C R I M I N A L L AW, R E G U L AT I O N & E N F O R C E M E N T
NEWSLETTER
May 2008
N O RW I C H O R D E R S
This Newsletter is
published by Miller
Thomson’s Criminal
Law, Regulation and
Enforcement Group as a
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Doug Best
Toronto
416.595.8588
[email protected]
Inside
Scenario: Your company has (apparently) been victimized by a fraud, either
internal (an employee) or external (an entity with which you have contractual
dealings). Money is missing from your corporate account, cheques have been
diverted and/or you have paid money to an outside vendor and the vendor has
absconded with the money. What do you do?
Contact your lawyer immediately. Why:
The sooner you can review your situation with your lawyer, the sooner you will become aware of legal
remedies that may be available to you to get your money back. Of the many remedies available, there
is one that is perhaps less well known than others - the "Norwich Order".
These Orders (named after the "Norwich Pharmacol" case), are available in the appropriate
circumstances to compel third parties (banks for example), to disclose information relevant to pending
litigation prior to the bringing of an action. Norwich Orders have been granted by the courts: where
information is sought to identify wrongdoers; to find and preserve evidence that may substantiate or
support an action against either known or unknown wrongdoers, or even determine whether an action
exists, and, to trace and preserve assets. In order to succeed in obtaining such an Order, it is necessary
to prove:
Norwich Orders
R v. Transpavé Inc.
Foreign Anti-Corruption
enforcement Becomes an
RCMP Priority
Alternative Measures: Matters
of Non-Compliance with the
Customs Act
Human Rights Commission’s
Draft Policy Seeks to Prohibit
Employers from Accessing
Mental Health Information
Contained in Criminal Record
and Police Record Checks
1. that you, as a plaintiff, have sufficient evidence to show a bona fide or reasonable
claim;
2. that the third party from whom the information is sought is somehow involved in
the acts complained of; again in the case of a bank, this condition would be
satisfied if the defendant had an account in one of its branches; it does not mean
the bank is tied up or complicit with the defendant in the fraud - the mere fact it
holds an account is sufficient;
3. that the third party is the only practicable source of the information sought;
4. that the third party can be indemnified for costs to which it may be exposed
because of the disclosure; and
5. that the "interests of justice" favour the obtaining of the disclosure.
In our example of a fraud having been committed, a motion would be made to the Court, without notice
to the defendant (fraudster), for an Order to compel the fraudster's bank to provide information
regarding monies (of yours) deposited into the fraudster's account(s), which are the subject of the fraud
and for information regarding the flow of these funds. Once this information is obtained, you will then
be in a position to use additional remedies to freeze or secure the accounts and/or seek other remedies,
including possibly in other jurisdictions to where the monies may have been transferred.
In our experience, Norwich Orders can therefore be used very effectively with other injunctive type remedies
to quickly identify the location, quantum and the flow of your fraudulently taken monies so as to maximize the
chances of recovery - speed of action is often the key to recovery and Norwich Orders are a very useful tool.
R . V. T R A N S PAV É I N C .
Robert England
Toronto
416.595.8566
[email protected]
A Quebec company has become the first corporation convicted in Canada of
criminal negligence causing death since the introduction, effective March 2004, of
amendments to the Criminal Code designed to enhance worker protection by
making it easier to successfully prosecute corporations for criminal negligence.
The Company, Transpavé Inc., is a paving stone manufacturer with approximately 100 employees. One of its
workers was killed when the worker was crushed by a piece of machinery. A safety device on that machine
had been disabled and the worker had not received proper training. Transpavé Inc. pleaded guilty to the
criminal negligence charge and was fined $100,000 (to which was added a 10% victim impact surcharge) in
accordance with a joint submission from the Crown and the company as to sentence.
The amendments to the Criminal Code brought about in 2004 by what was called Bill C-45 effected two
important changes to the Code. Prior to Bill C-45, in order for a corporation to be held criminally liable it was
necessary for the Crown to demonstrate that the prohibited conduct was conduct of an individual who was a
directing mind of the corporation. Bill C-45 replaced corporate criminal liability with organizational criminal
liability and established a lower threshold that need be met in order to impose criminal liability upon an
organization. As a result, corporate criminal liability may be imposed for the aggregate acts of a number of
persons not just the acts of the directing mind of the corporation. Furthermore and equally importantly, Bill C45 imposed upon everyone who undertakes or has the authority to direct how another person does work a
legal duty to take reasonable steps to prevent bodily harm to that person or any other person arising from
that work.
