where there was a "sole principle" of a company it meant that there was only one owner of a company. Therefore, she could issue the Third Party Demand in the form she had used. She stated that at the time she did not understand the distinction between an incorporated company and a proprietorship.
[7] The second incident at issue in this proceeding occurred in November 2000. Between June 1999 and November 2000, a number of requests had been made to Mr. Bell to provide a financial statement or to make arrangements for payment of the outstanding debt. Mr. Bell did not comply with any of these requests.
[8] On October 18, 2000, a new officer assigned to Mr. Bell's file, sent Mr. Bell a letter noting that the debt was still outstanding and that no repayment arrangements had been made. The letter also states that unless arrangements for repayment are made within 10 days steps will be taken to recover the outstanding debt. During the latter part of October, the officer verified that the file was not under review, there was no record of employment insurance, there were no monies being processed in the accounts receivable system and there were no payments that had not been processed correctly. He also conducted a BC Online search. Although the search came back negative with respect to any property in the name of Mr. Bell, he noted that "Cadnet Inc" had one principal. As a result of an inquiry to Vancity Savings, he learned that Mr. Bell had a personal account with a balance of $13.98 and Cadnet Productions Inc. had a balance of $4,789.91 in its account. Based on this information, on November 8, he approved a Third Party Demand to Vancity Savings. As with the earlier demand in June 1999, the debtor was identified as "William R Bell DBA Cadnet Productions Inc.".
[9] The October 18 letter prompted a telephone call from Mr. Bell on November 9, 2000. According to the officer, Mr. Bell was very upset and used profane language. He advised Mr. Bell that if he did not stop swearing he would not continue with the conversation. As the profanity continued, he hung up the telephone. According to Mr. Bell, during this heated conversation the officer referred to Cadnet Productions Inc.. From this reference, Mr. Bell inferred that action would be taken once again against the company.
[10] Mr. Bell testified that he telephoned HRDC on November 17. On this date, the officer assigned to his file was not in but he spoke to another officer. According to Mr. Bell, he explained that he was receiving demands for payment but that he did not have any money to make any payments. He recalled that the officer seemed to be a "compassionate" individual and referred him to a web site for further information. According to Mr. Bell, the officer also told him that HRDC could "freeze an incorporated company". The officer denies this allegation.
[11] Mr. Bell testified that his information caused him to panic. He immediately went to Vancity Savings to try to withdraw the funds from the company account. Initially, he tried to withdraw $3,500, leaving some money in the account for outstanding cheques but he was told by the teller he could not withdraw that amount on short notice. As a result, he withdrew $2,500 in cash which he placed in a safe at home. According to Mr. Bell, within a week's time both his personal account and his corporate account were frozen.
[12] In the interim, HRDC received a call from Vancity Savings on November 15 regarding a Third Party Demand they had received by fax. As HRDC does not fax Third Party Demands, it was assumed that the demand had been faxed by another branch. This was later confirmed on November 17 when Vancity telephoned again to say that the demand had been sent to the wrong branch and had been subsequently faxed to their branch. The person from Vancity also stated that no funds would be sent because the demand had been sent to the wrong branch.
[13] On November 30, Mr. Bell telephoned HRDC again to complain that his accounts were still frozen and demanding payment for all service charges. At this point in time, the collections officer testified that he believed, based on the information on the file, that the accounts were not frozen. He offered to telephone Vancity Savings to try to resolve the matter. Later the same day when he spoke to a person at Vancity Savings, he was informed that Vancity had made an error, that they would pay any service charges associated with the error and that they had advised Mr. Bell earlier that day of their error.
[14] Mr. Bell testified that as a result of the freeze on the corporate plaintiff's account two cheques, one to Telus and one to Canada Post, were not honoured. These problems were resolved by Vancity Savings and no service charges were charged to the corporate plaintiff.
[15] Immediately after this last Third Party Demand, Mr. Bell commenced the within action.
[16] While the cause of action is not clearly set out in the pleadings, it would appear that the plaintiffs seek damages for the tort of misfeasance in a public office or, alternatively, for negligence.
[17] Mr. Bell submits that HRDC collections officers knowingly and maliciously undertook illegal collection actions against the corporate plaintiff. These actions disrupted the normal business activities of the company and caused extreme financial hardship for the company. Mr. Bell also submits that the company was deprived of his full attention while he was attempting to resolve the illegal collection activities taken against the company. Finally, he also submits that the litigation process itself has taken him away from his duties as president of the company and has resulted in additional hardship to the company.
[18] With regard to his personal claim, Mr. Bell submits that the threats by HRDC to take action against his company and their ongoing harassment have caused him enormous stress and were the source of friction in his marriage. Additionally, the actions of HRDC resulted in his personal bank accounts being "frozen" causing him personal financial hardship.
