The Supreme Court Reiterates That a Mistake of Law Affords no Defence, But Opens a Discussion on a New Exception 


November 2013

Competition Bulletin

In La Souveraine, Compagnie d'assurance générale v. Autorité des marchés financiers,1 the Supreme Court of Canada has recalled that ignorance of the law affords no excuse and that a mistake in the application of a regulation, as complex as it may be, does not generally constitute a valid defense. However, the Court has shown some receptiveness with respect to a new defense based on regulatory complexity, but has decided to postpone the debate to a later time.

Strict Liability Offences

Most offences enacted under provincial statutes and regulations are of "strict liability", that is to say that the Crown is not required to prove the intent of the accused beyond a reasonable doubt. Regulatory offenses created under provincial legislation are presumed to be of strict liability in the absence of expressions such as "intentionally" or "knowingly" indicating the presence of an offense requiring proof of intent.

In the presence of a strict liability offense, the fault of the accused is presumed: the latter has the burden of rebutting, by a balance of probabilities, the presumption of intent with a defense of due diligence or a reasonable mistake of fact. A defense based on due diligence encompasses that the court must compare the actions of the accused in the commission of the offense to the conduct that a reasonable person would have taken in the same situation.

In La Souveraine, the Supreme Court held that section 482 of the Act respecting the distribution of financial products and services2 (the Act), a Quebec provincial statute, is a strict liability offense. The provision is to the effect that an insurer which induces an independent representative or independent partnership to violate the Act commits an offense.

It should be noted that a mistake of law is generally not a valid defense unless it is officially induced or is expressly provided by statute. Even where legal advice is sought, a mistake provoked by erroneous legal advice remains an inexcusable mistake in criminal law.


In 2004, La Souveraine, an Albertan insurance company duly registered with the Autorité des marchés financiers (AMF), issued a master policy on recreational vehicles at dealerships located across Canada, including 56 establishments in Quebec. La Souveraine then employed the services of a broker based in Winnipeg, which was not registered with the AMF.

Following the filing of a complaint, the AMF asked questions to La Souveraine regarding its broker's permits. La Souveraine replied that in its opinion, the broker did not have to register in Quebec, since the company had its headquarters in Ontario, the policy was negotiated and entered into in Ontario and the premiums were paid directly to the broker by the company. Its letter to the AMF having remained unanswered and the broker's counsel having provided reassurances with respect to the lawfulness of the commercial transactions, La Souveraine continued its business with the broker and the company.

More than six months later, the AMF filed 56 charges against La Souveraine for having violated the Act by allowing a broker unregistered with the AMF to issue an insurance policy to the Quebec dealerships.


In the majority's opinion (6 judges out of 9), La Souveraine was guilty. Rejecting the appellant's grounds, the Supreme Court held that La Souveraine had committed a pure mistake of law, which could not be raised as a defense to the perpetration of the offense.

La Souveraine claimed that it had committed a mistake of mixed fact and law arising, inter alia, from the erroneous advice of its broker's legal advisors and the AMF's failure to reply, which allowed the insurer to believe that its broker's transactions were lawful. However, the Supreme Court instead found that that appellant's mistake did not stem from a belief in a non-existent set of facts and a non-existent legal situation, but rather from a mistake as to a legal situation based on an existing set of facts.

The Court also concluded that AMF's silence could not transform a mistake of law into one of mixed fact and law. In addition, the Court pointed out that in Canada, a mistake of law, no matter how reasonable it may be, is never a defense to a strict liability offense, unless it is officially induced.

Finally, the appellant argued that the Supreme Court should have qualified the rule with respect to mistakes of law, since given the "vast mosaic of regulatory offenses," it is almost impossible for a citizen to know and understand the law properly, especially where a regulatory body such as AMF sets a "trap" by acting unfairly. After reviewing the legal philosophy supporting the rejection of a defense based on ignorance of the law, the Supreme Court concluded that the AMF was not required to provide information to regulated entities as to their rights and obligations.

Thus, it was not reasonable for La Souveraine to consider the AMF's silence as a confirmation of the lawfulness of the commercial transactions. In addition, according to the Court, a reasonable insurer would have consulted independent Quebec legal advisors specializing in insurance law.

A New Debate on a New Defense

It is interesting to note that the Court nonetheless considered that while it was not abusive and did not amount to bad faith, the AMF's attitude was "unfortunate" and did not "reflect the greater transparency that a regulator is normally expected to show".

The court also held that the regulations were complex to the point where the AMF itself had encountered serious interpretation difficulties when attempting to reach a conclusion with respect to the lawfulness of the commercial transactions. The majority judges stated the following: "Is it reasonable to require those to whom regulatory measures apply to have a more extensive knowledge of the law than the body responsible for enforcing it?" However, the Supreme Court decided to postpone the debate on the appropriateness of a new exception, in "very specific circumstances", to the rule that a mistake of law affords no defence.

by Guy Pinsonnault and Pierre-Christian Collins Hoffman

1 2013 SCC 63

2 RSQ, c. D-9.

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013