Canada: Civil Recovery

Last Updated: January 27 2015
Article by Edward Prutschi

Let me start by saying I don't condone shoplifting. Seen as a mere nuisance by some, the 'five-finger-discount' is a petty crime that exacts a heavy toll year after year on retailers – be they big box chain stores or mom and pop corner varieties. The cost is initially born by the store-owner but ultimately passed along to lawful consumers by way of increased prices to account for the overhead costs of security and the loss of inventory.

Many shoplifters are doubtless serial offenders with a pathological disrespect for the lawful property rights of others. However, in my experience having represented hundreds of people accused of shoplifting, a significant sub-set are often factually innocent having honestly forgotten to pay for a single item in a long list of things they shopped for that day thus never forming the requisite intent to be found guilty of a criminal offence. Even those who did make the unfortunate choice to steal often arrive in my office in tears, overwrought by guilt and terribly ashamed by their out-of-character lapse. The psychology of shoplifting is difficult to comprehend. There are of course those who shoplift out of desperate need – the many clients I have represented stealing baby formula or children's clothing or groceries. But even more common is the middle-class individual who conceals an item or two from the cashier while paying for dozens of other purchases. When store security search them upon arrest, their wallets are stuffed with a healthy wad of cash and bristle with credit and debit cards. When I question these clients in my office, almost universally I hear a tale of overwhelming stress – a family illness, marital troubles, or a failed project at work. They cannot articulate why they attempted to steal because they cannot understand the decision themselves.

Canadian criminal law addresses this crime with appropriate proportionate justice. Where the quantity of stolen property is relatively small and the offender has little or no prior criminal history,  diversion is offered. The accused accepts responsibility and pays their modest debt to society usually by making a charitable donation or performing a short stint of community service. If any of the stolen property is not immediately recovered, the offender will also be required to make restitution for the loss. Repeat offenders will typically face a discharge coupled with a period of probation or a small fine and the lifetime stigma of a criminal record that comes along with that.

But where the victimized store is part of a large retail chain, it is common to see a brazen attempt to gouge the offender and extract a further pound of flesh for their wrongdoing. Shortly after being charged, it is common for the accused to receive a letter in the mail. The vast majority of these missives (at least in Ontario) appear to emanate from a single Toronto lawyer, using a fill-in-the-blank form letter to demand payment of $595 for damages "based on trespass to goods, trespass to the Retailer's premises, and conversion." I'm not sure what to make of the fact that this lawyer demands that cheques be made payable to "CIVIL RECOVERY" at a Streetsville P.O. Box rather than to his own trust account at his Toronto office. In any event, the form letter goes on to assert that retailers estimate shoplifting costs exceed $4.0 billion and include in this calculation "the cost of apprehension, documentation and inventory control, and loss of sales opportunities." Essentially, the retailer argues: "even though we caught you and recovered 100% of what you tried to take from us, you owe us compensation for all the trouble we went to in catching you. Oh, and throw in a few bucks to cover the losses we incur for those folks we don't  catch."

This claim has always struck me as legally dubious but to a panicked layperson who receives the letter it comes across as frighteningly official. The letter refers to the $595 claim as the "Settlement Amount" and threatens that a failure to pay may lead to "the commencement of legal proceedings against you before a civil court, for all damages, plus interest, legal expenses, and other administrative costs incurred by the Retailer in connection with this matter." Clients are given a 2-3 week window to digest this after which they are warned that the claim amounts will "increase if payment is not made by the noted date." All of these threats are then given a legal stamp of approval as the letter concludes by saying, "the claiming of civil damages was affirmed by the Divisional Court in Hudson's Bay v.White."

No citation is provided for the White case but it's a safe bet that the letter is referring toHudson's Bay Company v. David James White, [1997] O.J. No. 307 (O.C.J. Gen. Div.) and its subsequent appeal at [1998] O.J. No. 2383 (Ont. Div. Ct.) in which The Bay made a claim to recover surveillance, investigation and apprehension costs arising from a shoplifting incident. It's also a safe bet that the authors of these types of demand letters are counting on the fact that none of the recipients of their missives will actually have the means or the desire to readthe case of Hudson's Bay Company v. David James White.  I say this because, having read both the case and its curt appellate endorsement, one would be hard-pressed to describe this precedent as a victory for retailers.

David White selected five pairs of women's gloves with a retail value of $200 and attempted to leave The Bay without paying for them. He was stopped by The Bay's loss prevention officer and the property was recovered. Interestingly, for reasons that are unclear, Mr. White was never charged with any criminal offence. This is significant as judicial commentary in related cases suggests that where a person is prosecuted for shoplifting in circumstances where the retailer suffers no actual loss (since all the property is immediately recovered) the basis for a civil claim of any kind is substantially weakened. In any event, The Bay took the position that Mr. White owed them $2000 in damages for trespass to land (the store) and chattels (the gloves). They further sought a lifetime injunction banning Mr. White from entering any Bay stores in the future.

The court conducted a detailed analysis concluding that White's decision to enter the store for the purposes of shoplifting did indeed constitute the tort of trespass as he had no valid reason for being there. This leaves open an intriguing (and disturbing for The Bay) question: in situations where an individual conducts some  legitimate shopping but also makes an attempt to steal, can the tort of trespass be made out at all? If not, retailers are left with no civil redress against the high number of shoplifters who actually pay for a portion of their purchases while only concealing a small number of items in an attempt to steal. Leaving that aside, the court expresses a great deal of discomfort with the heart of The Bay's claim raising numerous objections including the question of how The Bay can claim damages for the costs of security and loss prevention when, by their own admission, this cost is passed on to consumers by way of higher prices on the goods themselves. "Does The Bay really suffer any loss in the form of loss prevention costs, or do consumers?" asks Justice Lederman.

Justice Lederman concludes that in these unique circumstances – where White entered the store solely for the purposes of shoplifting and where he was never charged with a criminal offence – nominal damages for The Bay should be awarded. The court declined to make any injunction against Mr. White and ordered him to pay the princely sum of $100. Not content with being so badly beaten, The Bay appealed and in a three-line judgment devoid of any reasoning the Divisional Court concluded that the case "cried out for punitive damages" and replaced the $100 award with a whopping $300 recovery.

So what can we learn from the legal odyssey of Mr. White? In some circumstances, shoplifting can indeed incur modest penalties enforced by the civil courts. The Bay set out to win $2000 in damages and impose a lifetime injunction. What they got after a full trial and appeal was no injunction and a cheque for $300. I'm guessing there weren't too many champagne corks popping over in the legal department at the end of the day. Where does that leave the thousands of people each year who receive a demand for a $595 "Settlement Amount"? Are Retailers really going to launch Small Claims Court actions against people who, in most cases, have already faced criminal prosecution, in the hopes of recovering fees that would barely cover their courthouse parking costs? You do the math.

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