R. v. Canadian Dredge & Dock Co., Marine Industries Ltd., Porter (J.P.) Co. and Richelieu Dredging Corp. Inc., (1985) 59 N.R. 241 (SCC)

JudgeLaskin, C.J., Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson, JJ.
CourtSupreme Court (Canada)
Case DateMay 23, 1985
JurisdictionCanada (Federal)
Citations(1985), 59 N.R. 241 (SCC);[1985] SCJ No 28 (QL);1985 CanLII 32 (SCC);9 OAC 321;[1985] 1 SCR 662;[1985] ACS no 28;[1985] CarswellOnt 96;19 DLR (4th) 314;45 CR (3d) 289;19 CCC (3d) 1;59 NR 241

R. v. Cdn. Dredge & Dock Co. (1985), 59 N.R. 241 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

R. v. Canadian Dredge & Dock Company Limited, Marine Industries Limited, J.P. Porter Company Limited and Richelieu Dredging Corporation Inc.

R. v. Canadian Dredge & Dock Company, Marine Industries Limited, Porter (J.P.) Company and Richelieu Dredging Corporation Inc.

Indexed As: R. v. Canadian Dredge & Dock Co., Marine Industries Ltd., Porter (J.P.) Co. and Richelieu Dredging Corp. Inc.

Supreme Court of Canada

Laskin, C.J., Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson, JJ.

May 23, 1985.

Summary:

Twenty corporate and personal accused were charged with counts of fraud and conspiracy to commit fraud, contrary to ss. 338(1) and 423(1)(d) of the Criminal Code of Canada. The charges arose from contracts with public agencies, obtained by tender, where the accused allegedly acted in collusion to artificially raise the price of the accepted bids (bid- rigging). Some accused were convicted, some were acquitted. The convicted accused appealed.

The Ontario Court of Appeal, in a judgment reported (1981), 56 C.C.C.(2d) 193, dismissed the appeals. Four of the corporate accused applied for leave to appeal to the Supreme Court of Canada.

The Supreme Court of Canada dismissed the appeals after granting leave to appeal on the following questions of law: 1. Is the criminal liability of a corporation, when it is based on the misconduct of a directing mind of the corporation, affected because the person who is the directing mind is at the same time acting, in whole or in part, in fraud of the corporation, or wholly or partly for his own benefit or contrary to instructions that he not engage in any illegal activities in the course of his duties? 2. Was there any evidence that a directing mind of the applicant corporation was acting wholly or in part in fraud of the corporation during the period covered by the indictments herein or acting wholly or in part for his own benefit during that period or contrary to instructions that he not engage in illegal activities in the course of his duties and, if so, is the criminal liability of the corporation affected by any one or more of such circumstances? The court applied the identification theory to find the corporations criminally liable for the acts of the directing minds of the corporations. The court stated that the identification theory applied to attribute the criminal conduct of the directing minds to the corporation, where the directing minds were acting within their assigned fields of operation, were not in total fraud of the corporation and acted by design or result partly for the benefit of the corporations. The court stated that although there were limits to corporate criminal liability pursuant to the identification theory, those limits were not exceeded on the facts of this case.

Company Law - Topic 250

Nature of corporation - General - The Supreme Court of Canada stated that "the corporation in reality has three elements: the legal entity, the personal shareholder ( a natural person directly or indirectly), and the employee" - See paragraph 33.

Criminal Law - Topic 141

Vicarious liability - General - The Supreme Court of Canada stated that a natural person was responsible only for those crimes in which he was the primary actor either actually or by express or implied authorization; there is no vicarious liability in the pure sense in the case of the natural person - The court stated that the doctrine of respondeat superior was unknown in the criminal law where the accused was an individual - See paragraph 31.

Criminal Law - Topic 144

Vicarious liability - Criminal responsibility of corporations - The Supreme Court of Canada distinguished between corporate criminal liability on the basis of the identification theory (directing mind) and on the wider American basis of vicarious liability (respondeat superior) - See paragraph 20.

