Victims of Crime Research Digest No. 14

Restitution: An Update on the Case Law

By Kanchan Dhanjal and Susan McDonald

Restitution orders have “long been part of the array of measures available to judges when they undertake the difficult task of sentencing” (Moulton v R, paragraph 27). Indeed, restitution - or compensation, as it was previously called — has been part of Canada’s Criminal Code (the Code) since its inception in 1892.Footnote 24 That is a very long time to develop the jurisprudence. In this article, the authors focus only on relevant case law of the last six years — since the Canadian Victims Bill of Rights (CVBR) came into force and effect in 2015. Sections 16 and 17 of the CVBR state:

16 Every victim has the right to have the court consider making a restitution order against the offender.

17 Every victim in whose favour a restitution order is made has the right, if they are not paid, to have the order entered as a civil court judgment that is enforceable against the offender.

Since 1892, many relevant amendments have been made to the Code, such as: changing the term “compensation” to “restitution” to better distinguish elements of sentences from payments by the state; including restitution orders in conditions of probation or conditional sentences; and expanding the damages that can be claimed. In 2015, along with the CVBR, a number of amendments to the restitution provisions in the Code came into effect, including: requiring judges to consider all requests for restitution; requiring judges to include in their decisions the reasons for not granting requests for restitution; the establishment of a standardized form (Form 34.1 in Part XXVIII of the Criminal Code) which victims can use to request restitution; requiring judges to ask prosecutors if victims have been given the opportunity to request restitution; and requiring judges to ignore the offender’s financial means or ability to pay when considering restitution orders.Footnote 25

This article reviews the case law since the coming into force of the CVBR. Of key interest is what, if any, changes are seen in judicial decisions on restitution since the CVBR came into force in 2015. It is important to remember that jurisdiction over criminal justice is shared between the Government of Canada, which is responsible for enacting relevant laws, and the provinces and territories, which are responsible for the administration of justice.

Method

Case law databases — CanLII, WestlawNext Canada, and Lexis Advance Quicklaw — were searched using the specific Code sections on restitution, the CVBR sections, and the term “restitution.” The article considers only appellate-level cases heard between March 2015 and December 2020, and findings are presented by principles or themes.

As shown in Table 1, the search found a total of 39 appellate cases, most from the Courts of Appeal in Ontario and British Columbia. There were no appellate decisions from the Northwest Territories or Nunavut, and there were no Supreme Court of Canada decisions. Indeed, the last Supreme Court of Canada decision on restitution was in the 1978 case of R v Zelensky, where the Court made it clear that restitution orders fall under the federal government’s criminal law power under section 91(27) of the Constitution Act, 1867, specifically because they are part of the sentencing process.

Table 1: Number of appellate cases on restitution by jurisdiction, 2015–2020
Jurisdiction No. of cases
British Columbia 9
Alberta 3
Saskatchewan 1
Manitoba 1
Ontario 13
Quebec 4
New Brunswick 3
Nova Scotia 1
Prince Edward Island 1
Newfoundland and Labrador 1
Yukon Territory 2
Total 39

The case law is discussed by theme, starting with cases that mention the CVBR. Overall, the jurisprudence on restitution has remained stable without significant changes over the past thirty years. The case law from the past six years adds additional weight and nuance to previously established principles.

Recent Case Law: 2015–2020

The Canadian Victims Bill of Rights

Few cases discussed or mentioned the CVBR and the right to request restitution. Indeed, appellate courts have continued to emphasize the importance of making restitution orders with caution and restraint, notwithstanding the enactment of the CVBR (see R v Robertson, R v Abdulahi-Sabet, R v Bean). In Moulton v R, however, the New Brunswick Court of Appeal reached a different conclusion, stating that the legislative changes brought on by the VBRFootnote 26 made “inapplicable any restraint or caution courts may have believed they needed to exercise when considering a restitution order” (paragraph 31). According to the Court, the newly enacted provisions in the Code sent a “clear legislative message” that restitution must be considered during the sentencing process and, as such, the use of caution and restraint is no longer necessary. It remains to be seen whether appellate courts in other jurisdictions adopt this line of reasoning.

