Law360 Canada (June 11, 2026, 11:24 AM EDT) --

John L. Hill

Restitution orders are often imposed to require a convicted offender to compensate a victim for the victim’s direct, quantifiable loss caused by the crime. Restitution is often considered a rehabilitative sentencing tool, providing the victim with a swifter, more direct path to compensation rather than relying on a civil judgment.

What factors should be taken into account when considering a restitution order in sentencing? The British Columbia Court of Appeal has provided insight in its decision on a sentence appeal in R. v. Gallagher, 2026 BCCA 196.

The facts of the case, as set out in R. v. Gallagher, 2023 BCSC 1722, reveal a dramatic and destructive series of events that unfolded in the early morning hours of May 15, 2021, in Oliver, B.C. Shortly after 1 a.m., RCMP officers attended the home of Gallagher on the Osoyoos Reserve to investigate reports of gunshots. Gallagher initially cooperated and showed officers around his residence but became increasingly agitated around 2 a.m. The officers left and, shortly thereafter, observed several vehicles speeding away from the property.

Near the end of their shift, just before 4 a.m., the officers heard gunfire outside the Oliver RCMP detachment. A police vehicle was struck by gunfire, and officers observed Gallagher’s distinctive green pickup truck fleeing toward downtown Oliver.

Security cameras later captured Gallagher parking the truck in Triangle Park and deliberately setting it on fire. He then walked toward the nearby Remedys RX Pharmacy carrying a large dark case. After hiding the case in nearby bushes, he returned to the pharmacy, smashed the glass front door, entered the building and set several sundresses inside the store on fire.

Within seconds, the fire spread throughout the premises. Surveillance footage clearly captured Gallagher’s face as he exited the pharmacy, a piece of evidence that proved critical to his conviction. He then disappeared into the nearby woods.

Firefighters arrived within minutes, but by then the pharmacy’s inventory and interior were largely destroyed. The fire also damaged neighbouring businesses. Fortunately, the building itself did not sustain structural damage.

As a result of these actions, Gallagher was convicted of breaking and entering with intent to commit an indictable offence and of arson causing damage to property.

At sentencing, the court considered a Gladue report outlining Gallagher’s personal circumstances: R. v. Gladue, [1999] 1 S.C.R. 688.

Gallagher was 31 years old and a member of the Osoyoos Indian Band. Unlike many Indigenous offenders whose histories involve severe childhood abuse or neglect, the report described his upbringing as relatively stable and supportive. He was raised primarily on the Osoyoos Reserve by working parents and a devoted grandmother. He performed reasonably well in school and participated in sports.

His difficulties began in adolescence, when he became involved with alcohol, marijuana and peers who frequently encountered trouble with the law. He left school in Grade 11 after being accused of arson. His criminal record before this offence was relatively modest, consisting mainly of weapons offences, probation breaches, small fines and a brief jail sentence.

The Gladue report identified three traumatic events that Gallagher believed significantly contributed to his deterioration: (1) in 2020, his girlfriend died of a drug overdose one month after giving birth to their child; (2) later that year, a tenant in his basement was shot and died in Gallagher’s arms; and (3) in 2021, Gallagher’s older brother was killed in a motor vehicle accident, and Gallagher was the first family member to arrive at the crash scene.

After his brother’s death, Gallagher became addicted to MDMA. The report suggested that unresolved grief, trauma and substance abuse played a significant role in his life leading up to the offences.

The court also considered the broader effects of colonialism and intergenerational trauma. Gallagher’s grandparents had attended the Kootenay Indian Residential School, though the report did not identify any direct abuse suffered by Gallagher himself. Instead, the Gladue report emphasized the indirect impacts of residential schools and colonization on his community, including cultural disruption, loss of language and traditions, poverty and social instability. These factors were considered relevant to understanding his circumstances, though the report did not establish a direct causal link between those historical factors and the offences.