Criminal Law - Topic 263

Corporations - Criminal liability - Basis of - The Supreme Court of Canada traced the development of corporate criminal liability from virtual immunity from criminal liability to virtual equality with personal accused in like circumstances - See paragraphs 14 - 66.

Criminal Law - Topic 263

Corporations - Criminal liability - Basis of - The Supreme Court of Canada, in determining the basis and scope of corporate criminal liability in Canada, referred to and compared the basis for liability in the United States, England and Australia - See paragraphs 23 - 29.

Criminal Law - Topic 263

Corporations - Criminal liability - Basis for - Identification theory - The Supreme Court of Canada held that the identification theory, which was the basis for corporate criminal liability in Canada, operated only where the Crown proved that the conduct of the directing mind of the corporation (1) was within the field of operation assigned to him, (2) was not totally in fraud of the corporation and (3) was by design or result partly for the benefit of the company - See paragraph 66.

Criminal Law - Topic 263

Corporations - Criminal liability - Basis for - Identification theory - The Supreme Court of Canada stated that corporate criminal liability in Canada was based on the identification theory - The court stated that the theory produced the element of mens rea in the corporate entity, which would otherwise be present only in the directing minds of the corporation - The court further stated that the theory established the "identity" between the directing mind and the corporation, which resulted in the corporation being found guilty for the criminal act of a natural person, the employee - See paragraph 20.

Criminal Law - Topic 263

Corporations - Criminal liability - Basis for - Identification theory - The Supreme Court of Canada stated that the identification theory was inspired in the common law in order to find some pragmatic, acceptable, middle ground which would see a corporation under the umbrella of the criminal law of the community, but which would not saddle the corporation with the criminal wrongs of all its employees and agents - The court stated that without limits on the reach of liability under the identification theory, the common law would extend corporate criminal liability to that achieved by applying the principle of respondeat superior (vicarious liability) - See paragraph 48.

Criminal Law - Topic 264

Corporations - Criminal liability - Absolute and strict liability offences - The Supreme Court of Canada stated that corporate criminal liability in strict and absolute liability offences was based on the direct imposition of a primary duty on the corporation by the statute creating the offence - See paragraph 29.

Criminal Law - Topic 265

Corporations - Criminal liability - Mens rea offences - The Supreme Court of Canada stated that corporate criminal liability in mens rea offences was based on the attribution to the corporation of the acts of its employees and agents on the doctrine of the directing mind or identification, which was more limited than the American principle of respondeat superior (vicarious liability) - See paragraph 29.

Criminal Law - Topic 266

Corporations - Criminal liability - Directing mind or will - The Supreme Court of Canada held that generally, the directing mind of a corporation is also guilty of a criminal offence attributed to the corporation - The court opined that "it may well be inevitable that guilt of the directing mind is a condition precedent to corporate guilt, but this has yet to be stated judicially" - See paragraph 22.

Criminal Law - Topic 266

Corporations - Criminal liability - Directing mind or will - The Supreme Court of Canada stated that the identity of the directing mind of the corporation and the corporation itself coincide as long as the actions of the directing mind are performed within the sector of the corporation's operations assigned to him - The court stated that the sector may be functional, geographic or may embrace the entire undertaking of the corporation - The court also stated that whether a person is the directing mind of a corporation is not dependent upon the tortious concept of whether that person was acting within the scope of his authority - See paragraph 21.

Criminal Law - Topic 267

Corporations - Criminal liability - Defences - Instructions prohibiting conduct - The Supreme Court of Canada stated that where the court is concerned with those mens rea offences which can in law be committed by a corporation, the presence of general or specific instructions prohibiting the conduct in question is irrelevant - The court stated that the corporation and its directing mind become one and the prohibition directed by the corporation to others is of no effect in law on the determination of criminal liability of either the directing mind or the corporation itself - See paragraphs 43 - 46.