Ability to pay

One of the 2015 amendments to the restitution provisions in the Code was section 739.1, which provides that “[t]he offender’s financial means or ability to pay does not prevent the court from making an order” of restitution. As the Court noted in R c Simoneau, section 739.1 simply codified the existing law with respect to this issue. Likewise, in R v Cameron, the sentencing judge held that a restitution order was appropriate because the offender had neither explained where the defrauded funds had gone, nor demonstrated that he was without assets and, as such, would be unable to satisfy a restitution order of approximately $1.85 million (see also Simoneau and R v Johnson). Because an offender’s financial status is just one of many factors to be considered, judges must be careful not to place too much emphasis on this consideration.

Future ability to pay

An established principle of the doctrine of restitution is that courts, when assessing an offender’s means, must also consider future ability to pay. In fact, judges have explained that an offender’s future earning potential is at least as important, if not more important, than present ability to pay.

In Simoneau, the Quebec Court of Appeal recently affirmed the importance of considering an offender’s future ability to pay. The case involved an offender who defrauded a university’s student cooperative. At the time of the sentencing, the offender was a young student with limited resources. The judge considered imposing a restitution order, but ultimately declined to do so due to the offender’s present inability to pay. This decision was overturned on appeal, and a $15,000 restitution order was imposed. The Court of Appeal found that while the judge properly considered the present ability of the offender to satisfy a restitution order, the failure to consider the offender’s future ability to pay represented an error in principle.

Where offender’s means not primary consideration

The nature of an offence may also impact whether the offender’s ability to pay is given much weight. For example, when a crime involves a serious breach of trust, the means of the offender is not a primary consideration. In the case of R v Couture, the Ontario Court of Appeal upheld an offender’s restitution order partly on this basis. Specifically, the Court found that “[c]ontrary to the appellant’s submission, the trial judge considered the appellant’s ability to pay but, referencing the breach of trust, he correctly noted that this was not a determinative factor” (paragraph 12).

Failure to consider

Although ability to pay is not always a primary consideration, failure to consider this factor can result in an appeal court setting aside the restitution order. The Nova Scotia Court of Appeal in R v Kelly set aside a restitution order, in part, because the sentencing judge did not give proper consideration to the offender’s inability to pay. The record demonstrated that the sentencing judge was provided information about the offender’s modest means, but “dismissed it as unimportant, because of the paramount consideration for the victim of the fraudulent transactions” (paragraph 55). This, according to the Court, reflected a legal error because the ability of the offender to pay was an important factor that the sentencing judge should have properly considered.

A sentencing judge’s admission that he or she need not be concerned with the offender’s ability to pay may provide a basis for setting aside a restitution order. In 2019, in R v FMJ, the British Columbia Court of Appeal held that the trial judge erred by explicitly observing that she was not required to take the means of the offender into account. As a result, the appellant’s restitution order was set aside.

Appellate courts can eliminate a restitution order altogether due to an offender’s lack of means, as confirmed in the 2019 case of R v Ahmad from the Ontario Court of Appeal.

Alternatively, appellate courts might substitute the original order for a much lesser one. In the 2020 case of R v Chappell, the British Columbia Court of Appeal reduced the amount of an appellant’s restitution order from $201,613.37 to $6,500. The Court found that there was no discussion of this restitution order at sentencing, nor was any inquiry made about the appellant’s ability to pay. Particularly problematic was the fact that the order appeared to have been made based on the remote possibility of a windfall, when in all reality it was unlikely that the appellant would ever be able to “make a meaningful dent in the amount owed” (paragraph 7). As a result, it was necessary to reduce the restitution order to an amount that was still meaningful, but that the appellant would reasonably be able to satisfy.