By the time of sentencing, Gallagher had spent 427 days in pretrial custody. During that time, he had remained drug- and alcohol-free; participated in counselling for grief, addiction and trauma; worked with an Indigenous elder at the correctional centre; engaged in cultural and spiritual practices such as smudging, beadwork and making medicine pouches; and begun an application to attend a therapeutic community and farm residential treatment program. Counsellors reported that he was cooperative, pleasant to work with and appeared committed to rehabilitation.

However, the case involved a deliberate and highly dangerous course of conduct that began with gunfire directed at the RCMP detachment, continued with the burning of Gallagher’s own truck and culminated in the break-in and arson of a downtown pharmacy. The offences caused substantial property damage and posed a significant risk to public safety. At sentencing, the court also considered Gallagher’s Indigenous background, personal trauma, addiction struggles and efforts toward rehabilitation while in custody.

His appeal concerned only the sentencing judge’s order requiring Gallagher to pay two insurance companies after his conviction for breaking into and setting fire to the pharmacy. Gallagher did not challenge his prison sentence or probation order.

The restitution order consisted of $428,761 to compensate the insurer of the commercial building housing the pharmacy and neighbouring businesses, and $43,673 to compensate the insurer of a physiotherapy clinic damaged by the fire.

The Court of Appeal found that the sentencing judge committed several significant errors in principle in imposing the restitution order.

First, neither the Crown nor the defence had requested a restitution order. The judge raised the issue on his own initiative but failed to invite submissions from counsel on whether restitution should be ordered or on Gallagher’s ability to pay.

Second, restitution orders are not meant to be automatic. They must be imposed cautiously and only after considering the governing legal principles. The court concluded that the sentencing judge appeared to treat restitution as a simple “add-on” to the sentence rather than as part of the overall punishment.

Third, the judge himself acknowledged that the restitution order was “unlikely to ever be realized.” The court held that this finding was fatal to the order. Gallagher had no meaningful assets or savings, three children to support and faced years of incarceration. His future earning capacity was highly uncertain.

The court emphasized that where an offender has not profited from the crime, an inability to pay becomes an especially important consideration. Ordering nearly half a million dollars in restitution against someone who plainly could not pay was an error.

A major factor in the appeal was what had occurred since sentencing. After the pharmacy arson sentence was imposed, Gallagher received additional consecutive federal sentences for unrelated firearms offences. His combined sentence now totals 12.5 years in prison, with an anticipated warrant expiry date in 2036.

The court noted that both sentencing judges recognized Gallagher’s substantial rehabilitation efforts while incarcerated, including counselling, addiction treatment, Indigenous cultural programming and positive institutional behaviour.

The Crown itself argued that saddling Gallagher with a $472,434 debt would undermine the very rehabilitation and reintegration goals the probation order was designed to promote. If Gallagher eventually succeeded in rebuilding his life after release, the public interest would be better served by supporting that rehabilitation rather than imposing an unpayable financial burden.

The Court of Appeal granted leave to appeal and allowed the appeal. It concluded that the restitution order had been imposed without proper consideration of the legal framework governing restitution, without counsel’s submissions, and despite the judge’s finding that Gallagher would almost certainly never be able to pay. Accordingly, the court set aside the entire $472,434 restitution order, leaving the original prison sentence and probation order intact.

The decision reinforces several key sentencing principles:


In Gallagher’s case, the court concluded that rehabilitation and public safety would be better served by eliminating an enormous and effectively uncollectible debt rather than preserving a symbolic restitution order.

John L. Hill practised and taught prison law until his retirement. He holds a JD from Queen’s and an LLM in constitutional law from Osgoode Hall. He is also the author of Pine Box Parole: Terry Fitzsimmons and the Quest to End Solitary Confinement (Durvile & UpRoute Books) and The Rest of the (True Crime) Story (AOS Publishing). His most recent book, Acts of Darkness, (Durvile & UpRoute) was shortlisted as one of five nominees for the Crime Writers of Canada’s Brass Knuckles Award for Best Nonfiction Crime Book. Contact him at johnlornehill@hotmail.com.

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