Penal Provisions, Strict Construction

The appellant engages in the distribution of direct‑to‑home (DTH) television programming and encrypts its signals to control reception. The respondents sold U.S. decoding systems to Canadian customers that enabled them to receive and watch U.S. direct‑to‑home (DTH) television programming. Before finding that s. 9(1)(c) of the Radiocommunication Act prohibited such decoding, Iacobucci J stated (at para. 28):

Other principles of interpretation — such as the strict construction of penal statutes and the “Charter values” presumption — only receive application where there is ambiguity as to the meaning of a provision. (On strict construction, see: Marcotte v. Deputy Attorney General for Canada, [1976] 1 S.C.R. 108, at p. 115, per Dickson J. (as he then was); R. v. Goulis (1981), 33 O.R. (2d) 55 (C.A.), at pp. 59-60; R. v. Hasselwander, [1993] 2 S.C.R. 398, at p. 413; R. v. Russell, [2001] 2 S.C.R. 804, 2001 SCC 53, at para. 46. I shall discuss the “Charter values” principle later in these reasons.)

Before finding that s. 34 of the Criminal Code should be read in a literal manner so as to favour the accused, Lamer CJ stated (at para. 39):

The Criminal Code is not a contract or a labour agreement. For that matter, it is qualitatively different from most other legislative enactments because of its direct and potentially profound impact on the personal liberty of citizens. The special nature of the Criminal Code requires an interpretive approach which is sensitive to liberty interests. Therefore, an ambiguous penal provision must be interpreted in the manner most favourable to accused persons, and in the manner most likely to provide clarity and certainty in the criminal law.

Before finding that a possible mistake of law by the taxpayer, i.e., a belief that interest from "'escrow mortgages'" was not taxable, should be accepted as a defence to the imposition of a gross negligence penalty under ITA s. 163(2), Strayer J stated:

One must keep in mind, as Cattanach, J said in the Udell case, (supra), that this is a penal provision and it must be construed strictly.

In finding that the taxpayer should not be liable for a penalty under s. 56(2) (the predecessor to s. 163(2)) respecting the gross negligence of his accountant in preparing the taxpayer’s return, Cattanach J stated:

There is no doubt that Section 56(2) is a penal section. In construing a penal section there is the unimpeachable authority of Lord Esher in Tuck C' Sons v. Priester (1887), 19 Q.B.D. 629, to the effect that if the words of a penal section are capable of an interpretation that would, and one that would not, inflict the penalty, the latter must prevail. …

I take it to be a clear rule of construction that in the imposition of a tax or a duty, and still more of a penalty, if there be any fair and reasonable doubt the statute is to be construed so as to give the party sought to be charged the benefit of the doubt.