The impact of a restitution order on the offender’s chances for rehabilitation, whether positive or negative, is another factor to be considered. In Simoneau, the Quebec Court of Appeal discussed the importance of considering how the imposition of a restitution order might affect an offender’s prospects for rehabilitation. At paragraph 49 of the decision, Justice Vauclair wrote: “The judge, in determining a balanced, just and appropriate sentence, cannot ignore the impact of the restitution order, particularly when the offender will have to pay over a long period.”

In the 2018 New Brunswick case of Moulton, the Court of Appeal considered an appeal of two restitution orders totalling $146,513. The appellant asserted that the trial judge failed to properly consider the offender’s ability to pay, as well as the adverse impact the orders would have on likelihood of rehabilitation. The Court agreed with the appellant and set aside both restitution orders. At paragraph 41 of the judgment, Justice Richard wrote: “Imposing on Mr. Moulton restitution orders in amounts for which he clearly has neither current ability nor future prospects of paying is akin to financially crippling him for life. This would be most counterproductive to the aim of rehabilitation.”

Similarly, in Robertson, the appellant’s restitution orders were set aside because the sentencing judge did not conduct a meaningful inquiry into ability to pay or the impact that the restitution order would have on prospects for rehabilitation. The Court of Appeal held that while an offender’s ability to pay is not a pre-condition to making a restitution order, it is an important factor that must be considered. The Court noted, at paragraph 7, that a “restitution order is not intended to undermine the offender’s prospects of rehabilitation. This is why courts must consider ability to pay before imposing such an order.”

Availability of civil remedy

It is settled law that restitution orders should not be used as a substitute for civil proceedings (Zelensky). Parliament did not intend for the restitution provisions in the Code to displace the civil remedies necessary to ensure full compensation to victims. This is, in part, because criminal courts are not an appropriate forum for awarding damages for pain and suffering or for determining complicated issues regarding the assessment of damages.

In 2018 in R v Dunkers, the British Columbia Court of Appeal affirmed the proposition that the availability of a civil remedy does not bar the court from making a restitution order. At paragraph 27, the Court noted that the trial judge “was well within his discretion to find that a restitution order would hold Ms. Dunkers accountable for the financial harm she had caused and would provide the CFAFootnote 27 with a more convenient and less expensive means of attempting to recover its losses.”

Where a civil remedy has been sought

While the availability of a civil remedy does not prevent the court from making a restitution order, whether or not the victim has sought civil recourse is a factor that must be considered. This point was noted in Zelensky, where the Supreme Court held that “[a] relevant consideration would be whether civil proceedings have been taken and, if so, whether they are being pursued” (paragraph 29).

The fact that a victim has commenced civil proceedings may be a factor against restitution. In 2019, in R v Schoer, the Ontario Court of Appeal upheld the trial judge’s decision to reduce the quantum of the offender’s restitution order by $72,000, which represented the amount recovered by the victim through the civil process.

Length of sentence

The courts have long held that restitution orders ought to be accompanied by a corresponding reduction in other forms of sentencing in order to conform with the totality principle. This guiding principle remains relevant today. In the case of Moulton, the Court considered an appeal of two restitutions orders totalling $146,513 where the appellant argued that the imposition of the restitution orders on top of the three-year term of imprisonment resulted in a sentence that was unduly harsh. The Court of Appeal agreed and set aside the restitution orders. While the sentencing judge acknowledged that restitution forms part of an offender’s overall sentence, she turned her mind to the restitution orders only after determining an appropriate term of imprisonment. The two stages of analysis were distinct with no discussion of how one form of sentencing affected the other. This resulted in an overall sentence that was unduly harsh, so the restitution orders were vacated.

Likewise, in the 2020 case of R v Abdulahi-Sabet, the British Columbia Court of Appeal varied an offender’s restitution order, in part because the trial judge failed to consider the cumulative effect of the sentence imposed. On appeal, the Court reduced the amount of the restitution order from $35,607.09 to $10,000. The Court found that the custodial sentence was, by itself, proportionate to the gravity of the offence. As such, the addition of the restitution order rendered the punishment excessive and the overall sentence unfit.

