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Nasty Business

Posted on November 1, 2001 | Posted in Construction

Statutory declarations are a part of every project. Someone swears that all accounts for material and labour have been paid, except for legitimate holdbacks. A general supplies a statutory declaration to the owner, the subs in turn supply one to the general, and so on down the chain. The statutory declarations give a payer some comfort that there will be no lien claim coming out of the woodwork. 

What happens to the person who swears a false declaration? The question was answered in R. v. Murray, a 2000 decision of the New Brunswick Court of Appeal.


The general had a substantial contract with the municipality. Its principal filed statutory declarations to obtain progress payments on the contract. These declarations were false. The general’s subcontractors had not been paid. The principal was charged with fraud, uttering false documents, and breach of trust.

Everybody Does It  

The principal felt that he was a victim of small town politics. Evidence at the 7-day trial showed that it was the practice for some contractors to falsely declare that subs had been paid when they were not. This is no excuse for a breach of the law. It seemed that the principal recognised this when he decided in the middle of trial to make a deal; he would plead guilty to one of the charges and the Crown agreed to withdraw the other two.

Unfortunately, the principal did not extend the plea bargain to the sentence. The trial judge sentenced the principal to a prison term of one year and ordered him to repay the municipality for its losses of $250,000.

Not Pleased 

The principal appealed both the conviction and the sentence. We will not bore you with the precise arguments regarding the principal’s allegations that he really had not pleaded guilty. The arguments did not sway the Court of Appeal and the conviction stood.

The Court of Appeal, however, did vary the sentence. It agreed that the term of the sentence should be one year and that the principal repay the municipality as ordered but it decided that the sentence should be a conditional sentence to be served under house arrest rather than in a penal institution.

Under the Criminal Code, a conditional sentence may be imposed if the sentence is less than two years’ imprisonment, there is no danger to the community, and it is consistent with the principles of sentencing. The trial judge refused to impose a conditional sentence because she felt that it would not meet the communal message of denunciation and that it would not be a sufficient deterrent to others.

The Court of Appeal felt that it was not necessary to separate the principal from society in order to rehabilitate him and to send a message of deterrence to the community. The principal was ordered to serve his sentence in his house; he could not leave it except for emergency.


Needless to say – but we are doing it anyway – the effect of the whole process on the principal was catastrophic. He bore the financial liability of defending himself at the preliminary hearing and the trial, of appealing the judgment, and of paying the restitution order. He suffered the shame of a conviction in a small town that was not likely to forgive or forget, and his liberty was curtailed. Clearly, the immediate benefits of false statutory declarations are not worth the adverse consequences arising from them.


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