Court File and Parties

Court File No.: 4860 999 10 101777

Ontario Court of Justice

Toronto Region

IN THE MATTER OF THE PROVINCIAL OFFENCES ACT, R.S.O. 1990, c. P. 33

Her Majesty The Queen

v.

Wu Wang

Reasons for Judgment on Sentencing

Before: Her Worship Mary A. Ross Hendriks, Justice of the Peace

Appearances:

• Ms. E. Burton, Crown Counsel, Ministry of Natural Resources
• Ms. S. Zhai, Student-at-Law, Ministry of Natural Resources
• Mr. Wu Wang, on his own behalf

Trial Date: July 31, 2012

Judgment: October 12, 2012

Introduction

[1] At the outset of this trial, Mr. Wang and Crown counsel agreed that he would plead guilty to two counts of failing to make remittances and of unlawful possession of fish, and another count against him would be withdrawn.

Background

[2] The defendant is a 50-year old man, who is a Canadian citizen. He has three children, two of whom are in university and one of whom is in high school. His business is a company in the fishing industry. He testified that he recently went through a personal bankruptcy, which was verified by Crown counsel, and that he continues to struggle financially.

[3] As part of his bankruptcy proposal, Crown counsel advised that he has made restitution of almost $30,000 out of the approximately $98,000 owed to the Crown. Of that approximate $98,000, Mr. Wang had failed to remit $50,931.92 during the time frame relevant to the counts put before this court. The balance of this sum was for periods of time not put before this court. Crown counsel advises that the Crown cannot seek any further restitution.

[4] Mr. Wang has a prior related record from 2009 for making a late remittance, but Crown counsel concedes that it is a minor record.

[5] As a result of these proceedings, the Ministry of Natural Resources ("MNR") has imposed a lifetime ban on Mr. Wang from selling fishing licences on its behalf.

The Nature of the Convictions

[6] Mr. Wang has entered guilty pleas on the following two counts:

(1) Between the 20th day of September, 2007 to 20th day of September, 2009, at D2-4221 Sheppard Avenue East, Scarborough, ON M1S 5H5 did fail to comply with the Ministry of Natural Resources Manual of Licence issuing instructions to wit: by failing to remit revenues generated from licence sales monthly, contrary to the Fish and Wildlife Conservation Act, 1997, S.O. 1997, section 61(2); and

(2) On or about the 10th day of March, 2011, at D2-4221 Sheppard Avenue East, in the City of Toronto, did commit the offence of unlawfully possess fish, to wit: Largemouth and Smallmouth bass in the aggregate, in an amount that exceeded the possession limit for those fish, contrary to section 17 of the Ontario Fishery Regulations 2007, made pursuant to the Fisheries Act, R.S.C. 1985, Chapter F-14 as amended.

Summary of the Facts

[7] Since 2000, Mr. Wang and his business were authorized to sell fishing licences on behalf of MNR to members of the public, in accordance with the terms of a manual given to all licence-issuers. Under this arrangement, Mr. Wang was provided with fishing licences on a consignment basis, with instructions to sell them to the public, keep a commission for himself, and on the 20th day of each month, return outstanding remittances along with a remittance form to the government.

[8] The Crown realized in 2009 that Mr. Wang was behind in his remittances, and so MNR contacted him to investigate the matter. In addition to his tardiness in making remittances, the Crown asserts that the filings were inaccurate, and that he failed to remit $50,931.92 for the relevant time period before this court. The Crown asserts that its overall loss is much greater, beyond this time period, because of his repeated failure to make remittances.

[9] Mr. Wang agrees that he failed to remit that amount, but said he was unaware of the problem until his business sent a cheque to the government, and it was returned. Crown counsel responded that his cheque was returned because it was marked "NSF," and that MNR was unable to reach him.

[10] In terms of the possession of fish count, Crown counsel asserts that one of the investigating officers found that Mr. Wang had 13 bass in his shop aquarium, when the daily possession limit was for 6 fish. It seems that Mr. Wang had caught the fish and brought them back to his shop. Mr. Wang did not dispute this allegation.

