A. Purposes and Principles of Sentencing for Regulatory Offences

1. Introduction

Regulatory offences are different, conceptually, than criminal offences. That is, regulatory offences are different in that moral blameworthiness is not required, as is the case for true crimes. The essence of most regulatory offences is negligence, leaving it open to the defendant, on the basis of the doctrine of strict liability, to establish due diligence on a balance of probability, and exonerate himself/herself. An absence of fault will suffice for regulatory offences of absolute liability; on the other hand, some regulatory offences, like criminal offences, do require a mens rea element. These factors, which are unique to regulatory offences, limit the utility of sentencing considerations with respect to criminal offences.  

When it comes time for punishment, then, how is it that a court should determine what purposes and principles of sentencing should apply to this eclectic mix of regulatory offences. Does sentencing for regulatory offences constitute a veritable barrier to effective enforcement, as some have suggested, or does the difference between regulatory offences and criminal offences merit a special approach, as others have posited. It will be to these issues that this section is devoted. In the following section, a matrix of regulatory offences cases in the areas of workplace safety, consumer protection and environmental regulation will be examined, in order to see if the general observations made here respecting sentencing practices and patterns are borne out by reference to the jurisprudence in Canada.
 

2. Determining Sentencing Purposes and Principles for Regulatory Offences in Canada

The problem which currently confronts sentencers in regulatory offences cases is an intractable one. It arises, in part, from the pervasive nature of regulatory offences. Unlike the judge imposing sentence for a criminal offence, who need look no further than the Criminal Code for both a compilation of offences, and statement of sentencing purposes and principles, the justice of the peace or judge presiding over a regulatory offences case faces a much more diverse and unwieldy situation. As noted in Part I, in a study on strict liability conducted for the Law Reform Commission of Canada in 1974, it was estimated that there were approximately 20,000 regulatory offences in each province plus an additional 20,000 federal offences.[247]  This did not take into account municipal infractions, such as by-law offences. By 1983, the Department of Justice estimated that there were 97,000 federal regulatory offences.[248] Given these figures, there is no reason to believe that the number of regulatory offences at all levels of government has not continued to increase.[249]

Some of these regulatory offences statutes do include, as Archibald et al observe, a statement of sentencing considerations that are “tailor-made to a specific area.”[250] An illustration of this is found in environmental laws, such as the Canadian Environmental Protection Act, 1999,[251] where the “polluter pays” principle is set out.  According to this principle, polluters are assigned the responsibility of remedying contamination for which they are responsible, and bear the direct and immediate costs of pollution.[252] In fact, this principle has become “firmly entrenched” in environmental law throughout Canada, as it is found in almost all federal and provincial environmental legislation.[253]

But where there are no such sentencing provisions set out, where is the court to turn for guidance? In the case of federal regulatory offences which constitute “contraventions” within the meaning of the federal Contraventions Act the court is to be guided, in fact, by provincial offences legislation, to the extent that it contains any sentencing provisions; in the case of the majority of other federal regulatory statutes, where such a ticketing or “minor offences” procedure is not available, federal regulatory offences are generally enforced through the procedural sections of the Criminal Code, as well as the Interpretation Act.[254] Hence, where a particular regulatory statute enacted by Parliament is “silent” as to its own sentencing principles, the Criminal Code provisions apply, such that its sentencing sections and jurisprudence may be of some assistance. At the same time, though, such provisions apply to criminal offences, as opposed to regulatory offences. As a result, these Criminal Code principles “may not be transferred directly.”[255]

Provincial regulatory offences legislation, on the other hand, is based on a “simplified criminal procedure model.”[256] The stated purpose of Ontario’s Provincial Offences Act is to provide a procedure that “reflects the distinction between provincial offences and criminal offences.”[257] While Part IV of this legislation deals with trial and sentencing issues, no statement of the purposes or principles of sentencing is set out. As such, there is no sentencing guidance that is provided to sentencers. This “unsatisfactory state of affairs” is compounded where the particular provincial Act “is silent with respect to sentencing.”[258] While some provincial statutes do contain a list of sentencing considerations, such as the Ontario Environmental Protection Act,[259] which enumerates a list of aggravating factors, such as whether the offence caused an adverse effect or resulted from reckless or intentional behaviour, as well as the defendant’s conduct after the commission of the offence, including cooperation with the authorities,[260] and British Columbia’s recently enacted Public Health Act, [261]which addresses the relevant considerations in determining sentence[262] and the purposes of sentencing,[263] this is often not the case.

