Ontario (Ministry of Finance) v. Hartleib, 2019 ONCJ 63

CITATION: Ontario (Ministry of Finance) v. Hartleib, 2019 ONCJ 63

DATE: February 1, 2019

Central West Region

ONTARIO COURT OF JUSTICE

Ontario (Ministry of Finance)

-and-

Patrick Hartleib (Information 18-3566)

And

Ontario (Ministry of Finance)

-and-

Brian Bates (Information 18-3968)

Proceedings 10 October, 2018 and 07 December, 2018

Decision issued 01 February, 2019

Appearances:

Morgan, R. for the prosecution (original plea date)

Groeneveld, S. for the prosecution (sentencing date)

Selves for the defendants

Statutes Considered or Cited

Highway Traffic Act, R.S.O. 1990, c. H.8 (“HTA”)

Provincial Offences Act, R.S.O. 1990, c. P.33 (“POA”)

Tobacco Tax Act, R.S.O. 1990, c. T.10 (“TTA”)

Cases and Sources Considered

Ontario (Ministry of the Environment, Conservation and Parks) v. Henry of Pelham Inc., 2018 ONCA 999

Ontario, Legislative Assembly, Official Report of Debates, 39th Parl. 2nd Sess.5 May 2011, at 5721 (Hon. Sophia Aggelonitis)

R. v. Wyndale Paving Co. Ltd. (unreported decision, 26 April 2012, P. Macphail, JP)

York (Regional Municipality) v. Winlow, 2009 ONCA 643, [2009] O.J. No. 3691 (Ont. C.A.)

1. The issue before me is a question of sentencing two defendants, after convictions upon pleas of guilty, to offences pursuant to the TTA, for possession of quantities of unmarked cigarettes. The matters were before the Court pursuant to Part III of the POA, exposing the defendants to the full range of penalties set out in the TTA, and subject to the sentencing principles established in law.

2. The form of charge used routinely by the Ministry of Finance does not particularize the number of unmarked cigarettes that a defendant was said to have unlawfully held. That particular is presented to the Court upon conviction as part of the sentencing submissions.

3. In these cases, the defendants were said to have possessed the following quantities of unmarked cigarettes, and the proposed penalties are correspondingly set out:

Defendant	# of Cigarettes	Fine as per TTA[^1]	"Alternate" Fine Proposed[^2]
Patrick Hartlieb	3,600	$2,506.00	$668.80
Brian Bates	5,175	$3,368.24	$1,685.00

4. Notably, this was not the first conviction and sentencing undertaken by the Court during this sitting of the Court. The earlier matter involved a quantity of cigarettes producing a fine in excess of thirteen thousand dollars. In that case, the Court understood the Prosecutor to present her submission on the basis that the fine is a “minimum fine”, and advised the defendant would be making submissions pursuant to s.59(2) of the POA, in an effort to obtain relief from the minimum fine.

5. In making her submissions for the present matters, the language used by the Prosecutor lead the Court to inquire as to the nature of the sentencing provisions, which were then handed up. On review, the Court inquired as to the Prosecutor’s view on whether the language in the statute establishes a “minimum fine” or a “statutory fine”. The Prosecutor made no submissions, in spite of the Court’s reference to the decision of the Ontario Court of Appeal in R. v. Winlow.

6. On the date that these matters were returnable for completion of sentencing, a Crown attended and made completely new, comprehensive submissions. On this occasion, the Crown took the position that the penalty provision is not a minimum fine situation, but rather, a maximum fine situation, and, accordingly, s.59(2) of the POA is inapplicable. In the revised Crown view, any penalty between zero dollars and the amounts set out in s.29(14) would be appropriate.

7. The relevant penalty provisions in s.29 of the TTA are set out below:

Offence, possession, etc., of unmarked tobacco product for purpose of sale

(13) Every person who contravenes subsection (1) is guilty of an offence and on conviction is liable to,

(a) a fine of not less than $500 and not more than $10,000 and an additional fine of not less than an amount equal to three times the tax that would be payable under section 2 by a consumer purchasing the same quantity of cigarettes or fine cut tobacco; and

(b) a term of imprisonment of not more than two years in addition to the fine and additional fine under clause (a),

(i) if the person was in possession of 10,000 or more unmarked cigarettes or 10,000 or more grams of fine cut tobacco, or

(ii) if it is not the person’s first conviction under this section.

