Corporate Environmental Obligations and Directors' and Officers' Liability

• Author: Jamie Benidickson
• Pages: 197-218

197

CHA PTER 9

COR POR ATE

ENVIRONMENTAL

OBLIGATIONS AND

DIRECTORS’ A ND

OFFICERS’ LIABILITY

A. THE LIABILITY OF CORPORATIONS

Among the principal forms of business organizations — sole propri-

etorships, partnerships, and corporations — the last, corporations,

has attracted par ticular attention from an environmental perspective.

Despite many variations in corporate form, from small, not-for-prof‌it

entities to major multinational f‌irms, in the environmental context

corporations are regarded as ser ious sources of potential harm whose

operations require caref ul supervision and control.

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

lic interest in channelling corporate behaviour in ways t hat 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 ex ample.

Although it may be argued that cor porate action ultimately depends

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

dency is to subordinate philosophical dilemmas in the context of hold-

ing corporations responsible for wrongdoing. One analysis sets out the

ENVIRONMENTAL L AW198

normative and practical arg uments. First, justice requires that ever yone

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

fair,” the analysis continues, “that individua ls committing rather petty

crimes, almost alway s 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 esc ape punishment.” Second, although indi-

vidual actions with in a corporate environment may not constitute a

crime when considered separately, the cumulative impact can be crim-

inal and blameworthy; to exempt the corporation from liability 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 th at they, in strict point of law, are. Corporations are

therefore susceptible to stigmati zation (harm to status or reputation)

and deterrence in the same way individuals are. Finally, access to

resources, information, and expertise makes corporations better able

to take measures to avoid the commission of criminal offences than

individuals ordinarily are.1

Another approach to the conceptual challenges of holding corpor-

ations accountable for criminal offences att ributed to them is to mini-

mize the criminal dimensions of the situation. Such an approach is

hinted at by Lamer CJ, who express ed the opinion that “when the crim-

inal law is applied to a corporat ion, it loses much of its ‘crim inal’ nature

and becomes, in essence, a ‘v igorous’ form of admini strative law.” Since

the stigma attached to conviction is effectively reduced to a f‌inancial

penalty, the corporation — which cannot be imprisoned — is in a com-

pletely different situation than is an individual.2 As discu ssed below,

changes to the Criminal Code in the aftermath of the Westray Mi ne

disaster appear to h ave increased the direct exposure of corporations

to criminal liability.

Corporate liability for environment al violations has rested on a

variety of grounds. One mean s of linking the responsibility of the cor-

poration directly with t he conduct of individuals in its employ takes

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

latory legislation, Alber ta’s Environmental Protection and Enhancement

Act, for example, where it is provided that

for the purposes of t his Act, an act or thing done or omitt ed to be

done by a director, off‌icer, off‌icial, employee or agent of a corporation

in the course of his e mployment or in the exercise of hi s powers or

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

rations and Di rectors for Environmental Of fences” (1995) 5 Journal of Environ-

mental Law & Pract ice 209 at 222.

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