The Transpavé Inc. case is important, not just because it is the first conviction of an organization since the
Criminal Code amendments, but because it demonstrates, in our view that it is likely that Crown Attorneys
across the country will consider criminal prosecution in appropriate cases rather than just prosecutions under
provincial occupational health and safety legislation. That said, it must be remembered that in the Transpavé
Inc. case there is no detailed legal analysis, given that Transpavé Inc. pleaded guilty, of the conduct that gave
rise to the finding of criminal negligence. For that reason the case does not assist very much in helping us
understand what conduct will result in criminal, as opposed to regulatory, prosecution.
Be that as it may, however, it is clear that Transpavé Inc. had been in breach of a number of its duties under
Quebec's occupational health and safety legislation, that those breaches made harm to a worker foreseeable
and, finally, that Transpavé Inc. did not act to rectify the breaches.
Finally, while the amount of the fine may strike some as high, a fine of that amount, certainly in Ontario, would
be at the low end of the range that a similarly situated Ontario employer might expect to receive if prosecuted
under Ontario's Occupational Health and Safety Act on like facts.
It remains clear, that increased vigilance by all corporate officers is necessary to protect the corporation and
its employees from liability, criminal or regulatory, for workplace accidents.
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FOREIGN ANTI-CORRUPTION ENFORCEMENT BECOMES AN RCMP
PRIORITY
Bruce McMeekin
Markham
905.415.6791
[email protected]
The Corruption of Foreign Officials Act ("CFOA") was enacted by Parliament almost
ten years ago after Canada's adoption of the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions. This
criminal legislation has been applied infrequently by federal law enforcement officials,
with only one reported decision resulting from the guilty plea and sentencing of Calgary-based Hydro Kleen
Services Inc. in 2005.
In 2007, Canada ratified the United Nations Convention Against Corruption. It requires participating states to
dedicate law enforcement resources to the enforcement of legislation such as the CFOA and to assist other
states in the enforcement of anti-corruption legislation. To meet these obligations, in April the RCMP created
two investigation teams totalling fourteen officers located in Calgary and Ottawa dedicated to the
enforcement of the COFA
Section 3 of the CFOA prohibits Canadian business organizations (through their employees, agents and
consultants) from offering a benefit to a foreign public official if the purpose is to obtain or retain for the
organization a business advantage by offering the benefit:
• as consideration for an act or omission by the official in connection with the performance of
the official's duties or functions; or
• to induce the official to use his or her position to influence any acts or decisions of the foreign
state or public international organization for which the official performs duties or functions..
Section 3 is an indictable offence providing for a maximum of five years imprisonment for individuals and
unlimited fines for both individuals and business organizations.
The broad application of section 3 is narrowed by an exemption for "facilitation payments" which are benefits
provided to expedite or secure the performance of an "act of a routine nature" by a foreign official. "Acts of a
routine nature" are defined not to include decisions that award new business or to continue business with a
particular organization.
Canada, like many other developed countries, does not have a record of diligent enforcement of its anticorruption legislation. The United States has been the most active enforcer having undertaken, for example,
eleven prosecutions in 2006 under its Foreign Corrupt Practices Act ("FCPA"). One of these resulted in a plea
by Steven Head, the former CEO of Titan Africa. Head had allegedly paid $2 million (U.S.) into the President
of Benin's re-election campaign in return for higher management fee on a wireless telephone contract in
Benin. On the same set of facts, Titan was fined $28.5 million (U.S.).
Many business organizations with international operations have firmly established and practiced procedures
designed to minimize the risk of a breach of the COFA and the FCPA. Compliance programs typically include
the organization's adoption of a statement as to the importance of compliance, the dissemination of the
statement throughout the organization, accompanied by training and re-training. Many organizations have
also internal regional advisors who are available to assist the organization's representatives who may be
concerned that their interaction with foreign officials risks breaching the legislation. Like all compliance
systems, however, it is only through an organization's dedication to a culture of compliance that it can
succeed in minimizing or eliminating the risk of non-compliance.