The law of sentencing for regulatory offences has therefore developed, on a default basis, in the courts. It has been left to sentencers to fill in the gaps, with the common law development of sentencing principles, for the vast array of public welfare statutes. Indeed, in some cases the statutory regimes which do apply may serve to frustrate the court’s ability to impose a sentence which addresses issues such as the harm caused by the offence, or putting in place measures to prevent future violations of the regulatory standard, an example being the probation provisions of the Provincial Offences Act of Ontario which can only be imposed where the proceedings are commenced by information and not the ticketing procedure,[264] are not available for absolute liability offences,[265] and in some cases requires the defendant’s consent to impose conditions, such as community service.[266] In British Columbia, to provide another example, probation orders under the Offence Act[267] may be made for no more than six months, thereby limiting the court’s ability to put in place long term court sanctioned remedial and rehabilitation plans.[268]

It is perhaps due to the increasing complexity of regulatory provisions that courts have identified a list of multiple factors to consider in imposing sentence. In some cases, over 20 considerations are identified, in this “summary of sentencing principles approach”[269] or “shopping list” of sentencing factors.[270] An example of this approach is illustrated by R. v. Fraser Inc.,[271] a water pollution case caused by the defendant’s pulp mill.  Some 23 factors for consideration were itemized by the court, ranging from the nature of the offence, actual or potential harm, deliberateness of the offence, the attitude of the accused, attempts to comply, ease or difficulty of preventing pollution, technology available, uniformity of sentence, and innovative type of sentencing. A somewhat different approach was taken by the court in a British Columbia case, where the relevant factors were grouped under these categories: circumstances of the offence and circumstances of the offender, as well as factors in aggravation, factors in mitigation and sentencing objectives.[272] However, as Archibald et al caution, this “multiple approach” may result in the court losing “sight of the fundamental purposes of sentencing”, and perhaps even result in a sentence which is incompatible with the level of risk assessment set out in the legislation.[273] Further, as Verhulst notes, it is not clear how the approximately two dozen principles that have been applied for regulatory offences by the Courts interrelate, which principles are to be given priority, and which factors are to be considered as aggravating or mitigating.[274]

These “multiple approach” sentencing decisions originate from trial courts of first instance, and are therefore not binding on other courts as judicial precedent, although they may be considered persuasive or influential. Indeed, there is an institutional limitation that constrains the development of a cohesive jurisprudence for regulatory offences sentencing decisions at the appellate level. Whereas the Criminal Code provides for sentence appeals with leave of the court,[275] the threshold for bringing an appeal against sentence to the Court of Appeal under the Provincial Offences Act of Ontario is considerably more onerous. According to the Act, “special grounds” are required in order for leave to appeal to be granted.[276] This is defined as requiring a judge of the Court of Appeal to consider that “in the particular circumstances of the case it is essential in the public interest or for the due administration of justice that leave be granted.”[277] No further appeal or review may be brought against a decision granting or refusing leave to appeal under the Act.[278] There are similar restrictive provisions for appeals to other provincial Courts of Appeal in respect of regulatory offences. 

Not surprisingly, this stringent requirement for leave to appeal effectively limits the number of regulatory offences sentencing decisions that reach the level of the Ontario Court of Appeal. It is also an established principle that appellate courts owe considerable deference to the decisions of the courts below in imposing sentence, absent an error in principle, failure to consider or over-emphasizing a relevant factor, or the imposition of a sentence that is “demonstrably unfit” or  “clearly unreasonable.”[279] This, too, acts as a constraint on the ability of the appellate courts to assess the fitness of sentence, given that it is not simply a matter of the appeal court substituting its opinion of what the sentence should be for the particular regulatory offences infraction.[280] The dearth of regulatory offences sentencing decisions in the provincial appellate courts bears out the efficacy of these institutional limitations.

3. R. v. Cotton Felts Ltd. and its Legacy

In one of the few sentencing cases to reach the Ontario Court of Appeal, R. v. Cotton Felts Ltd.,[281] the Court, for the first time following the enactment of the Provincial Offences Act, discussed the principles of sentencing to be applied under the Occupational Health and Safety Act.[282]. In upholding the $12,000. fine levied by the trial judge in relation to a workplace safety accident case, Blair J.A., on behalf of the unanimous Court, stated:

The Occupational Health and Safety Act is part of a large family of statutes creating what are known as public welfare offences. The Act has a proud place in this group of statutes because its progenitors, the Factory Acts, were among the first modern public welfare statutes designed to establish standards of health and safety in the work place. Examples of this type of statute are legion and cover all facets of life ranging from safety and consumer protection to ecological conservation. In our complex interdependent modern society such regulatory statutes are accepted as essential in the public interest. They ensure standards of conduct, performance and reliability by various economic groups and make life tolerable for all. To a very large extent the enforcement of such statutes is achieved by fines imposed on offending corporations. The amount of the fine will be determined by a complex of considerations, including the size of the company involved, the scope of the economic activity in issue, the extent of actual and potential harm to the public, and the maximum penalty prescribed by statute. Above all, the amount of the fine will be determined by the need to enforce regulatory standards by deterrence.[283]

