Tim Madden is an economist with expertise on credit and banking. Tim and I are colleagues in lobbying government for public banking, with concentration in the US for state-owned banks (and here). The good news is that structural solutions to our economic controlled demolition are obvious and simple; and explained beautifully by many of America’s brightest historical minds. The bad news is that we’re still mired in oligarchic looting of our economies.
Tim’s following article explains collusion of government and judicial “leadership” to facilitate criminal looting through parasitic credit practices. This four-part article explains the principle and law, details a legal example of criminal looting with “official” collusion, and applies this to our international economy.
I also recommend Tim’s previous article, “Economist Tim Madden: U.S./Canadian consumer interest calculation method a monstrous fraud.”
Tim can be reached at: timothypmadden@gmail.com
For a US face to what Americans are discovering as rigged-casino economics, also consider Fred Burks’ work, like this one.
Hell claims his right, and with a roaring voice
Says, “Faustus, come; thine hour is almost come!”
- Christopher Marlowe, The Tragical History of the Life and Death of Doctor Faustus
Canadian courts use Thomson to turn centuries of civil and criminal law upside down
Rather than submit to its own legal and lawful limitations, however, the Canadian (Ontario) court of appeal in Thomson nominally (and unanimously) protected the solicitors from the financial consequences of their technically illegal/criminal/racketeering actions, by ruling that the Criminal Code does not expressly prohibit the making of agreements to receive interest at a criminal rate, but only provides for severe punishment for those who do so. Accordingly, it concluded, such contracts are "not fundamentally illegal" (emphasis added):
...Section 347,... provides only for punishment of persons agreeing to receive interest at criminal rates but does not prohibit agreements providing for such rates....
"The purpose of [s. 347] is to punish everyone who enters into an agreement or arrangement to receive interest at a criminal rate. It does not expressly prohibit such behaviour, nor does it declare such an agreement or arrangement to be void. The penalty is severe, and designed to deter persons from making such agreements. ... It is designed to protect borrowers ... It is not designed to prevent persons from entering into lending transactions per se.... Therefore the agreement is not fundamentally illegal."
The Court’s decision was to give Thomson Associates Inc. everything that it asked for, and converted its $75,000 civil claim (promissory note) into a $75,000 (plus costs) court-money-order judgement against Carpenter.
In so doing the Court itself committed a precisely defined and unambiguous racketeering offence (laundering proceeds of crime) contrary to ss. 462.31(1), in material part (emphasis added):
s. 462.31 (1) Every one [the Court] commits an offence who… alters, disposes of or otherwise deals with, in any manner and by any means, any property [$75,000 promissory note] or any proceeds of any property with intent to… convert that property [to a judgement money order] or those proceeds and knowing that all or part of that property or of those proceeds was obtained or derived directly or indirectly as a result of (a) the commission in Canada of an enterprise crime offence [“there is no doubt that the corporate plaintiff committed an offence under s. 347(1)(a) by entering into an agreement or arrangement to receive interest at a criminal rate”]
The Court of Appeal then tidied-up the socio-economic loose ends that would result from its larger decision.
In the above-mentioned Snell v. Unity Finance the English appeal court spelled-out the underlying legal obligation of the lower court (and of all courts), at p. 59: (emphasis added):
The principle of law is clear. The courts, which exercise the judicial power of the Crown, will not enforce a contract that Parliament, which exercises the legislative power of the Crown, has made unlawful.
While constructively suppressing over 400 years of English and Canadian jurisprudence, however, that had been submitted to and at least discussed by, the trial judge, in support of the above relationship, the Ontario Court of Appeal instead simply stated its reasons for asserting that the principle henceforth no longer exists in Canada:
In my opinion, [the court system’s own recent decisions] illustrate the breadth of a court’s discretion in determining whether or not a contract tainted by illegality under s. 347 is enforceable. They also illustrate the extent of the departure by the courts from the former view that public policy rendered entire contracts unenforceable if illegality was present...
