Regulatory Offences and Corporate Crime

• Author: Kent Roach
• Pages: 213-245

213

CHA PTER 6

REGUL ATORY

OFFENCES AND

COR POR ATE CR IME

Regulatory offences are enacted by the federal, provincial, and munici-

pal governments and they far outnumber offences under the Criminal

Code. Regulatory or public welfare offences emphasize the protection

of the public from the risk of harm and t he regulatory interests of the

modern state, as opposed to the puni shment of inherently wrongful

and harmful conduct. A person or a corporation is convicted for per-

forming a regulated activ ity without a licence or for failing to take

specif‌ied safety prosecutions not bec ause such non-compliance must

be denounced and punished, but because it fru strates the regulatory

ambitions of the modern state and create s a danger of harm. Courts

have fashioned distinct r ules to make it easier for the state to investi-

gate and prosecute regulatory offences.

Traditionally, Canadian courts were faced with the stark choice of

interpreting a regulatory offence to require either absolute liability, in

which a conviction followed from the commission of the prohibited act,

or proof beyond a reasonable doubt of a subjective fault element. The

former standard could impose li ability without fault, while the latter

might frustrate t he objectives of the regulatory s cheme by requiring the

Crown to prove that someone in a large organization had g uilty knowl-

edge. A third option, strict liabil ity, has now emerged to dominate the

f‌ield. Absolute liability offences are now vulnerable under section 7 of

the Charter, at least when they deprive individuals of life, liberty, or

security of the person by imposing terms of imprisonment.

CR IMIN AL LAW214

Strict liability offences require fault based on negligence, and for

this reason t hey satisfy the requirement under sect ion 7 of the Charter

that the morally innocent who act wit hout fault not be punished. They

do, however, violate the presumption of innocence under section 11(d)

of the Charter. After the Crown proves the prohibited act of a strict

liability offence beyond a reasonable doubt, negligence is presumed,

and the accused must establi sh that it was not negligent. The accused

makes its case by establishing on a bala nce of probabilities a defence of

due diligence or reasonable mistake of fact. Thi s approach violates the

presumption of innocence by allowing a convict ion even if there is a

reasonable doubt about whether the accused was negligent. Neverthe-

less, it has been held to be justi f‌ied because of the danger of acquitting

an accused who has entered a regulated f‌ield and committed an actus

reus when there is only a reasonable doubt about negligence. An ac-

cused who enters a regulated f‌ield can be expected to bear the burden

of establishing th at it was not negligent in allowing a harmful or dan-

gerous act to occur.

Regulatory offences frequently apply to corporations that have en-

gaged in harmful conduct such as pollution, misleading advertising, or

violations of health, safety, or licensing requirement s. The diff‌iculty of

establishing fault in a l arge organization is one of the reasons why it is

the accused who must establish a l ack of negligence when charged with

a strict liability offence. Negligence for regulatory offences also does

not have to be the marked departure f rom reasonable standards re-

quired when negligence is required for a criminal offence. When a cor-

poration is charged with a cr iminal offence, however, it is necessary to

f‌ind someone within the corporat ion who has the required fault. That

individual must have enough responsibility within the corp oration so

that his or her fault can be att ributed to the corporation and the Crown

must prove fault beyond a reasonable doubt. This makes it consider-

ably more diff‌icult to convict a corporation of a crimin al offence than

a regulatory offence.

Until recently, only the fault of a “directing mind” of the corpora-

tion could be attributed to the corporation for the purpos e of establish-

ing its crimi nal liability. At the end of 2003, Parliament introduced

extensive reforms designed to make it easier to convict and punish

corporations and other organizations for criminal offences. The com-

mon law concept of a “directing mind,” which had previously been re-

stricted to those who had enough power to establi sh corporate policy,

was replaced by a new statutory concept of a corporate “senior off‌icer.”

This position includes not only those who play an import ant role in

establishing a corp oration’s policies, including its board of directors,

Regulator y Offences and Corporate Cr ime 215

chief executive off‌icer, and chief f‌inancial off‌icer, but also those who

are “responsible for managing a n important aspect of the organization’s

activities.”1 Parliament also specif‌ied t he fault required by the senior of-

f‌icer in order to convict the corporation of a negligence-based crim inal

offence2 a nd a subjective intent crimin al offence.3 The criminal liability

of corporations and other organizat ions is still based on the att ribu-

tion of the fault of individuals to the organ izations, but Parliament has

replaced the common law def‌inition of a corporation’s directing mind

with a broader concept that allows the fault of its senior off‌icers to be

attributed to the organization.

A. ABSOLUTE LIA BILITY OFFENCES

An absolute liability offence requires t he Crown to prove the commis-

sion of the prohibited act beyond a reasonable doubt, but does not re-

quire proof of any additional fault element such as guilty k nowledge

or negligence. For offences of absolute liability, “it is not open to the

accused to exculpate himself by showing that he was free of fault.”4

This form of liability ha s been controversial. Supporters of absolute

liability argue that its imposition can persuade a per son or an organ-

ization to take additional measures to prevent the prohibited act. Op-

ponents stress that the imposition of absolute liability can punish t he

morally innocent, and that one who has not acted w ith subjective fault

or negligence cannot be expected to do anyt hing more to prevent the

prohibited act.5

Courts have recogni zed offences as requiring absolute liabil ity

when they have been convinced that t he legislature did not intend the

Crown to prove fault or that such a requirement would frustrate t he

1 Criminal Code, R.S.C. 1985, c. C-46, [Code], s. 2 (as amended by S.C. 2003, c.

21).

2 Ibid., s. 22.1.

3 Ibid., s. 22.2.

4 R. v. Sault Ste. Marie (City) (1978), 40 C.C.C. (2d) 353 at 374, [1978] 2 S.C.R.

1299 (S .C.C.) [Sault Ste. Marie].

5 In R. v. Hess (1990), 59 C.C.C. (3d) 161 (S.C.C.) [Hess], Wilson J. argued for the

majority th at an absolute liability offence for st atutory rape served no use ful

purpose and w as unfair to the accus ed who believed that the girl w as over four-

teen years of age. In d issent, McLachlin J. would h ave upheld the offence under

s. 1 of the Canadian C harter of Rights and Freedoms, Part I of t he Constitution Act,

1982, bei ng Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 on the basis

that it would dis courage men from having sex w ith girls who might be under

fourteen year s of age.