Restorative Justice and Privatized Policing for Fraud Victims

Norman Groot, LLB, CFE, CFI
June 5, 2015

To some people, the concept of privatized policing is offensive as they believe that the service of “policing” should be restricted to those who can be held accountable for their actions in the public realm – whether through a federal, provincial or municipal police service. Such resistance, however, is increasingly becoming outdated due to the lack of public resources to fund public policing and the corresponding increase in demand by the public for policing services. These ideas were explored comprehensively by the Law Commission of Canada in 2005 in its research entitled In Search of Security: The Future of Policing in Canada

Those who take a more modern view acknowledge that investigation and litigation services that civil fraud recovery lawyers offer to the public incorporate a version of the concept of privatized policing. They investigate losses for fraud victims to determine whether there is a viable case for recovery. They use legal proceedings to trace and freeze funds, secure evidence, and bring legal claims for recovery. They draft criminal complaints for fraud victims to assist them in dealing with the public police. These are all forms of what some fraud recovery lawyers coin as “Restorative Justice”. Issues of restorative justice for fraud victims has been discussed by Martin S. Kenney in his publication Access to Restorative Justice for Victims of Fraud – the Finance of Complex Fraud Recovery Investigations and Litigation

“Policing” – which the Law Commission of Canada defines as “maintaining and preserving peace, order, security and safety” – is an important element of a well-functioning society. A well-functioning society promotes lawful fraud investigations and litigation to maintain and preserve peace and order in society. The term “policing” in this context rejects resorting to “self-help” (unlawful methods of coercing payments from thieves and debtors). In effect, therefore, private fraud investigation and litigation are part of the matrix of privatized policing in a modern society.

The Law Commission of Canada has recognized that in today’s society, our lives are inundated with a complex mix of public and private policing services. The Commission’s report and this blog discuss some of the changes taking place in Canadian society, and how lawyers and law firms are becoming part of the networks of public and privatized organizations providing policing services in Canada.

The Growth of Privatized Policing is Occurring All Over the World

The growth of private policing as a phenomenon that is occurring all over the world has been discussed in Canadian criminologist Philip Stenning’s publication Powers and Accountability of Private Police

More recently, on November 20, 2014, the Toronto Star published an article announcing that the Conservative government is examining expanding the privatization of some policing services in Canada. Conservative government to study privatization of some police services The article read in part:

OTTAWA—The Conservative government is examining the “opportunities and challenges” involved in privatizing some policing services in Canada.

Public Safety officials are commissioning a study to examine the growing industry of private policing in Canada and abroad, and to outline the role private security firms could play in traditional public policing roles.

The study appears to be primarily motivated by the cost of and increased pressure on public forces, despite historically low crime rates.

The phenomenon is most clearly evident on the two ends of the policing spectrum, according to Benoît Dupont with the Université de Montréal: the more mundane cop work, like issuing tickets, and the leading edge of crime, such as cybercrime. It may make more sense for private contractors to handle some of these aspects, Dupont said, rather than a higher-paid sworn officer.

The push to include private security in the policing world has many experts concerned, however, about accountability in the criminal justice system. Unlike public police, which have at least some degree of political and civilian oversight, private contractors exist in a very different legal category.

Public Safety wants researchers to examine four jurisdictions with close ties to Canada’s security services — the United States, U.K., New Zealand, and Australia – to determine how they use private firms in policing roles. The report is expected in August 2015.

Fraud Investigation as the High End of Privatized Policing

Elizabeth Joh, in her paper Conceptualizing the Private Police, 2005 Utah Law Review 573, suggests that private police typically focus on loss instead of crime; preventive methods rather than punishment; private justice rather than public court proceedings; and private property rather than public property.

Others take a slightly different view when it comes to fraud recovery. We agree that privatized policing as a concept focuses on loss (or loss recovery) instead of “crime” (or criminal prosecutions which serve the public interest of general and specific deterrence). We also agree that privatized policing focuses on private property as opposed to public property. However, we disagree that privatized policing distinguishes between private justice and public court proceedings. Rather, we are of a view that “private justice”, as it pertains to fraud, includes private investigations and includes private (civil) litigation in the public’s courts.