In total the appeal court first ruled that it was not subverting the lawful primacy of Parliament because there was "no illegal purpose" inherent to the violation of s. 347 and that accordingly the otherwise criminal agreement "is not fundamentally illegal". It then concluded that it is no longer bound by the laws of Parliament because of its own decision not to apply them in terms of the same contract(s) which is "tainted by illegality under s. 347" and where "illegality [is] present".
The Court’s reasoning is objectively false (non sequitur) and on its face (prima facie) what is called a fraud upon a power, a legally recognized form of internal treason. The commercial/merchant court cannot argue that it has these immense new powers that render it superior-in-law to the legislature, by the mere expedient of asserting them, while neglecting to mention that it has never possessed any such power in fact or in law.
Also, the court was and remains necessarily in breach of its bond(s).
More new rules/powers as fallout control
The appeal court then cited Royal Bank of Canada v. Grobman (1977), 83 D.L.R.(3d) 415, wherein the trial judge in that case had employed a chain of reasoning and/or list of factors considered to arrive at the conclusion that a mortgage taken as additional security after the fact by a bank did not invalidate the original transaction notwithstanding that the amount of the advance had been in excess of the 75% market-value-ratio permitted under the Bank Act for credit secured by a mortgage. The judge ruled (quite erroneously) that the Bank Act limitation was intended solely to protect the bank’s shareholders and that a finding of unenforceabilty would hurt those very shareholders. Despite this manifest error in the court’s premise, however, it was dealing with a specialized piece of legislation which expressly states that it applies only to banks chartered under it (i.e., civil legislation and not criminal).
The Court of Appeal took the citation entirely out of context and, without even mentioning the original circumstances, asserted it as equally applicable to the criminal violation in Thomson.
The Court held that it is henceforth the law in Canada that a court may suppress a defendant's (borrower’s) right of due process so as to aid a commercial lender to enforce a criminal contract based on the judge's personal assessment of (emphasis added):
The serious consequences of invalidating the contract, the social utility of those consequences, and a determination of the class of persons for whom the [criminal] prohibition was enacted...
An interesting question: what is the “social utility” of a party’s right of due process? And what are the consequences of a ruling by the Supreme Court of Canada that corporations are not the class of persons to whom the criminal law is intended to apply?
As mentioned, the unanimous decision of the Ontario Court of Appeal was then ratified as the law across Canada upon refusal of leave to appeal by the Supreme Court in February of 1990 (normally the Supreme Court will refuse leave to appeal a unanimous decision of a provincial appellate court, and at that point it takes on the legal status of a decision of the Supreme Court itself, and becomes binding on all courts in Canada. Also the SCC does a thorough vetting of the issues under the Application for leave to appeal process). This way the appeal court decision becomes a de facto SCC decision but without attracting the media attention of a direct decision of the SCC.
Then, rather than bury the decision and never make reference to it again, for the next seven years (to 1997 (and forward)) courts across Canada embraced it with apparent universal approval and expressly followed and applied it in more than fifty additional written judgements, both entrenching and expanding on the commercial/merchant (Admiralty) courts’ newly-self-declared powers, into insurance law, securities law, condominium law, etc. and generally into all areas of law. See for example:
