We have blogged in the past on recovery for fraud victims on criminal restitution orders – see our blog Coordinating Criminal and Civil Justice for Fraud Victims. Many fraud victims we deal with are of the belief that they are owed a free investigation by the police, and a free prosecution by the Crown, and through these means they have their best chance at a recovery.
We advocate that where the losses are significant, fraud victims should have their case triaged by their own fraud recovery lawyer prior to making a complaint to the police or confronting the fraudster – see our blog Triaging Your Fraud Case. However, as the issue of recovery through criminal restitution orders is a reoccurring one, we provide further information on this issue.
Recently the Conservative Government introduced Bill C-32: An Act to enact the Canadian Victims Bill of Rights and to Amend Certain Acts. The entire text of the proposed legislation is available at:
http://www.scribd.com/doc/216163693/Bill-C-32-the-Canadian-Victims-Bill-of-Rights
Most interesting to fraud victims is the provisions on restitution orders through Canada’s criminal courts. The relevant provisions read as follows:
Section 16: Every victim has the right to have the court consider making a restitution order against the offender.
Section 17: Every victim in whose favour a restitution order is made has the right, if they are not paid, to have the order entered as a civil court judgment that is enforceable against the offender.
The wording of the proposed legislation begs for further explanation. To date the one of the better explanations of the theory of recovery through criminal restitution orders was written by Susan McDonald, a researcher for the Canadian Government. Ms. McDonald’s article is found in the Victims of Crime Research Digest, Issue No. 2, 2009, see:: http://www.justice.gc.ca/eng/rp-pr/cj-jp/victim/rd09_2-rr09_2/p2.html . Excerpts from their article follow:
Understanding Restitution
If you were to ask a member of the public about restitution, chances are that you would be met with a blank stare or the question “what is restitution?” Those who work with, or are affected by, the criminal justice system are aware of this discretionary sentence that is made in addition to another sentence and is paid to the victim, by the offender, to cover quantifiable losses. Yet, there are many gaps in our overall understanding of how restitution is working, and in particular, how it is working for victims of crime.
This short article provides a description of the restitution provisions in the Criminal Code and what we know about restitution from social science research, caselaw, and statistics. There is very little empirical research on the issue in Canada, and as such, there are many questions that remain to be answered in order to fully understand how the provisions are implemented and what that means for both victims and offenders. This article will conclude by highlighting some of those questions.
What is Restitution?
As noted above, restitution is a sentence made after a finding of guilt. It is different from compensation, which is a payment made by the state to a victim to compensate for pecuniary and non-pecuniary losses such as pain and suffering. Restitution orders may be “stand-alone” orders imposed as an additional sentence (s. 738 of the Criminal Code) or ordered as a condition of probation (s. 732.1(3.1)(a)) or as a condition of a conditional sentence (s. 742.3(2)(f)). The sentencing judge will only make a restitution order in appropriate cases, taking into account the sentencing principles and the facts of the individual case.
History of the Criminal Code Restitution Provisions
As modern criminal law evolved in common law jurisdictions from the Middle Ages onward, crimes were redefined as acts against the state; addressing the losses of individual victims was no longer a primary goal, and “the victim was transformed from prosecutor to mere witness” (see Young 2001, 5-7; Young 2008, 2).
Prior to 1857, in Ontario, the Attorney General was the Crown’s chief prosecutor and frequently appeared in court in serious criminal cases. The vast majority of cases, however, were prosecuted by what was called a “private informant” – the victim or another interested party. The onus fell on the victim to investigate, take into custody, and prosecute (or pay a barrister to prosecute) the accused. The victim was also the sole recipient of any payment (Karmen 1995). Hillenbrand (1990) notes that “private prosecution” was intended to be a means by which restitution could be provided to the victims of property crimes.
In 1857, the Attorney General for Canada West, John A. MacDonald, introduced the Upper Canada County Attorneys Act, establishing a network of criminal prosecutors to appear on his behalf, which was on behalf of the Crown or Queen Victoria. The new law was proclaimed in force on January 1, 1858. Nineteen prosecutors were appointed by the Governor General to represent the Crown, as Canada was still a British Colony (Ministry of the Attorney General 2007).
In the United Kingdom, the right of a victim’s family to compensation in any case of wrongful death was re-instated in legislation in 1846,[1] and in the United States, restitution re-emerged in the early 1900s when new sentencing laws allowed the courts to impose alternatives to incarceration (Frank 1992). In Canada, since its inception in 1892, the Criminal Code has permitted a sentencing court to order “compensation” for property lost as a result of the commission of an offence.
