WEPP: Offences and penalties

Clause by Clause Briefing Book

An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act and to make consequential amendments to other Acts

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• Bill Clause No. 1 - WEPP Section 38(1)
• Bill Clause No. 1 - WEPP Section 38(2)
• Bill Clause No. 1 - WEPP Section 38(3)
• Bill Clause No. 1 - WEPP Section 39
• Bill Clause No. 1 - WEPP Section 40

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Bill Clause No. 1
Section No. 38(1)
Topic: OFFENCES AND PENALTIES

Proposed Wording

38. (1) Every person commits an offence who

• (a) makes a false or deceptive entry, or omits to enter a material particular, in any record or book of account that contains information that supports an application under this Act;
• (b) in relation to an application under this Act, makes a representation that the person knows to be false or misleading;
• (c) in relation to an application under this Act, makes a declaration that the person knows is false or misleading because of the non-disclosure of facts;
• (d) being required under this Act to provide information, provides information or makes a representation that the person knows to be false or misleading;
• (e) obtains a payment under this Act by false pretence;
• (f) being the payee of any cheque issued as a payment under this Act, knowingly negotiates or attempts to negotiate it knowing that the person is not entitled to the payment or any part of the payment; or
• (g) participates in, assents to or acquiesces in an act or omission mentioned in any of paragraphs (a) to (f).

Rationale

This section is designed to protect the integrity of the Program by prohibiting acts of fraud against it, or any actions that impede the administration of the Act. These offences are punishable under section 38(3) of the Act (refer to clause 1, section 38(3)).

Present Law

Not applicable.

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Bill Clause No. 1
Section No. 38(2)
Topic: OFFENCES AND PENALTIES

Proposed Wording

38. (2) Every person who fails to comply with any of the requirements of subsection 21(1) commits an offence.

Rationale

Receivers and trustees who fail to comply with the requirements set out for them in the administration of the WEPP, as set out in section 21(1) of the Act (refer to clause 1, section 21(1) of the Bill) are guilty of an offence. However:

• it is anticipated that this provision will be rarely used; rather, in the event that trustees or receivers fail to fulfil their obligations, recourse will be pursued under section 14.01 of the Bankruptcy and Insolvency Act (BIA). Under amendments proposed to the BIA in this Bill (refer to clause 115(2), section 243(4)), receivers who are appointed for receiverships that fall within the parameters of the BIA (under section 243(2)) must be licensed trustees in bankruptcy and can therefore be sanctioned for misconduct by the Superintendent of Bankruptcy under section 14.01 of the BIA.
• it should be noted that the failure to comply with directives from the Minister (under s. 21(2)) is not considered an offence. This omission is deliberate, as it would be unfair to use criminal sanctions for failing to meet a requirement that is not set out in the Act.

Present Law

Not applicable.

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Bill Clause No. 1
Section No. 38(3)
Topic: OFFENCES AND PENALTIES

Proposed Wording

38. (3) A prosecution for an offence under subsection (1) or (2) may be commenced at any time within six years after the time when the subject-matter of the prosecution arose.

Rationale

The six-year limitation on the prosecution for offences corresponds to the six-year limit on the power of the Minister to audit WEPP payments in cases of suspected fraud under section 31(3) (refer to clause 1, section 31(3) of the Bill) because, in the case of the fraud-related offences described in section 38, the detection of most of these offences would occur through audits.

Present Law

Not applicable.

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Bill Clause No. 1
Section No. 39
Topic: OFFENCES AND PENALTIES

Proposed Wording

39. (1) Every person commits an offence who delays or obstructs a person in the exercise of his or her powers or the performance of his or her duties under this Act.

(2) A prosecution for an offence under subsection (1) may be commenced at any time within two years after the time when the subject-matter of the prosecution arose.

Rationale

This section prohibits individuals from obstructing an individual designated by the Minister to perform duties under this Act, in the performance of those duties. The two year limitation period set out in section 39(2) is shorter than the six-year limitation period for section 38(1) offences (refer to clause 1, section 38(3) of the Bill) because, unlike the offences listed in section 38(1) of the Act, the detection of the offence of obstructing the Minister (or designate) set out in section 39(1) will not rely on the auditing process enabled under section 31(3). (Previous claims to the Program may only be audited during a period of six years following the issue of payment to the claimant under section 31(3) of the Act. The six-year limitation for prosecuting offences under section 38(1) of the Act corresponds with the time limit on audits imposed by section 31(3).

Present Law

Not applicable.

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Bill Clause No. 1
Section No. 40
Topic: OFFENCES AND PENALTIES

Proposed Wording

40. Every person who is guilty of an offence under section 38 or 39 is liable on summary conviction to a fine of not more than $5,000 or to imprisonment for a term of not more than six months, or to both.

Rationale

This section provides proportionate penalties for offences committed under sections 38 and 39, in order to deter illegal activity and protect the integrity of the Program. The $5,000 fine is meant to provide a financial penalty greater than the maximum amount that could be defrauded through a fraud perpetrated against the WEPP (i.e. $3,000). This penalty provides a deterrent to fraudulent behaviour which enhances the deterrent effect of the power of the minister (or designate) to recover "overpayments" of WEPP benefits under section 32(3) of the Act, as any individual who received a payment from the WEPP to which he or she was not legally entitled could be compelled to repay the amount under section 32(3) of the Act (refer to clause 1, section 32(3) of the Bill).

Present Law

Not applicable.