Canadian organizations face new criminal liabilities
On May 9, 1992, twenty-six workers lost their lives in the Westray Mine in Nova Scotia as a result of criminal liability that occurred in their company. A decade later, and after much debate in parliament, Bill C45, an Act to Amend the Criminal Code (Criminal Liabilities of Organizations) was passed and became law on March 31, 2004.
Prior to the new law, criminal liability attributable to organizations did not reflect the reality of the internal dynamics of modern organizations, particularly in the case of larger organizations where subordinate managers, employees and supervisors sometimes feel compelled to cut corners.
Under the new law, organizations can now be held criminally responsible for the actions of senior management, and also for the actions of middle and lower level employees. The law also requires organizations to communicate within their internal structure and become more conscious and aware of the actions by employees.
It also expands the types of organizations that can be held criminally liable. Now, public bodies, corporations, societies, firms, partnerships, trade unions, municipalities and associations can be found criminally liable for their actions. Senior officials for these types of organizations must be aware and familiar with the actions of their employees.
C45 has created two broad categories of offences upon which organizations can be found guilty.
The first applies to cases of negligence. Negligence-based offences are judged ‘objectively’ so that the person’s conduct is itself proof of the necessary criminal fault. Under this category, any person who works for or is associated with an organization – including senior management, employees, members, agents or contractors of the organization – can trigger criminal liability for the organization. If there is proof that a senior officer in the organization did not reasonably prevent the person associated with the organization from committing an offence, the organization will be liable. In order to prove guilt, the key issue will be whether a senior officer should have taken reasonable steps to prevent the crime from occurring. A court will look at whether a system was created to prevent the criminal act from occurring.
The second category applies to cases where it can be demonstrated that there was criminal intent on the part of the person committing the crime. For organizations to be found liable, the person committing the offence must have acted within the scope of their employment. The organization’s liability is expanded because there is no need for active participation in the offence by anyone acting in a managerial capacity or control. Any representative of the organization, including an administrative assistant or even janitorial staff, can render organizations liable. Fault is not attributed to individuals, but rather to the organization itself. Organizations can commit an offence if a senior officer is a party to the offence, directs someone to commit an offence or does not take reasonable measures to prevent an offence from occurring.
Essentially, an organization can be found guilty without convicting the person whose failures are at issue. Senior officials are now expected, at a minimum, to communicate with each other and to be aware of the actions of each employee or member of their organization.
For less serious offences, the maximum fine has been raised to $100,000. For more serious offences, there is no limit on the fine that can be imposed.
When determining penalties, courts will look to the managers and employers for their role in crimes, previous convictions of organizations, attempts to conceal assets to avoid paying fines and any measures that could have been taken to avoid the likelihood of future criminal activity.
When courts consider the amount for fines, such factors as moral blameworthiness, monies that organizations made as a result of crimes, the public interest and the possibility of rehabilitation will likely be considered.
The courts may also put organizations on probation. The terms of probation may include informing the public, paying the victims for the loss they suffered and changing how the organization works.
Brian T.D. Bowman and Corrine L. Kulyk are with Pitblado LLP of Winnipeg. This article was written in association with The Abbey Reid Public Safety and Security Group and does not purport to form a legal opinion on the subject matter. For further information about this law, contact Brian Bowman (204) 956-3520 or Corrine Kulyk (204) 956-3571.