For a unanimous court on March 31, Chief Justice Richard Wagner allowed the Quebec Crown’s sentencing appeal in a notorious case involving the theft and sale on the black market of 9,571 barrels of maple syrup — worth more than $18 million — from a warehouse of the Fédération des producteurs acéricoles du Québec: R. v. Vallières 2022 SCC 10.
In the case of the person who was directing mind of the scheme — which took place for about a year and involved the surreptitious draining of maple syrup from the barrels and replacing the contents with water — the chief justice overturned the Quebec Court of Appeal below, and imposed a fine on respondent Richard Vallières of $9,171,397 ($10 million minus $828,602 Vallières was already required to pay under a restitution order).
The Supreme Court gave Vallières 10 years to pay, in default of which it imposed a six-year prison term, which the Criminal Code stipulates must be served consecutive to any other term of imprisonment.
Chief Justice Richard Wagner
Notably, the top court pronounced on whether a court has the discretion to limit the amount of a fine in lieu to the profit made by an offender from their criminal activities, and also delineated for the first time circumstances in which a court may apportion between co‑accused the value of property that is proceeds of crime.
Subsection 462.37(3) of the Code stipulates that when forfeiture is impracticable, a court “may ... order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property.”
Chief Justice Wagner held that this wording is “categorical” with respect to the amount of the fine: it is equal to the value of the property that is proceeds of crime.
The use of the word “may” in s. 462.37(3) of the Code, he explained, “indicates that Parliament intended courts to have some discretion, but this discretion does not allow them to limit the amount of a fine in lieu to the profit made from a criminal activity. The discretion applies only to the decision whether or not to impose a fine and to the determination of the value of the property.”
In interpreting the Code’s provision, the chief justice reasoned, in part, that limiting an order for a fine in lieu to an offender’s profit would undermine and disregard what Parliament intended.
“The dual objective of such an order is to deprive an offender of the proceeds of their crime and to deter them, as well as potential accomplices and criminal organizations, from reoffending,” Chief Justice Wagner explained. “Through the severity of the proceeds of crime provisions, Parliament is sending a clear message that crime does not pay and is thus attempting to discourage individuals from organizing themselves and committing profit‑driven crimes. Parliament’s decision that the fine must correspond to the value of the property is therefore deliberately harsh.”
Julien Beauchamp-Laliberté of Trois-Rivières, Que., who with Éric Bernier and Louis-Charles Bal successfully argued the appeal for the Poursuites criminelles et pénales du Québec, said the Supreme Court’s unanimous interpretation of Canada’s proceeds of crime legislation amplifies Parliament’s powerful message that crime does not pay.
“Organized criminals know that they will one day face jail — they just don’t know when, and how long,” Beauchamp-Laliberté told The Lawyer’s Daily. “But what hurts the most for criminals is money: the goods that they buy with the proceeds of crime, the cars that they drive, the buildings that they buy, the investments that they do ... that is what we have to fight.
“So this is a really important decision because it sends a clear message to organized crime, and to any kind of accused that would be attracted to committing crimes [for] profit, that they will have to reimburse not only the [net] profit that they are making, but the gross proceeds that they are getting from their crimes.”
Beauchamp-Laliberté said the Quebec Court of Appeal extended the concept of business profit, that applies in the context of legal commercial activities, to illegally generated revenue — a notion opposed by the Crown and rejected by the Supreme Court.
He suggested that if the value of fines in lieu of forfeiture had been pegged to criminals’ net profit, it could have meant, for example, that the large revenue generated by an organized drug trafficker selling a kilo of drugs, would be reduced by “the salary that he needs to pay for his runners, the gas that he needs to put in the car because he has to drive to deliver that kilo, the Ziploc bags that he needs to pay for. So, the concept of profit ... cannot be applied” in the context of forfeiture of the proceeds of crime.
Other counsel on the appeal were not immediately available for comment.
Vallières was convicted by a jury in 2016 of offences relating to fraud, trafficking and theft of the maple syrup, which passed through the hands of several people before Vallières resold it, collected the money and paid various accomplices. He admitted to getting $10 million from the stolen syrup and to a personal profit of nearly $1 million, minus some transportation costs.
(Vallières’s co‑accused were assessed fines in lieu of some $2 million.)
The sentencing judge in Quebec Superior Court concluded that when determining the value of the property for the purposes of imposing a fine in lieu under s. 462.37(3) of the Criminal Code, judicial discretion is limited and the fine’s amount must be equal to the value of the property the accused had in his possession or under his control. The sentencing judge determined that the evidence showed beyond a reasonable doubt that Vallières received $10 million from the theft, and therefore the court had no choice but to order the payment of a fine of $9,393,498 ($10,000,000 minus US$606,501 claimed under a restraint order, which was not in issue).
