Regulatory Offences and Corporate Crime

• Author: Kent Roach
• Pages: 252-288

252

CHAPTER 6

REGULATORY OFFENCES

AND CORPORATE CRIME

Regulatory oences are enacted by the federal, provincial, and munici-

pal governments. They far outnumber oences under the Crimina l Code.

Regulatory or public welfare oences emphasize the protection of the

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

state, as opposed to the punishment of inherently wrongful and ha rm-

ful conduct. A person or a corporation is convicted for performing a

regulated activity w ithout a licence or for failing to take sp ecif‌ied safety

precautions, not because such non-compliance must be denounced and

punished, but because it fru strates the regulatory ambitions of the mod-

ern state and creates a d anger of harm. Courts have fashioned distinct

rules to make it easier for the state to investigate and prosecute regula-

tory oences.

Traditionally, Canadian courts were faced w ith the stark choice of

interpreting a regulatory oence 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 t he objectives of the regulatory scheme by requiring

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

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

the f‌ield. Absolute liability oences are now vulnerable under section 7

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

security of the pers on by imposing terms of impr isonment.

Regulator y Oences and Corpor ate Crime 253

Strict liability oences requ ire fault based on negligence, and for this

reason they satisf y the 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 liabil-

ity oence beyond a reasonable doubt, negligence is presumed, and the

accused must establish t hat it was not negligent. The accused makes its

case by establi shing on a balance of probabilities a defence of due dili-

gence or reasonable mistake of fact. This approach v iolates the presump-

tion of innocence by allowing a conviction even if t here is a reasonable

doubt about whether the accused was negligent. Nevertheless, it ha s

been held to be justif‌ied becaus e of the danger of acquitting an accused

who has entered a regulated f‌ield and comm itted an actus reus when

there is only a reasonable doubt about negligence. An accused who enters

a regulated f‌ield can be ex pected to bear the burden of est ablishing that

it was not negligent in allowing a har mful or dangerous act to occur.

Regulatory oences frequently apply to corporations t hat have

engaged in harmful conduct such as pollution, misleading advertising,

or violations of health, safety, or licensing requirements. The diculty

of establishing fault in a la rge organization is one of the rea sons why it is

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

a strict liability oence. Negligence for regulatory oences a lso does not

have to be the marked depart ure from reasonable stand ards required

when negligence is required for a crimin al oence.

When a corporation is charged with a crimin al oence, however,

it is necessary to f‌ind someone within the corporation who has the

required fault. That individual must have enough responsibility wit hin

the corporation that their f ault can be attributed to t he corporation and

the Crown must prove fault beyond a reasonable doubt. This makes

it considerably more dicult to convict a corporation of a crimi nal

oence than a regulatory oence.

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

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

crimina l liability. At the end of 2003, Parliament introduced extensive

reforms designed to make it easier to convict and punish corporations

and other organizations for cri minal oences. The common law concept

of a “directing mind,” which had previously been restricted to t hose who

had enough power to establish corporate policy, was replaced by a new

statutory concept of a corporate “senior ocer.” This position includes

not only those who play an important role in est ablishing a corpora-

tion’s policies, including its board of directors, chief executive ocer,

CR IMI NAL LAW254

and chief f‌inancial ocer, but also those who are “responsible for man-

aging an important aspect of the organization’s activities.”1 Parliament

also specif‌ied the fault required by the senior ocer in order to convict

the corporation of a negligence-based criminal oence2 and a subjective

intent crimina l oence.3 The criminal l iability of corporations and other

organizations is st ill based on the attr ibution of the fault of individuals

to the organizations, but Parliament h as replaced the common law def-

inition of a corporation’s directing mind with a broader concept that

allows the fault of its senior ocers to be attributed to the organization.

A. ABSOLUTE LIABILITY OFFENCES

An absolute liability oence requires the Crow n to prove the commission

of the prohibited act beyond a reasonable doubt, but does not require

proof of any additional fault element such as guilty knowledge or neg-

ligence. For oences 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 be en controversial. Supporters of absolute liabilit y argue

that its imposition can p ersuade a person or an organization to take

additional measure s to prevent the prohibited act. Opponents stress

that the imposition of absolute liability can punish the morally inno-

cent, and that one who has not acted with subjective fault or negligence

cannot be expected to do any thing more to prevent the prohibited act.5

Courts have recognized oences 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 t he Supreme Court

held that the posses sion of undersized lobsters contrar y to regulations

under the Fisheries Act was an absolute liability oence. Justice Ritchie

1 Criminal Code, RSC 1985, c C-46, [Code], s 2 (as amended by SC 2003, c 21).

2 Ibid, s 22.1.

3 Ibid, s 22.2.

4 R v Sault Ste Marie (City), [1978] 2 SCR 1299 at 1301 (SCC) [Sault Ste Marie].

5 In R v Hess, [1990] 2 SCR 906 (SCC) [Hess], Wilson J argued for the m ajority

that an absolute l iability oence for statutory rap e served no useful purp ose and

was unfai r to the accused who believed th at the girl was over fourteen yea rs

of age. In dissent , McLachlin J would have upheld the oence u nder s 1 of the

Canadian Char ter of Rights and Freedoms, Part I of the Constitution Act, 1982,

being Schedule B to t he Canada Act 1982 (UK), 1982, c 11, on the basis that it

would discourage men f rom having sex with g irls who might be under fourteen

years of age.

6 [1971] SCR 5 [Pierce Fisheries].