In insurance fraud, a person’s impecuniosity must be considered in determining whether a restitution order should be made

Appeal by Popert from a restitution order requiring him to pay $40,537 to an insurance company was allowed. The court’s jurisdiction to make the restitution order rested on the words of section 738(1)(a) of the Criminal Code as well as on subrogation. The scope of s. 738 is not limited to persons whose property has been directly damaged, lost or destroyed as a result of an offence. However, the sentencing judge failed to consider Popert’s ability to pay.

R. v. Popert, [2010] O.J. No. 401, February 2, 2010, Ontario Court of Appeal, J.I. Laskin, R.J. Sharpe and E.E. Gillese JJ.A

The insured apparently arranged for her house to be burnt down, so she could collect the insurance monies. The accused, along with two others, set fire to some furniture in the basement. The fire department arrived and although the house was not burnt to the ground, it suffered considerable damage.  The policy was in the name of the insured and so all monies were paid to her and the companies that performed the cleaning, but all the insurer’s dealings were with the daughter of the insured and her husband and the majority of the money was paid for their benefit.

The accused was charged with and convicted of arson. At sentencing, the judge made a restitution order for him to pay $40,537.50 in favour of the insurance company.

The accused appealed on the basis that he did not receive any of the funds paid out by the insurance company or otherwise profit from the offence.  He argued that although the court has the power to order restitution in favour of an insurance company under s. 152(1) of the Insurance Act, the power is based on subrogation. A restitution order can be made only if the recipient of the insurance monies would him or herself have a valid claim for restitution. In this case the insurance claims were submitted by the same persons who asked Popert to burn down the home. As they were ultimately responsible for the arson, they would not have a right to claim restitution. Accordingly there was no valid claim to pass to the insurance company.

The Court of Appeal agreed with that reasoning, but found that the restitution order could also be justified on the basis of s. 738(1)(a) of the Criminal Code.  The Court of Appeal noted that on a plain reading of s. 738(1)(a), its scope is not restricted to persons whose property has been directly damaged as the result of an offence. Section 738(1) empowers the court to order restitution to “another person” in the case of damage, loss or destruction of the property of “any person.” This is to be contrasted with earlier versions of the section which limited the court’s power to making compensation orders in favour of the person whose property had been lost or damaged. Further, the Court noted, this interpretation accords with a purposive reading of the section. The purpose of the section is to provide a “convenient, rapid and inexpensive means of recovery” for victims. The Court of Appeal stated that the insurance company was, in a very real sense, a victim of the arson.

Ultimately, the restitution order was set aside based on Popert’s lack of ability to pay. The appeal was allowed.

This case was originally summarized by Natasha Morley and originally edited by David Pilley of Harper Grey LLP.

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