Overrules Negative Treatment of Dawood

Overrules Negative Treatment of Dawood

Overrules negative treatment of dawood

1977 CarswellOnt 1172
37 C.C.C. (2d) 122

R. v. Hickey

Regina v. Hickey

Ontario Court of Justice (Provincial Division)

Marshman, Prov. Ct. J.

Judgment: August 11, 1977

Docket: None given.

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Counsel: K. McGowan, for the Crown
W. B. Hagarty, for accused
Subject: Criminal; Criminal; Property
Criminal Law --- Offences against rights of property -- Theft and offences resembling theft -- Theft -- Nature and elements of offence -- Takes or converts
Owner having no intention to part with property essential element of offence -- Criminal Code, R.S.C. 1970, c. C-34, ss. 283(1), 319.
One of the essential elements of the offence of theft is that the owner of the article have no intention to part with his property to the person taking it. Where accused places goods in a box marked with lower price and thus obtains the goods at that price, he is committing the offence of obtaining by false pretences contrary to Code s. 319 or of obtaining by fraud contrary to s. 283(1) since the goods are being obtained by deceit, but he is not committing theft since the goods are not taken against the will of the owner.
Marshman Prov. Ct. J.:
1The accused, David Hickey is charged with the theft of merchandise from the Outdoor Stores Ltd. on September 28, 1976. The facts of this matter are not really in dispute. Steve Sweeney, an employee of the Outdoor Stores Ltd., on Oxford St., City of London, noted the accused in the sporting goods section of the store at 12:30 in the afternoon. In the accused's hand was a small cardboard box containing approximately 100 fishing hooks, appropriately labelled and priced. The price marked on the outside of this box was 39¢. Sweeney saw the accused dump out all the fish hooks and replace them with a number of more expensive fly lures. The evidence shows the value of these lures to be $8.75. The accused then proceeded to the check-out counter.
2Meanwhile, Sweeney had alerted the assistant manager of the store, Elsie, as to what he had seen, and directed Elsie to the counter at which Hickey was standing. Elsie then proceeded to the check-out counter where he himself took charge of the sale. Mr. Elsie took the small cardboard box from the accused, looked at the 39¢ price tag affixed thereto and rang 39¢ through, 3¢ tax, and total of 42¢ and took 42¢ from the accused. Elsie then placed the box into a paper bag, which he normally would do for any customer. However, when he had his hand inside the paper bag, he flipped open the top to see what was in the box and found that there were lures in it. At that time he knew conclusively that Sweeney's report was accurate. Elsie then followed the accused outside the door, apprehended him, called the police, and laid this charge of theft.
3It has been established that it was the accused's intention to remove the expensive lures from the store unlawfully. Certainly, a criminal offence had been committed. However, counsel for the accused has argued that the charge which ought to have been laid here was one either of false pretences or fraud and not of theft.
4In Canada, the offence of theft as found s. 283 of the Criminal Code is defined as any act of one who fraudulently and without colour of right takes or converts to his own use anything with the intent to deprive the owner thereof.
5One of the very technical but essential elements of the offence of theft is that the owner of the article has no intention to part with his property to the person taking it. The offence of obtaining by false pretences involves a false representation by words or otherwise which is made with intent to induce another to act. Obtaining by false pretences which s. 319 of the Code is generally considered a lesser offence than that of fraud.
6The classic definition of fraud is found in the judgment of Buckley, J., in Re London and Globe Finance Corp. Ltd., [1903] 1 Ch. 728 at pp. 732-33:

To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud is by deceit to induce a course of action.

7Under the Criminal Code fraud often encompasses the offence of false pretences.
8The Canadian Encyclopedic Digest, 7 C.E.D. (Ont. 3rd), p. 39-386, para. 645, draws the generally accepted distinction between these offences of theft and fraud:

... in [the offence of] theft the owner ... has no intention to part with his property to the person taking it, while in the case of deceit, falsehood or other fraudulent means the owner does intend to part with his property in the ... chattel, but it is obtained from him by an act of deliberate deception.

