COURT OF APPEAL FOR ONTARIO
MACPHERSON, SHARPE and CRONK JJ.A.
B E T W E E N :
HER MAJESTY THE QUEEN
Robert F. Goldstein for the respondent
Respondent
- and -
PIERRE BOURQUE
Matthew T. McGarvey for the appellant
Appellant
Heard: January 28, 2005
On appeal from the judgment of Justice W. Dan Chilcott of the Superior Court of Justice dated October 9, 2003.
MACPHERSON J.A.:
A. INTRODUCTION
1Section 734.7 of the Criminal Code, R.S.C. 1985, c. C‑46, as amended by S.C. 1995, c. 22, permits the imprisonment of a person for default in payment of a fine in certain circumstances.
2Section 734.7 came into force on September 3, 1996. The issue in this appeal is whether s. 734.7 applies to fines imposed after September 3, 1996, but in relation to offences committed before that date. The question of potential retrospective operation turns on whether s. 734.7 is characterized as a procedural or substantive provision. If it is procedural, retrospective operation is permitted; if it is substantive, such operation is forbidden.
B. FACTS
3The appellant, Pierre Bourque, did not declare $332,000 in income for the taxation years 1989 to 1993, thereby evading federal taxes of $95,212.70. On January 10, 2000, in a summary conviction proceeding, the appellant pleaded guilty before Justice B. T. Ryan of the Ontario Court of Justice to one count of tax evasion contrary to s. 239(1)(d) of the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.).
4On January 31, 2000, Ryan J. imposed a fine of $100,000, to be paid within one year. Ryan J. stated that if the appellant had difficulty paying the fine, he could apply for an extension of time. He cautioned, however, that he would not entertain such an application unless half the fine was paid.
5The appellant did not pay the fine. Nor did he apply for an extension of time to pay.
6The Crown applied for a warrant of committal to have the appellant incarcerated in default of payment. The application was based on s. 734.7 of the Criminal Code, which provides:
734.7(1) Where time has been allowed for payment of a fine, the court shall not issue a warrant of committal in default of payment of the fine
(a) until the expiration of the time allowed for payment of the fine in full; and
(b) unless the court is satisfied
(i) that the mechanisms provided by sections 734.5 and 734.6 are not appropriate in the circumstances, or
(ii) that the offender has, without reasonable excuse, refused to pay the fine or discharge it under section 736.
7The matter returned before Ryan J. on June 13, 2003. The appellant argued that Ryan J. had no jurisdiction to entertain the committal proceedings because s. 734.7 could not apply to an offence committed before it came into force. Ryan J. ruled in favour of the Crown, but agreed to adjourn the committal proceedings to permit the appellant to take the matter to a higher court.
8The appellant applied to the Superior Court of Justice for an order enjoining Ryan J. from hearing the committal application. In a decision dated October 9, 2003, Chilcott J. dismissed the appellant’s application. He concluded:
In my view, s. 734.7 deals with procedure upon default of payment of a fine and, therefore, applies to such proceedings on and after the date of the enactment of the section, regardless of when the offences took place that spawned the default proceedings.
9The appellant appeals Chilcott J.’s judgment.
C. ISSUE
10The only issue on the appeal is whether Chilcott J. erred in holding that a warrant of committal issued under s. 734.7 of the Criminal Code can apply to offences committed before s. 734.7 came into force.
D. ANALYSIS
11Statutes that affect substantive rights and liabilities presumptively apply only prospectively. Statutes that change procedure, and do not affect substantive rights and liabilities, apply retrospectively: see Gustavson Drilling (1964) Ltd. v. M.N.R., 1975 4 (SCC), [1977] 1 S.C.R. 271; Brosseau v. Alberta Securities Commission, 1989 121 (SCC), [1989] 1 S.C.R. 301; and Re Application Under s. 83.28 of the Criminal Code, 2004 SCC 42, [2004] 2 S.C.R. 248.
