Regulatory Offences and Corporate Crime

• Author: Kent Roach
• Profession: Faculty of Law and Centre of Criminology. University of Toronto
• Pages: 194-225

194

CHA PTER 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 wrong-

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

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

specif‌ied safety prosecutions not because such non-compliance must

be denounced and punished, but because it frustrates the regulatory

ambitions of the modern state and creates a danger of harm. Courts

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

gate and prosecute regulatory offences.

Traditionally, Canadian court s 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 f ault element. The

former standard could i mpose liability without fault, while t he l atter

might frustrate the objectives of the regulatory scheme by requiring the

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

edge. A third option, strict l iability, 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, l iberty, or

security of the person by imposing terms of impr isonment.

Regulator y Offences and Corporate Cr ime 195

Strict liability offences require fault based on negligence, and for

this reason they satisfy t he requirement under section 7 of the Char ter

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 reas onable doubt, negligence is presumed,

and the accused must establish that it was not negligent. The accused

makes its case by establi shing on a balance 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 i s a

reasonable doubt about whether the accused was negl igent. Neverthe-

less, it has been held to be justif‌ied b ecause of the danger of acquitting

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

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

cused who enters a regulated f‌ield c an 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 adverti sing, 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 lack of negligence when charged with

a strict liability offence. When a corporation is charged with a crim-

inal offence, however, it is nece ssary to f‌ind someone within the cor-

poration who has the required fault. That individual must have enough

responsibility within the corporation so t hat his or her fault can be

attributed to the corporation and the Crown must prove fault beyond a

reasonable doubt. This makes it considerably more diff‌icult to convict

a corporation of a criminal offence than a regulator y offence.

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

tion could be attributed to the corporation for the purpose of establish-

ing its cri minal liability. At the end of 2003, Parli ament introduced

extensive reforms designed to make it ea sier to convict and punish

corporations and other organizations for cr iminal offences. The com-

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

stricted to those who h ad enough power to establish corporate policy,

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

This position includes not only t hose who play an important role in

establishing a corporation’s policies, including its board of directors,

chief e xecutive off‌icer, and chief f‌i nancial off‌icer, but also those who

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

CRIMIN AL LAW196

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

f‌icer in order to convict the corporation of a negligence-based crimina l

offence2 and a subjective intent criminal offence.3 The criminal liability

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

tion of the fault of individuals to the organi zations, but Parliament has

replaced the common law def‌inition of a corporation’s direct ing mind

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

attributed to the organization.

A. ABSOLUTE LIA BILITY 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 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 has been controversial. Supporters of absolute

liability argue that it s imposition can persuade a person or an organ-

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

ponents stres s that the imposition of absolute liability can puni sh the

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

or negligence c annot 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 pur pose

of the statute. In R. v. Pierce Fisheries Ltd.,6 the Supreme Court held that

1 Criminal Code of Canad a, 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.

6 [1970] 5 C.C.C. 193 (S.C.C.) [Pierce Fisheries].