Thursday, 9 July 2009

What role deterrence as a factor in imposing imprisonment?

The following is a discussion of two cases decided in June 2009 that consider the role of deterrence in imposing prison sentences. The material was first published in the June Edition of Firstlaw's Criminal Law Online Service.

In the first, the High Court noted the lack of deterrence value in imposing imprisonment on those who are unable to pay a civil debt. In the second, the Central Criminal Court signalled its willingness to sentence company directors to prison for price fixing under the Competition Acts having regard to the demonstrable inadequacy of other deterrence measures.

The recent High Court judgment in the case of McCann v Judge of Monaghan District Court and others placed the spotlight on the use of imprisonment for people who are unable to pay their debts. The case involved a mother two who had borrowed money from her local credit union and had been subject in 2005 to a District Court order jailing her for the non-payment of the debt.

Ms McCann challenged section 6 of the Enforcement of Court Orders Act 1940 (1940 Act) claiming a breach of rights under both the Constitution (including the applicant’s right to fair and just procedures under Articles 34, 40.3 and 40.4) and the European Convention on Human Rights (Article 6). The High Court found that the use of imprisonment in this type of situation breached Ms McCann’s rights to fair procedures and personal liberty under the Constitution and therefore found that the District Court had no jurisdiction to make an order to jail her. No judgment was made on the rights claimed under the ECHR.

Echoing the claims of many human rights organisations, particularly FLAC who have long campaigned on this issue, Ms Justice Laffoy concluded that imprisoning someone because of their inability to pay their debts was both “futile in terms of securing a remedy” but also “imposed unnecessary expense on both the creditor and the state.” She also noted that both the state and the Credit Union had been agreeable to the order for imprisonment being quashed, and as a result she found it strange that the State should “countenance continuation” of a “vague scheme of enforcement of debt” that gave no guidance to any party involved. A FLAC report on this issue stated in 2003 “[a]part from the moral considerations … imprisonment does not make economic sense. Not only does the debt remain to be paid when the debtor is released from prison… but the cost to the State far outweighs any possible benefit that might result.” These costs are considerable – in 2008 276 people were jailed for failing to repay loans, a 37% increase 2007 cases, in total 1,138 people were imprisoned between May 2003 and July 2008.
The judgment has been welcomed by virtually everyone and in response the government has taken quick action in drafting the Enforcement of Court Orders (Amendment) Bill 2009. The proposed Bill will amend Sections 6 and 8 of the 1940 Act. It addresses the flaw in the current law that meant that if a debtor failed to appear in court for a Committal Order they could immediately be subject to that Order without any need to bring them before the court to give their side of the case. The amendment will allow for a summons to be issued in such a situation and if the debtor still fails to appear, a warrant will be issued to arrest them to bring them before the court. The impact of this change will be to ensure a hearing for the debtor and allow the court to ask the question as to whether s/he has wilfully refused to pay. It will also allow the court to make sure that all other possible steps have been taken to recover the debt. Imprisonment should therefore only be used where the debtor has the means to pay and refuses to do so.

It is expected that the Bill will complete its passage through the Oireachtas before the summer recess. Quick action to clear up the legal position is needed as the impact of the McCann judgment has already been felt in the courts. The District Court has been refusing applications to imprison people for non-payment in light of the case. For example, in the Mullingar District Court Mr. Justice Neilan questioned whether it was worthwhile even making instalment orders because of a concern as to how they could be enforced and he questioned the value of using civil processes if “the engine that brings about its effectiveness is being dismantled”. In the meantime, the Courts Service has now confirmed that it has written to each chief district court clerk confirming that no further committal warrants should be issued under section 6 of the 1940 Act.

The McCann judgment is important as it reaffirms the basic principle that prison should only be used as the punishment of last resort under our criminal justice system and should be reserved for people found guilty of committing the most serious crimes. The second case for consideration is DPP v Duffy [2009] IEHC 208, which involved charges brought against a number of individuals and Citroën dealerships following allegations of price fixing, and it indicates a growing awareness that white collar crime is serious and the real risk of imprisonment an effective means of deterring it. Company Director Mr Duffy pleaded guilty to two counts of authorising his company to enter into and implement an agreement which was designed to interfere with competition in the trade of Citroen motor vehicles between 1997 and 2002, contrary to the Competition Act 1991 and the Competition (Amendment) Act 1996. He also pleaded guilty to two similar counts, on behalf of the company. Mr Duffy was sentenced to six months in relation to “entering into” the price fixing cartel and nine months for implementing it; these sentences were suspended. He was also fined €100,000.

Although Mr. Duffy was not himself imprisoned, what is particularly interesting about this case are the comments of Mr. Justice McKechnie regarding the effectiveness of sanctions for price-fixing offences in breach of the Competition Acts. Referring to the previous case of DPP v Manning (Unreported, High Court, 9th February 2007) that he also presided over, Justice McKechnie noted that he had emphasised in that judgment the particularly serious nature of this type of offence describing it as “a crime against all consumers”. At that time he had warned that “the only real and effective deterrent for those involved in this type of unlawful behaviour might have to include a prison sentence.” He had also warned “that, because of the activity’s harmful effects on the public, those involved would have to take note that any lead in period for leniency could not be prolonged.” Thus in Duffy Justice McKechnie concludes that “fines, unless severe and severely impacting, are not a sufficient deterrent” and that the use of an un-suspended prison sentence in such cases “was close at hand.” Whilst to date the courts had been willing to impose fines and suspended sentences on Company Directors this judgment highlights the degree of frustration now felt by the courts. As a result it would appear that the courts are indicating their willingness to get tougher and ultimately imprison company directors in relation price fixing offences under the Competition Acts. While there is no fear of Irish courts ever imposing 150 year sentences as in the Madoff case in the US, this clear warning to company directors that white collar crime is serious crime is long overdue and welcome.

Labels: , , , , , , ,