Authors: Sébastien C. Caron and Fanny Albrecht

In a recent decision, the Court of Appeal (Heller v. Autorité des marchés financiers, 2022 QCCA 208) held that general mens rea (the defendant’s knowledge, intention, or recklessness) must be proven beyond a reasonable doubt by the prosecution when section 208 of Quebec’s Securities Act (“QSA”), which provides that “Every person who, by act or omission, aids a person in the commission of an offence is guilty of the offence as if he had committed it himself” is in question. In this decision, the Court of Appeal clarifies that the offence under section 208 QSA is not subject to the strict liability standard - not requiring proof of guilty intent - but rather requires proof of the defendant’s moral culpability.

CONTEXT

Michael E. Heller was convicted of eight counts of assisting in the distribution of a security. Among other things, he was found to have played a key role as counsel, corporate secretary, and director of Beluga Composites Corporation in assisting the company in the distribution of its securities, despite the company not having a prospectus as required by the QSA.

COURT OF APPEAL DECISION

The Court of Appeal stated that, according to the Supreme Court, regulatory offences (i.e. those enacted for the public welfare, but not criminal in nature) are presumed to be strict liability offences, whereas criminal offences are presumed to be “mens rea” offences, requiring proof of the defendant's guilty intent.

The Court reiterated that the Quebec Securities Act is a regulatory statute dealing with offences that are presumed to be of strict liability and do not require mens rea.

However, with respect to section 208 QSA specifically, the Court of Appeal held that this provision does not constitute a stand-alone offence, but establishes a mode of participation in an offence and is thus not limited to specific persons governed by the regulations. The section is therefore not subject to the strict liability standard:

[32]      […]

• Thus, as this court pointed out in Demers, 208 of the QSA can cover the conduct of a “mere clerk” who is not well informed about his or her employer's situation, but who may nevertheless be found to be in violation;
• Part of the rationale for the strict liability regime is that persons engaged in regulated activities agree in advance to be held to high standards and, by exercising due diligence, recognize that they will be held to those standards; this characteristic does translate well to an office worker’s situation;
• No decision of this Court or the Supreme Court has addressed the level of criminal liability required by s. 208 of the QSA;
• In order to do so, it is necessary to distinguish between provisions that create stand-alone offences and those that provide only for a mode of participation.

[Our emphasis and translation]

In addition, the Court of Appeal emphasized the particularly broad scope of section 208 QSA, which encompasses the actions of persons, such as a clerk or delivery person, who may unknowingly assist a business in committing an offence under the QSA. The Court added that although such individuals would likely be acquitted if charged, they would still be required to defend themselves by demonstrating due diligence if section 208 QSA were subject to the strict liability regime, “a profound injustice” according to the Court of Appeal.

In conclusion, the Court of Appeal held that the Superior Court erred in concluding that section 208 QSA was a statutory provision creating a strict liability offence and confirmed that general mens rea, i.e. the defendant’s knowledge, intention, or recklessness, must be proven beyond a reasonable doubt by the prosecution when invoking this provision. The Court added that such proof was indeed made by the Autorité des marchés financiers in the case at hand.

TAKE AWAY

By emphasizing that the prosecution (the Autorité des marchés financiers) must prove the knowledge, intention, or recklessness of the defendant charged with aiding in the commission of an offence under section 208 QSA, the Court confirmed the importance - in specific cases - of proving moral culpability in penal and regulatory matters.