The Court went on to comment that, in computing the quantum of fine, the controlling principle is that “without being harsh, the fine must be substantial enough to warn others that the offence will not be tolerated. It must not appear to be a mere licence fee for illegal activity.”[284]

In terms of the application of this element of deterrence to others, or “general deterrence”, the Court explained that this sentencing principle operates in a different manner for regulatory offences than it does for criminal offences. Blair J.A. stated as follows in this regard:

With reference to these offences, deterrence is not to be taken only in its usual negative connotation of achieving compliance by threat of punishment. Recently my brother Zuber in R. v. Ramdass, a judgment pronounced on November 17, 1982, referred to deterrence in a more positive aspect. There he was dealing with a driving offence and he quoted an earlier unreported decision of this Court in R. v. Roussy, [1977] O.J. No. 1208 (released December 15, 1977), where the Court stated:

But in a crime of this type the deterrent quality of the sentence must be given paramount consideration, and here I am using the term deterrent in its widest sense. A sentence by emphasizing community disapproval of an act, and branding it as reprehensible has a moral or educative effect, and thereby affects the attitude of the public. One then hopes that a person with an attitude thus conditioned to regard conduct as reprehensible will not likely commit such an act.

This aspect of deterrence is particularly applicable to public welfare offences where it is essential for the proper functioning of our society for citizens at large to expect that basic rules are established and enforced to protect the physical, economic and social welfare of the public.[285]  

Since the release of the Cotton Felts Ltd. decision over 25 years ago, the Ontario Court of Appeal has not issued a similar regulatory offences sentencing decision of general application. What few sentencing cases do reach the Court of Appeal are generally confined to the facts of the particular matter, as evidenced by a workplace fatality decision in 2000 where the Crown brought an appeal against the provincial offences appeal court which lowered the quantum of fine imposed by the trial judge from $250,000 to $125,000 on two of the three counts.[286] An employee had been killed while mining; the defendant was convicted, at trial, of failing to provide information, instruction and supervision; failing to maintain equipment; and failing to leave a guard to protect workers from a moving part. In restoring the sentence to the fine amount imposed at trial, the Court of Appeal, in a six paragraph endorsement, simply observed that for offences of this nature, involving the death of an employee, the penalty imposed must be such that it “acts as a deterrent” to both the defendant and “as an example to the mining community as a whole”.[287] It went on to state that the appeal court below had “diluted the importance” of deterrence by listing it as but one of the dozen factors to be considered in arriving at a fit sentence.[288]

The Cotton Felts Ltd. decision has also been referred to by other provincial appellant courts in regulatory offences sentencing decisions. The Alberta Court of Appeal did so in R. v. Terroco Industries Ltd.,[289] a case where the defendant was convicted of releasing chlorine gas into the environment, contrary to the Dangerous Goods Transportation and Handling Act[290]and the Environmental Protection and Enhancement Act.[291] In its unanimous judgment, the Court identified a number of general sentencing principles that apply in such cases, noting that environmental offences require a “special approach.”[292] What exactly is this “special approach”? The Court of Appeal enumerated the following five factors as having particular application for environmental sentencing cases: (1) culpability – which is the “dominant factor” in sentencing for environmental cases, and operates on a “sliding scale”: the more diligent the offender, the lower the range of fit sentences; the less diligent the offender, the higher the range of fit sentences;[293] (2) prior record and past involvement with the authorities; (3) acceptance of responsibility/remorse; (4) damage/harm – these factors include the “existence, potential, duration and degree of harm” which are to be “fully considered” in sentencing for environmental offences; where actual harm is established, this operates as an aggravating factor, particularly where the harm is a “readily foreseeable consequence of the underlying action”;[294] and (5) deterrence – that is, a “key component of sentences imposed for breaches of environmental protection statutes should be specific and general deterrence.”[295] 

Having set out these special considerations, the Alberta Court of Appeal directed sentencing judges to first consider the “degree of culpability” of the offender. By this, the Court explained, a rigorous assessment of the facts of the “predicate offence” is required, so as to determine “where the offender’s conduct lies on the continuum between virtual due diligence and virtual intent.”[296] The importance of deterrence was also noted, given that it plays a “considerable role” in determining the appropriate sentence, and that general deterrence is also “engaged” as others “must be made aware that what may appear to be cost effective but risky behaviour will result in a stiff penalty” were actual harm to occur.[297]