Offence, possession unmarked cigarettes

(14) Every person who contravenes subsection (2) and is found to be in possession of 10,000 or fewer unmarked cigarettes is guilty of an offence and on conviction is liable to the following penalties:

1. If the quantity of cigarettes is 200 or fewer, the penalty is a fine of $100 and an additional fine equal to three times the amount of tax that would have been payable under section 2 by a consumer purchasing the same quantity of cigarettes.

2. If the quantity of cigarettes is more than 200 but fewer than 1,001, the penalty is a fine of $250 and an additional fine equal to three times the amount of tax that would have been payable under section 2 by a consumer purchasing the same quantity of cigarettes.

3. If the quantity of cigarettes is more than 1,000 but fewer than 10,001, the penalty is a fine of $500 and an additional fine equal to three times the amount of tax that would have been payable under section 2 by a consumer purchasing the same quantity of cigarettes.

4. If it is not the person’s first conviction under this section, there is an additional penalty that is a term of imprisonment of not more than two years

Same, more than 10,000 unmarked cigarettes

(15) Every person who contravenes subsection (2) and is found to be in possession of more than 10,000 unmarked cigarettes is guilty of an offence and on conviction is liable to,

(a) a fine of not less than $500 and not more than $10,000 and an additional fine of not less than an amount equal to three times the tax that would be payable under section 2 by a consumer purchasing the same quantity of cigarettes; and

(b) a term of imprisonment of not more than two years, in addition to the fine and additional fine under clause (a).

8. Section 2(1) of the TTA provides “Every consumer shall pay to Her Majesty in right of Ontario a tax at the rate of 11.1 cents on every cigarette and on every gram or part gram of a tobacco product, other than cigarettes and cigars, purchased by the consumer.”

9. Notwithstanding that, O. Reg. 5/05: Tobacco Tax Rates, issued pursuant to s.2(2.2) of the TTA, establishes the current tax rate to be $0.18475 per cigarette.

10. Also relevant to the Crown submissions is s29(18), which reads:

Forfeiture

(18) Any unmarked tobacco product in respect of which a person is convicted of an offence under subsection (13), (14), (15), (16) or (17) is forfeited to the Crown to be disposed of in any manner determined by the Minister, to the extent the unmarked tobacco product has not been forfeited or disposed of under another provision of this Act.

11. It is noteworthy that s.29(3) of the TTA provides:

Seizure of unmarked tobacco products

(3) If a person authorized by the Minister has reasonable and probable grounds to believe that a person is in possession of any unmarked cigarettes or any unmarked fine cut tobacco contrary to subsection (1) or (2), the person authorized by the Minister may, without a warrant,

(a) stop and detain the person;

(b) inspect the person’s personal belongings for unmarked tobacco products;

(c) if any unmarked tobacco products are found, require the person to provide identification for the purpose of,

(i) assessing a penalty against the person under this section, or

(ii) charging the person with an offence under this section; and

(d) subject to subsection (7), seize, impound, hold and dispose of the unmarked tobacco products.

12. Section 29(7) provides a mechanism for anyone from whom cigarettes have been seized to apply to the Superior Court for return on proof of entitlement to hold such cigarettes.

13. Finally, the Crown also refers to s.29(19), which sets out penalties “when assessed”, often referred to as an administrative assessment. This is three times the tax that would have been paid, plus an amount of $500, $2,500 and $5000 respectively on first, second or third convictions. This penalty can be assessed for both possession of cigarettes, as well as possession for the purpose of sale.

14. The Crown acknowledges that the fine provisions (ss. 13, 14 and 15) were established in 2011, after the release of the decision and reasons in R. v. Winlow. Accordingly, they should be read in a manner consistent with the interpretation and direction in R. v. Winlow.