The Canadian provisions governing compensation were mostly unchanged until amendments in 1996 repealed the compensation order provisions, replacing them with restitution order provisions. The terminology was changed to reflect that “restitution” refers to payments the offender should make while “compensation” generally refers to payments from the state. While the original compensation provisions were only available for loss, destruction, or damage to property, restitution is also available for pecuniary damages including loss of income or support incurred as a result of bodily harm arising from the commission of an offence, or to cover expenses associated with moving out of the household shared with an offender in cases of bodily harm or its threat. The sentencing court may now order restitution on its own, whereas previously it could only be initiated by an aggrieved person.
In 1988, Bill C-89, which would have created a criminal enforcement scheme for restitution orders, was passed by Parliament but was never enacted due to concerns raised by the provinces after the Bill’s passage regarding the prohibitive costs of creating and operating such a scheme. After much study on the costs and operational implications, it was determined that there would be support for the existing civil enforcement scheme but not for a criminal enforcement scheme due to the costs to the provinces associated with implementation. It was determined that the annual operating costs would far exceed the financial benefits realized by victims.
In 2004, s. 741 of the Criminal Code was amended to expand a victim’s ability to receive a civil order for an unpaid restitution order to restitution orders made as a condition of probation or as part of a conditional sentence. Previously this option was only available for stand-alone orders. In 2005, s. 738(1)(b) was expanded so that readily ascertainable pecuniary damages, such as loss of income caused by the commission of an offence, became possible in the case of “psychological harm” resulting from the commission of an offence. Previously, this restitution order was only available in cases of “bodily harm” resulting from an offence.
The Test for Restitution Order – Principles from the Caselaw
The published caselaw provides a valuable, albeit limited, source of understanding about what the judiciary consider in their sentencing decisions. The search was limited to criminal cases.
There have been two Supreme Court of Canada cases on restitution in the past thirty years, several appellate court cases, and many cases where the provisions were considered in the lower courts. A review of these cases shows that many issues are covered. The Supreme Court decisions in R. v. Zelensky and R. v. Fitzgibbon established parameters that have been followed without challenge over the past three decades.
In R. v. Zelensky, the Supreme Court of Canada made it clear that restitution orders fall under the federal government’s criminal law power only because they are part of the sentencing process and that restitution orders are only appropriate when the amount of the loss is easy to calculate and is not in great dispute.
The Supreme Court in R. v. Fitzgibbon also declared the following important points:
- while the offender’s ability to pay the restitution order should be considered, it is not the determining factor in every case;
- Criminal courts are not an appropriate forum for awarding damages for pain and suffering or for determining complicated issues regarding the assessment of damages. These matters must be settled in civil courts;
- the offender’s ability to pay, although not determinative, is a factor which is considered by the judge when determining whether a restitution order is appropriate. When the court orders restitution as a term of probation, it must first ensure that the offender may reasonably make the payment during the term of probation as non-payment will result in a breach of the probation order.
- if the offender fails to pay the full amount of the restitution order, the victim must use civil enforcement methods to collect the money.
Another factor considered by judges when determining whether a restitution order is appropriate is the need for the court to consider the impact on the chances for rehabilitation. For example:
- in R. v. Siemens, the court noted that the impact of a restitution order upon the chances of rehabilitation of the accused, either pro or con, is a factor to be considered. Ruining an accused financially would impair his chances of rehabilitation; and
- in R. v. Bullen,[7] the court determined that the timing and amount of restitution must not significantly undermine an offender’s will or ability to pursue restitution, and those considerations act as an important constraint at sentencing.
In the case of Bullen, Chief Judge Stuart of the Yukon Territorial Court provided extensive comments on restitution, highlighting the challenges inherent in the application and implementation of the provisions.
Social Science Research
The academic articles that were found span decades and were predominantly from the United States. The writing in the last fifteen years has focused on evaluation research of restitution programs, in particular examining what factors lead to successful payment to the victims.
In Canada, restitution has not been studied to any great extent, either within the context of a restorative justice program or as part of probation. The Multi-Site Study (Prairie Research Associates 2004) was a large, five-site Canadian study wherein all criminal justice stakeholders (judges, Crown, defence, parole, probations, police, victims, victim services, and victim advocacy groups) were interviewed on their awareness and perceptions of the Criminal Code provisions relating to victims. For example, to determine views on when restitution should be requested, judges were asked when, in their view, restitution is appropriate. Surveyed judges responded that damages must be quantifiable (87%) and the offender must be able to pay (61%). They placed less emphasis on the victim’s desire for restitution (32%).Table 1 illustrates the responses from victim services and advocacy groups when asked “What are the obstacles to the use of restitution?”
