Not Enforcing Administrative Penalties

When regulators impose a fine or administrative penalty, do they have an obligation to try to collect it? In British Columbia (Securities Commission) v Thow, 2018 BCSC 1823, the Court said no. Mr. Thow misappropriated a large amount of money from his clients. He was found criminally responsible and a large restitution order was issued. The Securities Commission also prosecuted him and obtained an administrative penalty in the amount of $250,000. The Commission did not take steps to collect the administrative penalty so that Mr. Thow could continue to make payments on the restitution order. Mr. Thow argued that, because of this inaction, any attempt to now collect the administrative penalty would be an abuse of process. The Court disagreed:

On [the] basis of the record, the most compelling conclusion is that the plaintiff’s decision to refrain from actively pursuing collection was based on a recognition that money paid in satisfaction of the restitution order was the preferable outcome because funds would find their way to the benefit of the victims, rather than to government coffers, as would result from payments on the penalty. If that is the case, as it seems to be, in my view it is eminently commendable, and quite the opposite of an abuse of the court’s process or action taken for some ulterior motive.

The Court deferred dealing with the second argument (that the Commission had promised not to collect the administrative penalty) until better evidence could be obtained.

This case confirms that regulators are not compelled to make immediate collection efforts on a fine or administrative penalty in order to preserve their claim.

More Posts

One Appeal or Two?

Many discipline panels conduct their hearings in two parts. The first deals with the merits of the allegations (also known as the “finding” stage). If

Integrity Testing

A constable “was assigned to maintain the perimeter security at a crime scene. He entered the crime scene, leaving its perimeter insecure, and took $300

Void for Vagueness

Law has many pithy expressions that refer to complex legal concepts. For example, the phrase “intrusion upon seclusion” refers to the tort of invading someone’s