Canada: Monetary Administrative Penalties: Previous Non-Compliances By An Affiliated Entity Cannot Be Considered As An Aggravating Factor

On June 23, 2015, the Administrative Tribunal of Quebec (the "TAQ") quashed a monetary administrative penalty ("MAP") which had been imposed by the Ministry of Sustainable Development, Environment and the Fight against Climate Change ("MSDEFCC") because of minor violations to a certificate of authorization.¹

In its decision, the TAQ ruled that the MSDEFCC cannot take into account as an aggravating factor justifying the imposition of a MAP the fact that a previous notice of non-compliance had been issued to an affiliated entity. In reaching this conclusion, the TAQ thus invalidated a portion of the General Framework for applying MAPs published by the MSDEFCC pursuant to section 115.3 of the Environment Quality Act (the "EQA")².

As it has done it in two previous decisions³, the TAQ restated that the General Framework is an administrative document subordinated to the EQA which must be consistent therewith. Because the General Framework is creating an aggravating factor departing from the general principle that corporations have a legal personality separate from that of their officers and directors, the TAQ found that this principle could not be disregarded by the MSDEFCC in the absence of legislative authorization. The TAQ reviewed section 115.3 of the EQA and noted that it did not provide for this possibility and therefore concluded that the General Framework could not ignore the separate legal personalities of two affiliated corporations. The TAQ also ruled that non-compliances with several conditions of a certificate of authorization did not constitute a repetitive factor but rather a single violation under section 123.1 of the EQA.

This decision provides additional clarity on the circumstances under which a MAP can be imposed and further confirms that the MSDEFCC discretion in this regard is not boundless. It also illustrates that the legality of MAPs can be challenged when they are based on criteria that are not specified in the EQA and that depart from fundamental legal principles.

Footnotes

1. Coopérative Forestière Laterrière v. Ministère du Développement Durable, de l 'Environnement et de la Lutte contre les changements climatiques, 2015 QCTAQ 06827.

2. Cadre général d'application des sanctions administratives pécuniaires, Juillet 2013, section 4.3.1.

3. Soylutions inc. v. Ministère du Développement durable, de l'Environnement, de la Faune et des Parcs, 2014 QCTAQ 05620; Excavation René St-Pierre inc. v. Ministère du Développement durable, de l'Environnement et de la Lutte contre les changements climatiques, 2015 QCTAQ 02386.

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