While the Cotton Felts Ltd. decision concerned a workplace safety infraction, and Terroco Industries was an environmental case, they involved, in common, corporate defendants. In R. v. United Keno Hill Mines Ltd.,[298] Stuart C.J. reasoned that special considerations apply in not only environmental sentencing cases, but for corporate offenders as well. This is due to the “size, wealth, nature of operations and power of a corporation” and the fact that the activities of one corporation “can reach into the lives of people and communities in many parts of the world.”[299] The Court went on to identify the following factors as having particular relevance for the sentencing of corporations for environmental offences: criminality of conduct; extent of attempts to comply; remorse; size of corporation; profits realized by offence; and criminal record. Stuart C.J. also questioned the effectiveness of fines as a sanction against corporations, since they are “easily displaced and rarely affect the source of illegal behaviour,” and may simply be passed on to consumers or taxpayers.[300] Instead, what was required on sentencing are sanctions which could reach the “guiding mind” of the corporation – the corporate managers, directors or supervisors, since they were the “instigators of the illegality either through willfulness, willful blindness or incompetent supervisory practices.”[301] In this manner, sanctions would be imposed on the persons most directly responsible for the criminal activity. After all, pollution, as the Court put it bluntly, “is a crime.”[302]

Different sentencing considerations for regulatory offences may thus be relevant for individual offenders, or at least apply differently for individuals than corporations. As Morgan J. explained in R. v. Schulzke,[303] there is “a world of difference between an environmental offence committed by a large mining company, for example, caused by that corporate offender’s eye towards increasing profits, than with an environmental offence committed by a private citizen with no economic business interests at stake.”[304] Such a distinction is particularly germane in terms of the emphasis to be given to the factor of deterrence: a fine calculated to deter a “wealthy corporate offender” will be set at a different level than that for a person with modest economic means.[305]

In the British Columbia Court of Appeal’s recent decision in R. v. Abbott,[306] the Court applied the Cotton Felts case to an individual defendant, who was convicted of infractions under the Health Act.[307] The defendant had refused to remove a septic tank and sewage disposal field which he had installed on his waterfront property on Vancouver Island; this sewage system was in proximity of a public drinking water source. Fines of $5,000 were imposed at trial on two counts of violating the Act, and a removal order of the septic system was issued as well. The Court of Appeal upheld the sentence, and in doing so rejected the defendant’s argument that the removal order was unnecessary, given that no actual harm to the environment had been proven to have resulted from the sewage system he had installed. Stating that the sentencing principles applicable to public welfare offences are generally considered to be denunciation and deterrence, as indicated by the Ontario Court of Appeal in Cotton Felts, the Court pointed out that the circumstances of the offence in question were, in fact, “very serious”: there was a threat of sewage infiltrating a public drinking water source with “potentially very serious damage.”[308] Consequently, the removal order was justified. Kirkpatrick J.A., for the Court, explained:

I am unable to find any error in the approach taken by the sentencing judge or the summary conviction appeal judge to the removal order. Both had in mind the salutary principle that public welfare offences involving the contravention of rules designed and enforced to protect the physical, economic and social welfare of the public will attraction sanctions that are designed to deter the offender and other like-minded persons.[309]

4. Differing Views as to Purposes and Principles of Sentencing for Regulatory Offences

The review of leading regulatory offences sentencing decisions, to this point, illustrates Archibald’s assertion that the key principles of sentencing, deterrence and denunciation, and particularly restorative justice and remedial measures in environmental protection cases, emerge principally from the jurisprudence, limited as it may be.[310] Benidickson concurs in this assessment, stating that the task of determining the “most appropriate sentencing option” is generally left to the courts. As a result, the principles set out in sentencing decisions are of “considerable importance.”[311] The author acknowledges, though, that the legislature does have the power to set out the relevant principles of sentencing, and provides, as an example, the Canada Shipping Act,[312] which identifies as relevant considerations for sentencing factors such as the harm or risk caused by the offence; total cost of clean-up and mitigation measures; remedial action taken by the offender to mitigate harm; precautions taken by the offender to avoid the offence; and any history of non-compliance with legislation designed to prevent or minimize pollution.[313]

The “silence” in most public welfare statutes on the issue of sentencing, then, effectively leaves it “entirely within the discretion of the court.”[314]  There are some exceptions to this, particularly in the environmental area. Berger notes that the discretion of sentencing judges has been “further limited”[315] by environmental legislation enacted in Ontario, such as the Environmental Enforcement Act, [316] which prescribes similar aggravating factors in the case of violations of the Environmental Protection Act[317] and the Ontario Water Resources Act.[318] This list includes, in the case of the former, that the offence caused an adverse effect, the offender committed the offence “intentionally or recklessly”, and that the offence was “motivated by a desire to increase revenue or decrease costs”[319]; in the case of latter, aggravating factors include that the offence caused an impairment of water quality, the defendant committed the act “intentionally or recklessly”, and that in committing the offence the defendant was “motivated by a desire to increase revenue or decrease costs.”[320] Indeed, these provincial Acts require the Court to provide reasons if a determination is made that a statutorily enumerated aggravated factor “does not warrant a more severe penalty.”[321]

