Regulatory Offences and Corporate Crime

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

219

CHA PTER 6

R EGUL ATORY

OFFENCES AND

COR POR ATE CR IME

Regulatory offences are en acted by the federal, provincial, and munici-

pal governments and they far outnumber offences under the Criminal

Code. Regul atory or public welfare offences emphasize the protection

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

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 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 d anger 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 w ith 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 liabil ity 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, str ict 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 li fe,

liberty, or security of the person by imposing terms of imprisonment.

CR IMIN AL LAW220

Strict liability offences require fault based on negligence, and for

this reason they 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 establish 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 conviction 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 of fence. Negligence for regulatory offences also does not

have to be the marked depart ure from reasonable standards required

when negligence is required for a crimin al 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 responsibil ity 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 crimin al offence than

a regulatory offence.

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

could be attributed to the corporation for the purpos e of establishing

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

sive reforms designed to make it ea sier 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 est ablishing 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 import ant aspect of the organization’s activities.”1 Par-

liament also speci f‌ied 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 organizat ions is still based on the att ribution of the

fault of individuals to the organizations, but Parliament has replaced

the common law def‌inition of a corporation’s directing mind w ith a

broader concept that allows the fault of its senior off‌icers to be attr ib-

uted 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 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 ha s been controversial. Supporters of absolute

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

zation to take additional mea sures to prevent the prohibited act. Op-

ponents stress th at 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 (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.