Administrative Monetary Penalties
(“AMPs“) are increasingly being used by
Canadian regulators as sanctions for all manner of regulatory
non-compliance. This bulletin explains what AMPs are and what steps
you should take if faced with one.
What are AMPs?
AMPs are sanctions aimed primarily at deterring companies as
well as individuals from violating legislation through financial
penalties.
Instead of navigating through courts or tribunals, AMPs are
imposed directly within the regulatory framework as an alternative
and/or supplement to regulatory offence prosecutions. Their much
faster application is the main appeal for regulators. Generally,
when determining whether to impose an AMP, officers are expected to
consider factors such as the nature and severity of the offence,
aggravating factors, the duration of the violation, the
implementation of preventative and mitigation measures, and any
economic gains derived from the violation, while ensuring that the
AMP remains non-punitive in nature.1
AMPs offer regulators a faster, more flexible, and more
economical tool compared with traditional criminal or
quasi-criminal offence prosecution. While they have been in
existence for many years (for example in the federal environmental
protection area), they have been expanding in range and use as
regulators seek to remain timely in their enforcement activities
and find practical alternatives to a court system under stress.
High AMPs Upheld by Courts
While municipal AMPs such as parking fines are typically small,
provincial and federal AMPs can range from nominal to substantial
amounts. AMPs issued in the higher range have been upheld by
courts.
For example, violations of the Alberta Securities Act
have attracted penalties of up to $1 million per
infraction.2 Meanwhile, under the Investment Canada
Act violators have been charged up to $10,000 per
day,3 while deceptive marketing tactics under the
Competition Act have resulted in penalties of up to $10
million.4
Widespread Use
AMPs can be now found virtually everywhere: in federal,
provincial, and municipal regulations, across most regulated
sectors.
At the municipal level, AMPs are implemented
for a variety of infractions, ranging from parking violations to
issues related to business licensing.
Provincially, their scope is equally diverse,
covering sectors such as securities, environmental protections and
elections. For example, Ontario introduced proposals for revamped
environmental AMPs under legislation such as the Environmental
Protection Act and the Safe Drinking Water Act,
2002.5
At the federal level, AMPs can be found in
statutes ranging from the Canada Shipping Act to the
Canada Elections Act. Some examples of AMPs at the federal level
are:
|
AMPs under CEPA
In 2022, Bell Canada was fined $5,000 due to a halocarbon leak
In a more high-profile case, Volkswagen was subjected to a
|
Navigating the AMP Process
The approach to issuing and challenging an AMP generally
involves five steps:
- Notice of Intention Issued: The regulator
issues a Notice of Intention to the contravening party outlining
the contravention and the amount of the AMP, including dates,
location and severity of occurrence and any aggravating factors
considered. In limited cases, a Notice of Intention might not be
mandated by the regulation ̶ for example, where there is only
one contravention, a lower severity type or the contravention
occurs for only one day.12 - Responding to the Notice of Intention: The
notified party has an opportunity to provide additional context or
information about the situation.13 - Issuing the AMP: After assessing the
information provided, the regulator decides whether to impose the
AMP.14 - AMP Review and Appeal Process: The Director
(or another reviewing authority) can be requested to review the
AMP, which will either be confirmed, altered or revoked. If the
Director confirms or alters the AMP, the decision can be appealed
to the administrative tribunal.15 - Judicial Reviews, if any: As a last resort,
entities can seek a judicial review of the administrative tribunal
decision.
Challenging an AMP: Your Options
AMPs, while administrative in nature, can have substantial
financial and other consequences such as reputational damage.
Often, no distinction is made by stakeholders or the public or the
consumer between an AMP and a fine imposed by a court after a trial
and a criminal conviction.
When faced with an AMP, there are several avenues for a
challenge.
- Procedural challenges – the officer
failed to comply with the procedural protections and obligations
imposed by the governing statute. - Challenges on the merits – the officer
erred in law or fact because, for example, the facts did not make
out the elements of a violation under the applicable statute, or
the officer failed to properly apply the statutory factors in
deciding to issue the AMP and in fixing its
amount.16 - Bill of Rights challenges –
rely on the principle that one should not be deprived of property
without due process of law.17 An AMP may be found to
violate this principle if the administrative procedure leading to
the penalty was flawed or unjust. - Charter of Rights and Freedoms
challenges – under sections 7, 8 and 11 relating to
issues such as the right to a fair trial, the presumption of
innocence, the right to life, liberty and security, and protections
from unreasonable search and seizure. - Defences such as due diligence, reasonable and
honest mistake of fact, officially induced error, and abuse of
process may apply depending on the particular statutory
scheme.18
What to Do If You Receive a Notice of an AMP: A Strategic
Approach
When faced with a notice of an AMP, understanding its gravity is
crucial. Treat it with the same diligence as you would any
regulatory investigation or prosecution:
- Immediately secure the expertise of internal and/or external
legal counsel. - Preserve all relevant evidence.
- Assert your right to remain silent when necessary.
- Develop and follow comprehensive internal procedures. These
should include incident response, notification, disclosure,
reporting, inspections, and managing search warrants. - Don’t leave any stone unturned. Ensure a thorough and
organized collection of all relevant information. - Stay alert to any indications of potential quasi-criminal
offence charges emerging from the notice. - Review any prior interactions and dealings with the regulatory
relating to the notice. - Protect confidential and privileged communications.
- Ensure statutory timelines are met.
Above all, remember that the regulator has a number of tools at
its disposal. The AMP notice is just one of them. Be prepared and
treat every response not as a routine business communication but as
a formal judicial filing against you.
Footnotes
1. Ontario Ministry of the Environment,
Conservation and Parks “Consultation Guide on Proposed Regulations for the
Expansion of Administrative Penalties”, at 14.
2. Lavallee v Alberta (Securities
Commission), 2010 ABCA 48.
3. United States Steel Corporation v
Canada (Attorney General), 2011 FCA 176.
4. Canada (Competition Bureau) v
Chatr Wireless Inc., 2013 ONSC 5315.
5. Environmental Registry of Ontario, Expanding administrative penalties for
environmental contraventions (last updated 9 November
2023).
6. See the McMillan Bulletin regarding the AMP regime under the
Motor Vehicle Safety Act and Regulations.
7. Ibid.
8. Ibid.
9. Ibid.
10. Bell Canada v Canada, 2022 EPTC 6.
11. R v Volkswagen AG, 2020 ONCJ 398.
12. See the McMillan Bulletin regarding
Ontario’s AMP regime for environmental violations.
13. Ibid.
14. Ibid.
15. Ibid.
16. For example, in Callaway v Office
of the Election Commissioner, 2023 ABKB 233 at paras 93-124, a political
candidate fined for contravening the Election Finances and
Contributions Disclosure Act successfully argued that the
Commissioner had failed to take mitigating factors into
account.
17 Canadian Bill of Rights, S.C.
1960, c. 44, s. 1(a).
18. For example, due diligence is not
available under the British Columbia Environmental Management
Act, the federal Environmental Violations Administrative
Monetary Penalties Act or the federal Agricultural and
Agri-food Administrative Monetary Penalties Act. See Mount
Polley Mining Corporation v Environmental Appeal Board, 2022 BCSC 1483 at para 69; Environmental
Violations Administrative Monetary Penalties Act, SC 2009, c 14, s 11(1)(b); Canada Border
Services Agency v Castillo, 2013 FCA 271 at paras 20-22; Doyon v
Canada (Attorney General), 2009 FCA 152 at para 11.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
© McMillan LLP 2024
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