Criminal Law - Topic 267

Corporations - Criminal liability - Defences - Fraud - The Supreme Court of Canada stated that the identification theory ceases to operate to found corporate criminal liability on the basis of the actions of the directing mind of the corporation where the directing mind completely ceases to act, in fact or in substance, in the interests of the corporation - The court stated that where all the activities of the directing mind are directed against the interests of the corporation with a view to damaging that corporation, whether or not that result is beneficial economically to the directing mind, that may be said to be fraud on the corporation - The court also stated that a benefit to the directing mind in single transactions or in a minor part of the directing mind's activities does not make the identification theory inoperative - See paragraph 47.

Criminal Law - Topic 267

Corporations - Criminal liability - Defences - Fraud - The Supreme Court of Canada stated that where the directing mind of a corporation conceives and designs a plan and then executes it whereby the corporation is intentionally defrauded, and where this is a substantial part of the regular activities of the directing mind in his office, then it is unrealistic in the extreme to consider that the manager is the directing mind of the corporation - The court stated that when the manager's entire energies are directed to the destruction of the undertakings of the corporation he ceases to be the directing mind and there can be no corporate criminal liability based on the identification theory, because the criminal acts cannot be attributed to the corporation - See paragraphs 65.

Cases Noticed:

R. v. Sault Ste. Marie, [1978] 2 S.C.R. 1299; 21 N.R. 295; 40 C.C.C.(2d) 353; 3 C.R.(3d) 30; 85 D.L.R.(3d) 161, refd to. [para. 12].

R. v. Great West Laundry Co. (1900), 3 C.C.C. 514 (Man. Q.B.), refd to. [para. 16].

Lennard's Carrying Company, Limited v. Asiatic Petroleum Company, Limited, [1915] A.C. 705, refd to. [para. 16].

D.P.P. v. Kent & Sussex Contractors Ltd., [1944] K.B. 146, refd to. [para. 17].

R. v. I.C.R. Haulage, Ltd., [1944] K.B. 551, refd to. [para. 17].

R. v. Fane Robinson Ltd., [1941] 3 D.L.R. 409 (Alta. C.A.), refd to. [para. 18].

Rex v. Ash-Temple Co. et al. (1949), 93 C.C.C. 267 (O.C.A.), refd to. [para. 18].

R. v. Electrical Contractors Ass'n. of Ontario and Dent, [1961] O.R. 265 (C.A.), refd to. [para. 18].

R. v. H.J. O'Connell Ltd., [1962] Que. Q.B. 666 (Q.C.A.), refd to. [para. 18].

R. v. J.J. Beamish Construction Co. Ltd., [1966] 2 O.R. 867 (H.C.), refd to. [para. 18].

R. v. St. Lawrence Corp. Ltd., [1969] 2 O.R. 305 (C.A.), refd to. [para. 18].

R. v. Spot Supermarket Inc. (1979), 50 C.C.C.(2d) 239 (Q.C.A.), refd to. [para. 18].

R. v. P.G. Marketplace and McIntosh (1979), 51 C.C.C.(2d) 185 (B.C.C.A.), refd to. [para. 18].

Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153 (H.L.), refd to. [para. 20].

R. v. Martin, [1932] 3 W.W.R. 1 (Man. C.A.), refd to. [para. 20].

R. v. McDonnell, [1966] 1 All E.R. 193, refd to. [para. 20].

R. v. Fell (1981), 64 C.C.C.(2d) 456 (Ont. C.A.), refd to. [para. 22].

New York Central and Hudson Ry. v. U.S. (1909), 212 U.S. 481, refd to. [para. 23].

Egan v. U.S. (1943), 137 F. 2d 369, refd to. [para. 23].

U.S. v. Basic Construction et al. (1983), 711 F. 2d 570 (5th C.C.A.), refd to. [para. 23].

People v. Canadian Fur Trappers Corp. (1928), 248 N.Y. 159, refd. to [para. 24].

