Corporate Criminal Liability - Discussion Paper, March 2002

Introduction

Should a corporation be treated as capable of committing a crime? Canada and other common law jurisdictions have answered this question with a clear "Yes". Under our Criminal Code, a "person" is defined, in section 2, to include "public bodies, bodies corporate, societies, [and] companies…" A corporation, therefore, is a person and may be held responsible for a crime.

Corporations, however, can only act through the people they employ and the law must look to the actions of individuals -- particularly those in charge of the company -- in order to determine the criminal liability of the corporation itself. It is this attribution of liability to the corporate entity that provides the focal point for the development of the law.

Within common law jurisdictions, several broad, and quite different, models have evolved. These include: the identification model, the longstanding approach in Canada and the United Kingdom; vicarious liability, still the premise for liability in the United States; and, the corporate culture model adopted most prominently in Australia.

In May 2000, the Home Office issued proposals entitled Reforming the Law on Involuntary Manslaughter: The Government's Proposals, which contained the Government's preferred options for a statutory provision governing corporate criminal liability. The proposals built upon an earlier report by the U.K. Law Commission, which had concluded that the existing common law was ineffective in holding corporations responsible for a number of large-scale disasters in which people had been killed; more generally, the Commission had considered that there were many deaths in factories and building sites that could and should have been avoided. In issuing its proposals, the Home Office asserted that there was a need to restore public confidence.

In the early 1990s, the federal Government of Australia undertook a major review of corporate criminal liability, in part because of an awareness of several disasters that had caused loss of life. The Government was also seeking a standardized approach across the country. New legislation was passed in 1995.

In Canada, corporate criminal liability has been examined several times with a view to possible law reform, within the context of reviews of basic principles of criminal liability. These efforts include a 1987 Report by the Law Reform Commission of Canada, a study by a Sub-committee of the House of Commons Standing Committee on Justice and the Solicitor General in 1993 and a white paper issued by the Department of Justice in 1993. None of these proposals resulted in the tabling of legislation by the government of the day.

Interest was revived when the Westray Mine Public Inquiry, set up by the Government of Nova Scotia and headed by Mr. Justice K. Peter Richard, issued its Report in November 1997, The Westray Story: A Predictable Path to Disaster. On May 9, 1992, an explosion in the Westray Mine killed twenty-six miners and it was established that corporate mismanagement had created unsafe working conditions in the mine that directly contributed to the tragedy. The Inquiry Report offered the following Recommendation for action by the Government of Canada:

73. The Government of Canada, through the Department of Justice, should institute a study of the accountability of corporate executives and directors for the wrongful or negligent acts of the corporation and should introduce in the Parliament of Canada such amendments to legislation as are necessary to ensure that corporate executives and directors are held properly accountable for workplace safety.

At the request of the Attorney General of Nova Scotia, the federal Minister of Justice at that time agreed to begin examining the issue of corporate criminal liability. Recommendation 73 also prompted at least one Private Member's Motion and a Private Member's Bill in the last Parliament seeking a new, codified provision covering corporate criminal liability. In the current Parliament, debate on Private Member’s Bill C-284 led to the question of corporate criminal liability being referred to the Standing Committee on Justice and Human Rights for its consideration.

Any initiative to redesign and codify the law in this area must address a central legal question: how, and to what extent, should concepts of individual, moral fault in criminal matters be attributed to a corporate entity? Although it is literally true that a company cannot itself form the same kind of criminal intent as an individual human being, all common law legal systems have found a way to attribute responsibility, in the criminal sense, to corporations. All jurisdictions have recognized that corporations are capable of causing harm in breach of a criminal law standard. Recent law reform efforts in several countries have acknowledged the complexity of modern corporations and have tried to base attribution principles on the way that companies actually operate and the structure of managerial decision-making.

In the Canadian context, the question is whether our modern society is well served by the traditional "identification" model of corporate criminal liability, or whether a new approach should be established in the Criminal Code.[1] A related question is how, and to what extent, the directors, executives and board of directors of a corporation should be held criminally responsible for the acts of the corporation.

In considering possible changes in the law, it is essential to keep the objectives of the legal regime clearly in view. While punishment, in the form of fines, must be an element of any law on corporate criminal liability, equal attention should be paid to ways of remedying the delinquent conduct of corporations and to incentives to avoid criminal conduct in the first instance. The United States and other countries have entrenched remedial measures in their legal systems, so that criminal prosecution is linked to finding means of preventing the recurrence of the problem, whether it be an unsafe workplace, a dangerous consumer product or a damaged environment. This is a very complicated area of the law, requiring a review of a number of issues. The balance of this paper will set out various components of corporate criminal liability and highlight for the Committee some of the issues that it may wish to consider in its development of a possible legislative model for Canada.

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