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A LT E R N AT I V E M E A S U R E S : M AT T E R S O F N O N - C O M P L I A N C E W I T H T H E
C U S TO M S A C T
Angela Rinaldis
Vancouver
604.643.1294
[email protected]
Non-compliance with the Customs Act (the "Act") can lead to criminal charges.
Section 161 of the Act stipulates that every person who contravenes any of the
provisions of the Act is guilty of an offence punishable on summary conviction and
liable to pay up to $25,000 and not less than $1,000 or to imprisonment for a term
not exceeding six months. Depending on the circumstances of the case and the gravity of the offence, an
individual found guilty of contravention may be liable to both a fine and a term of imprisonment.
General offence provisions in the Act include the following: false statements, evasion of duty; hindering an
officer; misdescription of goods in accounting documents; hindering an officer; keeping, acquiring or
disposing of goods illegally imported; possession of blank accounting documents for fraudulent purposes and
smuggling.
Any case that is investigated will be referred to the Department of Justice for charge approval. The gravity of
the offence, the alleged offender's criminal history, the likelihood of conviction, the prevalence of the offence
in the community and the need for general and specific deterrence are factors to be considered when a
request for approval to proceed with prosecution is made.
Of utmost concern to an individual who is the subject of a criminal investigation are the negative
consequences of conviction. If convicted, the Criminal Code allows for a variety of evidence to be considered
at the time of sentencing. However, prior to sentencing one option that may be considered by an individual
accused of a criminal offence is an Application for Alternative Measures, also known as diversion.
Alternative Measures is an agreement between the accused and the prosecution to deal with the charges
against the accused outside of the court system. When the prosecution reviews applications for diversion,
they will consider whether the accused has been charged or diverted before, if the accused has a criminal
record and how the accused feels about the alleged offence.
Defence counsel will prepare submissions on behalf of the accused and the prosecution can exercise their
discretion to refer the accused to an individual or agency where they will be supervised by a probation officer.
When preparing an Application for Alternative Measures defence counsel must advise the accused that a precondition of diversion is the willingness for the accused to accept responsibility for their actions and admit
guilt. The admission of guilt is made only in the context of Alternative Measures. If the request for diversion
is denied, the accused can proceed to trial and will be afforded the normal rules of trial fairness pursuant to
the Criminal Code.
The following information is usually the framework for the diversion application: the accused's background;
work history; education; volunteering/community involvement; circumstances of the case that make the
accused a suitable candidate for diversion; examples of good character (no previous dealings with court
system and unlikely to re-offend); and how a conviction will negatively impact this accused. Attaching several
letters of reference from individuals who can attest to the accused otherwise responsible nature are highly
recommended.
Where an Application for Alternative Measures is being considered the prosecution must satisfy themselves
of the following;
1. the offender is willing to accept responsibility for his or her actions (ss. 717(1)(c) and (d) of the
Criminal Code);
2. the offender has either no previous criminal record or recent record;
3. the offender is willing to complete community service within 3 months; and
4. the offence was minor (offences that are objectively less serious or potentially serious offences
committed in a less serious way).
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If the offender successfully completes the diversion program, the criminal charge will be withdrawn or stayed
and not re-instituted. Because alternative measures takes place outside the court system, the accused will
not have a criminal record. However, if the accused does not complete the diversion program, prosecution
may continue.
In summary, Alternative Measures is most suitable for offenders with no criminal record, who have not
violated the law previously and who are unlikely to do so in the future. The results of a criminal record can
have harsh effects on the life of an accused, including but not limited to being considered inadmissible for
travel to the United States.
H U M A N R I G H T S C O M M I S S I O N ' S D R A F T P O L I C Y S E E K S TO P R O H I B I T
E M P L O Y E R S F R O M A C C E S S I N G M E N TA L H E A LT H I N F O R M AT I O N
C O N TA I N E D I N C R I M I N A L R E C O R D A N D P O L I C E R E C O R D C H E C K S
Stuart Rudner
Toronto
416.595.8672
[email protected]
The Ontario Human Rights Commission has recently issued a draft Policy on Mental
Health Discrimination and Police Record Checks ("Policy"). The draft Policy, for
which the Commission is seeking the public's consultation, sets out the Commission's
position regarding when and under what circumstances employers should be
permitted to access information concerning non-criminal contact with police that may be found in police and
criminal record checks. All employers should be aware of this potential change to their ability to request and
rely upon police record checks.