Aggravating Factors

Breach of trust

Where a breach of trust is involved, general deterrence and denunciation are typically given the most weight during sentencing. Several important cases since 2015 have examined breach of trust more than other issues, and each of these cases will be reviewed briefly. In 2018, the British Columbia Court of Appeal wrote in Dunkers that “the principles of deterrence and denunciation are typically of greater importance when deciding whether to impose a restitution order in cases involving theft and breach of trust” (paragraph 31).

A similar conclusion was reached in R v Lavallée. The sentencing judge ultimately declined to order restitution on the basis that such an order would offend the sentencing principle of rehabilitation since it could not be fulfilled. On appeal, this decision was overturned and a restitution order was imposed. The Quebec Court of Appeal held that,

Where the effect of the fraud on the victim is significant and there is some expectation, even faint, that the offender may be in a position to eventually comply, in whole or in part, with the restitution order, then the primary consideration must be the effects on the victim and a restitution order should follow (paragraph 28).

With regards to the offender, the Court of Appeal found that it was “not beyond hope that he may find gainful employment” following his term of imprisonment (paragraph 31) and, as such, a restitution order was appropriate.

In the case R v Wagar (2018), the Ontario Court of Appeal upheld an appellant’s restitution order for comparable reasons. On appeal, the Court held that the trial judge did not err in making the restitution order, even though the funds were likely “beyond the reach of [the] victims forever” (paragraph 17). For offences involving a breach of trust, the paramount consideration is the victims’ loss, so restitution can be ordered even if there does not appear to be a likelihood of repayment. As these cases have shown, victim restitution takes priority over an offender’s ability to pay when a breach of trust is involved. Likewise, in Simoneau, the Quebec Court of Appeal wrote that sentencing judges should be “focused more on the impact of the crime on the victim than the impact of the order on the offender” in breach of trust cases (paragraph 51).

Payment of restitution (particularly when it results in considerable hardship to the offender) can result in a non-custodial sentence in breach of trust cases, even though the norm is for a custodial sentence to be imposed. In R v Samson, the offender was an employee of a non-profit ambulance service. She used her status as an employee to have a debit card associated with a government account made out in her name, and subsequently withdrew $8,380.78 for her own purposes. At sentencing, the judge acknowledged that breach of trust cases typically warrant a term of imprisonment, even for first-time offenders. However, there were many factors — including the offender’s remorse, rehabilitative efforts and that the repayment of all money taken had caused considerable hardship to her family — that justified a finding of exceptional circumstances, such that a custodial sentence was not appropriate. As a result, the judge imposed a conditional discharge and the sentence was upheld on appeal.

In the 2015 case of R v Murdoch, the New Brunswick Court of Appeal expressed a similar sentiment. At paragraph 66, the Court wrote:

The public interest is best served by emphasizing denunciation and deterrence in imposing sentence for thefts or frauds committed by employees who thereby abuse a position of trust in relation to their employers.

The Court also provided an example of “exceptional circumstances,” stating that “where restitution entails particularly onerous sacrifices by an offender of modest means, it may, in conjunction with other compelling circumstances, justify a finding of exceptionality” (paragraph 44).

Courts have subsequently relied on the decision in Murdoch to justify the imposition of non-custodial sentences in cases involving breach of trust. For instance, in the 2016 case of R v Schriver, the New Brunswick Court of Appeal upheld a 10-month conditional sentence for a breach of trust theft. Although the offence involved a breach of trust, the sentencing judge held that a jail sentence was not appropriate and instead imposed a 10-month conditional sentence. The judge particularly emphasized the fact that the offender had made full restitution prior to sentencing. On appeal, the Court agreed that the facts of the case justified a finding of exceptionality pursuant to Murdoch.

Restitution orders where multiple defendants

Restitution orders can be made against several offenders who participated in the same crime. However, courts must consider fairness and consistency in such cases. In Abdulahi-Sabet, the British Columbia Court of Appeal reduced the quantum of the appellant’s restitution order, such that the appellant had to pay less than one-third as much as his co-accused, because he played a lesser role in the commission of the offence.

