Corporate Environmental Obligations and Directors' and Officers' Liability

• Author: Jamie Benidickson
• Pages: 191-214

191

chAPter 9

CORPORATE

ENVIRONMENTAL

OBLIGATIONS AND

DIRECTORS’ AND

OFFICERS’ LIABILITY

A.the LiABiLity of corPorAtions

Among the principal forms of business organizations — sole proprietor-

ships, partnerships, and corporations — the last, corporations, has at-

tracted particu lar attention from an environmental perspect ive. Despite

many variations i n corporate form, from small, not-for-prof‌it entities to

major multinational f‌irms, in the environmental context corporations

are regarded as serious sources of potential harm whose operations

require careful supervision and control.

While the nature and mag nitude of the risks create an obvious pub-

lic interest in channelling corporate behaviour in ways that reduce the

likelihood of environmental damage, the practical problems of inf‌lu-

encing corporate behaviour through the legal regime must be faced.

Those who rely on legal mechanisms, criminal sanctions in particular,

have had to consider how a regime of prohibitions and penalties will

affect corporate operations. In the context of corporate accused, some

aspects of criminal law pose especially intriguing problems. The need,

in relation to the prosecution of certain offences, to establish a guilty

mind or some form of intent on the part of accused corporations is one

obvious example.

Although it may be argued that corporate action ultimately de-

pends on human agency, or that the corporation can never act alone,

the tendency is to subordinate philosophical dilemmas in the context

of holding corporations responsible for wrongdoing. One analysis sets

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out the normative and practical arguments. First, justice requires that

everyone in breach of penal law be equ ally subject to prosecution. “It is

hardly fair,” the analysis continues, “that individuals committing rath-

er petty crimes, almost always entailing only one or a few victims, are

subject to prosecution and imprisonment while a corporation might

cause harm on a far grander scale, yet escape punishment.” Second,

although individual actions within a corporate environment may not

constitute a crime when considered separately, the cumulative impact

can be criminal and blameworthy; to exempt the corporation from lia-

bility would be to permit such conduct to go unchecked. Moreover,

corporations, because of the collectivity of individuals involved, can

and do behave as the persons that they, in strict point of law, are. Cor-

porations are therefore susceptible to stigmatization (harm to status or

reputation), and deterrence in the same way individuals are. Final ly, ac-

cess to resources, information, and expertise makes corporations bet-

ter able to take measures to avoid the commission of criminal offences

than individuals ordinarily are.1

Another approach to the conceptual challenges of holding cor-

porations accountable for criminal offences attributed to them is to

minimize the criminal dimensions of the situation. Such an approach

is hinted at by Chief Justice Lamer, who expressed the opinion that

“when the criminal law is applied to a corporation, it loses much of

its ‘criminal’ nature and becomes, in essence, a ‘vigorous’ form of ad-

ministrative law.” Since the stigma attached to conviction is effectively

reduced to a f‌inancial penalty, the corporation — which cannot be im-

prisoned — is in a completely different situation than is an individual.2

As discussed below, recent changes to the Criminal Code in the after-

math of the Westray Mine disaster appear to have increased the direct

exposure of corporations to criminal liability.

Corporate liability for environmental violations has rested on a

variety of grounds. One means of linking the responsibility of the cor-

poration directly with the conduct of individuals in its employ takes

the form of vicarious liability. Such an approach appears in some regu-

latory legislation, Alberta’s Environmental Protection and Enhancement

Act, for example, where it is provided that

for the purposes of this Act, an act or thing done or omitted to be

done by a director, off‌icer, off‌icial, employee or agent of a corpora-

1 MA Bowden & T Quigle y, “Pinstr ipes or Prison Strip es? The Liability of Cor-

porations and Di rectors for Environmental Of fences” (1995) 5 J Envtl L & Pr ac

209 at 222.

2 R v Wholesale Travel Group Inc, [1991] 3 SCR 154 at 182.