What’s Next For Administrative Monetary Penalties (“AMPs”)?
In July 2015, the Supreme Court released its decision Guindon v. Canada finding that AMPs were not offences attracting the protections contained in s.11 of the Charter. As a result, entities and individuals regulated and exposed to the risk of AMPs under a wide variety of statutes are not entitled to the presumption of innocence or to the constitutional right to a fair trial before an independent and impartial tribunal.
Guindon is a decision that challenges many opinions. It raises at least two obvious and reasonable questions: (1) How can a government law enforcement proceeding exposing an individual to liability measured in the hundreds of thousands of dollars not require the Crown to prove the allegation beyond a reasonable doubt when that very requirement falls on the Crown in a $20 parking ticket prosecution; and, (2) How can a government law enforcement proceeding, that, if successful, may stigmatize an individual (in Guindon as a fraudster) not require proof on the legal standard of beyond a reasonable doubt (as required by the presumption of innocence)?
Guindon will no doubt also serve as a well-lit path for regulators on exactly how to legislate new AMP provisions not only supplementing, but supplanting, the historical enforcement process reliant on prosecution. Who, after all, needs the expense and procedural delay that frequently comes with the latter?
It is with the likelihood of the increased enactment and use of AMPs, however, that one might suggest that the judicial treatment of AMPs is just at its beginning as opposed to its end. Although by no means exhaustive, there are three unresolved issues:
(1) Are AMPs Still Subject to the Charter?
Guindon speaks to the issue of whether the alleged violations therein were offences and therefore subject to s.11 of the Charter. It provides no assistance, however, on the question of whether AMPs are deprivations of liberty engaging s.7 of the Charter.
Section 7 is intended to protect the physical and psychological integrity of individuals from state action that offends one or more principles of fundamental justice. It is not concerned with protecting economic interests. To the extent that AMPS are seen as an infringement of an economic interest, the less likely they are to be seen as attracting the protection of s.7. But what if the AMP can be characterized as a deprivation of liberty in the sense that it is a government order compelling one to undertake action it would not otherwise do?
Any finding that an AMP is a deprivation of liberty engaging s.7 must be based on the contextual analysis the Charter demands. The wide range of originating instruments and procedures would suggest that for many AMP regimes that process would be fraught with difficulty. One significant hurdle arises from the licensing concept. The Supreme Court has found that Charter rights should be relaxed in circumstances wherein parties choose to work or operate in industries subject to strict government regulation.
(2) What About Disclosure?
Perhaps the greatest benefit of attracting the protection of s.7 is that a fair hearing becomes a constitutional requirement.
The same, of course, can be said of the common law requirements of procedural fairness, but subject to context. For that reason, at least one aspect of procedural fairness remains nebulous within the context of AMPs, namely disclosure or knowing the regulator’s case.
To a criminal or quasi-criminal litigator, disclosure means the Crown is required to provide to a defendant all information in its possession relevant to the defendant’s guilt or innocence, subject to valid claims of privilege. The policy reason behind the rule (“the fruits of the investigation which are in the possession of counsel for the Crown are not the property of the Crown for use in securing a conviction but the property of the public to be used to ensure that justice is done”) should be equally applicable to AMPs. Why? AMPs are nothing more than an alternative means of law enforcement albeit administrative in nature. Yet there are no uniform means by which regulators, whether federal or provincial, must provide disclosure to the penalized, except through and subject to the procedural requirements of the rules of practice for the tribunal or court, whatever the case may be, that hears an AMP.
The absence of disclosure and its prejudicial effect has not gone without notice by the Courts. For example, FINTRAC, the federal anti-money laundering regulator, has been criticized by the Federal Court for a lack of transparency in formulating the size of penalties and failing to disclose to the penalized the process it followed.
(3) What About Reasonable Care?
For over thirty-five years, Canadian law has provided that the defence of all reasonable care is a full defence to regulatory or strict liability offences. The defence has two branches, either of which operate to exonerate a defendant: (1) the defendant exercised due diligence to comply with the legislation at issue; or (2) the defendant was operating under a reasonable mistake of fact.
Post-Charter, the availability of the defence became a constitutional requirement for those regulatory offences that were punishable by imprisonment. The Supreme Court found that fault operated as a presumption in the sense that a defendant was presumed on the legal standard of proof to have caused the offence out of their negligence. However, the defendant could avoid conviction by rebutting the presumption on the civil standard of proof (proof on a balance of probabilities) establishing that it had acted with all reasonable care (the logical opposite of negligence) required by the circumstances to avoid the commission of the alleged offence. The Court found that the reversal of the burden of proof onto the defendant’s shoulders requiring the defendant to establish its innocence on the civil standard of proof was not unconstitutional.
The fundamental principle of justice behind the defence of all reasonable care is that the morally blameless should not be punished. This explains why not all AMP regimes specifically provide that the penalized can invoke the defence to avoid penalization. Absent a finding that an AMP regime is more punitive and less concerned with promoting regulatory compliance, there is no constitutional requirement that the defence be available to a penalized party.
But in situations wherein the defence is available, how does it operate? Placing the onus on the penalized to establish the defence would be consistent with the approach historically taken by the courts, but what is the standard of proof? Unless the originating legislation requires more, the regulator need only prove the wrongful act on the civil standard. One would think that the absence of reasonable care (negligence) would operate as it does in regulatory prosecutions, as a rebuttable presumption but on the same civil standard required for the wrongful act. If correct, requiring the penalized to prove its reasonable care on the civil standard – as opposed to something less – would effectively render the defence unavailable to the penalized. It would require the penalized to establish that their compliance efforts were conceptually perfect as opposed to reasonable in the circumstances. The Supreme Court, albeit within the context of regulatory prosecutions, has found that all reasonable care does not demand perfection – only reasonableness in the prevailing circumstances.