BCORP Financial v Baseline Resort Developments Inc. (1990), 46 B.C.L.R. (2d) 89 (B.C. S.C.); J.D.M. Capital Ltd. V. Smith (1997) , 39 B.C.L.R. (3d) 340 (B.C.S.C.); Loghlean v. McNabb, [1997] I.L.R. I-3482 (Ont. Gen. Div.); Milani v. Banks (1997), 32 O.R. (3d) 557 (Ont. C.A.); Pilan Properties Ltd. & Carpentry Ltd. V. Masnyk (April 2, 1996), Doc. 27695/91/U (Ont. Gen. Div.); 271053 N.B. Ltd. V. Burton (1996), 183 N.B.R. (2d) 155 (N.B. C.A.); Keevil v. PT Southern Cross Aqua Culture Indonesia (1995), 15 B.C.L.R. (3d) 45 B.C.S.C.); Olympic Enterprises Ltd. V. Dover Financial Corp. (1995), 147 N.S.R. (2d) 121 (N.S. S.C.); Barrie v. 687844 Ontario Ltd. (1994), 43 R.P.R. (2d) 267 (Ont. Gen. Div.); Hajek v. Riedelsheimer (March 2, 1994), Doc. CA C12640 (Ont. C.A.); Painter v. 745100 Ontario Ltd. (January 14, 1994), Doc. Hamilton 955/89 (Ont. Gen. Div.); Standard Trust v. Brillinger (September 19, 1994), Doc. CA C9872 (Ont. C.A.); T.F.P. Investments Inc. (Trustee of) v. Beacon Realty Co. (1994), 17 O.R (3d) 687 (Ont. C.A.); Terracan Capital Corp. v. Pine Projects Ltd. (1993), 75 B.C.L.R. (2d) 256 (B.C. C.A.); Ingram v. Dorian (1992), 22 R.P.R. (2d) 198, (Ont. Gen. Div.); Kebet Holdings Ltd. v. 351173 B.C. Ltd. (1992) 25 R.P.R. (2d) 174, (B.C. S.C. [In Chambers]); Terracan Capital Corp. v. Pine Projects Ltd. (1991), 20 R.P.R. (2d) 187 (B.C. S.C.); Affordable Payday Loans v. Harrison, 2002 ABPC 104, [2003] 2 W.W.R. 757 (Alta. Prov. Ct.); 1512759 Ontario Ltd. v. OLE Canada Inc., 2002 CarswellOnt 4060 (Ont. S.C.J.); Dunlap v. Iveszic, 2001 CarswellOnt 2656 (Ont. S.C.J.); Garland v. Consumers’ Gas Co., 2001 CarswellOnt 4244, [2001] O.J. No. 4651 (Ont. C.A.); Fernandez v. Colucci, 2000 CarswellOnt 5225 (Ont. S.C.J.); Degelder Construction Co. v. Dancorp Developments Ltd., 1998 Carswell B.C. 2246 [1999] 5 W.W.R. 797 (S.C.C.); L & M Downtown Legal Services Inc. v. Ontario Realty Corp. 1998 CarswellOnt 322, [1998] O.J. No. 379 (Ont. Gen. Div. [Commercial List]; Roberts v. Buhr, 1998 CarswellBC 1962 (B.C. S.C.);
More importantly, of course, these decisions define official commercial policy of the courts in Canada so as to affect virtually every commercial contract in the country. The fifty-plus decisions that followed were, and remain, a clear and unambiguous message to the legal community that anything goes.
“Technical deficiencies” added to courts’ self-proclaimed new powers
Once the commercial courts had opened the flood gates to generally illegal and now even criminal/racketeering provisions in civil/commercial contracts and financial securities, they were logically/practically compelled to keep expanding their asserted powers to differentiate between various classes of offenders.
Then, as a critical expansion of the courts’ new role, in 1997 the Ontario Court of Appeal unanimously reversed an Ontario trial judge while concurrently demonstrating mens rea, or guilty mind, with respect to its constructive/de facto coup against the Parliament of Canada inherent to the earlier Thomson decision.
In Beer et als. v. Townsgate Developments I, et als. [1997] 152 D.L.R. (4th) 671, certain purchasers of condominium units (Beer et. als. (and others)) were already suing the developer/vendor for rescission (legal nullification/cancellation) of contracts-of-sale due to (conventional) fraud and/or misrepresentation, when it came to light during the trial that the developer/vendor had also not been licensed as directly required by provincial statute. The trial judge held the contracts-of-sale to be void and unenforceable therefore, and more-so because, citing Thomson, the provincial statute (s. 6) expressly prohibits the sale of any units by an unlicensed vendor (emphasis added):
6. No person shall act as a vendor or builder unless he is registered by the Registrar under this Act.
The trial judge noted that these particular contracts “are fundamentally illegal” under the reasoning of Thomson. Again citing Thomson she concluded that the provincial legislation is “a clear and unambiguous prohibition” against sale prior to registration, and that such “prohibition in s. 6 of the Act is fundamental to the nature and purpose of the regulatory scheme”.
