Justice Committee on Nov. 25th, 2010

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much.

I would like to say first that I commend the intention with which Ms. Jennings has approached this issue; however, I think the difficulty in this particular case is that there is a very valid and important distinction between ordinary fraud and stock manipulation.

When it comes to ordinary fraud, the section clearly refers to depriving or defrauding the public of “property, money or valuable security”. The value of those things can be ascertained rather exactly if you defraud someone of money, property, or valuable security.

However, there is no direct link in the case of stock manipulation between the conduct and the results--at least, no necessary direct link. One can manipulate stock and not receive a million dollars, yet still cause more than a million dollars' worth of losses. Similarly, one might receive more than a million dollars but not cause a million dollars' worth of losses, because there are other factors at work in the market that determine the amounts of losses and gains.

It's like trying to put a square peg in a round hole to apply a sentencing provision based on the amount involved when we're talking about an open system that isn't specific to a particular piece of property, money, or valuable security. I think it's likely for that reason that the government has not proposed applying this mandatory minimum provision to the issue of stock manipulation.

That's my view; however, Mr. Chair, I think it would be useful for us to hear from Ms. Kane, our Department of Justice representative, for some further explanation of or comment on the potential implication of this amendment.

[The Chair, Conservative, Ed Fast]

Go ahead, Ms. Kane.

[Catherine Kane, Director General and Senior General Counsel, Criminal Law Policy Section, Department of Justice]

Thank you, Mr. Chair.

I think Mr. Woodworth has captured the rationale very well, so I'd only reiterate that: that this is not a gap. This was an intentional drafting of the MMP to apply only to subsection 380(1), because that offence has a monetary value attached to it and the others do not, so for practical reasons, it would be very difficult to determine the value of the public market manipulation.

The other point is that when we look at all the data about the offences that are charged, we see that there are very few, if any, charges under anything but subsection 380(1), so where there's an actual fraud that results, the fraud offence under subsection 380(1) is charged, rather than the other. So where the value can be attached to the fraud, that would be the applicable charge.

So for the other offences that involved perhaps more perhaps more preparatory conduct in terms of influencing the markets, where a person is charged and convicted, they would be subject to any penalty along the way, up to the maximum of 14 years, and all the aggravating factors that would apply would suggest that the sentence be increased in accordance with those aggravating factors and their applicability.

[The Chair, Conservative, Ed Fast]

Thank you.

Mr. Lee, you were on the speakers list. Do you still want to speak?

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Yes, and I did the last time, too, so thank you.

I have some questions.

I just want to confirm with Ms. Kane that the current wording of this amendment relying on subsection 380(1) would catch almost every case of someone who took money from people, for good or bad reasons, for pretence, but in the end defrauded them of the money. Because what I'm describing doesn't involve manipulating the stock market; it involves deceitfully taking money from individuals. That's fully covered by subsection 380(1), isn't it?

[Catherine Kane]

That's correct.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Yes.

And then, I would have said to Mr. Woodworth that I would have thought it would be really easy to value a stock market fraud, because almost everything on the stock market has a listed value or has a value somewhere. In any event, that's probably moot.

But I did note that the amendment proposed by my colleague, unlike proposed subsection 380(1.1) that is proposed as an amendment, does not require the existence of an indictment. This penalty could apply with this amendment on a simple summary conviction. If that is the case--and as I read it, that appears to be the case--and my colleague is aiming at stock market fraud, then a prosecution summarily, based on the wording that I see now in the amendment, could result in the mandatory minimum two-year sentence if it's a million dollars or more.

I'm just wondering if in the rest of the Criminal Code we have at least some instances where there are mandatory minimum sentences for summary convictions.

[Catherine Kane]

I may have difficulty following your question, but I'll try to break it down.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay.

[Catherine Kane]

When I looked at this amendment, I read it as applying only to subsection 380(2), which is a strictly indictable offence. Does that answer your concern?

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay. Yes, it completely answers it. Thank you.

[The Chair, Conservative, Ed Fast]

Thank you.

Is there anybody else?

We have Liberal amendment number 1. Seeing no further discussion, I'll call the question on the amendment. We'll do a recorded vote.

(Amendment negatived: nays 8; yeas, 3)

[The Chair, Conservative, Ed Fast]

The amendment fails. We'll move to clause 2, unamended. Unless there's further discussion on clause 2, I'll call the question.

