Non-criminal penalties in other jurisdictions
The Canadian penalty system is centred not on court-imposed civil penalties but primarily on “administrative” penalties commonly referred to as “AMPs”, or administrative monetary penalties. These are usually imposed by administrative officials with prescribed statutory powers. Appeals and reviews are heard by an independent officer or panel tasked specifically with that role. This means that the large majority of penalties are negotiated, imposed, reviewed and disposed of outside of the courts. However, there is provision under the Competition Act RSC 1985 for them to be imposed by the Canadian Competition Tribunal, a specialist quasi-judicial body.
The field of AMPs in Canada
AMPs are an accepted part of the regulatory landscape in Canada. In 1977, commentators wrote they were “here to stay”, but they may only have become a favourite tool of regulators more recently. They are used in a range of fields at both federal level (for example competition law, consumer protection law, environmental law, marine transport, spam and unsolicited telecommunications) and provincial level (in Saskatchewan, for example, in securities law, insurance, alcohol and gaming, electricity and gas regulation, forest harvesting, and the environment). Their use appears to be growing; for example the Law Commission of Ontario recently recommended expanding their use to parking violations. And, in 1999, major reforms of the federal Competition Act made AMPs a more established presence, extending them to cover all abuses of dominance (previously they could only be used in response to breaches by domestic airlines) and greatly increasing the maximum AMP for deceptive marketing practices provisions: for a first time provision, from CAN$50,000 to $750,000 (individuals) and from CAN$100,000 to $10m (bodies corporate). An example of a high penalty paid under the Competition Act is the 2004 Forzani Group Case, in which Canada’s largest sporting goods retailer agreed to pay the Canadian Competition Bureau a penalty of CAN$1.7m (inclusive of the Bureau’s investigative costs) for misleading advertising.
Varying degrees of discretion are involved in imposing AMPs. Some schemes involve limited exercise of discretion, such as customs contraventions. In contrast AMPs under the Competition Act are imposed by a quasi-judicial tribunal comprised of six federal court judges and six government-appointed lay members with specialist expertise. The tribunal operates under its own rules and has, for example, the power to punish litigants for contempt.
Most AMP schemes are relatively comprehensive in their handling of key issues like burden of proof, review and appeal rights, due diligence defences, choice of proceedings and limitation periods. As in New Zealand, some AMPs form part of a dual civil-criminal enforcement regime, and some regimes address double jeopardy issues accordingly. For example, s 41 of the Marine Transportation Security Act SC 1994 provides that if a contravention can be proceeded with as a violation or an offence, the Minister can either commence the process for an AMP, or can recommend offence proceedings be sought.
AMPs compared with civil pecuniary penalties
AMPs are distinguished from civil pecuniary penalties in some key ways. In general, they are imposed directly by regulators, so in this way they may bear a closer resemblance to forms of administrative penalty in New Zealand. The Law Commission of Ontario suggests that their use is justified by the additional rationale that the people imposing them have expertise in, or knowledge of, the particular regulatory field, and are therefore better placed to impose penalties that take into account all the regulatory variables.
They are generally viewed as non-punitive, and some legislation states this expressly, such as the Fighting Internet and Wireless Spam Act SC 2010, under which “the purpose of a penalty is to promote compliance with this Act and not to punish”. This also means the factors taken into account when imposing them differ from under some New Zealand penalty regimes. Canadian Competition Act penalties are not intended to put competitors out of business, and the Competition Tribunal is directed by the Act to consider the financial position of the person against whom the order is made. The Canadian Government has said that the criteria relevant to penalty setting are not intended to be linked to the defendants’ blameworthiness; they are not akin to sentencing guidelines.
Because AMPs are imposed in the first instance by regulators, AMP regimes are constructed to minimise the risk of allegations of regulator impropriety. For example some AMPs may not be used for the benefit of the regulator or government department. Most schemes incorporate degrees of independence between those who investigate or inspect for compliance; those who impose penalties; and those who hear reviews or appeals. A common procedure is as follows:
- The decision-maker notifies the person of the violation and the penalty amount that it has determined applies, or may offer to enter a compliance/consent agreement.