12The appellant contends that s. 734.7 of the Criminal Code is a substantive provision. It creates a regime in which a punishment of imprisonment can replace a punishment of fine. This change, the appellant submits, imposes a different substantive liability on him. Such a result would be inappropriate in the appellant’s case because the offence for which he received the fine (tax evasion) was committed several years before s. 734.7 came into force.
13I do not accept this submission. In my view, it is inconsistent with the interpretation of s. 734.7 enunciated in R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530.
14In Wu, a sentencing judge imposed a fine and, in default of payment, a conditional sentence. The Supreme Court of Canada struck down the conditional sentence component of the punishment. In doing so, the court stated clearly that s. 734.7 did not impose an automatic term of imprisonment for default in payment of a fine. Rather, the proper interpretation of s. 734.7, taking into account its own explicit wording and the important contextual fact of the other changes to the sentencing regime made in the 1995 amendments to the Criminal Code, was that it was designed as a mechanism to encourage an offender to pay a fine. In other words, s. 734.7 serves to enforce a fine, not to impose imprisonment.
15In his reasons, Binnie J. examined the history of s. 734.7 and related provisions enacted at the same time and concluded that the purpose of the amendments was to separate inability to pay a fine and a punishment of imprisonment. He also emphasized the words “without reasonable excuse, refused to pay the fine” in s. 734.7(1)(b)(ii). These components of his analysis, taken together, led him to a conclusion which he had presaged early in his reasons, at para. 3:
As will be seen, the purpose of imposing imprisonment in default of payment is to give serious encouragement to offenders with the means to pay a fine to make payment. Genuine inability to pay a fine is not a proper basis for imprisonment. A conditional sentence is a form of imprisonment. Therefore, a conditional sentence is not an appropriate sentence to impose on an offender simply because he or she has no means to pay a fine.
16This reasoning is applicable in the present case. The appellant will not automatically go to jail for non‑payment of his fine. He will have the opportunity to contend that he is unable to pay the fine. If he establishes this, it will constitute a “reasonable excuse” and a warrant of committal will not be issued. On the other hand, if the appellant has the ability to pay the fine, the possibility of imprisonment will provide an incentive to him to pay the fine. In other words, in this second scenario, the possibility of imprisonment is a mechanism − a legitimate one − for enforcing the fine penalty that has already been imposed on him. As an enforcement mechanism, s. 734.7 is a procedural provision that can be applied retrospectively, by virtue of both the canons of statutory interpretation and s. 44(d)(i) of the Interpretation Act, R.S.C. 1985, c. I‑21.
17The appellant advances a second argument on the appeal, which his previous counsel appears not to have raised before Ryan and Chilcott JJ. He submits that s. 734.7 of the Criminal Code applies only to indictable offences and that s. 787 is the only provision relating to imprisonment in default of payment of a fine for summary conviction offences.
18A complete answer to this submission is that Wu was a summary conviction case.
19Finally, the appellant makes an alternative argument based on s. 787(2) of the Criminal Code, which authorizes that “the court may order that in default of payment of the fine … the defendant shall be imprisoned for a period not exceeding six months”. The appellant submits that since a term of imprisonment in default of payment of a fine under s. 734.7 can be up to two years, he should be entitled to the benefit of the “lesser” punishment in s. 787 because of s. 11(i) of the Charter and s. 44(e) of the Interpretation Act.
20In my view, this argument is misconceived. Although a period of imprisonment for default in payment of a fine imposed as part of an initial sentence under s. 787 is a true punishment, Wu makes it clear that a subsequent imprisonment imposed for a default in payment of a fine imposed under s. 734.7 is not a punishment; rather it is an enforcement mechanism designed “to give serious encouragement to offenders with the means to pay a fine to make payment”. In short, the provisions for imprisonment in default of payment of fines in ss. 734.7 and 787 of the Criminal Code are not of the same genus.
E. DISPOSITION
21I would dismiss the appeal.
RELEASED: February 18, 2005 (“JCM”)
“J. C. MacPherson J.A.”
“I agree Robert J. Sharpe J.A.”
“I agree E. A. Cronk J.A.”