A 1985 study paper prepared for the Law Reform Commission of Canada, Sentencing in environmental cases,[322] argued, in fact, for a “broader range of penalties” and “wider variety of sentencing tools” to reflect the wide range of offenders and offences which are comprised by environmental laws.[323] It was noted, for example, that while some violations may be the result of deliberate, reckless or negligent conduct, others such as offences of absolute liability, might be nothing more than a “reasonable error of judgment.”[324] Moreover, while the imposition of a fine was the usual punishment for breaches of environmental statutes, the authors queried whether fines, alone, were adequate to cover all the circumstances, given the wide range of activities, effects and degrees of fault.  Indeed, fines may be too broad and too narrow at the same time. The former where the “highest fines” are out of proportion to the means of most offenders and the gravity of “minor infractions”; the latter where they do not reflect some offenders’ “extreme wealth” and the “great gravity of a minority of flagrant offences.”[325] This is exacerbated, in turn, by legislation which tends to incorporate, in a single statutory provision, what are separate environmental offences which include different degrees of gravity and a wide range of conduct, without taking into account the ability of offenders to pay.[326] A fine may be inadequate in some cases because it is unclear what the long term impact of an accidental spill or emission will be; in other cases a fine may be inadequate due to the offender’s ongoing behaviour and financial resources.

This Law Reform Commission Report identifies a further “conceptual problem” which is related to its discussion of the limitation of fines as a sanction for environmental offences. That is, there is “no consensus on the appropriate sentencing principles or the factors to be taken into account in sentencing and the relevant weight to be given different principles or factors.”[327] It is not clear, the authors observed, whether offences which are true crimes should be “treated differently” than regulatory offences in terms of the applicable sentencing principles and factors. By way of example, it was queried whether punishment was “capable of achieving rehabilitation or deterrence in environmental cases,” or how might the victim be “taken into account in sentencing.”[328]  To the extent that such factors merited consideration, the question, then, was to what degree was this to be done in the case of regulatory offences.

The authors of this Report, Swaigen and Bunt, concluded their introductory comments by stating that while courts frequently based their sentences on “deterrence”, without attempting to reconcile these issues, it was important to address these “underlying principles” so as to determine whether the goals of the prosecution had been achieved, namely, “prevention, abatement, restoration of the environment, and restitution to victims, as well as punishment of offenders.” [329] Writing 20 years before the enactment of the statement of sentencing purposes and principles to the Criminal Code, it was observed that the four objectives in criminal cases, protection of the public, retribution or punishment, reform and rehabilitation, and deterrence, were recognized in sentencing decisions for both environmental offences and criminal offences. However, it was not apparent as to how one was to decide between them, especially in cases where these objectives appeared to be “appropriate”, but “incompatible” with each other.[330]

As one of the first commentators to touch on the importance of sentencing principles and purposes for public welfare offences, the views of the authors of Law Reform Commission’s study paper are particularly significant.  While the Report focused on environmental offences, it has been observed that such offences constitute “paradigmatic examples of regulatory offences.”[331] Environmental legislation provides a “particularly rich and informative counterpoint to so-called criminal legislation”; however, the observations and analysis that may be gleaned from such provisions might well be said to apply to a “whole range of regulatory laws.”[332]

The Law Commission’s Report noted that very few attempts had been made in environmental cases to “articulate the relationship between underlying objectives such as retribution and deterrence and the relative weight to be given to them in different kinds of cases.”[333] While some decisions, such as United Keno Hill Mines Ltd., [334] set out a “shopping list” of general principles and specific factors for sentencing on environmental cases, it appeared that a “different” or “special” approach was required, especially where the polluters were corporations. After enumerating the sentencing factors from the case law, such as extent of potential and actual damage, intent, savings or gain derived from the offence, size and wealth of the corporation, and contrition or remorse, the Report turned to the issue as to whether sentencing “in public welfare cases generally, and environmental cases specifically, requires a different approach from sentencing in criminal cases.”[335] In its view, the most important differences in sentencing were “practical rather than theoretical considerations”, which flowed from the fact that most polluters were corporations, and not individuals, and that the risk of pollution was “inherent in many otherwise socially useful activities and can be difficult or close to impossible to control.”[336] Hence, a “difference in emphasis” was appropriate on sentencing to reflect the difference between criminal offences and public welfare statutes: the latter were primarily offences based on negligence, and as such tended to lend themselves more to “general deterrence, to consideration of actual and potential damage, to the role of the victim, and to a wider array of sanctions aimed at prevention and restitution or compensation.”[337]

