Contents

Appendix 2
Non-criminal penalties in other jurisdictions

Canada

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.639  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.640

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”,641  but they may only have become a favourite tool of regulators more recently.642  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)643  and provincial level (in Saskatchewan, for example, in securities law, insurance, alcohol and gaming, electricity and gas regulation, forest harvesting, and the environment).644  Their use appears to be growing; for example the Law Commission of Ontario recently recommended expanding their use to parking violations.645  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).646  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.647

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.648

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.649
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”.650  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.651
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:652
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.654  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.655

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.656 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”.657  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.658

Government reviews and responses

Federal government

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 Management659  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.660
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”.661  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”.662

Provincial government

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 2012,663  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.664
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.665
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.666  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.667
639A Tait “The Use of Administrative Monetary Penalties in Consumer Protection” (Public Interest Advocacy Centre, May 2007) at 9.
640Competition Act RSC 1985 c C–34.
641D Schmeltzer and W Kitzes “Administrative Penalties Are Here to Stay – But how Should They Be Implemented?” (1977) 26 Am UL Rev 847.
642Tait, above n 639 at 7.
643See for example Canada Consumer Product Safety Act SC 2010 c 21, Competition Act RSC 1985 c C–34, Environmental Violations Administrative Monetary Penalties Act SC 2009 c 14, Fighting Internet and Wireless Spam Act SC 2010 c 23, Marine Transportation Security Act SC 1994 c 40, and Telecommunications Act SC 1993 c 38.
644See for example Securities Act SS 1988–89 c S–42.2, Saskatchewan Insurance Act RSS 1978 c S–26, Alcohol and Gaming Regulation Act SS 1997 c A–18.011, Electrical Inspection Act SS 1993 c E–6.3, Gas Inspection Act SS 1993 c G–3.2, Forest Resources Management Act SS 1996 c F–19.1, Environmental Management and Protection Act SS 2002 c E–10.3.
645Law Commission of Ontario Modernization of the Provincial Offences Act (Final Report) (Law Commission of Ontario, Toronto, August 2011). Parking violations are currently treated as offences under the Provincial Offences Act RSO 1990 c P–33.
646Budget Implementation Act SC 2009 c 2, pt 12. See also Canada Competition Bureau “A Guide to Amendments to the Competition Act” (22 April 2009).
647Canada Competition Bureau “Canada’s largest sporting goods retailer pays $1.7 million for misleading consumers” (press release, 6 July 2004).
648Marine Transportation Security Act SC 1994 c 40, s 14. See also Telecommunications Act SC 1993 c 38, s 72.14.
649Law Commission of Ontario Modernizing the Provincial Offences Act: A New Framework and Other Reforms (Law Commission of Ontario, Interim Report, Toronto, March 2011) at 72.
650Fighting Internet and Wireless Spam Act SC 2010 c 23, s 20(2) (the Act has been passed but is not yet in force).
651Sheridan Scott, Competition Commissioner “Speech to the Canadian Marketing Association” (Toronto, Ontario, 22 September 2005).
652For example, the Canadian Radio, Television and Telecommunications Commission is responsible for investigating breaches and enforcing the Telecommunications Act SC 1993 c 38. Suspected breaches are investigated by Commission staff; the decision of whether to issue a notice of violation is made by the Vice-Chairperson; and reviews are heard by a panel of Commissioners excluding the Vice-Chairperson which decides, on the balance of probabilities, whether or not the violation occurred.
653See for example the Marine Transportation Security Act SC 1994 c 40, s 33: if the Minister of Transport, Infrastructure and Communities has reasonable grounds to believe someone has committed a violation, s/he may either issue a notice of violation containing a penalty or may enter into an “assurance of compliance” with that person, which requires the deposit of a security.
654Law Commission of Ontario, above n 649 at 71.
655Tait, above n 639 at 21. See for example the Environmental Violations Administrative Monetary Penalties Act SC 2009 c 14, which creates an administrative monetary penalties program for less serious environmental offences.
656Case law to date suggests that administrative monetary penalties are unlikely to engage s 7 of the Charter, which protects the right to life, liberty and security of the person: see for example Lavallee v Alberta (Securities Commission) [2010] ABCA 48, where the Alberta Court of Appeal held that the maximum CAN$1m penalty under the Securities Act RSA 2000 c S–4 did not trigger the protections of s 7. Citing Blencoe v British Columbia (Human Rights Commission) 2000 SCC 44, [2007] SCR 307, Paperny JA said: “the s 7 security of the person interest is triggered only in exceptional cases where the state interferes in profoundly intimate and personal choices; such choices ‘would not easily include the type of stress, anxiety and stigma that result from administrative or civil proceedings’ ”: at [28].
657R v Wigglesworth [1987] 2 SCR 541. The Court held that a “true penal consequence” is imprisonment; or a fine which is so large that it “would appear to be imposed for the purpose of redressing the wrong done to society at large, rather than to the maintenance of internal discipline within the limited sphere of activity”: at [24].
658Martineau v MNR [2004] 3 SCR 737, 2004 SCC 81.
659Cabinet Directive on Regulatory Management (1 April 2012) <www.tbs-sct.gc.ca>. 
660Above, at 6D.
661Opinion letter written on behalf of Diane J Brisebois (President and Chief Executive Officer, Retail Council of Canada) by Peter Hogg (Blake, Cassels & Graydon) “Bill C–19’s proposals respecting Administrative Monetary Penalties” (17 October 2005).
662Tait, above n 639 at 15. See Scott, above n 651.
663Law Reform Commission of Saskatchewan Administrative Penalties: Final Report (Law Reform Commission of Saskatchewan, Saskatoon, March 2012).
664Above, at 1: Summary of recommendations.
665Law Commission of Ontario, above n 645 at 49–72.
666British Columbia Administrative Justice Office Review of Statutory Decision-Makers’ Powers, Procedures and Authorities: Developing a Framework for Earlier Solutions, Faster Justice <www.ag.gov.bc.ca/ajo/popt/overview_sdms.htm>.
667British Columbia Administrative Justice Office Administrative Monetary Penalties: A Framework for Earlier and More Effective Regulatory Compliance – A Discussion Paper (British Columbia Administrative Justice Office, June 2000) <www.ag.gov.bc.ca/ajo/down/amps092008.pdf>.