At-a-glance

In Heller c. Autorité des marchés financiers, 2022 QCCA 208, the Court of Appeal of Quebec (Court of Appeal) considered whether the offence under section 208 of the Quebec Securities Act (QSA)[1], which states that “[e]very person who, by act or omission, aids a person in the commission of an offence is guilty of the offence as if he had committed it himself” required proof of mens rea (a guilty mind) — and thus that the defendant had committed the prohibited act intentionally, recklessly, with knowledge of the facts constituting the offence or with wilful blindness toward them — or whether it was a strict liability offence only giving rise to the defences of reasonable belief in a mistaken set of facts or of reasonable care.

Background

Michael E. Heller (Heller), a lawyer, served as Corporate Secretary of Beluga Composites Corporation (Beluga or Corporation). In the course of his duties, Heller issued and signed stock certificates for the Corporation. He countersigned all of Beluga’s investor subscription forms, ensured that all payments were made and deposited, and even authorized the use of his electronic signature to issue stock certificates. In addition, investor meetings were held at Heller’s law office, where the Corporation had its place of business.

In 2016, by means of section 208 QSA, the Court of Quebec[2] found Heller guilty of having aided the Corporation in the distribution of securities without a prospectus from the Autorité des marchés financiers (AMF), Quebec’s securities regulator, in violation of section 11 QSA.

The Court of Quebec concluded that Heller was “on the front lines” and not a mere clerk performing clerical duties for the Corporation. In other words, he was an officer of Beluga without whom the distribution of the shares in violation of the QSA could not have been feasible.

With respect to mens rea, the Court of Quebec concluded that, in the case of regulatory offences, the presumption of strict liability applied and that no proof by the AMF of a mental element or guilty mind was required for conviction. All defences raised by Heller were rejected.

The Superior Court[3] dismissed the appeal and confirmed that section 208 QSA was a strict liability provision and indicated that Heller, as a lawyer and Corporate Secretary of the Corporation, was active in the issuance of the share certificates in contravention of the QSA’s requirements.

The Court of Appeal’s Decision[4]

Although regulatory offences, such as those contained in the QSA, are presumed to be strict liability offences, and despite the absence of any clear indication in the text of section 208 QSA that the legislator intended it to be a mens rea offence (e.g., through the use of words such as “knowingly”, “willfully” or “intentionally”), the Court of Appeal concluded that the lower courts erred in law in characterizing section 208 QSA as a strict liability offence. Two main reasons emerge from the Court of Appeal decision:

  • First, the Court of Appeal emphasized the fundamental distinction between a statutory provision that makes aiding and abetting a prohibited act a stand-alone offence, with specifically associated penalties, and one that enacts a mode of participation, as is the case with section 208 QSA, which makes the accomplice guilty of the same offence as the principal offender and subject to the same penalties;
  • Second, the Court of Appeal found section 208 QSA to be very broad in that it theoretically allows for the punishment of the actions of persons who are not in a position to know or appreciate the wrongfulness of the activities they are assisting in. The Court of Appeal concluded that it would be unfair to subject such persons to a strict liability regime requiring them to defend themselves and demonstrate due diligence.

Ultimately, the Court of Appeal found that section 208 QSA required proof beyond a reasonable doubt of general mens rea, i.e., that the defendant had aided a person in the commission of an offence under the QSA intentionally, recklessly, with knowledge of the facts constituting the offence, or with wilful blindness toward them.

In the case of Heller, the error of law committed by the lower courts as to the requirement for proof of general mens rea under section 208 QSA was inconsequential given that his general mens rea was amply demonstrated—in the Court of Appeal’s view—by the central role he played in the commission of Beluga’s offence.

Key Takeaways

  • General mens rea (intention, recklessness, knowledge of the facts or wilful blindness toward them) must be proven beyond a reasonable doubt by the AMF when section 208 QSA is at issue;
  • The reasoning adopted by the Court of Appeal in this case can also be applied, in our view, to section 491 of the Act respecting the distribution of financial products and services[5], given its very similar wording to section 208 QSA.

The authors would like to thank Ms. Kassandra Rousseau, student at law, for her valuable contribution to this article.

 

[1] Securities Act, CQLR c V-1.1.

[2] Autorités des marchés financiers, c. Heller, C.Q., no 200-61-168997-136, August 10, 2016.

[3] Heller c. Autorités des marchés financiers, 2020 QCCS 2762.

[4] Heller c. Autorité des marchés financiers, 2022 QCCA 208.

[5] Act respecting the distribution of financial products and services, CQLR c D-9.2.