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The Litigator
AGM :: Affleck Greene McMurtry LLP

THE LITIGATOR

Affleck Greene McMurtry LLP
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Charges Stayed After Crown Breaks Deal in Gas Conspiracy Case

Quebec gas retailer and convenience store operator Couche-Tard Inc. escaped price fixing charges after a Quebec Superior Court judge found that the Crown’s repudiation of a settlement agreement irreparably prejudiced the fairness of the proceeding.

In 2008, Alimentation Couche-Tard was charged with fixing retail prices in Sherbrooke, Magog, Victoriaville, and Thetford Mines, Quebec. On January 14, 2010, lawyers for the company reached an agreement with prosecutors from the Public Prosecution Service of Canada. Alimentation Couche-Tard agreed to pay the government $3.25 million and accept a prohibition order prohibiting future violations of the Competition Act. In return, the companies in the Couche-Tard group would not be prosecuted, nor would their officers, directors, or employees. Additionally, Alimentation Couche-Tard agreed that its lawyers would provide their arguments as to why the company was not criminally responsible for the conspiracy.

The next day, January 15, Alimentation Couche-Tard’s lawyers met with the Crown lawyers and outlined the facts and legal arguments as to why Alimentation Couche-Tard was not criminally responsible. These were quite extensive. One of the reasons was that the Crown had charged the wrong company; Alimentation Couche-Tard does not sell gasoline.

During this meeting, the Crown lawyers told Alimentation Couche-Tard that the Competition Bureau did not like the deal they had reached. Indeed, a few days later, on January 21, the Crown advised Alimentation Couche-Tard that the Director of Public Prosecutions (DPP), Brian Saunders, had decided to repudiate the deal. Two months later, on March 24, 2010, the DPP wrote to Alimentation Couche-Tard to explain why he was repudiating the agreement. He explained that it was not in the public interest to let a company off the hook because the wrong company had been charged, and that the requirement that the Competition Bureau not recommend charges against any Couche-Tard company was too broad.

The Crown then withdrew the charges against Alimentation Couche-Tard and charged Couche-Tard Inc. instead.

Couche-Tard applied for a stay of the criminal charges.

Tardif J. of the Quebec Superior Court held that the DPP’s repudiation of the deal was neither arbitrary nor abusive. Indeed, he considered that the DPP was correct to repudiate the deal. Tardif J. went further still, speculating that lawyers on both sides got carried away in their desire to reach a deal. He even speculated that the Crown attorney wanted to clear up his files because he was expecting to be appointed as a judge. (This is no evidentiary foundation for this slur on the character of a lawyer in the decision.)

Tardif J. then turned to whether the Crown caused irreparable prejudice to the fairness of the trial by repudiating the agreement after receiving disclosure of the defence case. He held that it had:

Notwithstanding the good faith of the prosecution, notwithstanding the fact that the lawyers now on the record are different from those who acted at the time, the prosecution can never unlearn what was disclosed to it. And even if it offers not to use it as evidence, it remains that, in general, it is difficult to conceive that there has not been irreparable harm to the fairness of the process. To arrive at the opposite conclusion, one would need strong evidence. On this point, the defence submissions are the more compelling. [My translation]

As a result, Tardif J. held, the only appropriate remedy was a stay of proceedings.

The result is ironic: Alimentation Couche-Tard reached a deal with the Crown that involved a large payment and a prohibition order, but no criminal prosecution of any company in the Couche-Tard group of companies. The stay of proceedings ordered by Tardif J. as a remedy for the Crown’s repudiation of this agreement means that the Couche-Tard group of companies gets off without having to pay make the $3.25 million payment or accept a prohibition order. In other words, Couche-Tard is in a better position, and the Crown is in a worse position, than they would have been had the deal been respected.

This is, perhaps, as it should be. In R. v. Nixon, the Supreme Court upheld the right of the Crown to repudiate plea agreements, but imposed an obligation on the Crown to explain its reasons for the repudiation. The court emphasized that plea agreements should generally be honoured, and only in very exceptional cases, repudiated. The court also cautioned that repudiation by the Crown undermines confidence in the finality of agreements reached with front-line Crown counsel.

The Supreme Court’s warning is apposite. Regardless of the merits of the DPP’s decision to repudiate the Couche-Tard plea bargain, his repudiation risks undermining the confidence of the competition bar in the negotiation process with the competition prosecutors.

W. Michael G. Osborne
Affleck Greene McMurtry LLP

W. Michael G. Osborne

Michael Osborne is a former Partner of Affleck Greene McMurtry LLP

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