The Federal Court of Appeal has overturned a contempt ruling against Canadian Pacific Railway (CP), finding that the Federal Court erred in its application of the law regarding civil contempt in a long-standing dispute with the Teamsters Canada Rail Conference.
The Federal Court of Appeal set aside the earlier contempt ruling which had found CP guilty of 22 violations of a labour arbitration award related to the company’s obligations under a collective agreement. The dispute centred on the rest provisions that govern the relief of train crews from duty, with the Teamsters alleging that CP had repeatedly failed to comply with the arbitration award, which was registered as a Federal Court order in 2018.
The case hinges on a fundamental issue in civil contempt law: whether intent is required to establish contempt. The Federal Court had originally ruled that CP’s failures to comply with the award constituted contempt, even though it acknowledged that CP had taken significant and meaningful steps to adhere to the provisions of the award.
The appeal and ruling
CP appealed the Federal Court’s decision, arguing that the court had effectively treated civil contempt as a strict or absolute liability offence, disregarding the need to prove intent. CP asserted that the lower court had wrongly discarded the “directing mind” principle, which typically guides the inquiry into corporate liability in quasi-criminal matters, and had improperly excluded defenses of due diligence and reasonable efforts from its analysis.
In its ruling, the Federal Court of Appeal agreed with CP, stating that the Federal Court misdirected itself on the law of civil contempt by not adequately considering the requirement of intent. “Contempt is not a strict liability offence,” Justice Rennie wrote in the decision. “The mental element of intent must still be made out. Here, the reasons and factual findings of the Federal Court do not reveal any evidentiary pathway which leads to a conclusion of intent. In fact, the Federal Court’s findings lead to the opposite conclusion — that CP had no intent.”
The appeal court highlighted that the Federal Court’s decision conflated proof of the actus reus (the physical act of non-compliance) with proof of the necessary intent, an error that justified the reversal of the contempt ruling. The court emphasized that intent in civil contempt cases can be inferred from conduct, but such an inference must be grounded in evidence. In this case, the appellate court found no such evidence.
Implications for corporate contempt cases
The appeal court also addressed the broader issue of how intent is ascribed to corporations in civil contempt cases. The Federal Court had rejected the application of the “directing mind” principle, which requires that the intent to commit an offence must be found within the individuals who are the guiding forces of the corporation. However, the appeal court reaffirmed the relevance of this principle, particularly in large organizations like CP.
The court noted that failing to apply the “directing mind” doctrine effectively turns civil contempt into an offence of vicarious liability, which is generally unknown in criminal law. The ruling clarifies that for large, publicly held corporations, establishing intent for contempt requires a careful analysis of the actions and intentions of those in senior management roles, not just operational errors or failures by lower-level employees.
Final conclusions and costs
Given the findings, the Federal Court of Appeal concluded that there was no basis for a finding of contempt against CP and substituted an acquittal. The appeal court also awarded costs to CP, both for the appeal and the initial proceedings.
For more information, see Canadian Pacific Railway Company v. Teamsters Canada Rail Conference, 2024 FCA 136 (CanLII).