15. In R. v. Winlow, the Ontario Court of Appeal resolved what had been a controversy regarding imposition of sentence pursuant to s.128 of the HTA. In that case, the Court resolved the meaning of “is liable to”, as follows:

(i)

Immediate context

44 The dictionary meaning of "liable" is "bound or obliged by law of equity, answerable at law ... bound in law to do": see the New Shorter Oxford Dictionary Vol. 1 (Clarendon Press: Oxford, 1993). The dictionary meaning of a word is not always the same as Driedger's "ordinary sense" of the word because words take their colour from their surroundings: see Iacobucci J. in Bell ExpressVu at para. 27, quoting Professor John Willis, "Statute Interpretation in a Nutshell" (1938), 16 Can. Bar Rev. 1.

45 However, here the immediate context in which the phrase "is liable ... to" occurs, s. 128(14) of the Act itself, strongly suggests that these words are meant to bind or oblige courts to impose the specified fines. Why else, I ask rhetorically, have a precise scale of fines where the dollar amount of the fine increases for every kilometre per hour over the speed limit by a specified amount depending on whether the rate of speed over the limit falls under ss. (a), (b), (c) or (d)?

(ii)

Broader context

46 The broader legislative context of the other penalty provisions of the HTA further supports this conclusion. The Act is replete with specific fines for specific offences. Two things may be said about these fine provisions. First, the legislature consistently has used the words "is liable ... to" in setting out the fine that the court may impose.

47 Second, where the legislature intends to give courts discretion on the amount of the fine, it uses the words "not more than" and "not less than". Typical are the fine provisions where the legislature prescribes a minimum and a maximum fine, and gives the court discretion to impose an amount in between these limits. The fine under s. 8(2) for driving contrary to restrictions on one's permit is illustrative. On conviction, the offender is liable to a fine of not less than $100 and not more than $500. Similarly, on a conviction under s. 12 for defacing or altering a licence plate, an offender is liable to a fine of not less than $100 and not more than $1,000. Other analogous penalty provisions of the act include s. 9(1), s. 23(4) and (5), s. 32(16), s. 51, s. 53, s. 79(5), s. 99, s. 105(3), s. 124(6) and s. 172(2).

48 Perhaps more significant for this appeal, when the legislature prescribes only a maximum fine but intends to give the court discretion to impose a reduced fine below a stipulated maximum, it uses the words "not more than". The fine under s. 70(4) of the HTA for driving without tires that conform to prescribed specifications is an example. On conviction, the offender is liable to a fine of not more than $1,000. Other analogous provisions include s. 77(2), s. 82(9) and s. 187(4).

49 From this consistent statutory scheme, I infer that if the legislature had intended to give courts discretion to reduce the specified fines for speeding it would have used words such as "... is liable ... to a fine of not more than $3 for every kilometre per hour that the motor vehicle was driven over the speed limit ...". That the legislature did not do so powerfully supports the conclusion that the courts have no discretion to reduce the fines for speeding.

54 For all these reasons, in my view, the fines for speeding in s. 128(14) of the HTA are fixed and are derived simply by multiplying the number of kilometres per hour over the speed limit by the appropriate dollar figure. The courts have no discretion to reduce these fines.

16. The Crown in this case invites the Court to rely on the words found in paragraphs 41 and 42 in R. v. Winlow as a starting point for the analysis in this case:

41 The exercise of determining the meaning of these words is an exercise in statutory interpretation. Two key elements that guide a court's interpretation of the words of a statute are context and legislative purpose. These two elements underlie Driedger's cardinal principle of statutory interpretation, repeatedly endorsed by the Supreme Court of Canada:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

See, for example, Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559 at para. 26, quoting E.A. Driedger, Construction of Statutes (2nd ed. 1983).

42 The apparently conflicting results in the cases I have summarized may simply reflect the different contexts and legislative purposes of the statutes in which these words appear. Although some have argued that the meaning of "is liable ... to" in s. 128(14) is ambiguous, the mere existence of different results does not create ambiguity. As Iacobucci J. said in Bell ExpressVu at para. 30, "[i]t is necessary, in every case, for the court charged with interpreting a provision to undertake the contextual and purposive approach set out by Driedger" to determine whether real ambiguity exists - that is, whether the provision is reasonably capable of more than one meaning.