- The person has an opportunity to contest the appropriateness of the penalty in front of an independent officer.
- If the penalty is confirmed there may be a right of review to another independent officer, tribunal or possibly a court, although typically not before the penalty becomes enforceable.
Otherwise, justifications for using AMPs instead of criminal offences focus on regulatory effectiveness and timeliness. They are considered a more flexible tool for regulators; consistent with moves towards responsive regulation. They are a quicker and less expensive option than court proceedings; therefore they are more likely to be enforced and are said to serve as a more effective deterrent. On this basis they are increasingly being used for what are said to be clear contraventions with minimal impacts, with more serious breaches dealt with through criminal prosecutions.
Role of the courts
Canadian Charter of Rights and Freedoms
AMPs have been challenged on the grounds of s 11 of the Canadian Charter of Rights and Freedoms (the Charter), which protects the privilege against self-incrimination; the presumption of innocence until proven guilty; and the right not to be doubly punished. If the Charter applies, an AMP system may be ruled unconstitutional or in need of additional, court-imposed procedural safeguards.
Courts have tended to take a narrow view of the applicability of Charter rights to AMPs. In R v Wigglesworth the Canada Supreme Court held that s 11 only applied to matters that are criminal or penal by nature, or that lead to a “true penal consequence”. It does not apply to proceedings that are regulatory, protective and corrective and that are primarily intended to maintain discipline, professional integrity, and professional standards or to regulate conduct within a limited private sphere. Later decisions have reinforced that AMPs fall into the latter category of proceedings. In Martineau v MNR the appellant claimed that s 11 of the Charter applied to a customs penalty of CAN$315,458 and that he could not be ordered to make discovery. The Supreme Court found that the penalty was regulatory, not penal in nature, based on the objective of the Act, the provision in question and the purpose of the sanction.
Government reviews and responses
The Canadian federal government has not undertaken a comprehensive review of the use of AMPs specifically. However, federal regulatory policy gives an idea of the Government’s current approach to regulation and provides a contextual backdrop to the use of AMPs. A Cabinet Directive on Regulatory Management directs agencies to select the appropriate mix of regulatory instruments and demonstrate, among other things, that the regulatory response addresses policy objectives and is proportional.
The federal Government also engaged with the topic in 2004, when it first proposed to significantly increase the AMPs in the Competition Act RSC 1985. Professor Peter W Hogg submitted an opinion on the Bill on behalf of the Retail Council of Canada, in which he rejected the increase as unconstitutional and said that, under the test in R v Wigglesworth, the new maximum levels were so high as to have a “true penal consequence”. The Government of the day issued a rebuttal paper stating that higher penalties were not unconstitutional as the penalties were imposed administratively; that the legislative criteria for setting the penalty were not linked to the defendant’s blameworthiness and were not intended to be punitive; and that high penalties were needed for deterrent purposes, to prevent companies seeing the sanctions as a “cost of doing business”.
Some provincial governments have looked at AMPs, either as a discrete topic or as part of a wider review of a field of law.
The Law Reform Commission of Saskatchewan recently undertook an examination of administrative penalties. The review did not question the usefulness or desirability of penalties themselves, but sought to identify the minimum natural justice requirements that should be incorporated into penalty regimes. In its final report, published in March 2012, it recommended that all administrative penalty regimes include an appeal right to the Court of Queen’s Bench and minimal procedural rules for all regimes, including notice of an intention to impose a penalty; the opportunity to be heard; and reasons for the decision.
The Ontario Law Commission discussed AMPs as an alternative to criminal offences in their Provincial Offences Act RSO 1990 c P–33. The final report, published in August 2011, recommended replacing part 2 of the Act, which deals with parking offences, with AMPs which could be disputed before a hearings officer, outside of court.
In 2008 the British Columbia Administrative Justice Office began a review of statutory decision-makers, with the aim of ensuring they had appropriate and proportionate powers, procedures and authorities to make fair and just decisions. The Office issued a discussion paper exploring the advantages and common characteristics of AMPs, and asking a series of questions such as the circumstances in which decision-makers should have recourse to AMPs and what an effective framework for an AMP scheme looks like.