In the 2015 case from the Saskatchewan Court of Appeal, R v Fast-Carlson, the appellant worked as a bookkeeper for a corporation that her father used in a Ponzi scheme. On appeal, the Court held that the trial judge showed neither caution nor restraint in imposing a $1 million restitution order on the appellant, given “that the appellant did not profit from the fraud, that she was not the architect of the fraud but was used by her father to facilitate the fraud and was in a significantly lesser position of trust” (paragraph 26). In light of these considerations, as well as the appellant’s inability to pay, the restitution order was varied from $1 million to $250,000.

An offender’s greater involvement in the commission of a crime may warrant imposing a restitution order even when no such order is imposed on the other offenders. In Widdifield, a 2018 case from the British Columbia Court of Appeal, the appellant and three others were convicted of extortion. The appellant, who instigated and oversaw the criminal enterprise, was ordered to pay restitution. The Court upheld the restitution order, finding that the trial judge correctly noted that apportionment of restitution is not appropriate in cases involving a common enterprise. With respect to the fact that the other three offenders had not been made joint and severally liable, the Court simply stated that the appellant was “entitled to seek contribution from the other responsible offenders” to the extent that he made restitution payments (paragraph 58).

Effect on Sentence

Restitution made

When determining an appropriate sentence for an offender, courts will consider whether significant restitution has been paid. In the past six years, several appellate courts have confirmed that the payment of significant restitution constitutes a mitigating factor. For instance, in 2015 in R v Shi, the Ontario Court of Appeal held that the trial judge properly treated the offender’s full restitution as a mitigating circumstance. Five years later in R v Stead, the Court discussed the fact that the offender had repaid the victim the entire amount lost while summarizing the mitigating factors of the case.

However, as the Manitoba Court of Appeal noted in 2017 in R v Gurske, an offender need not necessarily make full restitution prior to sentencing for it to be considered a mitigating factor. Although a considerable amount of restitution remained outstanding, the Court held that the accused’s efforts nevertheless constituted a mitigating factor.

Despite the foregoing, not all courts have found that the payment of significant restitution is relevant on appeal. In R v Slizak, a 2017 case from the British Columbia Court of Appeal, the appellant sought to adduce fresh evidence which demonstrated, among other things, that he had fulfilled his restitution order. The Court dismissed the application, noting that while the payment of restitution is “commendable,” it is “also to be expected” (paragraph 25). Therefore, the new evidence the appellant wished to introduce did not “bear in a sufficiently material way on a fit sentence,” such that it ought to be admitted (Ibid.).

The following year, in R v Chandler, the Court held that the accused’s stated intention to make restitution was a mitigating factor. On this issue, the courts have diverged with some finding the willingness to make restitution to be commonplace rather than exceptional.

In 2020, the British Columbia Court of Appeal revisited the issue of if and when an offender’s offer to make restitution should be considered a mitigating factor in the case of R v Kodimyla (see also R v Mathur, R v Hills). The Crown argued on appeal that the sentencing judge erroneously treated several facts as mitigating, including the appellant’s willingness to pay restitution. The Court ultimately agreed with the Crown, stating that, “in the context of Mr. Kodimyala’s continued denial of responsibility for the offence, it is difficult to conceive how his stated intention to pay restitution in and of itself could have been considered a mitigating factor” (paragraph 36). The Court went on to suggest that if a restitution order is sought or acceded to by an offender, it may be indicative of remorse and, as such, can be taken into account in mitigation. However, given that the appellant had not taken any responsibility for his actions, it was an error in principle for the sentencing judge to treat his offer to make restitution as a mitigating factor.

