Crown settles suit for malicious prosecution

Sylvain Parent

James Bagnall – February 13, 2012

Ottawa actuary Sylvain Parent has at last settled with the federal government, nearly eight years after launching his suit for malicious prosecution. The epic legal war ended, as these things often do, with a behind-the scenes deal whose terms are confidential.

Nevertheless, it's probably safe to assume Parent has recouped his considerable legal expenses, as well as costs related to third-party claims. Make that several million dollars at a minimum.

Sylvain Parent
Ottawa actuary Sylvain Parent.
Photograph by: Kier Gilmour, The Ottawa Citizen

It's a pittance, considering what the Crown put him through. Parent, now 52, endured criminal fraud charges a decade ago in a case so weak the Crown withdrew charges before any preliminary inquiry. In 2004, Parent sued the federal government - along with RCMP investigator Denis Desnoyers and six federal employees - for $160 million plus damages and lost income.

Had this been a simple dispute over economic damages, it might have been settled long ago. What distinguished this and related litigation was the hard attitude of the Crown throughout. Consider that Parent's suit arose from the actions of a handful of federal officials who - according to a 2008 ruling by Madam Justice Catherine Aitken of the Ontario Superior Court - lied, withheld information and colluded to trigger the ill-advised RCMP investigation into Parent's business.

Parent in 2000 had applied federal pension transfer rules in an unusual yet legal manner, on behalf of more than 100 public-sector employees. The latter left to work as consultants for Loba Ltd., which was controlled by Parent. Federal officials didn't like what he did, in part because of policy concerns but also because the mechanism Parent used produced richer-than-normal pensions.

Judge Aitken found in particular that Treasury Board employees Ann Gravelle and Heather Macpherson neglected to inform Desnoyers that Parent had, in fact, informed them about key aspects of the employment arrangements at Loba. Nor, the judge added, did Gravelle or Macpherson provide Desnoyers with a copy of Loba's employment agreement - which might have convinced the RCMP investigator he was headed down the wrong path.

Just days before Christmas in 2001, the RCMP laid fraud charges against Parent for allegedly misrepresenting the employment status of the former federal government workers.

After the Crown withdrew its charges, eight Loba employees sued the government for $3.4 million - the amount they reckoned they lost because federal officials prevented the transfer of their pension entitlements to Loba. However, the Crown included Parent as a third party in the suit, arguing he was the one who should pay for the lost pension credits.

The Crown lost that fight - badly - but would view it as just one battle in a very long legal war.

Judge Aitken was scathing in her Sept. 2008 judgment, which declared that the Crown had tendered "no evidence" that "anyone on behalf of Loba lied or knowingly misled or misrepresented the relationship between Loba and the Plaintiffs," she wrote in reference to the eight Loba employees.

Judge Aitken reflected further in March 2010 when she gave supplementary reasons for forcing the Crown to bear 80 per cent of the costs. She devoted nearly one-third of her 15-page analysis to criticizing the Crown's presumption that Parent was guilty of fraud, even though the charges had been withdrawn years ago.

She castigated Desnoyers for his testimony in which he made it clear "that he believed (Parent) had been participating in a fraudulent scheme." Judge Aitken also chastised Crown attorney Anne Turley for giving voice to similar sentiments "during opening and closing submissions" - and for failing to rein in her witness.

"The tenacity of the (Crown) in continuing to assert that Parent and the other Third Parties had engaged in fraudulent behaviour - namely intentionally providing false information to the (Crown) about the employment relationship between Loba and the Plaintiffs - warrants a rebuke by the Court."

Nevertheless, the Crown appealed Judge Aitken's ruling, along the way gaining more leverage over Parent. The Court of Appeal for Ontario early last year reduced to 60 per cent the Crown's share of the responsibility for the losses suffered by the Loba employees. The Court ruled that Parent's fiduciary duty to the Loba employees began when he first provided advice, not when they started work at Loba - as Aitken inferred. Thus, the Appeal Court concluded, Parent's failure to disclose potential risks to the Loba employees was larger than assumed by Judge Aitken. Accordingly, the Appeal Court bumped up Parent's share of the costs to 40 per cent - or $1.4 million.

The Crown cut cheques for the full amount to the eight former Loba employees, then went after Parent for the remaining 40 per cent.

"For 10 years, every dealing we've had with the government has been so difficult," said one former Loba employee, "to suddenly get a call saying our cheques were there, seemed unreal."

But not for Parent. His leave to appeal the decision to the Supreme Court of Canada was denied in October 2011, at which point Parent was deep into preparations for his civil suit against the Crown for malicious prosecution.

Parent, who declined an interview, was feeling the pressure - financially and psychologically. Colleagues say he was more and more anxious to put this legal mess behind him.

It's not clear precisely what produced an agreement. Certainly Parent appeared to be tiring of the fight. Perhaps the Crown sensed it could - for a relatively low price - avoid a trial that would once more portray the actions of senior civil servants in a most unfavourable light. The main departments involved - Treasury Board, Canada Revenue Agency and the RCMP - were to have completed discovery by May 1 with a trial slated to begin no later than Sept. 1.

In its statement of defence, the Crown said its employees "acted lawfully, properly and reasonably" and that they performed their duties "without malice."

Nor is the Loba affair really over. Six other former Loba employees - represented by Ottawa lawyer Dougald Brown - filed a claim for damages against the Crown before the statute of limitations ran out, and this case is just starting to wind through the system.

It's telling that the Crown has not offered Parent an apology, or ever hinted that one would come. If Parent once expected more of his government, by the end, his goal was simply to be rid of it. He's decided it's time to reclaim the rest of his life.

Original article on Ottawa Citizen website


A 10-year audit from hell


Although Sylvain Parent is not a whistleblower, his case is eerily similar to that of Joanna Gualtieri.

Both he and Gualtieri launched lawsuits in response to egregious attacks on them by bureaucrats. In both cases legal actions were fought for more than a decade at huge expense to the taxpayer. In both cases the government lawyers' methods were condemned by judges. And in both cases these same lawyers finally settled virtually on the courthouse steps, apparently demonstrating that they didn't have a case after all and didn't want the facts to be aired in a trial.

What's most disturbing is the unchecked abuse of power by bureaucrats: using public money and the courts to pursue what look like vendettas, causing immense stress and suffering and wiping a decade or more out of innocent people's lives. Yet the bureaucrats in question have suffered no consequences for their irresponsible actions.

As Parent's lawyer Howard Yegendorf told the court in 2008 "I didn't think things like this happened in Canada," The persecution of his client "was something that might have happened in the Soviet Union in the 1970s."

David Hutton

I am proud of Mr. Parent and his determination not to give up in the face of a rigged game and seemingly impossible odds. 

While abuses of power are common in Canada and the realization that proper channels do not work most often come at a terrible cost to those of us who opt to direct the course of our lives with integrity, the pathology of senior public sector officials and cronies sinks to an even lower level than one might expect.