17. To that end, the Crown begins with a review of the legislative history. In the predecessor legislation, the penalty for simple possession of unmarked cigarettes as well as possession for the purpose of sale of unmarked cigarettes was the same. The new legislation created distinct penalties for possession simpliciter and possession for the purpose of sale.

18. More importantly, the Crown argues that the penalty for the offence of possession for the purpose of sale is a minimum fine, based on the words “not less than”, and, therefore, a defendant is able to bring an application pursuant to s.59(2) of the POA. This could lead to an odd circumstance where a defendant charged with a presumptively more onerous offence could attract a lesser penalty than one charged with the offence simpliciter, in the event that a successful application for relief from minimum fine is granted for the former charge. This could lead defendants electing to plead guilty to the presumptively more onerous offence in order to become eligible for potential relief.

19. In addition, in the Crown’s view, a finding that the penalty prescribed in s.29(14) to be a statutory fine in the spirit of the guidance in R. v. Winlow, a defendant would be dis-incentivized from entering a plea of guilty in the hope of attracting a lower penalty by way of a s.59(2) application. This would lead to an unintended increase in matters being scheduled for trial, as defendants might take their chances that trials may collapse, and, if not, the penalty would not change.

20. Similarly, in the corresponding case where a defendant is charged with possession of in excess of ten thousand cigarettes, the fine would again be susceptible to s.59(2) submissions and could be reduced below that set pursuant to those in s.29(14) of the TTA, again given that s.29(15) contains the words “not less than”. Examples cited by the Crown suggest that the fine for possession simpliciter would be $6,042 for ten thousand cigarettes, but $6,153.35 for ten thousand and two hundred cigarettes, but against which application for relief from minimum fine would be permissible.

21. In response to the Court’s inquiry, the Crown argues it would become problematic to allow the defendant to enter a plea of guilty to an offence particularized with a lower quantum of cigarettes (hence producing a lower fine), since that could prejudice the Crown in seizing the original number of cigarettes seized, pursuant to the forfeiture provision in s.29(18) of the TTA.

22. In support of its position that the penalty ought be treated as a “maximum penalty”, and neither a statutory fine nor minimum fine subject to s.59(2) of the POA, the Crown introduced a transcript of Hansard reflecting the comments made in advancing the legislative amendments through the Legislature. In particular, the Crown points to the following comments:

I'd now like to talk a little bit about the revised fine structure. The amendments propose, in Bill 186, a new fine structure for persons convicted of possessing small amounts of illegal tobacco products. The proposed fine structure for illegal cigarettes is: $100 plus three times the tax for possession of up to 200 illegal cigarettes, for a maximum fine of $174.10; $250 plus three times the tax for possession of between 201 and 1,000 illegal cigarettes, for a maximum fine of $620.50; and $500 plus three times the tax for possession of between 1,001 and 10,000 illegal cigarettes, for a maximum fine of $4,205.

23. The Crown invites me to conclude that it was the intent of the Legislature to establish the fine structure as a “maximum fine”, noting the repeated use of “maximum”.

24. Finally, the Crown takes the position that the fines contemplated by s.128 of the HTA, as referenced in R. v. Winlow, are relatively nominal, typically below one thousand dollars, and there is no corresponding administrative assessment. The cumulative effects of the penalty after conviction and the administrative penalty, when assessed, pursuant to the TTA can easily mount to several times that amount. There is no provision for out-of-court, pre-trial payment of fines, except in the case of those matters advanced by Part I of the POA.

25. I will deal with these submissions in turn.

26. The starting point of the Crown position is that the finding in R. v. Winlow ought be read in context, or, perhaps more specifically, that in making a finding regarding the import of the wording in the TTA, I must have regard to the context of the TTA as the authorizing authority in this case. I accept that.