Absence of restitution efforts

Just as the jurisprudence is divided on the mitigating impact of willingness to make restitution, the jurisprudence is similarly divided on whether an absence of restitution efforts constitutes an aggravating factor at sentencing. On the one hand, several appellate courts have, either implicitly or explicitly, treated an offender’s failure to make restitution as an aggravating circumstance. For instance, in the 2017 case of R v McGee, the British Columbia Court of Appeal explicitly held that the fact that the offender had not repaid his victims was an aggravating factor. However, in the Quebec Court of Appeal case of R c Dayfallah (2015), the offender’s failure to provide restitution was simply described as an “important factor” (paragraph 11). Meanwhile, in R v Bhatti, a 2016 case from the Ontario Court of Appeal, the Court noted that the sentencing judge had not placed much weight on the lack of restitution paid by the appellant. The Court further wrote that, “if [the appellant’s] failure to make restitution had been taken into account by the sentencing judge, it could only have served to increase his sentence” (paragraph 15).

On the other hand, in the 2020 case of R v Penttila, the British Columbia Court of Appeal found that the sentencing judge erred in treating the appellant’s failure to pay restitution as an aggravating factor. The Court went on to explain that, “[f]ailure to make restitution is, at best, the absence of a mitigating circumstance” (paragraph 77).

Reduction for inability to pay

There are numerous decisions showing that the amount of a restitution order may be reduced on appeal because the offender is unable to pay. In the 2015 case of R v Heathcliff, the Yukon Court of Appeal varied the amount of a restitution order because the sentencing judge failed to adequately consider the appellant’s limited means. Based on the record, it was clear that the appellant “would be crushed financially” by the order and that he “had no hope of paying such a large amount of restitution” (paragraph 9). As a result, the restitution order was reduced from $101,008 to $9,688. Alternatively, appellate courts may set aside a restitution order altogether due to the offender’s inability to pay.

Impact on sentence if restitution imposed

When a restitution order is made on appeal, the court may vary other aspects of the offender’s punishment to ensure that the overall sentence complies with the principle of totality. Specifically, where the imposition of a restitution order results in an otherwise reasonable sentence becoming too severe, the court will reduce either the offender’s term of imprisonment or period of probation accordingly. For instance, in the case of Simoneau, the Quebec Court of Appeal reduced the offender’s probation period by six months after making a restitution order in the amount of $15,000.

However, in 2018, in R c Paquette, the Quebec Court of Appeal noted that “the addition of a restitution order, which aims in particular to facilitate compensation for victims, does not mean that the prison sentence must automatically be reduced if the total sentence does not thereby become unreasonable” (paragraph 15).

There was no recent case law on issues such as enforcement and failure to pay, mutual legal assistance, and demonstrating loss with sufficient and detailed information.

Amount ordered

The setting of the amount of a restitution order is a judicial inquiry. In the 2019 case of R v Erez, the Ontario Court of Appeal held that, because the setting of the amount of a restitution order is a judicial inquiry, the sentencing judge is entitled to accept “some, all or none” of the evidence presented to them regarding the total loss. The appellant was responsible for the total loss caused by his fraudulent scheme. Thus, the fact that he may not have benefited from all of the money he received had no bearing on determining the appropriate quantum of restitution.

Scope of order – Replacement value

In the 2018 case of R v Lawrence, the offender was convicted of several offences after being caught smuggling refined gold in the form of “gold pucks” out of his workplace, the Royal Canadian Mint. On appeal, the offender submitted that the trial judge erred in calculating the appropriate quantum of restitution by using market value for the gold. In particular, he asserted that because the victim (the Mint) was able to purchase large quantities of unrefined gold at a discounted price, the market value was not the same as the replacement value, so the amount of the restitution order should be reduced accordingly. The Court rejected this argument on the basis that the property stolen was not unrefined gold, but rather refined gold in the form of gold pucks. As such, the trial judge was entitled to determine the appropriate amount of restitution based on the replacement value of the pucks, irrespective of the fact that the victim was able to purchase, at a discounted price, unrefined gold to make the pucks.

Concluding Remarks

This article reviewed the published case law on restitution since 2015, when the CVBR came into force. The CVBR includes the right to request restitution (s. 16). Overall, the jurisprudence on restitution has remained stable without significant changes, with the case law adding additional weight and nuance to previously established principles.

Table of Cases

References