In the recent Supreme Court of Canada (“SCC”) decision in R. v. Topp, 2011 SCC 43 the Crown attempted to do the impossible and get blood from a stone. The metaphorical stone in this case was John Phillip Topp, a defendant sentenced to five years in prison for his conviction on 16 counts of fraud and attempted fraud under the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.). Topp had defrauded Canada Customs of $4.7million through his brokerage business. The Crown sought to have a fine of the same amount imposed on Topp in addition to imprisonment, but Baltman J. of the Ontario Superior Court of Justice refused to impose any fine whatsoever because she was not persuaded that Topp had the ability to pay pursuant to s. 734(2) of the Criminal Code of Canada, R.S.C., 1985, c. C-46 (“CCC”). Both the Ontario Court of Appeal and the SCC upheld Baltman J.’s decision not to impose a fine due to Topp’s inability to pay the fine.
Summary of the Law and the Crown’s Argument
Subsection 734(1) of the CCC provides that a court may fine a convicted offender in addition to imprisonment subject to ss. 734(2). Subsection 734(2) provides,
Except when the punishment for an offence includes a minimum fine or a fine is imposed in lieu of a forfeiture order, a court may fine an offender under this section only if the court is satisfied that the offender is able to pay the fine or discharge it under section 736 (emphasis added).
The Crown argued that ss. 734(2) should be interpreted to require the defendant to prove that he or she is unable to pay – in essence a reverse onus. This argument was made because the Crown could not track the whereabouts of the $4.7 million and Topp could not explain what happened to the money. Fish J., writing for the unanimous SCC, rejected the Crown’s argument because the legislative intent of requiring that a defendant be able to pay was to avoid imprisoning individuals for failing to pay fines. As well, the wording of ss. 734(2) did not create a reverse onus for the defendant.
While there is no formal burden on the Crown to prove a defendant’s ability to pay, in practice the former will need to marshal evidence of the latter’s ability to pay. Fish J. explained that, “as a matter of law, the court cannot impose a fine unless it is satisfied [on a balance of probabilities] that the offender is able to pay. This necessarily involves an affirmative finding based on the evidence and information properly before the court pursuant to ss. 720 to 724 of the Criminal Code. Absent a sufficient basis for that finding, the party seeking the fine cannot legally succeed.” Evidence must be marshaled otherwise a sentencing judge cannot make a finding that a defendant is able to pay. Similarly, while there is no formal burden on a defendant to rebut the evidence marshaled by the Crown, the defendant is free to present evidence on his or her inability to pay.
Inferences by the Sentencing Judge are Permitted
The ability of the trial judge to make inferences based on the offender’s ability to pay was also discussed by the SCC. Where the offender has received illegally obtained funds in the past but cannot provide a reasonable explanation as to its whereabouts, the sentencing judge is not required as a matter of law to make an inference that the offender still possesses sufficient funds to pay a fine, but is permitted to do so. While it is permissible for him or her to make such an inference, the SCC cautioned that an inference cannot always be made, and the strength of the inference is based on the facts of each case and thus varies from case to case.
Two factors are relevant in a sentencing judge’s assessment of whether to make the inference that a defendant is able to pay based on his or her receipt of illegal funds in the past: (i) the length of time that has passed between the acquisition of the funds and the imposition of sentence; and (ii) the amount of funds acquired. The SCC explained that, “[t]he more time that has passed since the acquisition of the funds, the less likely it is that the offender still possesses the full amount. And the lower the amount of funds acquired, the less likely it is that the offender still possesses much or all of the funds. A small sum is more likely than a large sum to be gone in its entirety.” The sentencing judge will have to exercise his or her discretion to determine how much weight to assign to the past receipt of illegal funds.
Minimizing the Deterrent Effect of Fines
While the avoidance of imprisonment for failing to pay a fine is laudable, it is still worthwhile to enquire whether this decision diminishes the deterrent effect of fines. It is arguable that if individuals know that they will not have to pay a fine if they do not have the funds and/or cannot reasonably explain the whereabouts of the funds, then there is incentive for them to spend lavishly into oblivion and/or conceal the money. They wager that they will not have to pay the fine, and thus the effect of the fine in deterring individuals from committing crime is reduced. The strength of this argument is weakened by the reality that some individuals will engage in those activities regardless of whether the ability to pay is a factor in sentencing. Thus, in that regard the emphasis put on the ability to pay may not significantly impact the deterrent effect of fines.
Similarly, it could also be argued that the factors that are used to assess whether a sentencing judge should make an inference regarding ability to pay create an incentive for individuals to conceal illegally obtained funds and wait patiently in order to weaken the strength of any inference that they still possess the funds and are able to pay the fine. It is plausible that some individuals may bank (both in the literal and figurative sense) on that, though, once again, the reality is that some individuals that engage in fraud will conceal illegal funds and wait until the there is less scrutiny of their activities regardless of whether those factors are used.
The factors are practical because they reflect the likelihood of a particular defendant being in possession of illegally obtained funds after the passage of time. As cliché as the title of this post sounds, one cannot extract what is not there to begin with. Based on those reasons as well as the importance of guarding liberty, as reflected in the legislative intent of ss. 734(2), it was appropriate that the SCC upheld Baltman J.’s sentencing decision.