Judgment of the Court
J.:-This is an appeal from a judgment of Mr. Justice Thurlow of the Exchequer Court' whereby it is determined that the respondent, Levy Brothers Company Limited (hereinafter referred to as "Levy Brothers") is entitled to recover the sum of $3,191 from the appellant in respect of the loss of a parcel of diamonds shipped to it from Antwerp by prepaid registered air mail and presumably stolen by a person or persons unknown from the office of the Customs Postal Branch of the Department of National Revenue at Hamilton. By the same judgment the claim of the Western Assurance Company was dismissed and no cross-appeal has been asserted in this regard.
This action was tried on the basis of a statement of agreed facts which was signed by counsel for the respective parties and which stipulated that the parcel of diamonds in question, shipped and valued in manner aforesaid, arrived at Hamilton on or before Saturday, the 15th of October, 1955, on which day the Customs Postal Branch was not open to the public and that a skeleton staff of four employees of that branch sorted 213 dutiable items of mail (including the parcel of diamonds) from the non-dutiable, and having entered these items on a form headed "PACKAGES RECEIVED FROM POST OFFICE BY CUSTOMS POSTAL BRANCH" transferred them to the Customs Postal Branch office which was not open at all on Sunday, October 16th, and where they were deposited in bins situate in two large steel bunks to which members of the public are not permitted access and which face each other and are covered with wires and enclosed at each end by wire doors with locks on them. It is further agreed that there was mailed to Levy Brothers on Saturday, October 15th, a printed notice over the name of the Collector of Customs
Co. and Excise describing the package in question and stating in effect that it was liable to duty and had arrived at the office of the Customs Postal Branch at the Dominion Government Building, King and John Streets, Hamilton,
Ontario, there to be opened, formally entered for customs and delivered to the addressee or its attorney on receipt of payment of duty if any were found to be payable. Having received this advice notice, in due course on Tuesday,
October 18th, Levy Brothers attended at the office in question for the purpose of making due entry of the parcel but the parcel could not be found, and in spite of a thorough search by the R.C.M.P. and officers of the Department of
National Revenue it had not been found at the time of the hearing of this appeal and is presumed to have been stolen.
Without further recitation of the facts, it is enough for me to say that I agree with the conclusion reached by the learned trial judge that it is and I also agree that
Customs officers are required by s. 44(3) of the Post Office
Act, R.S.C. 1952, c. 12, to "deal with" dutiable mail in accordance with the laws relating to customs pending delivery to the addressee or return to the Canada Post Office, and it was in the course of so dealing with the respondent's parcel of diamonds that an employee or employees of the
Crown converted them to his or their own use. The employee or employees concerned were thus doing fraudulently that which they were employed to do honestly and the theft was, therefore, in my view, committed under such circumstances as to render the employer liable for the loss. The law governing these circumstances has been stated in Story on
S.C.R.
Agency, 7th ed., para. 452, in terms which have been THE approved in this Court on more than one occasion. It is there said:
Co.
he (the principal) is held liable to third persons in a civil suit for et al.
the frauds, deceits, concealments, misrepresentations, torts, negligences, and Ritchie J. other malfeasances, or misfeasances, and omissions of duty, of his agent, in the course of his employment, although the principal did not authorize, or justify, or participate in, or, indeed, know of such misconduct, or even if he forbade the acts, or disapproved of them.
This language was adopted as applicable to the relationship between master and servant by Lord Macnaghten in Lloyd v. Grace, Smith & Company', and by this Court in Lockhart v. Canadian Pacific Railway Company', per Duff C.J., W. W. Sales Limited v. City of Edmonton', and The Queen v. Spence'. See also Percy v. Corporation of the City of Glasgow', and United Africa Company Limited v. Saka Owoade.
The liability of the Crown for the torts of its servants is now clearly established by the Crown Liability Act, Statutes of Canada, 1952-53, c. 30, ss. 3 and 4, by which it is provided that:
3. (1) The Crown is liable in tort for the damages from which, if it were a private person of full age and capacity, it would be liable (a) in respect of a tort committed by a servant of the Crown, or (b) in respect of a breach of duty attaching to the ownership, occupation, possession or control of property.