Authority for the above rule is cited as R. v. Lake (1953), 107 C.C.C. 97, [1953] O.R. 1009, 17 C.R. 317, and R. v. Hemingway (1955), 112 C.C.C. 321, 1 D.L.R. (2d) 34, 22 C.R. 275.
9A similar distinction between theft by trick and false pretences is to found in the former English law as stated by A. L. Smith, J., in R. v. Russett, [1892] 2 Q.B. 312 at p. 316:

... if possession only of money or goods is given, and the property is not intended to pass, that may be larceny by a trick; the reason being that there is a taking of the chattel ... against the will of the owner; but if possession is given and it is intended by the owner that the property shall also pass, that is not larceny by a trick, but may be false pretences, because in that case there is no taking, but a handing over of the chattel ...

10Counsel for the accused has directed attention to the case of R. v. Dawood (1975), 27 C.C.C. (2d) 300, 31 C.R.N.S. 382, [1976] 1 W.W.R. 262, a situation similar to the one before the Court. In that set of circumstances, the accused had switched price tags on articles of clothing and thus obtained the clothing at quite a reduced price. At trial, Dawood was convicted of theft, but the conviction was quashed by the Court of Appeal. A majority (2 to 1) in the Supreme Court of Alberta upheld the appellate Court's decision.
11McDermid, J.A., speaking for the Court, applied the distinction between theft and fraud as laid down by the Supreme Court of Canada in R. v. Hemingway, supra. McDermid, J.A., found that when the accused had taken the goods to the check-out counter, she was offering to purchase them at the lower price and the cashier accepted that offer by receiving payment for the amount registered in the till. At that point there was a contract of sale, albeit a voidable one since it had been induced by fraud, and property in the items passed to the accused. Hence, the offence committed was held to be false pretences and not theft.
12Clement, J.A., in dissent, chose not to follow the established line of cases and rather held that the display of goods in a self-serve store is not an offer to treat but rather an offer to sell. To this offer to sell is attached an implied term: that the offer can only be accepted by carrying the article to the cashier and paying the marked price. Clement, J.A., reasoned that, by dishonestly altering the original marked price, the accused had altered the proper contractul sequence and in law was making a new offer to the cashier, namely, to purchase the articles at the reduced price. Clement, J.A., then found that the job of the attendant cashier was only to receive money from the customers and record the transactions. Thus, Clement, J.A., reasoned that she had no greater authority of the shopkeeper, and could therefore not accept the new offer made by the accused. Hence, the "contract" alleged to have been formed was rendered void by a fundamental mistake and accordingly no property passed to the accused. Thus, Clement, J.A., found that in the circumstances there was the element of aspiration essential to the offence of theft.
13R. v. Malhotra (1975), 28 C.C.C. (2d) 551, a trial Court decision in the Judicial District of York, has followed the lead of Clement's dissenting judgment. However, Judge Charles expressed doubts about the correctness of his findings, and suggested that our Court of Appeal decide whether they agree with the Alberta Court of Appeal or not. It is upon R. v. Malhotra and Clement, J.A.'s dissent in R. v. Dawood that the Crown in this case mainly relies.
14In order to ascertain whether the accused took the fishing lures or had them handed over willingly, two sub-issues must be determined. They are first, whether the accused's act of deception was effective to make the contract of sale void or voidable at law, and second, whether the assistant manager who took charge of the sale had sufficient authority to accept the offer made to him by the accused.
I. Void or Voidable?
15A fundamental mistake may act to make a contract void from the start. The Manitoba Court of Appeal has held that [paraphrase]:

There is not consensus ad idem where there is a fundamental error relating to the person of the other contracting party, or to the nature of the contract or the subject matter of the contract. In such cases, there being no consensus in the minds of the parties to the proposed transaction, there is no contract. What takes place between them is void ab initio.

