D. Corporations And Mens Rea Offences
| Author | Kent Roach |
| Profession | Faculty of Law and Centre of Criminology. University of Toronto |
| Pages | 230-242 |
Page 230
Canadian courts resisted holding corporations vicariously liable for the mens rea offences of their employees. Instead, they identified the cor-
Page 231
poration with a senior official who acts as the corporation’s directing mind and attributed the fault or mental element of that person to the corporation for the purpose of determining the corporation’s liability for a criminal offence. In doing so, they followed English authorities that suggest that a corporation is liable only for what is done by "the directing mind and will of the corporation, the very ego and centre of the personality of the corporation."64Under this identification or alter ego theory, the wrongful action of the directing mind is attributed to the corporation so that the corporation has primary, not vicarious, liability for the acts and mind of an official who is a directing mind of the corporation.
A corporation could not insulate itself from the crimes committed by a directing mind by claiming ignorance or issuing instructions that the crime not be committed. Thus, the Supreme Court has stated: "Acts of the ego of a corporation taken within the assigned managerial area may give rise to the corporate criminal responsibility, whether or not there be formal delegation; whether or not there be awareness of the activity in the board of directors or the officers of the company, and
. . . whether or not there be express prohibition."65One relatively narrow exception was that a corporation would not be held liable if the directing mind acted wholly in fraud and against the interest of the corporation. In that case, the corporation would be the victim of the crime, not responsible for it. The Court has restricted this principle so that the corporation remains liable if the directing mind’s activities were "by design or result partly for the benefit of the company."66Thus, a corporation may be guilty of fraud if it receives kickbacks, even though the directing mind fraudulently keeps some of the kickbacks from the corporation.
Canadian courts defined the directing mind of the corporation somewhat more broadly than English courts, in part because of the decentralized nature of much corporate activity in Canada. In the leading case of Canadian Dredge & Dock, the Supreme Court made clear that there could be more than one directing mind of a corporation. Directing minds could include "the board of directors, the managing director, the superintendent, the manager or anyone else delegated . . . the governing executive authority of the corporation." In R. v. Waterloo
Page 232
Mercury Sales Ltd.,67the manager of a used car lot was held to be the corporation’s directing mind for the purpose of determining whether it had committed fraud by rolling back odometers, even though the president of the corporation had no knowledge of the acts and had circulated written instructions not to roll back odometers. The manager was acting as the corporation’s directing mind within the field of operation assigned to him. An employee with lesser responsibility, such as a salesperson or a mechanic, would not be a directing mind.
In the 1990s, Canadian courts placed limits on who might be classified as a corporation’s directing mind. A directing mind must be an officer or manager of a corporation, acting in the scope of his or her responsibility. A directing mind must also have "an express or implied delegation of executive authority to design and supervise the implementation of corporate policy rather than simply to carry out such policy."68
Under this test, both a tug captain who exercised considerable discretion69and a truck driver who was a corporation’s sole representative in an area70were held not to be directing minds of their corporations. The courts reasoned that these employees did not have the power to design or supervise the implementation of corporate policy and that their fault could not be attributed to the corporation. This trend made it difficult to hold corporations criminally accountable for crimes committed in Canada. Not infrequently, those with the degree of responsibility required of a directing mind would be sheltered within the corporate hierarchy and not have the required fault, while those with the required fault would not have enough policy-making power within the corporation to be classified as the corporation’s directing mind. The designers and even the supervisors of corporate policies in a large and economically dependent country such as Canada often were so far away from any criminal acts that took place that they did not have the mens rea required for the particular crime. Those closer to the ground who would have the required fault were not classified as directing minds because they did not design or supervise the implementation of corporate policy, even though they exercised an important managerial role in the corporation.
Page 233
There were many calls to abandon the identification, alter ego, or directing mind approach in favour of less restrictive approaches. One option would be to hold corporations vicariously responsible for the actions of all their employees and agents as is done in some American jurisdictions. This would run against the criminal law’s reluctance to impose vicarious liability based on the fault of another. Such vicarious liability likely offends the principles of fundamental justice, but it may not violate section 7 of the Charter because corporations have no rights to life, liberty, and security of the person. In any event, vicarious liability would still only attribute the fault of individuals to corporations. Another option would have been to to impose liability on corporations based on their organizational fault or "corporate culture," as is done in some Australian jurisdictions.71The focus under such proposals would not be on the fault of individuals within the corporation, but the fault of the corporation as a whole.
In late 2003, Parliament enacted Bill C-45 that amended the Criminal Code to provide a new regime to determine when corporations and other organizations were guilty of criminal offences and its provisions took effect at the end of March 2004. The Bill also provided a new punishment regime to allow courts not simply to fine corporations, but also to place them on probation in an attempt to ensure that the offences were not repeated. This new regime is a fundamental change to corporate criminal liability in response to corporate misconduct that led to the death of twenty-six miners in the Westray Mine disaster, as well as events such as the Enron scandal.
The new regime replaces the common law concept of a directing mind with a new and broader statutory concept of a senior officer, which now includes those who are responsible for managing an important aspect of the corporation’s activities. At the same time, the new regime retains the idea that a senior officer of the corporation must be at fault before that person’s fault can be attributed to the corporation for either a negligence or subjective fault offence under the Criminal Code. The new provisions do, however, allow an organization to be found criminally liable for crimes of negligence because of the aggregate actions of more than one of its representatives and the aggregate or collective fault of more than one of its senior officers. It does not go as far
Page 234
as vicarious liability for the fault of all employees or fault that inheres in the corporation as an organization including "corporate culture" as opposed to the senior officers of the corporation.
The new regime also lends some structure to the Criminal Code by providing a separate provision for determining organizational liability for criminal offences of negligence and for criminal offences of subjective fault. It also builds on the parties provisions of the Criminal Code by tying organizational liability to individuals in the organization being a party to the specific offence. This underlines the reality that in many cases both individuals within the organization and the organization itself may face criminal charges. Nevertheless, it does make the new sections complex and can in some circumstances result in the corporation being...
To continue reading
Request your trial