Sentencing

Crown's Submissions with Respect to his Sentence

[11] In light of the apparent deliberateness of failing to make a significant number of remittances over a two-year period, his prior record, and the fact that this offence is a breach of trust that cannot be explained by mere sloppy bookkeeping, the Crown has asked the court to impose a custodial sentence of 45 to 60 days, which she submits can be served intermittently. She submits that society has suffered as a result of the loss of these funds.

[12] In terms of the other conviction, the Crown is seeking a fine of $700, or alternatively, one day of incarceration on this matter if incarceration is ordered on the other matter.

[13] In addition, the Crown has asked that the court impose a probation order on Mr. Wang in addition to incarceration.

[14] In particular, the Crown notes that the money Mr. Wang failed to remit was held in trust on behalf of the Crown, and that his actions constitute a breach of trust. Since she asserts that he was the Crown's fiduciary, this is an aggravating factor on sentencing. Moreover, she maintains that his actions were not spontaneous or isolated, but represent an ongoing pattern of behaviour that lasted for a lengthy period of time.

[15] The Crown also concedes that there are some mitigating factors in this case. His record, while related, is not lengthy. He has made some restitution, and he has lost his ability to sell fishing licences because of MNR's lifetime ban imposed upon him. She also submits that he should be given some credit for pleading guilty, even though it was at the outset of the trial.

Defendant's Submissions with Respect to his Sentence

[16] Mr. Wang reiterated his very difficult financial circumstances, and explained to the court that he works 6 a.m until midnight daily, and non-stop on weekends, in order to support his family. He submits that he has no one to run his business for him if he is incarcerated. He submits he is only able to generate enough income from the business to cover rent and electricity costs. He said he is working odd jobs on the side to make ends meet.

[17] If he is ordered detained, Mr. Wang did indicate that he would prefer to serve his sentence in the winter, when business is slow, and intermittently, on weekends, since he drives his children to school.

[18] Mr. Wang also referred to issues of mental illness in his own family, and said that he sees a therapist, however, his answer as to what type of therapist he sees changed from psychologist to psychiatrist to his own family doctor. His mental health issues relate to the stress he has felt from the problems with his business. He also said that he has difficulty with one leg, and describes himself as "a bit handicapped."

Analysis

The Purpose of Regulatory Offences

[19] The Provincial Offences Act, R.S.O. 1990, c. P. 33, (the "POA") replaced the (then) Summary Convictions Act in 1979. The POA was meant to simplify the legal process for regulatory offences. Since that time, some important changes to the law have occurred, including the adoption of the Canadian Charter of Rights and Freedoms (the "Charter"), amendments to the Criminal Code, and greater penalties for certain provincial offences.

[20] Since R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299, it has been clear that regulatory offences are viewed as public welfare offences, meant to protect society as a whole. As such, they are to be given a broad and liberal interpretation, see: Ontario (Ministry of Labour) v. Hamilton (City), 2002, 16893 (ONCA).

[21] Section 102(1) of the Fish and Wildlife Conservation Act, 1997 permits me to order a fine up to $25,000, or imprisonment for a term up to one year, or both. Nevertheless, Crown counsel relies on the case of R. v. Nilsson, [2012] O.J. No. 2750, to submit that this court lacks the authority to order a conditional sentence, because there is no provision within the POA to permit such an order.

[22] As I noted in R. v. Perruzza, 2012 ONCJ 111, at paragraphs 59-60, the time has come to incorporate a full set of sentencing principles into the POA, similar to those contained in the Criminal Code, particularly for Part III offences. Inconsistency in sentencing outcomes leads to a perception of unfairness. Again, I adopt the recommendation made by the Law Commission of Ontario in its Final Report, August 2011, "Modernization of the Provincial Offences Act," at p. 4, which stated:

The proposed sentencing principles cannot be realized with the penalties currently available. We therefore recommend that the POA be amended to give the court the authority to (a) make probation orders for all provincial offences in order to achieve the remedial and rehabilitative sentencing principles, including broad authority to order terms of probation (although for less serious offences only under certain circumstances); (b) make express, freestanding restitution or compensatory orders outside of probationary terms that may be enforced in civil courts; (c) use victim impact statements; and (d) impose an embedded auditor to monitor compliance with regulatory standards. We defer to the Ministry of the Attorney General consideration of whether alternative measure programs should also be available for less serious offences, after further consultation with municipalities. (Recommendations 18 to 23). [emphasis theirs]

Relevant Statutory Provisions

[23] The penalties contemplated under the Fish and Wildlife Conservation Act, 1997 are less than the maximum penalties contemplated under section 61 of the Provincial Offences Act.