16This decision in Boyd v. South Winnipeg Ltd., [1917] 2 W.W.R. 489, has never been followed in Canada. Rather, the scope of this rule of fundamental mistake has generally been limited to cases where the identity of the contracting party is mistaken and that identity is essential to the contract itself.
17The accepted law of contract in Canada is that "if one party in entering into a contract is acting under a mistake known to or induced by the opposite party, then the contract is voidable by the mistaken party": 5 C.E.D. (Ont. 3rd), p. 32-145, para. 143.
18In the case at hand, rather than finding that there was a unilateral mistake made by the assistant manager, it is much more likely that Mr. Elsie was a victim of a false or fraudulent representation made by the accused. The accused had represented the contents of the box to Mr. Elsie to be fishing hooks, a fact which he knew to be false. As a result of this representation Mr. Elsie was induced to enter into the contract. The law as stated in Fridman's Law of Contract in Canada (1976), p. 116, is clear: "... a contract induced by fraud is voidable at the election of the defrauded party. It is not void ab initio: but liable to be upset": see Wallbridge v. W. H. Moore & Co. (1964), 48 W.W.R. 321. This rule is supported by the English law as stated in Newbigging v. Adam (1886), 34 Ch. D. 582 at p. 592: "It is a fundamental principle that the effect of a misrepresentation is to make the contract voidable and not void." When the accused took the box labelled "fish hooks", but containing fishing lures, he was offering to purchase the goods for the price of 39¢. At the moment the assistant manager rang through the price on the box, he was accepting the accused's representation that what was actually in the box was fishing hooks. An officious bystander, observing the scene at this time would conclude that there was a common intention between the parties to complete the sale of the contents of the box for the price of 39¢. According to the "reasonable man" test, and the weight of Canadian legal authority, a contract was thus entered, although it was voidable due to the accused's fraudulent act, and not void.
II. Did the assistant manager have sufficient authority to pass property on behalf of his employer?
19The majority in R. v. Dawood, supra, found that a cashier, who generally has limited duties and responsibility, had still enough authority to accept the offer made by the accused to form a contract on behalf of her employer. This finding was based on the case of Lacis v. Cashmarts, [1969] 2 W.L.R. 329, where the English Court of Appeal held that a manager of a store has authority to pass property in goods which pass before him, even though he may be mistaken as to their true value. R. v. Prince (1868), 11 Cox C.C. 193 at p. 197, per Blackburn, J., states that "... where the servant or agent had a general authority to part with his employer's property in the management of the business, there the offence was not larceny if he intended to part with the property wrongfully obtained".
20On these authorities McDermid, J.A., found that a mere cashier had sufficient authority to part with her employer's property. Clement, J.A., in dissent and Judge Charles in R. v. Malhotra, supra, took issue with granting of such authority to an employee of the level of a cashier. However, an assistant manager, whose duty it is to often be in full charge of the store, would, with the great scope of his responsibility, be much more likely to possess that general authority referred to by Blackburn, J., in R. v. Prince. Hence, it is submitted that Mr. Elsie did possess sufficient authority to enable him to pass the property in his employer's retail goods over the accused.
III. Conclusion
21It is submitted that the act of deception carried on by the accused Hickey, constituted an offer to contract. It is further suggested that Mr. Elsie, by virtue of his position of assistant manager, had sufficient authority to pass property in the fishing lures to the accused. Therefore, when Mr. Elsie accepted that offer, seconds before his suspicion of the trick was verified, a contract was entered into. However, this contract was voidable at Mr. Elsie's option due to the fraudulent representation made by the accused. Therefore, because the accused obtained the goods by having them handed over to him instead of having taken them against the will of the owner, he cannot properly be convicted by theft. Rather, because the amount involved was less than $10, and the offence of false pretences is often considered lesser than the offence of fraud under s. 283(1), the proper charge with which the Crown should have proceeded was that of obtaining by false pretences under s. 319 of the Criminal Code, or in the alternative, obtaining by fraud. The charge is dismissed.