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Are Conditional Sentences Available in Ontario Securities Fraud Cases?

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By Tyler Alviano

The prosecution of securities-related offences has seen an increase in Ontario over the last several years.  In Ontario, the investigation and prosecution of securities-related offences is delegated to the Ontario Securities Commission (OSC) under the Securities Act.[1]  These offences fall under the scope of “provincial regulatory offences” and are not strictly speaking criminal offences.  However, certain offences that the OSC has the authority to initiate are described as “quasi-criminal” offences.[2]  “Quasi-criminal” indicates that a term of incarceration is a possible sanction if convicted of the offence.  For instance, section 122 of the Securities Act sets out that, among other possible sanctions, the court can order a jail term of not more than five years less a day.[3]  Given the possibility of hefty prison terms if convicted of a quasi-criminal securities offence, the question often arises if a conditional sentence is available as a sentencing option.

A conditional sentence is a sentencing option available under the Criminal Code.[4]  This is a form of custodial sentence where the individual convicted can serve their sentence in the community (but subject to strict conditions).  Conditional sentences are only available for certain offences under the Criminal Code and where the court is satisfied that service the sentence in the community would not endanger the safety of the community and would be consistent with the fundamental purpose and principles of sentencing.[5]

This sentencing option is certainly appealing in any circumstance where traditional incarceration is a possibility upon conviction.  Having said that, its use is only explicitly provided for under the Criminal Code.  Neither the Securities Act nor the Provincial Offences Act provide for the use of conditional sentences.  In several cases the argument has been advanced that the conditional sentence regime can be applied in the provincial regulatory context and therefore for securities offences.  This argument, however, has been unsuccessful to date.  In the leading case on this matter, R v Pellegrini,[6] the court held that there is no mechanism to adopt Criminal Code procedures to provincial regulatory offences when those procedures do not exist under provincial legislation.[7]  Further, in Pellegrini the court references Libman on Regulatory Offences in Canada in which Justice Libman acknowledges that conditional sentences are “creatures of statute” and available under the Criminal Code, but that there is no jurisdiction to impose them under provincial legislation.[8]  Likewise in R v Von-Anhalt, Moore J. held that they were not aware of any provision under either the Securities Act or the Provincial Offences Act and thus concluded they did not have jurisdiction to impose a conditional sentence.[9]

More recently, similar results were reached in R v Nilsson[10] and OSC v Brunet.[11]  In Nilsson, Nadel J. agreed that there is no general power to impose a conditional sentence in the provincial regulatory context.[12]  While in Brunet, citing all the aforementioned cases, the court held that the reality is that neither the Ontario Securities Act nor the Provincial Offences Act provide for conditional sentences as a sentencing option and that the ability to import conditional sentences is circumscribed having not been contemplated in either act.[13]  Given this, the jurisprudence in Ontario currently suggests that conditional sentences are not available for provincial securities offences nor any other provincial offence for that matter.

Despite this, it is worth noting that in Pellegrini the court leaves open the possibility of a conditional sentence being imposed for a provincial offence through “creative sentencing” as part of the rehabilitation principle under the Provincial Offences Act.[14]  Thus, in the appropriate case, the possibility of a conditional sentence for a provincial securities offence is perhaps not entirely foreclosed upon.

[1] Securities Act, RSO 1990, c s 5.

[2] Ibid, s 122.

[3] Ibid.

[4] Criminal Code, RSC 1985, c C-46, s 742.1.

[5] Ibid.

[6] R v Pellegrini, [2006] O.J. No. 3369 [Pellegrini].

[7] Ibid at para 44.

[8] Ibid at para 47.

[9] R v Von-Anhalt, [2007] O.J. No. 2745 at para 32.

[10] R v Nilsson, [2012] O.J. No. 2750 [Nilsson]

[11] Ontario Securities Commission v Marc and Helene Brunet [Brunet].

[12] Nilsson at para 14.

[13] Brunet at para 35.

[14] Pellegrini at para 50.

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