State of Idaho v. Adjustment Department Credit Bureau Inc. (1971), 483 P. 2d 687, refd to. [para. 24].

State of Louisiana v. Chapman Dodge Center Inc. (1983), 428 S. 2d 413, refd to. [para. 24].

Commonwealth of Massachusetts v. Beneficial Finance Co. et al. (1917), 275 N.E. 2d 33, refd to. [para. 24].

R. v. Australian Films Ltd. (1921), 29 C.L.R. 195 (Aust. H.C.), refd to. [para. 26].

Mousell Brothers Ltd. v. London and North Western Railway Co., [1917] 2 K.B. 836, refd to. [para. 26].

Morgan v. Babcock and Wilcox Ltd. (1929), 43 C.L.R. 163 (Aust. H.C.), refd to. [para. 26].

Australian Stevedoring Industry Authority v. Oversear and General Stevedoring Co. Pty. Ltd., [1959] 1 F.L.R. 298, refd to. [para. 26].

Grain Sorghum Marketing Board v. Supastok Pty. Ltd., [1964] Qd.R. 98, refd to. [para. 26].

Lamb v. Toledo-Berkel Pty. Ltd., [1969] V.R. 343, refd to. [para. 26].

Kehoe v. Dacol Motors Pty. Ltd., [1972] Qd.R. 59, refd to. [para. 26].

Universal Telecasters (QLD) Ltd. v. Guthrie (1978), 32 F.L.R. 361, refd to. [para. 26].

Trade Practices Commission v. Annand and Thompson Pty. Ltd. (1978), 19 A.L.R. 730, refd to. [para. 26].

Nordik Industries Ltd. v. Regional Controller of Inland Revenue, [1976] 1 N.Z.L.R. 194, refd to. [para. 28].

U.S. v. Hilton Hotels Corp. (1972), 467 F. 2d 1000, refd to. [para. 45].

Upholsterers International Union of North America, Local 1 v. Hankin & Struck Furniture Ltd. et al. (1964), 49 W.W.R.(N.S.) 33 (B.C.C.A.), refd to. [para. 45].

R. v. Waterloo Mercury Sales Ltd., [1974] 4 W.W.R. 516 (Alta. D.C.), refd to. [para. 45].

Moore v. I. Bresler Ltd., [1944] 2 All E.R. 515, refd to. [para. 53].

R. v. Parker Car Wash Systems Ltd. (1977), 35 C.C.C.(2d) 37, refd to. [para. 59].

Old Monastery Co. v. U.S. (1945), 147 F. 2d 905 (4th C.C.A.), refd to. [para. 60].

U.S. v. Empire Packing Co. et al. (1949), 174 F. 2d 16, refd to. [para. 61].

Standard Oil Co. of Texas v. U.S. (1962), 307 F. 2d 120 (5th C.C.A.), refd to. [para. 62].

U.S. v. Carter et al. (1963), 311 F. 2d 934 (6th C.C.A.), refd to. [para. 62].

U.S. v. Ridglea State Bank et al. (1966), 357 F. 2d 495 (5th C.C.A.), refd to. [para. 62].

U.S. v. Beusch et al. (1979), 596 F. 2d 871, refd to. [para. 62].

U.S. v. Cincotta (1982), 689 F. 2d 238, refd to. [para. 62].

U.S. v. Richmond (1983), 700 F. 2d 1183, refd to. [para. 62].

Authors and Works Noticed:

Halsbury's Laws of England (2nd Ed.), vol. 10, pp. 281-282, para. 52 [para. 15].

Halsbury's Laws of England (3rd Ed.), vol. 10, p. 90, para. 183 [para. 15]; vol. 14, p. 30, para. 34 [para. 15].

Halsbury's Laws of England (4th Ed.), vol. 9, p. 31, para. 1379 [para. 26]; p. 804, para. 1379 [para. 15].

