Financial Exploitation of Crime 1996


1. Limitation Periods

[80] The normal limitation period to sue for those criminal actions that have caused personal harm is two years. 53 The problem with requiring victims to comply with this type of limitation period is that, particularly when victims first go to court, criminals do not have a lot of money. Therefore, in both of those models where the legislation requires the victim to obtain a judgment against the criminal, victims are required to commence an action within the limitation period without any real prospect that the judgment can be satisfied. Since no lawsuit is required in the administrative model, there should be no corresponding limitation problems.

[81] This requirement to sue within a particular period of time is particularly onerous in the fund preserving model where the victim also has to risk the cost of proving damages. In the assisted legal action model, it is expected that victims will be more willing to sue within the normal limitation period, because of the simpler and less costly process, and merely continue to renew their judgment until such time as the criminal obtains funds that can be attached.

[82] Particularly if the choice is made to create legislation on the fund preserving model, there are a few options to the standard limitation period. First, as in the Ontario legislation, the limitation can be extended for a few years to give victims a greater chance of filing their suit in time. The problem with this option is that it creates a lack of uniformity of limitation periods while still not assuring the victim that by the time the new limitation expires it is financially advantageous to sue. Second, the legislature can create a flexible limitation, starting with, for example, the time when the money is first sent to the government agency. The problem with this option is that, as actually happened in Ontario, the first money that the criminal earns may be so small that it will never give victims financial incentive to sue. Finally, the legislation can give the government agency (1) the power to declare to all victims when the limitation period is to begin or (2) a discretion to extend the limitation period in particular instances. This power or discretion is particularly useful in those circumstances where the limitation period would have already started but the financial incentive to sue does not yet exist.

[83] While these options all have some benefit for victims, none of them is completely satisfactory. In particular, it must be recognized that the longer the victim has to sue the longer the criminal must do without his or her money. The validity of this deprivation that the criminal must suffer will not doubt be tested by a Charter application.

[84] For those provinces that opt to create legislation based on the fund preserving model, it is recommended that an amalgam of some or all of the options be adopted. At the very least, therefore, the limitation period can begin when the governmental agency actually receives some money. This is consistent with the second option. However, to ensure that a victim is not deprived of his or her opportunity merely because the limitation period began to run with a small amount of money, the courts should be given the ability to extend the limitation period: if the victim has a reasonable likelihood of success on the suit; if the only reason the suit was not brought within the limitation period was that it was uneconomical to do so; and, if the criminal is reasonably likely to profit from his or her crime in the near future.

[85] On a related issue, it should be noted that the government agency cannot pay out any money to the victims, or return the money to the criminal, until some time after the limitation period expires. The only exception is when, as explained below, the agency is able to return the money early. However, if the agency is aware that an action is pending, but the plaintiff/victim has not yet received judgment, in all fairness the government agency should have the ability to extend the time for payment until a judicial resolution has been made on all outstanding actions. To ameliorate the effect that this may have on those victims who had already received their judgment, the agency should also have the power to distribute to those judgment creditors a portion of the pro rata amount that is payable to long as such payment does not have an adverse impact on the ability of those victims who are in the process of obtaining judgment but have not yet done so.

2. Remainder of the Profits

[86] Under the Ontario legislation as presently drafted, money earned by the criminal through the recollection of his or her crimes is given first to those victims who sue and obtain a judgment. If no-one sues, or if the judgments are lower than the amount earned, all remaining money is given back to the criminal after the statutory period has expired.

[87] If the purpose of the legislation is to assist victims, and the victim either does not want to sue or is able to recover from the criminal all of the money that he or she has been awarded by a civil court, then there is nothing wrong with this. On the other hand, if the purpose of the legislation is to ensure that criminals do not profit from their crime, then the legislation may have failed to effect its purpose. This failure arises in those instances where the profit earned by the criminal greatly exceeds the money that courts would award the victims.

[88] The option that many of the U.S. state legislatures have chosen is to provide that, in addition to going to victims, the money earned by the criminal is to be used to pay off other debts. The types of things that have been included in legislation, and which may be of interest to legislators in this country, are: other civil debts; cost of legal defence; and, cost of housing in prisons and penitentiaries. If it is decided to use the remainder of the criminal’s earnings for other purposes, it should be recalled that there may be a Charter problem if the legislature takes too much of the criminal’s profits.

