Regulatory Offences and Corporate Crime

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

194

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 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 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 requiring the

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

edge. A third option, strict liability, 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.

Regulator y Offences and Corporate Cr ime195

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

reuswhen 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 lack of negligence when charged with

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

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

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

responsibility within the corporation so that 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 regulatory offence.

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

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

ing its criminal 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 establish corporate policy,

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 off‌icer, and chief f‌inancial off‌icer, but also those who

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

CRIMINAL LAW196

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

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

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

of corporations and other organizations is still based on the attribu-

tion 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

attributed 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 organ-

ization 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 purpose

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].