[19] While HRDC readily admits that the two Third Party Demands were clearly issued in error, it denies that any of its officers knowingly or maliciously undertook any activity desgined to inflict harm on either of the plaintiffs.
[20] HRDC submits that liability for the tort of misfeasance in a public office requires proof of malice, intent to harm, or actions taken outside the scope of authority. In support of this assertion, HRDC relies on Chhabra v. The Queen (1989), 89 D.T.C. 5310 at page 5314 where Cullen J. stated that in order to succeed in an action based on misfeasance in public office "the plaintiff must show that the persons involved were acting with malice or intent to injure, or that they were acting without authority". HRDC also relies on Francouer v. Canada (1994), 78 F.T.R. 109, affirmed on appeal, as authority for the proposition that the tort of misfeasance in a public office requires more than carelessness or the deficient exercise of statutory authority.
[21] In my opinion, the evidence in the present case falls far short of establishing the tort of misfeasance in a public office. Throughout the relevant time period, Mr. Bell was indebted to HRDC fro the overpayment of benefits. HRDC is statutorily mandated to recover overpayments. The collection activities taken by HRDC to recover the amount owing by Mr. Bell were clearly within their statutory authority. It is equally clear that the two Third Party Demands were issued in error. However, there is no evidence that either of the collections officers who issued the Third Party Demands acted with malice or intent to injure. The first officer testified that she did not understand the distinction between a proprietorship and a company having a sole principal. The second officer testified that he did not learn until after he returned to work that he had improperly issued the Third Party Demand. There is simply no evidence that their actions were motivated by malice or any intention to cause harm to either of the plaintiffs.
[22] The HRDC also submits that the plaintiffs have failed to prove their claims in negligence. First, HRDC argues that the plaintiffs have failed to prove that it was the actions of HRDC that caused the bank accounts to be "frozen" or held. Second, the plaintiffs have not proved any damages flowing from the negligent actions.
[23] With respect to the issue of causation, although the plaintiffs did not call an employee of Vancity Savings to give evidence regarding the steps taken by it upon receipt of the Third Party Demands, I am satisfied on the evidence that the accounts of both plaintiffs were held for some period of time following the receipt of the Demands. Although, Vancity Savings acknowledged some responsibility for what transpired and may have contributed to the length of time the accounts were held, it was the issuance of the Demands that initially led to holds being put on the accounts.
[24] However, the corporate plaintiff has failed to prove any special or general damages stemming for the acts of HRDC. Any service charges that may have arisen as a result of the two cheques not being honoured were paid Vancity Savings. No other specific losses were raised by the corporate defendant. Although Mr. Bell testified that the company suffered economic hardship as a result of the Demands, other than broad assertions no evidence was called linking the actions of HRDC to any adverse financial or other impact on the company. For these reasons, the claim of the corporate defendant fails.
[25] With respect to Mr. Bell's personal claim, he and his spouse testified as to their dire financial circumstances and pressure they were under at the time these events were unfolding. It is clear that the actions of HRDC compounded the stress Mr. Bell was under at the time. I also accept that at a time when Mr. Bell was already worried about the financial viability of his company, "freezes" being placed on the corporate account would cause significant distress. For these reasons, I award Mr. Bell $750. for general damages. Mr. Bell did call any evidence regarding any special damages he may have incurred. Accordingly, no order will be made in this regard.
[26] I also wish to add one comment regarding Mr. Bell's allegations of harassment. In my view, these allegations are without merit. Mr. Bell made a number of promises at various times to begin repaying the debt or to provide a financial statement demonstrating his inability to make payments. He did not follow through with any of the promises. In fact, he admitted that these promises were made as a stalling tactic. In my opinion, the numerous contacts made by HRDC to Mr. Bell were simply legitimate actions taken by the collections officers to try to recover a lawful debt.
ORDER
IT IS HEREBY ORDERED that the defendant shall pay to the plaintiff, William R. Bell, the amount of $750.00 being the amount of the judgment in this action. The claim of Cadnet Productions Inc. is dismissed. "The issue of costs is reserved for submission from the parties."
"Dolores M. Hansen"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2316-00
STYLE OF CAUSE: Cadnet Productions Inc. v. Her Majesty the Queen
PLACE OF HEARING: Vancouver, B.C. & Ottawa, Ontario
via Videoconference on September 26, 2001
DATE OF HEARING: August 15, 16, 17, 2001 and September 26, 2001
REASONS FOR : The Honourable Madam Justice Hansen
DATED: December 9, 2002
APPEARANCES:
Mr.William Bell FOR PLAINTIFF
Litigant in person
Mr. Glenn Rosenfeld FOR DEFENDANT
Department of Justice
SOLICITORS OF RECORD:
Mr. William Bell on his own behalf FOR PLAINTIFF
Morris Rosenberg FOR DEFENDANT
Deputy Attorney General of Canada