[89] The best way to ensure that the Charter does not invalidate the legislation because of this provision is to ensure that the legislation does not appear to be a colourable attempt to take all of the criminal’s money. In that regard, it will probably be best if the money is directed toward those obligations over which the criminal would otherwise be liable rather than services that are ordinary provided by the state. The criminal’s civil debts come within this category, as do the criminal’s liability to his or her dependants.

[90] Unfortunately, by stretching the legislation to encompass these other obligations, there is a concern that at some point the legislation will cease to be true to its legislative purpose. Thus, after the victims have been paid all money owing to them, and the only payments being made by the government agency are to civil creditors and dependants, by continuing to collect money from the criminal that is to be sent to civil creditors the agency in essence operates as a publicly funded collection agency. In some cases, particularly with regard to the criminal’s dependant’s, this obligation may continue for a long period of time and without much money involved.

[91] Accordingly, although there people other than victims who may deserve to the benefit of legislation that prevents criminals from profiting from their crime, it is recommended that the legislation only operate for the benefit of victims. Moreover, and this applies primarily under the Fund Preservation Model, once the victims have been paid the money they are owed, no more money should be paid under the legislation to the government agency.

3. Early Return or Pay-out of Money

[92] One other thing that should be considered in the context of the fund preserving method is the ability of the governmental agency to send the criminal his or her money back before the end of the limitation period. The reason why this power is necessary is that the situation can easily arise where the criminal’s only victims have already sued in civil court and been awarded a judgment for less than the money held by the governmental agency. Rather than keep the remainder of the money until the limitation period has expired, the agency should be entitled (perhaps after advertising or after getting a court order) to send the remainder of the money back to the criminal.

[93] Similarly, if the monetary value of existing judgments against the criminal is less than the amount of money that the government agency has, and if there is no reasonable possibility that any other claims may arise, there is no reason why the government agency should have to wait until the end of the limitation period to pay out the money to the victim(s).

[94] It is recommended that the government agency have the authority to disburse money to the victims, or the criminal’s portion of any proceeds to him or her, before the limitation period so long as the early return of such money will not adversely affect the interest of any victim.

4. Anti-Avoidance

[95] One aspect of anti-avoidance, the prohibition against the criminal assigning his or her right in a story for the purposes of avoiding legislation that prevents the exploitation of crime, has been dealt with above. See There is one other type of avoidance that should be discussed: the ability of the criminal to escape the strictures of legislation altogether by entering into contracts outside of the province.

[96] The Ontario legislation is drafted in such a way that it requires people who enter into contracts with criminals to pay money to a governmental agency instead of to the criminal. This type of legislation (or legislation that imposes a trust on such people, or an obligation on them to advise the governmental agency about the contract) is only effective under the Constitution Act, 1867 if the legislative matter is within the province.

[97] If, therefore, the contract is entered into outside of a province (or the criminal or the person whose obligation it is to pay the money to the criminal resides outside of the province), a strong argument exists that neither the criminal nor the publisher is bound by the legislation even though, for example, books written by the criminal for the purpose of exploiting a crime are sold in that province. The way to resolve this problem, of course, is to ensure that the provinces and territories commonly create legislation that would prevent criminals from profiting from their crimes.

[98] Unfortunately, a wily criminal has another option.he or she can enter into their contract and produce their books offshore. In the absence of legislation in that jurisdiction that covers crimes committed outside of the jurisdiction, the only way that the criminal can be prevented from profiting is by ensuring that the various provincial laws relate to matters within their jurisdiction. The only option.if for example books are sold in this to direct the legislation toward booksellers.

[99] While it is possible, with carefully crafted legislation, to attach the profits earned by every criminal that seeks to profit from his or her crime, it is submitted that there are good reasons why legislation should not be so drafted. First, any legislation that seeks to prevent criminals from profiting from crimes by dealing with a large, diverse group such as booksellers is going to make the administration of the legislation much more difficult than if a small, defined group of persons had obligations under the Act. Second, in exchange for the difficulty of administering the legislation, it is not expected that there will be a great number of criminals who will be so sophisticated that they will set out to avoid the Act. In this regard it must be recalled that, even if the legislation covers all criminals rather than merely those criminals whose actions have outraged the public, there will still only be a few instances where any provincial legislation can operate to prevent criminals from exploiting their crime. Finally, even if a criminal is sophisticated enough to think about going offshore, the most easily used jurisdictions (U.S. states) already have legislation that would prevent a criminal from profiting from his or her crime.