The draft Policy was issued as a result of a number of human rights complaints alleging that police record
checks can contain information about non-criminal contact with police as a result of a mental health episode.
Under the Mental Health Act, the police are authorized to apprehend a person and take him or her to a
hospital for examination in circumstances where the person appears to have a mental disorder that will likely
result in serious bodily harm to themselves or to others, or serious physical impairment of the person, and
the person engages in certain behaviour such as, for example, behaving violently towards someone else.
Police contact in these circumstances is recorded in police databases. If a criminal record check or police
record check is provided to a prospective employer, these records may disclose such non-criminal contact
with police. The Commission's position is that these record checks can be a barrier when the person applies
for a job because the employer may discover that the applicant suffered from a mental health episode.
The Commission has expressed a concern that until recently, police services routinely provided criminal
records checks and police record checks without editing the information contained therein. This could lead
employers to make hiring decisions based on assumptions relating to protected grounds, including mental
disability.
To understand the Commission's position, it is important to know the difference between a criminal record
check and police record check and the information contained within each. Criminal record checks include
information about criminal records, records of having been judged not criminally responsible by reason of
mental disorder, pending criminal charges and matters for which someone is on probation. No one, except
law enforcement agencies, can access a person's criminal record without that person's consent.
Police record checks are much broader than criminal record checks since they include a criminal record
check and a search of the local database maintained by the police service where the person lives. The local
police force may also contact other local police departments in Canada and the United States to obtain
information from their databases. The database maintained by local police forces includes information related
to any involvement or contact with the police including: incident reports, charges, convictions, information
about the person as a complainant, victim, suspect or witness to an occurrence, including allegations where
charges were not laid. Contacts between police and individuals pursuant to the Mental Health Act are also
recorded. An employer or organization requires an individual's consent to obtain a police record check.
5
The Policy acknowledges that employers are permitted under the Code to request criminal record checks.
Under the Code, however, a person cannot be discriminated against in employment because of pardoned
criminal offences under federal law or for violations of provincial laws such as the Highway Traffic Act, subject
to some exceptions. The Code does not protect persons from discrimination due to unpardoned convictions.
In some circumstances, however, the Code allows an employer to ask if an applicant or employee has been
convicted of a provincial offence or a pardoned federal offence if the employer can demonstrate that the
nature of the job is such that the essential qualification or requirements of the job cannot be changed, or the
individual cannot be accommodated without creating excessive costs or unreasonable health or safety risks.
One example where a pardoned offence may be relevant could include serious driving convictions for a
commercial or school bus driver, or a conviction for child sexual abuse of a daycare worker who may be alone
with children.
The Commission's draft Policy states that because of the potential for an adverse human rights impact, police
record checks (as opposed to criminal record checks) should only be requested in exceptional
circumstances. The Policy further states that if an organization wants to obtain a police records check, it must
consider whether, on a balance of probabilities, the record check requirement is reasonable and bona fide
and:
1. was adopted for a purpose or goal that is rationally connected to the function being performed;
2. was adopted in good faith, in the belief that it is necessary for the fulfillment of the purpose or
goal; and
3. is reasonably necessary to accomplish its purpose or goal, in the sense that it is impossible
to accommodate the claimant without undue hardship.
While the circumstances surrounding each case must be considered separately, some circumstances where
a police record check may be warranted include situations where:
• the position involves working directly with vulnerable persons, such as children, the frail
elderly, or persons with severe developmental disabilities
• there is little or no supervision or the applicant would be working alone with vulnerable persons
• the applicant would be charged with significant responsibility for the health and safety of such
persons; for example, driving them in a vehicle.
The Policy also states that if the organization can demonstrate a legitimate need for conducting a police
record check, the check should only be requested after it has made a decision that the candidate is otherwise
suitable for the position and has extended an offer of employment that is conditional on a satisfactory record
check.