4. (2) No proceedings lie against the Crown by virtue of paragraph (a) of subsection (i) of section 3 in respect of any act or omission of a servant of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or his personal representative.
It is, however, argued on behalf of the appellant that the Crown is exempt from liability under the present circumstances by reason of the provisions of s. 40 of the Post Office Act, R.S.C. 1952, c. 12, and s. 23(1) of the Customs Act, R.S.C. 1952, c. 58.
Section 40 of the Post Office Act provides that:
40. Neither Her Majesty nor the Postmaster General is liable to any person for any claim arising from the loss, delay or mishandling of anything deposited in a post office, except as provided in this Act or the regulations.
1[19121 A.C. 716 at 736-7.
2[1941] S.C.R. 278 at 281-2. 3 [19421 S.C.R. 467 at 473-4.
4 [19521 2 S.C.R. 517 at 533. 5 [1922] 2 A.C. 299 at 306.
6 [1955] A.C. 130.
It was pointed out by counsel for the appellant that by s. 2(1) (c) of the same Act the words "deposit at a post office" are defined as meaning "to leave in a post office or with a person authorized by the Postmaster General to receive mailable matter" and that 2(2) provides that "an article shall be deemed to be in the course of post from Riti J. the time it is deposited at a post office until it is delivered".
It was contended on behalf of the appellant that the application of s. 40 should not be limited to articles which are actually "in a post office" or in the custody of a person authorized by the Postmaster General to receive mail, but that it should be construed as referring to an article from the time it is deposited in a post office until it is delivered and that the parcel here in question, having been deposited in a post office and having been lost before it was delivered to the addressee must be taken to have .been lost "in the course of post" and that the loss is, therefore, one for which the Crown is not liable by reason of the provisions of s. 40.
Section 44(1) of the Post Office Act requires that:
and by s. 44(3) it is provided that:
The parcel in question contained goods subject to duty, and at the time of its conversion it had been submitted to the Customs Postal Branch and had not been returned "to the Canada Post Office for transmission through the post in the usual way", but was in the course of being dealt with by customs officials pending delivery to the addressee upon payment of duty. In my view, at the time of the loss the diamonds in question were neither "deposited in a post office" nor "in the course of mail" and, accordingly, I agree with the learned trial judge that the provisions of s. 40 of the Post Offlice Act have no application to the present case.
It was submitted, however, that the parcel in question was being kept in the Customs Postal Branch "at the risk and charge of the owner", and in this regard reliance was placed upon s. 23(1) of the Customs Act which reads: The application of this subsection is, in my view, limited by its opening words to cases in which there has been a "default" in one or more of the ways specified therein. The words "landing, or production of the goods" appear to be referable to goods imported by sea or by inland navigation as will be seen by reference to s. 19 of the present Customs Act and s. 15 of the Customs Act, 1877, 40 Vict., c. 10, and it is "default of ... entry ... or payment of duty" by Levy Brothers which must be shown in order to invoke the provisions of this subsection under the circumstances here disclosed. The fact that the statement of agreed facts discloses no default of any kind by Levy Brothers is, in my view, sufficient to exclude the application of this subsection. In its petition of right Levy Brothers did not base its claim on a conversion by a servant of the Crown in the course of his employment, but as the learned trial judge granted it leave to make the amendment necessary to include such a claim, and as the appellant in this Court agreed that the case should be treated as if such an amendment had been made, it becomes unnecessary to express any view as to the validity of the contention made by the respondent in the Court below that the provisions of s. 3(1) (b) of the Crown Liability Act have the effect of making the Crown liable as a bailee of goods in its possession under the circumstances here disclosed.
I would dismiss this appeal with costs.
Appeal dismissed with costs.
Cases cited
- Lockhart v. Canadian Pacific Ry. Co. scr-1941-278 281-2
- 2 A.C. 299 2 A.C. 299 306
- A.C. 130 A.C. 130
Statutes and regulations cited
-
Unresolved citations
- s. 44(3)
- ss. 3
- 4
- paragraph (a)
- section 3
- s. 40 of the Post Office Act
- Section 40 of the Post Office Act
- Section 44(1) of the Post Office Act
- s. 40 of the Post Offlice Act
- s. 19 of the present Customs Act
- s. 15 of the Customs Act, 1877