Regulatory Offences and Corporate Crime

• Author: Kent Roach
• Profession: Faculty of Law and Centre of Criminology.University of Toronto
• Pages: 219-251

219

CHAPTER 6

REGULATORY

OFFENCES AND

CORPORATE CRIME

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 the regulatory interests of the

modern state, as opposed to the punishment of inherently wrongful

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

forming a regulated activity without a licence or for failing to take

specif‌ied safety precautions not because such non-compliance must be

denounced and punished, but because it frustrates the regulatory am-

bitions of the modern state and creates a danger of harm. Courts have

fashioned distinct r ules to make it easier for the state to investigate 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 liability without fault, while the

latter might frustrate the objectives of the regulatory scheme by re-

quiring the Crown to prove that someone in a large organization had

guilty knowledge. A third option, strict liability, has now emerged to

dominate the f‌ield. Absolute liability offences are now v ulnerable 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.

CRIMIN AL LAW220

Strict liability offences require fault based on negligence, and for

this reason they satisfy the requirement under section 7 of the Charter

that the morally innocent who act without 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 establish that it was not negligent. The accused

makes its case by establishing on a balance of probabilities a defence of

due diligence or reasonable mistake of fact. This approach violates the

presumption of innocence by allowing a conviction even if there is a

reasonable doubt about whether the accused was negligent. Neverthe-

less, it has been held to be justif‌ied 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 that 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 requirements. The diff‌iculty of

establishing fault in a large 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 of fence. Negligence for regulatory offences also does not

have to be the marked departure from reasonable standards required

when negligence is required for a criminal offence. When a corpora-

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

someone within the corporation who has the required fault. That in-

dividual must have enough responsibility within the corporation 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 criminal offence than

a regulatory offence.

Traditionally, only the fault of a “directing mind” of the corporation

could be attributed to the corporation for the purpose of establishing

its criminal liability. At the end of 2003, Parliament introduced exten-

sive reforms designed to make it easier to convict and punish corpora-

tions and other organizations for criminal offences. The common law

concept of a “directing mind,” which had previously been restricted to

those who had enough power to establish corporate polic y, was replaced

by a new statutory concept of a corporate “senior off‌icer.” This position

includes not only those who play an important role in establishing a

corporation’s policies, including its board of directors, chief executive

Regulator y Offences and Corporate Cri me 221

off‌icer, and chief f‌inancial off‌icer, but also those who are “responsible

for managing an important aspect of the organization’s activities.”1 Par-

liament also specif‌ied the fault required by the senior off‌icer in order

to convict the corporation of a negligence-based criminal offence2 and

a subjective intent criminal offence.3 The criminal liability of corpora-

tions and other organizations is still based on the attribution of the

fault of individuals to the organizations, 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 attrib-

uted to the organization.

A. ABSOLUTE LIABILITY OFFENCES

An absolute liability offence requires the 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 knowledge

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 has been controversial. Supporters of absolute

liability argue that its imposition can persuade a person or an organi-

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

ponents stress that the imposition of absolute liability can punish the

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

or negligence cannot be expected to do anything more to prevent the

prohibited act.5

Courts have recognized offences as requiring absolute liability

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

Crown to prove fault or that such a requirement would frustrate the

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 (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 wa s over four-

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

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

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

that it would disc ourage men from having sex w ith girls who might be under

fourteen years of a ge.