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SCC clarifies re fines instead of forfeiture where proceeds of crime.

maple syrup
"In 2016, V was convicted of fraud, trafficking and theft in respect of maple syrup. The stolen maple syrup, which had a market value of over $18,000,000, passed through the hands of several individuals before it was resold by V, who collected the income and paid his various accomplices. By V’s own admission, he earned $10,000,000 in income from the resale of the syrup obtained by theft or fraud and made a personal profit of nearly $1,000,000, minus certain transportation costs.

Under s. 462.37(3) of the Criminal Code, the trial judge imposed a fine on V in lieu of an order for forfeiture of property that was proceeds of crime (“fine in lieu”). Because the trial judge was of the opinion that he had no choice but to impose a fine equal to the value of the property that was proceeds of crime and that had been in V’s possession or under his control, he ordered V to pay a fine corresponding to the resale value of the maple syrup obtained by theft or fraud, that is, $10,000,000, minus the amount of a restitution order. However, the Court of Appeal reduced that amount to the profit made by V, $1,000,000, minus the amount of the restitution order. It held that courts have the discretion to impose a fine that reflects the profit made from a criminal activity, provided that this penalty meets the dual objective of deprivation of proceeds and deterrence. It was of the view that the fine imposed on V by the trial judge was clearly disproportionate to the objectives of the scheme governing this type of fine and that it created a situation of double recovery in light of the fines imposed on V’s accomplices."

The SCC (9:0)
allowed the appeal.

The Chief Justice wrote as follows (at paras. 1-2, 34-35, 39, 43-46, 49-50, 56, 68):

"This appeal gives the Court an opportunity to clarify the scope of judicial discretion when determining the amount of a fine to impose on an offender under s. 462.37(3) of the Criminal Code, R.S.C. 1985, c. C‑46 (“Cr. C.”), in lieu of an order for forfeiture of property that is proceeds of crime (“fine in lieu”). In particular, this Court must determine whether a court has the discretion to limit the amount of a fine in lieu to the profit made by an offender from their criminal activities and must delineate the circumstances in which a court may apportion between co‑accused the value of property that is proceeds of crime. This appeal serves, incidentally, as an occasion for this Court to reaffirm that a fine in lieu is ordered as a substitute for forfeiture and not as a punishment for the commission of an offence, although the fine is part of the sentencing process.
The backdrop to this case is a large‑scale theft and fraud scheme targeting maple syrup, a scheme in which the respondent, Richard Vallières, was one of the major players. At trial, Mr. Vallières was convicted of fraud, trafficking and theft in respect of maple syrup belonging to the Fédération des producteurs acéricoles du Québec (“Federation”). The Crown’s appeal is limited to the fine in lieu imposed on Mr. Vallières at sentencing. The trial judge imposed a fine in lieu corresponding to the resale value of the maple syrup obtained by theft or fraud, but the Quebec Court of Appeal reduced that amount to the profit made by Mr. Vallières. In both cases, the amount of a restitution order was subtracted from the fine.

...

Through the severity of the proceeds of crime provisions, Parliament is sending a clear message that “crime does not pay” and is thus attempting to discourage individuals from organizing themselves and committing profit‑driven crimes. In Lavigne, Deschamps J. noted that “[t]he effectiveness of the adopted methods depends largely on the severity of the new provisions and on their deterrent effect” (para. 9). Parliament’s decision that the fine must correspond to the value of the property is therefore deliberately harsh. Reducing a fine to the profit made by an offender from their criminal activities would clearly be contrary to this objective.

In summary, the discretion conferred on courts by s. 462.37(3) Cr. C. does not allow them to limit the amount of a fine in lieu to the profit made from criminal activity. In accordance with the principles set out in Lavigne, judicial discretion applies first to the decision whether or not to impose a fine and second to the determination of the value of the property (para. 35).

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In my opinion, courts may divide the value of property among several co‑accused in order to avoid a risk of double recovery. This risk arises where the Crown seeks to have a fine in lieu imposed on more than one offender in relation to the same proceeds of crime. At the stage of imposing a fine in lieu, one can speak only of a “risk” of double recovery, for it may well be that this scenario will never materialize given the fact that some co‑accused might be unable to pay their fine within the time allotted. However, this possibility does not prevent a court from apportioning the fine between co‑accused if there is a risk of double recovery, if apportionment is requested by the offender and if the evidence allows this determination to be made.

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The exercise of a court’s discretion is limited by the circumstances in which an order is made (Lavigne, at para. 27). The conditions under which a court may exercise its discretion to apportion are as follows.

First, it is not enough for an offender to argue that they transferred the property to a third party in order to be entitled to apportionment. For the offender to raise a risk of double recovery, that third party must have been charged as well (Siddiqi, at para. 6). The issue of double recovery obviously does not arise where the offender is the only person who stands trial (Schoer, at para. 95, fn. 2).

In this regard, Dieckmann is a unique case. There could be no actual risk of double recovery because the accomplices had died, but apportionment of the total amount of the fraud between the offender and her accomplices was nonetheless justified in the circumstances. The evidence showed that the proceeds of the fraud had been divided, the deceased accomplices were clearly guilty of the alleged offence and, above all, the Crown conceded that it would have apportioned the value of the property among the accomplices if they had stood trial.

Second, the evidence must show that several co‑accused had possession or control of the same property, or part of it, at some point in time (R. v. Lawlor, 2021 ONCA 692, at para. 27 (CanLII)). In Dieckmann, the Ontario Court of Appeal correctly stated that “if there is evidence before the court that establishes or admits of an allocation of benefit, it is open to the court to exercise its discretion to adjust the quantum of the fine” (para. 100).

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The apportionment exercise presents special difficulties where an offender’s co‑accused are tried in separate proceedings. In such a situation, the court may consider the fines already imposed on the co‑accused if it is satisfied that they create a risk of double recovery of the same property. That being said, the fact that some co‑accused have not yet stood trial at the time an offender is sentenced should not deprive the offender of the benefit of apportionment. The court cannot foresee whether fines will be imposed on the offender’s co‑accused in the other proceedings or what their amount might be. To overcome this problem, the court need only find that the available evidence would have allowed it to impose a fine on the co‑accused if they had been before it, thereby justifying apportionment based on the risk of double recovery. In the end, the manner in which this discretion is exercised will depend on the circumstances of each case.

Where the conditions giving rise to a possibility of double recovery are met, the court must apportion the value of the property between the co‑accused in order to prevent this risk from materializing. The court has no choice but to proceed in this manner, because it must exercise its discretion in keeping with the nature of a fine in lieu, which replaces the property that cannot be forfeited, nothing more and nothing less. However, given the approximate nature of the exercise, the court retains some flexibility in deciding how the value of the property will be apportioned between the co‑accused.

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In summary, a fine in lieu must, in principle, be equal to the value of the property of which an offender had possession or control at some point in time. The exception to this principle, whereby an offender may be ordered to pay less than the total value of the property that was in their possession or under their control, is justified by a concern for avoiding double recovery of the value of the same property from a number of co‑accused.

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For these reasons, the appeal is allowed. The fine imposed on Mr. Vallières is set at $9,171,397.57, that is, $10,000,000 minus the amount of the restitution order, $828,602.43. Mr. Vallières has 10 years to pay this fine, in default of which he is subject to imprisonment for 6 years consecutive to any other term of imprisonment."

Note: The summary and body are drawn from Eugene Meehan’s SupremeAdvocacy Weekly Updates for the Law Community.