At that point the vendor’s mainstream solicitors became liable for the financial losses. The vendor then appealed to the Ontario Court of Appeal, which then unanimously overturned the trial judge/decision by radically expanding and complimenting the new doctrine of “not fundamentally illegal”. From the headnote summary, at p. 671 (emphasis added):
On appeal to the Ontario Court of Appeal, held, allowing the appeal [i.e., reversing the trial decision], the effect of the breach of the statute was not to render the contracts void. Public policy required that contracts should not be rendered void on account of technical deficiencies.
Ever since, the commercial courts in Canada have adopted a duology for dealing with illegal provisions in commercial contracts and especially financial securities. If the provision is criminal, then they cite Thomson as authority for the doctrine of not fundamentally illegal, and enforce the contract anyway.
Alternatively, if the illegal provision is expressly prohibited by statute, then they cite Beer et als. as authority for enforcing the contract anyway on the ground that the otherwise illegal contract should not be rendered void on account of such technicalities or technical deficiencies.
There exists in Canada as a result a literal and codified two-tiered civil/money justice system that turns on the person of the offender.
From the above, the result is clear where the plaintiff is financially superior to the defendant. When the technical (and even unintentional) offender is weaker than the other party, however, then the law still retains its centuries-old principles, as is made equally clear by the following newspaper account of those principles (the point being that the principle is so clear that they would not even go to court over it).
A Toronto-area man had a paid-up life insurance policy when he was taken hostage as an innocent bystander at a botched robbery attempt. He was then murdered by the bandits and his body dumped in a field. Because his death had been caused by a criminal act, a routine autopsy was ordered by the police which revealed that the man had suffered a mild previous heart attack of which he himself had apparently not been aware. The insurance company accordingly declared the life insurance policy/ contract null and void because, unintentionally or otherwise, the man had made a factually inaccurate declaration on the original application:
Life policy void, widow told
The Canadian Press - Toronto
The Canadian Press - Toronto
A woman whose husband was slain last fall has been denied his $50,000 life insurance policy. *** Since [the insured] hadn’t told the insurance company about a previous heart attack, the policy was ruled invalid. *** "He was murdered" the 56-year-old widow said Monday. "Somebody took my future. And now the (life insurance) security blanket has been pulled out from under me." *** [The insured] was killed last Sept. 14, [1994] when armed robbers used his vehicle as a getaway car after fleeing a shoot-out at a sports store in nearby Oshawa, Ont. *** His body was found in nearby Pickering last January. The case is still under investigation. *** After his death, [his wife] was sent a letter from Metropolitan Life Insurance Co. declaring her husband’s policy "null, clear and void" along with a check for $2,700 for reimbursed premiums. *** A Metropolitan Life spokesman said the company wouldn’t have insured [the man] in the first place if proper medical information had been provided. *** The company first learned about [the] heart attack when police sent in his file a few months ago, said Jim Hiller, an agent in Whitby, Ont., for the insurer. "Do we make an exception and pay out the money or go by the rules and the law," asked Hiller, who said the decision has caused him some sleepless nights.
The most revealing aspect of the two cases together is their respective treatment of the concept of due process as nominally guaranteed under Canada’s Charter of Rights and Freedoms.
In the latter case, the victim was the widow of a murdered bystander whose death was totally unrelated to what would prove to be a factual inaccuracy in his insurance contract. The essential position of the insurance company was that such is irrelevant because due process effectively voids the contract from the outset (and this remains true with or without the victim’s knowledge of the heart attack). The death benefits under the contract are the property of the owners of the insurance company, and they shall not be deprived thereof "except by due process of law". There is effectively a multi-billion-dollar stand-alone insurance industry in Canada and the rest of the world that systematically voids insurance contracts after the fact (i.e., only after a claim is made) on the basis of such technicalities. It is a major source of de facto income for all insurance companies.
But where a mainstream corporate lender commits half a dozen prima facie racketeering offences, aided and abetted by its equally criminal mainstream solicitors, then such is not sufficient to void the contract, because such racketeering offences are not fundamentally illegal, and public policy demands that such contracts should not be rendered void on account of such technicalities as the criminal law, and the lender is not of the class of persons to whom the racketeering laws were intended to apply.
Part 4 tomorrow...
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