[100]O ther than having legislation in each province that prevents criminals from profiting from their crimes, it is recommended that the legislation not be drafted to apply to contracts entered into outside of the jurisdiction of each province where at least one of parties to the contract is not a resident of the province.

5. Victims in other Jurisdiction

[101] None of the legislation that I have seen expressly states that even though the victims reside in another jurisdiction (or that the crime occurred in another jurisdiction), the legislation still applies. Given that this type of legislation is new to this country, and because its application to crimes committed in other jurisdictions is uncertain, a situation could easily arise where a criminal who committed a crime in another jurisdiction decided it would be profitable to recollect the crime in this jurisdiction.

[102] Given the uncertainty and the ensuing litigation that may arise if this type of situation is not expressly dealt with, it is suggested that it would be advantageous to expressly deal with this situation. The advantage of including such people within the scope of the legislation is that all criminals and victims are treated, within this jurisdiction, on an equal basis. The disadvantage, however, if the administrative re-distribution model is chosen, is that it would be increasingly difficult and expensive to administer the legislation. Moreover, if such a clause is included, care must be taken to avoid supporting laws in other countries that we would otherwise consider to be unacceptable.

[103] It is recommended:

1. that the legislation should expressly apply to the benefit of victims that reside in other jurisdictions, even if the crime took place in another jurisdiction, so long as the contract has been entered into in the province or if one of the parties to the contract resides in the province.

2.that the legislation will only benefit these victims if the legislation that creates the crime that caused the victim harm is not contrary to the public policy of Canada and so long as the conviction was obtained according to the principles of fundamental justice.

6. Information Required by State

[104] In all the forms of the fund preserving model, the focus of the legislation is on finding out about relevant contracts and then preserving the money payable under those contracts for victims. In most cases, however, the relevant government agency is given no information about who the victims are.

[105] The reason why it does not is that it relies upon civil judgments to self-identify victims. However, if it is decided to alter that basic form of legislation, for example, giving the governmental agency a power to declare when limitations periods are to commence or the discretion to extend such periods, or if the agency has the power to return the money early to the criminal, then the governmental agency is going to have to have additional information to make these decisions. This information is also necessary if the administrative model is chosen, since under this model the government agency will not only be allocating money among the victims but, so that it can do that job, it will also have to identify all possible victims.

[106] A decision can be made to allow the governmental agency to acquire that information itself, but it is unlikely that many governments these days would consider adding to public sector work and thus to governmental costs. The alternative, of course, is to require the people with knowledge to provide the information.

[107] The type of information that should be required to be produced, either by the criminal or by the person with whom he or she has contracted, is as follows: and last known address of the criminal;
2.names and last known address of the victims;
3.location and date of crime(s), and connection between the crime and the victim;
4.other information that may assist victims to evaluate whether it is worthwhile to sue the criminal; and
5.a copy of any material with which the criminal seeks to exploit his or her crime.

The legislation should also clearly state that this information, when provided to the government agency, can be given to the victims.

[108] It is recommended that the legislation expressly require both the criminal and the person contracting the criminal to provide to the governmental agency all information that will be necessary for the effective and efficient implementation of the legislation.

7. Retroactivity

[109] Although it probably will not be desired, nor practically possible, to make the legislation retroactive, some thought should be made about how the legislation is going to impact on ongoing profit made by criminals. By this I mean profits from, for example, books whose contract was entered into and executed before the legislation was created but which continue, due to sales that take place after the legislation, to make profit for the criminal.

[110] Although this type of provision may well provide victims with more money, there are a number of disadvantages with this provision.

1.If the legislation is of a type that relies upon a civil suit, the right to victims to sue for damages will, in the vast majority of cases, have already been defeated by limitations legislation.

2.Even if the limitation problem can be resolved by legislation, or by adopting the administrative model, re-awaking the memories of the crime may cause more harm than the small amount of money that many of the criminal’s recollections continue to bring.

3.Even if these problems can be resolved, there will have to be some time limit on the right to take profits from criminals who have sought to profit from their crime. This is so because there are many books that still survive where both the criminal and the victim are long dead, and there is no sense taking the profits earned in the sale of these books.

[111] It is recommended that legislation only apply to those criminal recollections that take place after provincial legislation comes into force.

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