27. That said, I am unable to discern any meaningful difference in the language used and interpreted by the Ontario Court of Appeal under the HTA from that in the TTA, except that under the TTA, the fine is set out as two components, the first being a base amount and the second being a calculation based on the number of cigarettes unlawfully held. Both use the phrase “is guilty of an offence and on conviction is liable to” a specified penalty. The Ontario Court of Appeal found under the HTA that the Court has no discretion to reduce these fines.

28. I have also had an opportunity to review an unreported decision of my brother Justice of the Peace P. Macphail in R. v. Wyndale Paving Co. Ltd. (26 April 2012). In his decision, His Worship considers a similar sentencing issue pursuant to the HTA, in relation to overweight commercial motor vehicles. He, likewise, considers the import of the Court of Appeal decision R. v. Winlow, and concludes that, given the language of the enabling statute, he is bound to impose the statutory fine, established by use of identical wording as found in the speeding provision under the HTA as well as the relevant section of the TTA.

29. The legislative history and the highlighting of unintended consequences does not suggest that the fine ought be treated as a statutory fine in the spirit of R. v. Winlow.

30. Inasmuch as the Crown advances the view that the Legislature signaled its intention to create a “maximum fine”, by repeated use of the word maximum, it appears that the fines cited in the remarks in Hansard are simply the calculation of the appropriate fine at the maximum level of possession for that range of cigarettes, based on the tax rate of the day. In that sense, the amounts referenced would indeed be the maxima for each level, and would not be the maximum for conviction in relation to a lesser number of cigarettes.

31. Further, I note that there are hundreds of statutes that use the terms “maximum fine” or “maximum penalty”. I am confident that had the Legislature intended to establish a maximum fine, it would have done so. This argument does not lead me to the conclusion suggested by the Crown.

32. While I acknowledge that the difference between the set fine and statutory fine for speeding offences may be relatively smaller, I reflect back upon the finding of P. Macphail, JP in relation to overweight vehicles. In those cases, the differences can be much larger. Accordingly, this leg of the Crown’s argument is not persuasive.

33. Further, I note that convictions for speeding also attract administrative consequences in the form of demerit points, based on the speed for which conviction is registered. This has potential statutory and regulatory consequences in terms of maintaining licensing status, as well as non-statutory consequences in terms of insurance premiums charged by insurers. The cumulative impacts of convictions for speeding are not necessarily as inconsequential as the Crown might invite me to accept.

34. That said, I am aware that the illustrations set out by the Crown assume that the base fine (which is described successively as “not less than” $500, $2500 and $5000) would be imposed. That corresponding amount is also reflect in s.29(14), but it is prefaced with “is liable to”, signaling that the amount is meant to be neither higher nor lower. A sentencing Court is expected to be mindful of these considerations, and it could be cogently argued that that informs any sentencing for those charged either with possession for the purpose of sale, or for in excess of ten thousand cigarettes. This could, and in appropriate cases, result in the base amount being higher than the minimum set out in the statute, and the total payable being correspondingly higher[^3].

35. I am also now aware of a recent decision of the Ontario Court of Appeal in Ontario (Ministry of the Environment, Conservation and Parks) v. Henry of Pelham Inc. In that case, the Court of Appeal clarified the interpretation and application of s.59(2) of the POA. The Court stated:

44 In my view, it is important to distinguish the authority to provide relief from a minimum fine from the duty to impose the minimum fine itself. Contrary to the intervener's assertion, minimum fines are not mere guidelines; they are statutory requirements that establish sentencing floors. The starting point is that trial judges are required to impose minimum fines established by the relevant legislation. Their authority to provide discretionary relief under s. 59(2) of the POA -- to impose a lesser fine or even suspend a sentence -- does not have the effect of rendering minimum fines conditional in their application. On the contrary, minimum fines must be imposed unless the defendant satisfies the court that exceptional circumstances exist that justify the exercise of the court's discretion to provide relief.

45 It is important to emphasize that the court's discretion is not unfettered. If it were -- if trial judges could refuse to impose a minimum fine whenever they considered it suboptimal to do so -- minimum fines would be reduced in status from rules to mere suggestions.