[24] Section 102(1) of the Fish and Wildlife Conservation Act, 1997 states as follows:

A person convicted of an offence under this Act is liable to a fine of not more than $25,000, to imprisonment for a term of not more than one year, or to both.

[25] However, the penalties contemplated under section 78 of the Fisheries Act, R.S.C. 1985, c. F-14 for exceeding the possession limit as set out under section 17 of the Ontario Fishery Regulations, 2007, SOR/2007-237 are extremely high. They are as follows:

OFFENCE AND PUNISHMENT

Punishment Not Otherwise Provided For

78. Except as otherwise provided in this Act, every person who contravenes this Act or the regulations is guilty of

(a) an offence punishable on summary conviction and liable, for a first offence, to a fine not exceeding one hundred thousand dollars and, for any subsequent offence, to a fine not exceeding one hundred thousand dollars or to imprisonment for a term not exceeding one year; or to both; or

(b) an indictable offence and liable, for a first offence, to a fine not exceeding five hundred thousand dollars or to imprisonment for a term not exceeding two years, or to both.

[26] I find that Mr. Wang's conviction for exceeding the limit for the possession of fish falls within the penalties prescribed under section 78 (a) of the Fisheries Act, in that it is a summary conviction, and a first offence, and thus, any penalty imposed should be a fine not to exceed $100,000. This statute does not prescribe any minimum fines. It is not open to this court, however, to consider a custodial sentence instead of a fine for this offence.

General Sentencing Principles

[27] Borrowing from the sentencing principles articulated in section 718 of the Criminal Code:

The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:

(a) to denounce unlawful conduct;

(b) to deter the offender and other persons from committing the offences;

(c) to separate offenders from society, where necessary;

(d) to assist in rehabilitating offenders;

(e) to provide reparations for harm done to victims or in the community; and

(f) to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.

[28] Pursuant to section 72 of the Provincial Offences Act, probation is only available for those offences that carry a term of imprisonment. See also: Archibald, T., Jull, K. and Roach, K., "Regulatory and Corporate Liability," Canada Law Book, Aurora:2010, at page 12-9.

[29] Subsection 718.2 of the Criminal Code states:

A court that imposes a sentence shall also take into consideration the following principles:

(a) a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender, and, without limiting the generality of the foregoing,

(iii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim.

[30] Thus, borrowing again from subsection 718.2(a)(iii) of the Criminal Code and its related jurisprudence for guidance, a person who breaches a position of trust for personal gain is normally sentenced to a period of imprisonment as a form of deterrence, unless there are exceptional circumstances.

[31] Denunciation and general deterrence are the paramount sentencing principles for first offenders who commit abuse of trust funds. See: R. v. Williams, [2007] O.J. No. 1604.

[32] It is only in the most exceptional circumstances that a conditional discharge is appropriate for fraud over $5000. See: R. v. Kalonji, 2010 ONCA 111, at paragraph 2.

[33] There are no exceptional circumstances to be considered in this matter, that would have caused me to consider a conditional discharge as his sentence, for the reasons outlined below.

Denouncement

[34] I accept the Crown's submission that Mr. Wang's failure to remit $50,931.92, goes beyond sloppy bookkeeping practices, and was deliberate. He collected the money from the public when he sold fishing licences on behalf of MNR, and then failed to remit the money he owed MNR, for several years. This situation only ended when MNR investigated him.