Commenting on the Law Commission’s Report, Chappell echoed the concerns that, with few exceptions, courts were generally reluctant to impose substantial or innovative penalties in environmental cases, thus posing a “barrier of sentencing” to effective enforcement strategy.[338] Chappell went on to observe that in order to produce a change in such views, “greater guidance” was required by the legislature respecting the “exercise of sentencing discretion.”[339] A sentencing commission was mentioned as one means of providing such guidance, as was the use of guidelines tailored to environmental offences, such as those in use in the United States.[340] The author noted, however, that the possible need or use for such sentencing guidelines or “more formal curbs on judicial discretion” when sentencing environmental offenders in Canada, had not been addressed by the Law Commission in its Report.[341]

A point of departure, then, between the approach advocated by Swaigen and Bunt in their study paper for the Law Reform Commission, and Chappell’s observations as to judicial officers and sentencing, is the latter’s identification of the issue as being not so much to make courts take public welfare offences “more seriously”, but the desirability of providing a framework for how sentencing for such offences should be approached, the result being sentences which are different, and in some cases more stringent, being imposed.[342] Hughes explains the distinction thusly: the “principles” of sentencing in environmental cases are not necessarily different from those in criminal cases, but what is different is the “way” in which these sentencing principles are applied.[343]

Another commentator, Wilson, questioned whether the Law Reform Commission’s recommendations with respect to the continued use of “traditional sanctions” such as fines and imprisonment for preventing pollution, were effective for artificial entities like corporations.[344] He proposed, instead, the use of civil law remedies as being more flexible and effective, including, divestiture, licence revocation and probation. Such “structural remedies” would permit the court to “restructure” the offender so as to prevent repetition of the offence.[345] This would also provide an effective means for dealing with the reluctance of the courts to impose “large penalties” for pollution, which was regarded as merely a regulatory offence. Indeed, it appeared that strict liability offences, “by their nature, are not consistent with excessive penalties.”[346]  Most corporate wrong-doing, as noted by Puri,[347] is not prohibited by the Criminal Code, but by numerous regulatory statutes such as the Competition Act,[348] the Canada Business Corporations Act,[349] the Ontario Business Corporations Act, [350] the Income Tax Act,[351] occupational health and safety legislation, health and safety acts, environmental protection statutes, provincial securities acts, and the like. Corporate structures which are deliberately set up as shells without assets, so as to be shielded from paying fines, frustrate enforcement of these regulatory regimes.[352] Moreover, it has been observed that unless “violators” are subject to escalating penalties for infractions of regulatory statutes, others will not voluntarily comply since they will be at a “competitive disadvantage with non-compliers.”[353] 

A recent article by Verhulst directly addresses the issue as to whether or not there should be a statement of sentencing purposes and principles for regulatory offences generally.[354] Noting that the Government of Canada’s response to complaints that sentencing for criminal offences in Canada lacked a principled, uniform approach, was to enact s.718 of the Criminal Code so as to legislate purposes and principles of sentencing, Verhulst observes that no similar amendments have been made to provincial statutes of general application, such as the British Columbia Offence Act,[355] which contain sentencing provisions specific to the regulatory context. As a result, there is no guidance provided to courts “as to how sentencing should relate to the regulatory objectives the legislators desire to achieve.”[356] Where sentencing provisions are set out in a particular piece of legislation, as was recently done under the British Columbia Public Health Act,[357] the application of these sentencing sections is confined to that statute. Moreover, while courts have endeavoured to create “some uniformity of approach” by developing principles of sentencing for regulatory offences, inconsistency “clearly remains.”[358]

The preferred approach, in Verhulst’s view, is for legislators to assist the courts in achieving a “consistent and principled approach” in sentencing for regulatory offences so that it “aligns that part of the regulatory process with the underlying regulatory goals.”[359] The mechanism for doing so, in British Columbia, would be to amend the Offence Act[360] and put in place general principles to be applied during the sentencing process, as well as expanding the list of available sanctions to permit “greater flexibility” of sentencing dispositions.[361] Verhulst also contends that within the respective public welfare statutes, there should be included by the legislature, authority for “specific sanctions” or “guidance” that will assist the courts in achieving the regulatory objectives sought to be achieved. In her view, while legislation does not provide the sole means of addressing important sentencing issues, it does have a role to play. Stated shortly, in enacting laws, legislators seek to “achieve particular goals”; courts should be provided by the legislators with the means of achieving “those goals through sentencing.”[362]

