Government Response to the Fifteenth Report of the Standing Committee on Justice and Human Rights

Corporate Liability

November 2002

The Current Canadian Model

There is no question that, under current Canadian law, corporations are subject to criminal prosecution. The Criminal Code provides that references to "person" include public bodies, bodies corporate, societies and companies.[9] Professor Puri's sentencing study presented to the Standing Committee shows that in 1999-2000, 58 companies in Ontario were convicted of offences under the Criminal Code and were fined amounts ranging from $175 to $175,000.

The current Canadian approach to corporate liability requires that a person who committed an offence be the directing mind of the corporation and have the requisite mens rea for the offence before any corporate liability is incurred. In effect, the corporation is identified with its directing mind but there are limits to its responsibility for the acts of its directing mind. The identification doctrine only operates where the Crown proves that the action taken by the directing mind was:

  1. within the field of operation assigned to him;
  2. not totally in fraud of the corporation; and
  3. by design or result partly for the benefit of the company. [10]

In Rhône v. Peter A.B. Widener, the Supreme Court further qualified the notion of the directing mind: The key factor which distinguishes directing minds from normal employees is the capacity to exercise decision-making authority on matters of corporate policy, rather than merely to give effect to such policy on an operational basis. [11]

Previous Reform Proposals

In Canada, corporate criminal liability has been examined several times with a view to possible law reform in the context of reviews of basic principles of criminal liability. These efforts include a 1987 Report by the Law Reform Commission of Canada and a study by a subcommittee of the House of Commons Standing Committee on Justice and the Solicitor General in 1993.

In June 1993, the Government responded to the subcommittee report by tabling a White Paper "Proposals to amend the Criminal Code (general principles)" in the form of a draft Bill. Corporate criminal liability was one of many issues dealt with in the Bill.

In November 1994, the then Minister of Justice released Reforming the General Part of the Criminal Code: A Consultation Paper. It was followed by Towards a New General Part of the Criminal Code of Canada - Details on Reform Options which contained options developed in response to comments the Department of Justice had received on the White Paper. One option suggested that the Criminal Code should provide that a corporation could be held liable through the acts, taken together, of any number of its representatives, no matter what level they occupy in the company.

The White Paper proposed that a corporation would be liable for the acts of its "representatives," defined as its directors, officers, employees, members or agents. For an offence requiring criminal negligence or negligence, there would be no need for individual attribution of the failure to exercise reasonable care. The corporation would be liable for the collective failure of its managerial people to exercise reasonable care. For offences requiring intent or recklessness, the necessary state of mind would have to be found in representatives who had "express or implied authority to direct, manage or control its activities in the area concerned."

The White Paper proposals were criticized by the corporate sector, which expressed concern that they would in effect create vicarious liability by making the corporation liable for the actions of their agents even if the corporation had no actual knowledge and the act was contrary to instructions. Moreover, dividing the commission of the offence into parts committed by several representatives seemed contrary to the normal requirement that the moral turpitude connoted by offences requiring mens rea only arises when the same person both commits the actus reus and has the requisite guilty mind.