[35] The Minister of Natural Resources has the power under section 60 of the Fish and Wildlife Conservation Act, 1997 to issue licences. The Minister has the statutory authority to delegate this power to issue licences, pursuant to section 60.1(1). Where this power has been delegated, pursuant to subsection 60.1(1), "any fees established by the Minister under clause 83(1)(a) and chargeable in relation to any licences or authorizations that the delegate issues or gives shall be charged and collected by the delegate on behalf of the Crown, pursuant to subsection 60.1(4). Subsection 60.1(4) clearly provides that:

Fees collected by a delegate under subsection (4) shall be deemed to be held in trust for the Crown.

[36] The Fish and Wildlife Conservation Act, 1997 also clearly permits the Minister to authorize a person to issue licences on the Minister's behalf, as per subsection 61(1).

[37] A person so authorized is to comply with a manual of instructions issued by the Minister, which may be updated from time to time, as per subsection 61(2).

[38] Subsection 61(3) of the Fish and Wildlife Conservation Act, 1997 creates a deemed statutory trust for the fees owing, as follows:

Fees owing to the Crown in right of Ontario that are collected by a person who is authorized to issue licences on the Minister's behalf shall be deemed to be held in trust for the Crown.

[39] Mr. Wang collected the fees for the fishing licences that he sold on behalf of the Minister, but failed to make remittances of the fees collected and owing, which was a breach of a statutory trust. Contemporaneously, he became personally insolvent. From the information I have been able to glean at this trial, it appears that the fees collected and his other personal funds were commingled, and thus there was no common law trust.

[40] According to British Columbia v. Henfrey Samson Belair Ltd., [1989] 2 S.C.R. 24, a statutory trust created by provincial legislation was not a trust within the meaning of the (then) Bankruptcy Act, R.S.C. 1970, c.B-3, but a mere Crown claim. The Supreme Court of Canada found that to hold otherwise would be to invite the provinces to create priorities under the (then) Bankruptcy Act through their own legislation.

[41] Similarly, in Timber Lodge Ltd. v. All the creditors of the applicant, rental security deposits, which were subject to what was arguably a deemed statutory trust created by provincial legislation, was in the hands of a court-appointed monitor for the business under the protection of the Companies Creditors Arrangement Act, R.S.C. 1985, Cap. C-36. The court held that there was no deemed statutory trust under the provincial statute, but merely a requirement on the lessor to hold the security deposit in trust. The court followed British Columbia v. Henfrey Samson Belair Ltd., and found there was no priority on the security deposits.

[42] In Giffen (Re), [1998] 1 S.C.R. 91, an employee was provided with a company car. The employer leased the car, and in turn, leased it to Giffen, its employee. Neither the lessor nor the employer had registered any financing statements under the provincial Personal Property Security Act, S.B.C. 1989, c.36. When Giffen made an assignment into bankruptcy, the trustee brought a motion for the proceeds of the sale of the car. The lessor was found to have an unperfected security interest in the car. Although federal bankruptcy legislation provides that a trustee shall step into the shoes of the bankrupt, and generally acquires no higher right in the property of the bankrupt than that which the bankrupt enjoyed, it is a policy choice of the legislature that an unsecured creditor's position, as represented by the trustee, is more meritorious than the unperfected security interest of a secured creditor. Thus, the trustee was able to sell the car and confer good title to it.

[43] Once Mr. Wang's consumer proposal made under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 was accepted by MNR, then MNR was precluded from seeking any further financial compensation from him, and this has been acknowledged by the Crown.

[44] Crown counsel is seeking 45 to 60 days of custody, which can be served intermittently, as a matter of denouncement for his breach of trust.

[45] Mr. Wang's pattern of behaviour has hurt society as a whole, and constitutes a breach of a statutory trust. However, based on the jurisprudence outlined above, and the paramountcy of federal law over provincial law, I find that his statutory breach of trust ended when MNR accepted his proposal and took approximately $30,000 as a final settlement.

[46] Mr. Wang cooperated with the Crown in making significant restitution during his bankruptcy proceeding. He also pled guilty at the outset of trial. His prior related POA record is related, but very minor in nature. He has lost the ability to sell fishing licenses for the rest of his life, even though he continues to work in that industry.