Sentencing in the context of regulatory offences is part of a “cycle”, Verhulst observes, unlike the case of criminal offences.[363] The identification of regulatory goals starts the cycle, which then moves to drafting and implementing regulatory provisions in support of these objectives. Where a person engaged in a regulated activity is found in violation of such a provision, an enforcement strategy is to bring a prosecution, after which sentencing follows in the event of a conviction. However, the cycle does not terminate at this stage necessarily, except in the case of a disposition such as licence revocation or “permanent incapacitation”; instead, the offender is usually permitted to continue to participate in the regulated activity.  Hence, courts should impose a sentence that takes this regulatory cycle into account, and in so doing “actively participate in achieving regulatory goals.”[364] In order to do so, however, courts must “understand the regulatory scheme” and the offender’s place within it, so as to be better able to “craft sentences that seek to align offenders’ behaviour with those goals.”[365]

The goal of designing sentences which further the “regulatory goals of the legislators” requires courts to embark on the following five steps: (1) encouraging the parties to make joint submissions on aggravating and mitigating factors, and the sanctions to be imposed, so as to provide the court with a “clear basis for sentencing”[366]; (2) the “first priority”, to the extent that it is “possible and reasonable”, should be to impose a sanction that remedies the violation, thereby giving effect to the principle of remediation; consequently, probation orders and community service orders should be the “first choice of sanctions”, rather than simply imposing a monetary penalty, since fines are “divorced from the offence, the offender, and the regulatory goals,” and are often regarded as a “fee for non-compliance”; [367] (3) the “second priority”, if it is likely that the offender will continue to engage in the regulated activity following sentencing, but there must be a change in the offender’s behaviour in order to prevent future violations, should be for the court to impose a sanction to promote the necessary changes, thereby giving effect to the principle of rehabilitation[368];  (4) where the court is satisfied that the sanction would serve “a purpose that is consistent with the regulatory objective”, and if the totality of the sentence would not be disproportionate due to any sanctions already imposed for the purposes of remediation and rehabilitation, the court should impose a sanction that will promote change in the behaviour of other persons, thereby giving effect to the principle of general deterrence[369]; and (5) where there are “sufficient aggravating factors” that make it appropriate, the court should impose a sanction that denounces and punishes the offender’s behaviour, thereby giving effect to the principle of punishment.[370]

Amendments to the Offence Act (B.C.) would be made so as to require courts to consider these steps, in order, as well as to provide for a wider variety of sentencing dispositions, particularly in the area of probation and community service orders. The advantage of such an approach, as opposed to the statement of general sentencing principles under s.718 of the Criminal Code which provides “no guidance on how to resolve the conflict” between the principles and purposes, is that there is a clear priority to the various principles of sentencing, while providing courts with a “single, guiding purpose: to further the regulatory objective.”[371]

The recently enacted British Columbia Public Health Act[372] provides an example of the approach advocated by Verhulst, that is, to legislate the principles and purposes of sentencing in a regulatory context. In the section entitled “determining sentence”, the court is given the authority, before imposing a sentence, to request a joint submission from the offender and prosecutor, setting out any agreement on the circumstances that should be considered by the sentencing judge as either mitigating or aggravating the offence, and the penalty to be imposed.[373] The court is expressly directed to consider, in determining the appropriate sentence, circumstances that aggravate or mitigate the offence.[374] There is also the requirement that the court consider the purposes of sentencing,[375] and, to give effect to those purposes, to first consider as a penalty an order for “alternative penalties”[376], such as community service for up to three years or paying compensation for the cost of remedial or preventive action, and second, to consider whether a fine or incarceration[377] is also necessary.[378]

Section 106 of the legislation sets out the purposes of sentencing. It is stated that in imposing sentence, the sentencing judge may impose one or more penalties that, in order, achieve the following: first, if harm was caused, remedy the harm or compensate a person who remedied or suffered the harm, including the government, or, if no harm was caused, acknowledge the potential harm or further the regulatory objective underlying the provision that was contravened;[379] second, if the offence was committed in relation to a regulated activity, or other activity, in which the offender is reasonably likely to continue to engage, rehabilitate the offender.[380] The court is not permitted to impose any additional penalties if it would be “disproportionate to the offence”, having regard to the offender, the nature of the offence, and the totality of the offences imposed under the section.[381] However, such a penalty may be imposed for the “purpose of achieving general deterrence” where the sentencing judge “reasonably believes that the additional penalty would have a deterrent effect, including because: the penalty imposed for the purposes of remedying the violation or rehabilitating the offender is inadequate to address the circumstances of the offence, or the nature of the penalty may assist others “similarly situated to the offender to avoid committing a similar offence” or educate others “similarly situated to the offender respecting the seriousness of the offence.”[382] Finally, a sentencing judge may impose a penalty for the purposes of punishing the offender if he/she committed the offence “knowingly or deliberately, or was reckless as to the commission of the offence” or “sufficient aggravating circumstances exist” such that the offender should be punished for the offence.[383]