We are also in agreement with the Law Commission of Canada that the concept of privatized policing is taking place at both ends of the spectrum of what was historically the realm of public policing. The Commission’s report discusses what is described as “high-end” security – being a mix of “‘for-hire” forensic accountants, investigators, consultants, and computer specialists who work for corporations and individuals in the private sector, as well as for government agencies. The report states it is now commonplace for businesses and governments who suspect fraud to hire private sector professionals such as forensic accountants to conduct investigations. We suggest that private sector professionals also include lawyers whose practice focuses on fraud recovery.

Private Criminal Prosecutions

An extension of the concept of privatized policing is the concept of privatized public (criminal and quasi-criminal) prosecutions. This growing phenomenon was discussed in an April 24, 2010, article in the Lawyers Weekly entitled Private Prosecutions Now Get Respect from the Bench

As a general rule, the Crown (as represented by the Attorney General), reviews all prosecutions of a criminal or quasi-criminal nature, except those undertaken by the Attorney General of Canada.

In the context of a private prosecution, s. 507.1 of the Criminal Code requires that a justice who receives an ‘Information’ (complaint) laid by a private informant refer it to a provincial court judge or a designated justice who shall consider whether to compel the appearance of the accused to answer the charge on the Information.

Subsection 507.1(3)(a) provides that the judge or designated justice may issue a summons or a warrant only if he or she has heard and considered the allegations of the informant and the evidence of witnesses.

Subsection 507.1(3)(d) provides that the judge or designated justice may issue process (permit a summons be issued) only if he or she “has given the Attorney General an opportunity to attend the hearing under paragraph (a) and to cross-examine and call witnesses and to present any relevant evidence at the hearing.”

The accepted practice is that the judge or designated justice will defer to the Crown as to whether the proposed private prosecution should proceed or be quashed.

While private prosecutions are occasionally permitted to proceed in some cases (for example, criminal assaults or environmental regulatory actions), they are not often granted for fraud cases. This may be because of the Crown’s perception that the public criminal justice system should not indirectly be used by fraud victims as a means to collect a private debt. That said, the existence of some types of private prosecutions indicates that the government has formally recognized that some forms of privatized prosecutions are lawful in the private sector – something that may be extended to matters of fraud at some point.

Criminal Code Provisions for Restorative Justice for Fraud Victims

Like the concept of privatized policing, the concept of restorative justice has different meanings to different people. Restorative justice is a form of justice often promoted in native communities whereby the offender and the victim meet and agree on a method of reconciliation. Restorative Justice to fraud recovery lawyers incorporates public justice legislated provisions such as criminal restitution orders and fines-in-lieu-of-forfeiture. These Criminal Code provisions of restorative justice for fraud victims should be kept in mind by civil fraud recovery lawyers, especially when it is not possible to freeze assets prior to litigation, as the cost of private investigations and litigation often makes access to justice otherwise unachievable.

Dual Roles as Lawyers and Investigators

The Canadian legal system, unlike the practice in the UK, long ago did away with separating the functions of barristers and solicitors, and licences lawyers to perform these dual roles of preparing cases with clients (solicitors) and presenting cases to Courts (barristers). The Canadian legal system has also acknowledged that the very nature of solicitor work incorporates an element of investigative work, although most solicitors will contract out specialized investigative work to licenced investigators in the private sector.

Also in more recent times, both the Law Society of Upper Canada (LSUC) and the Ontario Securities Commission (OSC) have designated various staff lawyers as ‘investigation counsel’ to investigate their cases for their prosecution counsel. By doing so, it appears that the LSUC and the OSC have implicitly recognized the concept of privatized policing – the LSUC by policing the lawyers they regulate and unlicenced persons providing legal services in the marketplace, and the OSC by policing its licenced members and unlicenced persons dealing in securities in the marketplace.

This merging of functions of lawyer and investigator is also apparent in the Court’s recognition of Independent Supervising Solicitors for civil search warrants (Anton Piller orders – evidence preservation orders), and Independent Referees being lawyers appointed to oversee the execution of Criminal Code search warrants executed on lawyer’s offices. In these functions, the lawyer is “maintaining and preserving peace, order, security and safety” – the terms used to define the service of ‘policing’ by the Law Commission of Canada.


At Investigation Counsel, we promote victim advocacy and academic discussion through various private and public professional associations and organizations. If you have an interest in the topics discussed herein, we welcome your inquiries.

Norman Groot, LLB, CFE, CFI – June 5, 2015