[47] Taking into account his personal circumstances, including his economic circumstances as noted under section 57(3) of the Provincial Offences Act, which have been verified by Crown counsel, I find that he should be shown some leniency in the sanctions to be imposed for his regulatory offences.

[48] Mr. Wang also admitted to unlawful possession of fish, contrary to section 17 of the Ontario Fishery Regulations, 2007. Over-fishing poses a serious problem for the preservation of wildlife. Mr. Wang must understand that such breaches are unacceptable in society.

General Deterrence

[49] In the realm of criminal law, it is clear that general deterrence has been identified by the Court of Appeal as "the paramount consideration" in sentencing, for cases of large-scale frauds. See: R. v. Dobois, 58 O.R. (3d) 536, [2002] O.J. No. 646, at paragraph 46, citing the earlier decision of Justice Doherty in R. v. Holden, [2000] O.J. No. 3481.

[50] In R. v. Bogart, 61 O.R. (3d) 75, [2002] O.J. No. 3039, at paragraph 30, where the Court of Appeal held:

This court has affirmed that in cases of large-scale fraud committed by a person in a position of trust, the most important sentencing principle is general deterrence. Mitigating factors and even rehabilitation become secondary....

[51] In R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154, Justice Cory confirmed that imprisonment is a sanction available for regulatory offences. A distinction is emerging between regulatory offences where the fault is based on negligence, and thus incarceration is not usually appropriate, versus regulatory offences which are closer to a true crime. See: R. v. Pellegrini, 2006 ONCJ 297, at para. 31; R. v. Virk, [2002] O.J. No. 4102 (Q.L.)(O.C.J.); and Ontario (Travel Industry Council) v. Perruzza, [2012] O.J. No. 987, 2012 ONCJ 111, at para. 81.

[52] Thus, in terms of denunciation and general deterrence, I find that a 30 day sentence, to be served intermittently, and on weekends, balances the need to punish his serious breach of trust, with the mitigating factors in his favour, such as the restitution he has already made, his guilty plea, his unfortunate economic circumstances that include a recent bankruptcy, and his family and business responsibilities.

[53] In terms of his unlawful possession of fish, I find that a fine of $300 meets the principles of general deterrence for a first offence, and is a sufficient penalty given his economic circumstances. See: R. v. St. Cyr, 2009 ONCJ 110. I caution Mr. Wang that future breaches could result in much more serious penalties, including incarceration.

Sense of Responsibility

[54] Mr. Wang did not express remorse during this proceeding, and in fact, he seemed to evade taking full responsibility by characterizing his breach of trust, which was admitted, as the result of bookkeeping errors. This is an aggravating factor, although it may be partially explained by the high level of stress that he described as a result of his financial difficulties.

[55] I find that counseling would be beneficial for Mr. Wang, so that he can acknowledge the harm that he has done, and improve his overall well-being.

Probation

[56] I am imposing a period of probation on Mr. Wang for a period of two years, commencing today. In addition to the statutory conditions outlined in s.72(2) of the Provincial Offences Act, he must:

(a) Report to Room 371 at Old City Hall, 60 Queen St. W., Toronto, within two working days of today's date and thereafter as directed by the probation office; and

(b) Attend any counseling, and attend to serve any period of incarceration as required herein; and sign any waivers related thereto, as directed by the probation office.

Order

[57] For the reasons set out above, I hereby order Mr. Wang to be sentenced as follows:

(a) 30 days in custody, to be served intermittently, commencing today for processing only and to be released later today; and to re-commence on Friday, December 28, 2012. He must attend at prison every Friday night at six p.m until Monday morning at six a.m., until he has completed his time served;

(b) Probation for two years, on all the conditions set out above, reporting to room 371 at Old City Hall, 60 Queen St. W., Toronto, within two working days of today's date and thereafter as directed; and

(c) Pay a fine of $300, plus the statutorily imposed surcharges, within one year of the date of this Order.

Dated at Toronto, this 12th day of October, 2012.

Mary A. Ross Hendriks, J.P.