The British Columbia Public Health Act[384] thus illustrates how the legislature can provide guidance to courts in fashioning sentences that reflect the purposes and principles of sentencing for regulatory offences, at least in relation to a specific statute. Jull cites another legislative response in a discussion paper on market surveillance administrator proceedings before the Alberta Utilities Commission.[385]  Noting that the statute in question, the Alberta Utilities Commission Act,[386] provides for administrative penalties of up to $1,000,000 for each day or part of a day on which the contravention occurs or continues, [387] without specifying any intermediate ranges, Jull queries whether, “as a policy matter, is it wise to create ranges of penalties for certain types of infractions?”[388]

In response, Jull observes that most enforcement regimes contain categories of penalties that reflect the “gravity of different types of offences and specific fact situations.” [389] In fact, there are a number of techniques that are open to the legislators to employ in this regard, and thus provide guidance to courts in imposing penalties, under the particular statute. Referring to the federal Office of the Superintendent of Financial Institutions Act,[390] it is noted that Cabinet is given the authority to make regulations by subject matter, namely, classifying each violation as a “minor violation”, a “serious violation” or a “very serious violation”,[391] and to set a penalty, or range of penalties, in respect of each category of violations.[392] The corresponding maximum penalties reflect these three different categories: in the case of a violation committed by a person, $10,000 for a minor violation, $50,000 for a serious violation, and $100,000 for a very serious violation;[393] in the case of a violation committed by an entity, $25,000 for a minor violation, $100,000 for a serious violation, and $500,000 for a very serious violation.[394] The legislation also addresses the criteria for determining the amount of the penalty. Four such factors are specified: (1) the degree of intention or negligence on the part of the person who committed the violation; (2) the harm done by the violation; (3) the history of the person who committed the violation in terms of prior violations or convictions under a financial institutions Act within a five year period preceding the violation; and (4) any other criteria prescribed by regulation.[395]

Accordingly, one technique which is available to legislators is to enact regulations which set out in a schedule a list of various sections of a statute, or perhaps even groups of statutes, and assign to them penalty categories such as minor, serious, or very serious. This, in turn, would guide courts in devising a corresponding sanction. While Jull’s comments are proffered in respect of administrative penalties which extend from $0 – $1,000,000, with no intermediate range in between, the same broad and unstructured penalty ranges apply to many public welfare statutes, such as making a misleading statement under the Ontario Securities Act[396] which carries a maximum penalty of a fine up to $5,000,000, or to imprisonment for up to five years less one day, or to both.[397] It would also be open to the legislators to devise categories based on the “magnitude of the maximum penalty”.[398] This method would allow regulators to elect which category of penalty is being sought in a particular case, and to tailor the penalty to a given fact situation. Once such ranges of maximum penalties are identified, this would help serve as a “distinguishing point” between minor, moderate and more serious infractions under the regulatory regime. Courts, in turn, would have a basis to distinguish between the seriousness of the offence in imposing sentence, in much the same way that the prosecutor’s election in criminal cases to proceed by summary conviction or indictment exposes the offender to different penalty ranges upon conviction, and is thus a relevant consideration in sentencing.[399]

5. Conclusion

In summary, while the state of sentencing for regulatory offences in Canada may not be in “chaos”, it certainly appears that there is in the courts a lack of uniformity, and marked inconsistency, in applying sentencing purposes and principles to such offences.[400] Indeed, how could it be otherwise, one might wonder, given the absence of any legislative rationale or guiding principle in sentencing provisions for most regulatory offences. The situation bears many similarities, in fact, to that in the criminal courts prior to the 1996 amendments to the Criminal Code, when a statement of sentencing purposes and principles was enacted, for the first time, so as to provide legislative guidance to sentencers of criminal offences. 

The review in this section of sentencing purposes and principles for regulatory offences in Canada illustrates a concern that guidance is required for courts imposing sentences for such offences. However, there are differences of opinion as to how this guidance, and in what form, should be provided. To some, sentencing for regulatory offences constitutes a veritable barrier to effective enforcement. For others, the difference between regulatory offences and criminal offences merits a special approach. In order to see if the general observations made here respecting sentencing practices and patterns are borne out, in the following section a matrix of regulatory offences will be examined in the areas of workplace safety, consumer protection and environmental regulation, within the Canadian jurisprudence.

 

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