Table 1: Obstacles to the Use of Restitution – Reports by Victim Services and Advocacy Groups
| 34% | |
| 31% | |
| 16% | |
| 14% | |
| 10% | |
| 9% | |
| 7% | |
| — | |
| 11% |
Source: Multi-Site Study (PRA 2004)
A study in Nova Scotia (Martell Consulting Services 2002), which included interviews with all criminal justice professionals, found that, despite the 1996 amendments to the Criminal Code and despite the apparent support for restitution as a condition of sentencing, restitution could only be found on the periphery of the criminal justice system and that there was, overall, low awareness amongst victims about restitution. The Canadian study concluded that three main barriers exist with respect to accessibility of restitution orders for victims:
(1) the lack of enforcement by the criminal justice system;
(2) the costs for victims; and
(3) the requirement for victims to gather information about the offender, which is needed to register a restitution order as a civil judgment.
For ease of reference, we have provided the sections of the Criminal Code on Restitution orders relevant to fraud cases:
738. Restitution to victims of offences
738. (1) Where an offender is convicted or discharged under section 730 of an offence, the court imposing sentence on or discharging the offender may, on application of the Attorney General or on its own motion, in addition to any other measure imposed on the offender, order that the offender make restitution to another person as follows:
(a) in the case of damage to, or the loss or destruction of, the property of any person as a result of the commission of the offence or the arrest or attempted arrest of the offender, by paying to the person an amount not exceeding the replacement value of the property as of the date the order is imposed, less the value of any part of the property that is returned to that person as of the date it is returned, where the amount is readily ascertainable;
(b) in the case of bodily or psychological harm to any person as a result of the commission of the offence or the arrest or attempted arrest of the offender, by paying to the person an amount not exceeding all pecuniary damages incurred as a result of the harm, including loss of income or support, if the amount is readily ascertainable;
(2) The lieutenant governor in council of a province may make regulations precluding the inclusion of provisions on enforcement of restitution orders as an optional condition of a probation order or of a conditional sentence order.
740. Priority to Restitution
740. Where the court finds it applicable and appropriate in the circumstances of a case to make, in relation to an offender, an order of restitution under section 738 or 739, and
(a) an order of forfeiture under this or any other Act of Parliament may be made in respect of property that is the same as property in respect of which the order of restitution may be made, or
(b) the court is considering ordering the offender to pay a fine and it appears to the court that the offender would not have the means or ability to comply with both the order of restitution and the order to pay the fine,
the court shall first make the order of restitution and shall then consider whether and to what extent an order of forfeiture or an order to pay a fine is appropriate in the circumstances.
741. Enforcing Restitution Orders Through the Civil Courts
741. (1) Where an amount that is ordered to be paid under section 732.1, 738, 739 or 742.3, is not paid without delay, the person to whom the amount was ordered to be paid may, by filing the order, enter as a judgment the amount ordered to be paid in any civil court in Canada that has jurisdiction to enter a judgment for that amount, and that judgment is enforceable against the offender in the same manner as if it were a judgment rendered against the offender in that court in civil proceedings.
Moneys found on offender
(2) All or any part of an amount that is ordered to be paid under section 738 or 739 may be taken out of moneys found in the possession of the offender at the time of the arrest of the offender if the court making the order, on being satisfied that ownership of or right to possession of those moneys is not disputed by claimants other than the offender, so directs.
741.1. Notice of Orders of Restitution
741.1 Where a court makes an order of restitution under section 738 or 739, it shall cause notice of the content of the order, or a copy of the order, to be given to the person to whom the restitution is ordered to be paid.
741.2. Civil Remedy Not Affected
741.2 A civil remedy for an act or omission is not affected by reason only that an order for restitution under section 738 or 739 has been made in respect of that act or omission.
To review the Canadian Resource Centre for the Victims of Crime July 2009 paper on Restitution, see: http://crcvc.ca/docs/Restitution.pdf .
Inquiries
Coordinating civil recovery prosecutions with criminal complaints is something most fraud victims should canvas with their fraud recovery lawyers before commencing either process. For further information on having a criminal restitution order enforced as a civil judgment, please contact us.
Norman Groot, LLB, CFE, CFI – April 23, 2014