Law Times

LAw times • August 6, 2012 Corporate/Commercial Law FOCUS ON si-criminal one, had been proven beyond a reasonable doubt. Yet the Ontario Securities I BY RICHARD FOOT For Law Times Lawyers raise constitutional concerns over growing phenomenon I'm aware of." Are AMPs too high? f Ontario stockbroker Roger Rowan had received a speed- ing ticket in 2008, the gov- ernment couldn't have fi ned him unless the off ence, a qua- Commission faced a far lower burden of proof that year when it ordered Rowan to pay a $520,000 fi ne for breaching the provincial securities law. Although the penal- ty was much higher and the maxi- mum fi ne could have reached $1 million per infraction, Rowan had none of the constitutional safeguards available to him that he would have had for a simple speeding charge. But that doesn't matter, ac- cording to the Ontario Court of Appeal. It ruled last May in Row- an v. Ontario Securities Commis- sion that the half-million-dollar fi ne wasn't high enough to be pe- nal in nature and therefore didn't trigger the s. 11 criminal safe- guards of the Charter of Rights and Freedoms. Welcome to the strange and fi nes suffi cient enough to deter rule breakers. "When you're talking about breaches of rules by compa- nies, the options before AMPs were somewhat unsatisfac- tory, commercial litigator with Af- fl eck Greene McMurtry LLP in Toronto. "Th e criminal process has " says Michael Osborne, a the issue. "I get the argument for Osborne says he's torn on why we need AMPs and I've come around to the view that I now think they're OK," he says. "But it goes against the grain for a lawyer to have these kinds of provisions. It' a number of disadvantages: the criminal stigma may not be appropriate for the off ence and the penalties historically under that option were oſt en less than the profi t made by the rule breaker. So there was this weird problem of the policy being too extreme in the sense that it' being strong enough to deter the bad behaviour. tive monetary penalties have proliferated across controversial world of adminis- trative monetary penalties, a little- known but rapidly emerging tool used by governments to enforce rules that are largely commercial in nature without the burden of having to resort to the criminal law and the vigorous constitution- al protections it brings. Administrative monetary penalties are civil fi nes in all but name. Th ey fi rst began appearing in Canada about 30 years ago as a way to encourage behaviour with- out the harshness of a criminal sanction while at the same time allowing the authorities to impose mercial landscape. Federal and provincial governments as well as their regulatory agencies use them to discipline companies in numerous fi elds from stock trading to agriculture to bank- ing. Advertisers face them under the Competition Act, retailers are subject to them as part of consumer protection legisla- tion, and numerous companies face them under environmental protection laws that carry some of the most draconian monetary penalties in the country. Where the laws once lim- In recent years, administra- the com- s criminal and also not " relatively novel and it goes against our traditional notion of the diff erence between civ- il and criminal provisions. "But s 'I get the argument for why we need AMPs and I've come around to the view that I now think they're OK,' says Michael Osborne. regulators to ignore due-dili- gence defences or double-jeop- ardy limitations. For constitutional scholar Pe- Some regimes even allow ter Hogg, many administrative monetary penalty regimes have the look and feel of penal conse- quences that should trigger the s. 11 guarantees of the Charter, in- cluding the right to a presumption of innocence until found guilty beyond a reasonable doubt. Hogg, a scholar in resident at regimes, something Hogg fi nds troubling. "Th e eff ect of the decision in Blake Cassels & Graydon LLP, formally raised these concerns by arguing the constitutional chal- lenge on Rowan' ited regulators to preventative measures against rule breakers, such as suspensions or termina- tions of trading licences in the case of the securities matters, legislatures are now increasingly empowering them to impose substantial fi nes, oſt en with wide discretion. the Ontario Court of Appeal. Th e court dismissed his argument in May, saying the fi ne imposed on Rowan wasn't too high in relation to the sums of money that churn through the securities industry. As a result, it wasn't penal in nature and didn't violate the Charter. Th e decision will likely em- s behalf before bolden legislatures and regulators to continue strengthening their administrative monetary penalty Rowan is that legislative bodies can now do an end run around the s. 11 safeguards surrounding criminal proceedings by confer- ring on administrative tribunals or offi cials the power to impose massive per-infraction fi nes un- der the name of 'administrative monetary penalties,'" he writes in a forthcoming update to his text, Constitutional Law of Canada. "Where a regulator has the pow- er to impose an AMP, the crimi- nal process need not be invoked if it is only a fi ne that is sought by the regulator [as opposed to imprisonment]." Hogg adds in an interview: "I think that as the AMP numbers are permitted to infl ate, and that' the tendency, it means there will be less and less reliance by admin- istrators on regular criminal pros- ecutions, and that is a concern. " s the radar. Th ere hasn't been any political debate about this that And it's all going on under ment tool and undoubtedly they will continue to grow and proliferate. Th e problem is there' it's a valid enforce- out of hand." s a danger of it getting likely be more court rulings on the subject, perhaps one day from the Supreme Court of Canada itself and possibly trig- gered by a fi ne so extreme that a panel of judges declares it off en- sive and unconstitutional. Consider the recent increases on the assumption that skyrock- eting monetary penalties are an increasingly common feature of the legal landscape. Th e smart players, he notes, will have com- pliance programs in place to guard against penalties. But he also says there will under the Competition Act. Th e maximum fi nes for deceptive marketing and abuse of domi- nance now reach up to $15 mil- lion for corporations found in breach of the act. At what point will the courts For now, says Osborne, companies should proceed PAGE 9 start seeing fi nes big enough that they stop being civil and start be- ing criminal? Who knows? says Osborne. "But there are still fruitful areas of litigation here. " LT Excellence2 Hayes eLaw LLP and Heydary Hamilton PC are excited to announce their merger to create Heydary Hayes PC. By combining over 60 years of Intellectual Property, Technology and Media Law experience under one roof, we provide our clients with stronger advocacy, better results and greater efficiencies. What's more, our expanded practice in Intellectual Property, Commercial, Litigation, Privacy, Technology and Media Law means our expertise goes beyond what's traditional to meet our clients' evolving needs. T: 416-972-9001 E: info@heydary.com W: eBusinesslawerys.ca 66 Wellington St W, Suite 4500, P.O. Box 150, Toronto On M5K 1H1 www.lawtimesnews.com

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