When the police records check is obtained, the Policy advises employers that they are obliged to deal with
the information in a manner that is consistent with the Code by, for example, "not relying on stereotypical
assumptions about persons based on the information revealed or automatically assuming that the person
would be unfit for the position. Instead, the Commission states that employers must "require" a job applicant
to provide context for the information, after which the employer should conduct an individualized assessment
as to whether it would be undue hardship to employ the person. The Policy warns employers that "rejecting
the person because of a stereotypical perception that he or she will "become a problem" down the road, will
have issues with absenteeism or will require accommodation because of his or her mental disability would
be a contravention of the Code".
In the Policy, the Commission also instructs police services on how to respond to requests for police records
checks and warns that the "disclosure of information by a police force may be a violation of the Code if it goes
beyond the bona fide criminal record of the individual or what is reasonably required to assess the safety risk
an individual could pose in the circumstances." In order to comply with the Code, the police are instructed to
"undertake an individualized assessment of the results of each record check and should only reveal
information that is found to be relevant to health and safety concerns."
6
In order to be able to carry out the individualized assessment, the Policy states that the police will need to
know the following for every police records check received:
• the nature of the position being screened;
• the nature and degree of contact with vulnerable persons that the applicant would have in the
position;
• the nature of the vulnerability; and
• any other relevant information about the nature and duties of the position (e.g., whether the person
would be working alone or with others).
The above information would be provided by the applicant, the prospective employer or both.
After the individualized assessment is conducted by the police, the Policy states that the police should not
automatically reveal to the prospective employer that there has been police contact relating to the Mental
Health Act. Rather, the police are instructed to simply state to the prospective applicant that there is
"information of concern". At this time, the applicant can then decide to learn from the police the nature of the
concern and decide whether to withdraw the application prior to disclosure to the employer, or to share the
results of the record check and explain the circumstances and context to the organization requesting the
search.
The Policy concludes by providing "tips" to police services and employers on how to respect the Code's
provisions while at the same time requesting police and criminal record checks. To obtain a copy of the Policy,
please visit the Commission's website at <<www.ohrc.on.ca>>.
While Commission policies are not given equal weight as the law, they are given great deference if the Policy
is consistent with Human Rights Code values. Until the Policy is ultimately approved by the Commission, an
employer's practice of requesting police record checks may need to be reviewed. If approved in the current
draft form, the above Policy will severely restrict an employer's current ability to obtain and consider the
information contained in police record checks for the purpose of assessing a candidates' suitability for
employment.
Miller Thomson LLP will keep you apprised of the status of the Policy.
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M I L L E R T H O M S O N L L P C R I M I N A L L AW, R E G U L AT I O N A N D
ENFORCEMENT GROUP
Toronto / Markham
Roderick M. McLeod, Q.C.
[email protected]
J. Bruce McMeekin
[email protected]
Katherine Xilinas
[email protected]
Adam Stephens
[email protected]
Douglas Best
[email protected]
Andrew Roman
[email protected]
Robert England
[email protected]
Stuart Rudner
[email protected]
Vancouver
Donald J. Sorochan, Q.C.
[email protected]
Daniel L. Kiselbach
[email protected]
Dwight M.D. Stewart
[email protected]
Angela Rinaldis
[email protected]
905.415.6707
905.415.6791
416.595.8165
416.595.8572
416.595.8588
416.595.8604
416.595.8566
416.595.8627
604.643.1214
604.643.1263
604.643.1248
Note:
This newsletter is provided as an information service to
our clients and is a summary of current legal issues.
These articles are not meant as legal opinions and
readers are cautioned not to act on information
provided in this newsletter without seeking specific
legal advice with respect to their unique
circumstances. Miller Thomson LLP uses your contact
information to send you information on legal topics that
may be of interest to you. It does not share your
personal information outside the firm, except with
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policy and other rules.
© Miller Thomson LLP, 2008 All Rights Reserved. All
Intellectual Property Rights including copyright in this
publication are owned by Miller Thomson LLP. This
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Thomson LLP which may be requested from the editor
at [email protected].
w w w. m i l l e r t h o m s o n . c o m
604.643.1294
Calgary
Fred R. Fenwick, Q.C.
[email protected]
403.298.2421
Edmonton
Daniel C.P. Stachnik, Q.C.
[email protected]
780.429.9761
8