46 Section 59(2) addresses this concern by limiting the circumstances in which relief may be granted. The discretionary power not to apply a minimum fine arises only if, in the opinion of the court, the specified criteria are satisfied.

The Court then concluded:

63 I would summarize the above discussion as follows:

1. Minimum fines establish sentencing floors that apply regardless of ordinary sentencing principles. The imposition of fines above the minimum threshold is governed by ordinary sentencing principles, as well as any principles set out in the relevant legislation.

2. Section 59(2) of the POA vests a discretionary authority in trial judges to provide relief from minimum fines in exceptional circumstances. The burden is on those seeking the grant of relief to establish that relief is warranted based on the relevant considerations.

3. Section 59(2) applies exceptionally. It will be an unusual case in which the imposition of a minimum fine may be considered "unduly oppressive" or "otherwise not in the interests of justice".

4. Whether a minimum fine is unduly oppressive usually will depend on consideration of personal hardship. The bar for relief is set very high. Mere difficulty in paying a minimum fine is inadequate to justify discretionary relief.

5. Whether a minimum fine is otherwise not in the interests of justice involves consideration of not only the interests of an individual offender but also the interests of the community protected by the relevant public welfare legislation.

6. The discretion under s. 59(2) cannot be exercised arbitrarily. Trial judges must explain their reasons for invoking s. 59(2), and in particular must demonstrate both that the circumstances are exceptional and that it would be unduly oppressive or otherwise not in the interests of justice to apply the minimum fine.

36. With these principles now expected to be applied, any concern that odd circumstances such as anticipated by the Crown should arise exceptionally, with appropriate judicial consideration and in keeping with sentencing principles.

37. The Crown also noted that the set fines established by the Chief Justice of the Ontario Court of Justice do not align with the fines calculated as per the statute. For example, the set fine for possession of under one hundred cigarettes is the base amount without the additional tax multiplier. The authority to establish set fines is found in s.91.1 of the POA. I have no information before me as to how or why the set fines were established as they appear. Nor do I have any information to explain how any inconsistency between the fines set by statute and the set fines is resolved. However, the case before me is prosecuted pursuant to Part III of the POA, and it is unnecessary for me to resolve this for the purposes of my decision.

38. I acknowledge that the combined effect of the civil assessment and the statutory fine can be significant and onerous, particularly for many of those we see before the Court facing charges under this legislation. Once again, that is not an issue for the Court to resolve, where the Legislature has expressly provided for both provisions and outcomes for the defendant. I adopt the comments of HW Macphail with regard to the value of an exercise of judicial discretion when fixing penalty on conviction, and, likewise, acknowledge the intent of the Legislature to limit such discretion in regard to the matters before me.

39. In reference to the combined impact of the penalty arising from conviction and the administrative penalty when assessed, I only note that the latter is discretionary. Should the Crown be concerned about abusive or onerous outcomes to those convicted, it appears the Crown has discretion not to pursue such assessments. The Ministry may wish to adopt a policy direction that is more nuanced to the circumstance where a minimum fine is to be imposed, when determining whether to pursue the corresponding assessment.

40. In reference to the issue of forfeiture, I note that there are two sections which provide for seizure and forfeiture, being sections 29(3) and 29(18). Even if there were an issue somehow impugning forfeiture under 29(18) because of a conviction registered in relation to a lesser number of cigarettes, there still exists authority to “impound, hold and dispose of the unmarked tobacco products” under 29(3). And, were that not sufficient, I call to mind a practice engaged in by federal prosecutors obtaining consent forfeiture orders in drug cases as part of resolution of charges. I am confident there is a practical solution to this issue.

41. For these reasons, I find I have no discretion to impose anything other than the penalty which flows from the calculation set out in the TTA.

His Worship Donald Dudar

Justice of the Peace in and for the Province of Ontario

01 February 2019

[^1]: These numbers were provided by the Prosecutor but appear to be miscalculated; they would need to be verified before final sentencing.

[^2]: These numbers were provided by the Prosecutor but appear to be miscalculated; they would need to be verified before final sentencing.

[^3]: The maximum base amount is $10,000 in both ss29(13) and 22.29(15).