Hearing none--

Go ahead on a point of order, Monsieur Ménard.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

I have already provided all my arguments on this, but, in my opinion, it applies perfectly. You are not thinking about all the accessories there can be in cases like this. Some of them do not even deserve prison. It is the odious nature…

Perhaps you can eventually consider what all Commonwealth countries do, I think. They allow judges to not apply minimum sentences in exceptional circumstances, but they require them to explain their reasons in writing. The minimum sentence that you have set is really very low in terms of what is usually imposed, and upheld in courts of appeal. With thousands of cases being decided every day in Canada, we can always find some that do not seem to be fair. But to assess that, we first need to know the facts on which the judges based the decision. Then, recourse in the face of bad decisions is first sought in a court of appeal. As legislators, we must become involved only when we do not agree with the principles issued by the courts of appeal.

Of course, we will vote against this provision for the same reason. Minimum sentences are rarely justified. I accept them in the case of murder, that is, when we are faced with the most serious acts. I accept them when they are not very severe, such as when we are dealing with repeat offences committed by ordinary people, like drunk driving. After all, when they are convicted the first time, they are warned that there will be a minimum sentence if they offend again.

But I am sure that this is going to result in injustices. If you believe the opposite, it is because you feel that the police or the prosecutors will not be rash enough to proceed with cases. I will not be voting for a bill if I think that it is so bad that neither police nor prosecutors will want to apply it.

[The Chair, Conservative, Ed Fast]

Thank you.

Is there anybody else...?

I'll call the question on clause 2. Do you want a recorded vote?

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Yes.

[The Chair, Conservative, Ed Fast]

We'll call the vote.

(Clause 2 agreed to: yeas 8; nays 3)

Clause 2 carries.

We'll move to clause 3. Is there any discussion on clause 3? There are no amendments on that one.

I'll call the question on clause 3.

Do you wish for a recorded vote on this one, Monsieur Ménard?

[An hon. member]

Call the vote.

[The Chair, Conservative, Ed Fast]

(Clause 3 agreed to)

(On clause 4)

We'll move to clause 4. We have Liberal amendment 1.1.

Mr. Lee.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Before I move it, and I will move it, to go back in the section earlier than that, on proposed subsection 380.2(3), this is a question to Ms. Kane. It's about the ability of the court to vary one of these prohibition orders or restrictive orders. It's not clear on the face of it. It talks about a variance, so that would mean a variance up or a variance down. For example, if a person was prohibited from participating in sales of stolen bicycles, or just bicycles, or whatever the currency of the fraud was, for a period of three years, I take it from the wording here that the original court or a successor court could vary that up or down.

My question is a double-pronged question. That essentially becomes a variation in the sentence, as I see it. Is that appropriate? I could see why you might shrink the prohibition period, but is that appropriate? Secondly, can the prohibition period extend out beyond the sentence period? If it does, does that prohibition period actually become a part of the sentence? When does the sentence end?

[Catherine Kane]

In general, a prohibition period can extend beyond another sentence because sometimes it's only a prohibition that's imposed. Where they exist in other circumstances, we have other provisions in the code that prohibit convicted child sex offenders from being around playgrounds, from being anywhere near children, all those sorts of things.

We have recognizance under section 810. Those orders, in the variety of circumstances that they can be imposed, can be for particular lengths of time even though a person may spend much less of a period of time under a probation order, or in custody, or whatever the other part of the sentence is. It can extend a particular number of years.

With respect to your question regarding varying up or varying down, what was contemplated here was a varying in the terms of conditions prescribed, so it could be that the scope of the prohibition is changed. I would suggest that if the period were extended, then offenders may well be seeking a judicial review of that extension if they thought that was extending their sentence beyond what was originally contemplated.

This was drafted to permit the person to come back before the court and say, “I can't comply with that anymore because of the following circumstances”, so that the individual wouldn't then be in breach. There could be some variation, or because of some change in their behaviour, some steps they'd made, or some desire on their part to engage in some occupation that might put them in violation of this, so they'd be able to do so without running afoul of the prohibition order.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay. I understand that part of it, but it's also possible, under these provisions, for the prosecutor to come back and look for a variance. I was concerned about the prosecutor reworking the sentence a bit because of community pressure in a smaller community. The guy who's been stealing cars for 10 years finally gets sentenced and he's prohibited from selling cars for five years—this is a trite example, I know—and then in year four the prosecutor decides that this guy is still hanging out in the garage and we have to extend the period of time he's prohibited from engaging in the sale of cars.

Under this provision, it appears to be doable, but something is making me nervous about that. It seems to me that if the person has been sentenced, you can't really go back and double up on the sentence, including the prohibition.

[Catherine Kane]

Well, bear in mind that the process requires that the application be brought back before the court and that both parties be heard. The judge would be looking at all those circumstances and would understand the grounds by which the crown is seeking this, and also the offender's reply to that, and would presumably come to the appropriate decision at the end on whether and how to change those conditions of the prohibition order.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay. I'm asking you if the justice department is comfortable with this provision in this bill.

[Catherine Kane]

Yes, we are.