Leigh, Criminal Liability of Corporations and other Groups (1977), 9 U. Ott. L.R. 247, pp. 248, 249 [para. 16]; 257 [para. 20].

Winn, C.R.N., Criminal Responsibility of Corporations (1929), 3 Camb. L.J. 398, pp. 404, 407 [para. 20].

Ewaschuk, Corporate Criminal Liability and Related Matters (1975), 29 C.R.N.S. 44, pp. 62-64 [para. 20].

Williams, Glanville, Textbook on Criminal Law (1978), p. 947 [para. 22].

Howard, Criminal Law (4th Ed. 1982), pp. 379-380 [para. 26].

Fisse, W.B., The Distinction between Primary and Vicarious Corporate Criminal Liability (1967), 41 A.L.J. 203, pp. 205 [para. 26]; 210 [para. 27].

Ford, H.A.J., Principles of Company Law (1982), pp. 133-138 [para. 27].

Clad, J.C., The Criminal Liability of Companies, [1977] N.Z.L.J. 420, p. 424 [para. 28].

Muir, I.A., Commentary: Tesco Supermarkets (1973), 5 N.Z.U.L.R. 357 [para. 28].

Shorter Oxford Dictionary (1959) [para. 32].

Waddams, S.M., Alter Ego and The Criminal Liability of Corporations (1966), 24 U.T. Fac. L.R. 145, pp. 148-149 [para. 55].

Welsh, R.S., The Criminal Liability of Corporations (1946), 6 Z.L.Q.R., 345, p. 359 [para. 55].

Andrews, J., Reform in The Law of Corporate Liability, [1973] Crim. Law Rev. 91 [para. 55].

Stewart, D., Canadian Criminal Law (1982), p. 520 [para. 55].

Williams, Glanville, Textbook of Criminal Law (2nd Ed. 1983), p. 973 [para. 55].

Fien, C.M., Corporate Responsibility Under Criminal Law (1973), 5 Man. L.J. 421, p. 427 [para. 55].

Archbold, Pleadings, Evidence and Practice in Criminal Cases (41st Ed. 1982), p. 995 [para. 55].

Yarosky, H., The Criminal Liability of Corporations (1964), 10 McGill L.J. 142, p. 148 [para. 55].

Caroline, M.W., Corporate Criminality and the Courts: Where are they Going (1985), 27 C.L.Q. 237, pp. 245-246 [para. 56].

Burns, P., Commentary: R. v. Parker Car Wash Systems Ltd. (1977-78), 2 Can. Bus. L.J. 474 [para. 59].

Counsel:

Douglas Laidlaw, Q.C., and Roy Stephenson, for the appellant, Canadian Dredge & Dock Company Limited;

John Sopinka, Q.C., and James Woods, for the appellant, Marine Industries Limited;

Marcel Piche, Q.C., and J. O'Reilly, for the appellants, The J.P. Porter Company Limited and Richelieu Dredging Corporation Inc;

Edward Then, Q.C., and John C. Pearson, for the respondent.

These appeals were heard on May 24-26, 1983, at Ottawa, Ontario, before Laskin, C.J., Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson, JJ., of the Supreme Court of Canada.

On May 23, 1985, the judgment of the Supreme Court of Canada was delivered by Estey, J.

Laskin, C.J., and Ritchie, J., did not participate in the judgment.

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255 practice notes
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    • Canada (Federal) Supreme Court of Canada
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    ...[1961] S.C.R. 144, consd. [para. 17]. Lizotte v. R., [1951] S.C.R. 115, consd. [para. 17]. R. v. Canadian Dredge & Dock Co., [1985] 1 S.C.R. 662; 59 N.R. 241, consd. [para. 17]. R. v. Miller, [1985] 2 S.C.R. 613; 63 N.R. 321; 14 O.A.C. 33; 23 C.C.C.(3d) 97; 52 O.R.(2d) 585; 49 C.R.(3d) ......
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