Supreme Court of Canada: The Evolution of Strict Liability Regulatory Offences

With insurance and tax regulations becoming increasingly complex, some have been arguing for years that “strict liability offences” should provide a bit of relief for those who have trusted their affairs to professionals when regulations are complex and burdensome.

Unless indicated, violations of provincial statutes and regulations are presumed to be “strict liability” offences, which means that the Crown does not have to prove intent to disobey them. The only saving grace for an offender of a strict liability offence is that they had a reasonable mistake of fact (not law) and they did all they could in the circumstances, otherwise known the “due diligence” defence. These are objective tests, with the burden resting on the accused to establish their veracity.

A mistake of law currently affords no defence to a valid accusation unless it is officially induced. Although not departing from the traditional understanding of strict liability, the Supreme Court of Canada (SCC) recently released a decision that will likely have the effect of kindling the debate for extending the available defences for such offences, albeit in very limited circumstances and only for highly technical laws and regulations.

In La Souveraine, Compagnie d’assurance générale v. Autorité des marchés financiers, 2013 SCC 63, the SCC held that section 482 of a Quebec provincial statute, the Act Respecting the Distribution of Financial Products and Services (the Act), is a strict liability offence. The provision states that an insurer that induces an independent representative or independent partnership to violate the Act commits an offence.

Although strict liability offences sound unfair, they are frequently justified by the notion of proportionality; they enforce social behaviour where minimal stigma attaches to a person upon conviction, or where society is concerned with the prevention of harm, and wishes to maximize the deterrent value of the offence.

NEXT TIME: The Facts in La Souveraine

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.