The Quebec Court of Appeal unanimously allowed the defence’s appeal on the basis that the fine was clearly disproportionate to the Code’s objectives for fines in lieu and that it created a situation of double recovery in light of the fines imposed on the offender’s accomplices.
Endorsing the Ontario Court of Appeal’s approach in R. v. Dieckmann, 2017 ONCA 575, the Quebec Court of Appeal held that where there is sufficient evidence, a court may exercise its discretion to set a fine that reflects the profit the offender received from the criminal activity, provided that the Code’s dual objectives of depriving offenders of the proceeds of crime and deterring criminal organizations and accomplices are met — as the Appeal Court held they were in the case of Vallières.
The Court of Appeal held that the trial judge erred in principle on the issue of discretion, which led to the imposition of a fine that was demonstrably unfit and was a substantial and marked departure from the fine imposed on the other co-accused who had the stolen syrup in their possession. The Appeal Court imposed a $1-million fine in lieu, minus the amount of the restitution order (US$606,501 based on the foreign currency conversion suggested by the Crown) for a total fine in lieu of $171,397.
Chief Justice Wagner ruled that the trial judge was obliged to require Vallières to pay a fine equal to the value of the property that was in his possession or under his control, i.e. $10 million as the trial judge found.
“This amount is warranted in light of the scheme for the forfeiture of proceeds of crime, under which a fine must, in principle, be equal to the value of the property of which an offender had possession or control at some point in time,” the chief justice wrote. “Because a court does not have the discretion to limit the amount of a fine in lieu to the profit made by an offender from their criminal activities, the Court of Appeal assumed a discretion it did not have “when it reduced the fine.
Moreover, Vallières had not proved, either at trial or on appeal, that there was a risk of double recovery of the $10 million, the Supreme Court held.
Chief Justice Wagner emphasized that the purpose of a fine in lieu is in the nature of a forfeiture order, whose purpose is to replace the proceeds of crime rather than to punish the offender.
He reasoned that limiting the scope of a fine to the profit made by an offender from their criminal activities would be disregarding the nature of fines in lieu, which serve as a substitute where forfeiture of the property has become impracticable.
“Equivalency between the amount of the fine and the value of the property is inherent in the notion of substitution,” he wrote.
The chief justice said that when determining the value of the property that is proceeds of crime, “the Crown’s burden is only to show that the offender had possession or control of property that is proceeds of crime and to establish the value of that property.”
The determination of the property’s value “must be based on the evidence and not on a purely hypothetical calculation.”
And where a case involves the resale of property obtained by crime, the proceeds of crime are, “in principle, the sum obtained in exchange for the property originally in the offender’s possession or under their control, in keeping with the definition of the word ‘property’ in s. 2 of the Criminal Code,” Chief Justice Wagner said.
“An offender’s ability to pay must not be considered in determining the amount of a fine in lieu, any more than in deciding whether or not to impose such a fine,” he stipulated.
The Supreme Court ruled that in situations involving co‑accused who had possession or control of the same property that constitutes proceeds of crime, courts may divide the value of the property between the co‑accused if there is a risk of double recovery — if apportionment is requested by the offender and if the evidence allows such a determination to be made.
Chief Justice Wagner said the onus is on an offender to make such an apportionment request and to satisfy the judge that it is appropriate to divide the value of the property between co‑accused.
“The exercise of the court’s discretion to apportion will depend on the circumstances of each case,” the chief justice said. “Where the conditions giving rise to a possibility of double recovery are met, the court must apportion the value of the property between the co‑accused in order to reflect the nature of a fine in lieu, which replaces the property that cannot be forfeited, nothing more and nothing less.”
However, given the approximate nature of the exercise, “the court retains some flexibility in deciding how the value of the property will be apportioned between the co‑accused,” said the chief justice.
He added that while the offender bears the burden of raising apportionment and establishing its appropriateness,“the Crown should, to the extent possible and where the available evidence allows, mitigate the risk of double recovery by apportioning, on its own initiative, the value of the property that is proceeds of crime between the co‑accused.”
The Crown should discharge this duty in every case, the chief justice said, but especially where co‑accused are tried separately “because it has an overview of the various proceedings and can limit up front the amount it seeks as a fine in lieu in each proceeding in order to ensure that the total of the fines imposed on the co‑accused corresponds to the value of the property that is proceeds of crime.”
Photo of Chief Justice Richard Wagner by Supreme Court of Canada Collection
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