Bill C-45, An Act to Amend the Criminal Code:

Criminal Liability and Accountability

for Workplace Safety

by Leanne E. Standryk

On November 7, 2003, Bill C-45, An Act to Amend the Criminal Code (Criminal Liability of Organizations), popularly known as the “Westray Bill”, received Royal Assent.  The origins of Bill C-45 arise from an inquiry into the Westray mining disaster, a 1992 explosion on a Nova Scotia mine that led to the death of 26 miners.  The Government of Canada has now passed legislation that will amend the Criminal Code to increase the risk of criminal liability and accountability in respect of accidents and other incidents occurring in the workplace.

Bill C-45 does not create a new criminal offence relating to workplace safety.  Rather, it broadens both the range of entities that can be held criminally liable and the range of individuals whose acts can be attributed to such entities.  The reforms contained in the Bill are designed to ensure that entities are held fully accountable for workplace environments.  Bill C-45 came into effect March 31, 2004.  As a result, the Criminal Code will:

(a) establish the rules under which criminal liability may be attributed to corporations for the acts of individual corporate representatives;

(b) establish an explicit legal duty for all individuals directing work to take reasonable steps to ensure the safety of workers and the public;

(c) set out factors for courts to consider when sentencing a convicted organization; and

(d) provide optional conditions of probation that a court may impose on an organization.

Every jurisdiction in Canada currently mandates health and safety requirements through their Occupational Health and Safety statute.  The Federal government has indicated that the proposed amendments are not intended to supplant or interfere with the existing regime.  The expansion of potential liability demonstrates the severity with which the Federal Government views breaches of workplace health and safety legislation and emphasizes the importance of good workplace health and safety practices and employer due diligence.  In order to avoid potential criminal liability and increased fines arising from a failure to adhere to the Criminal Code amendments, employers must become familiar with the contents of Bill C-45.

The Current Legal Landscape

Criminal Liability Generally

The Criminal Code requires the proof of various elements before finding criminal liability.  The Crown must prove that the accused had the requisite state of mind in committing the offence.  Generally speaking, the accused must have the specific intent to achieve a certain outcome or commit a certain act.

Some offences are negligence based, judged on an objective standard.  The person’s conduct itself is proof of the necessary “criminal fault.”[1]

Criminal Liability of Corporations

Currently, corporations can be convicted of a crime under the Criminal Code.  Corporations, however, can only act through individuals who represent them.  A corporation can be criminally liable for the acts and omissions of a person who is a “directing mind” of the corporation.  At present, a corporate representative will only be considered a “directing mind” if she or he occupies a senior position and exercises executive authority (i.e. officer, director) and/or has a policy development or supervision function.

To fix a corporation with criminal liability the Crown must prove that the individual (directing mind) intended to commit the crime or their actions demonstrate a lack of care and/or disregard that constitutes criminal negligence_[2].  The reality of the internal corporate dynamics, particularly in larger corporations, is such that corporate officials (directing mind) delegate general operational responsibilities to subordinate managers and are almost never personally involved in the specific conduct or decisions that result in workplace safety violations. Given the internal corporate dynamics of corporations, many corporations are shielded from criminal liability.

With respect to negligence based offences, criminal negligence occurs when an act or omission of an accused party shows wanton or reckless disregard for the lives or safety of others in a situation where the accused party has a duty to act.  The Crown is required to prove that the conduct represents a marked departure from what would reasonably be expected of the prudent person in the circumstances.  The internal dynamics of the corporate culture create opposition for the Crown in establishing the key elements of the crime; that the employees of the organization committed the requisite acts and that a senior officer should have taken reasonable steps to prevent them from doing so.  Furthermore, the core requirement of the offence of criminal negligence is to establish the breach of an existing legal duty.  The Code does not contain an explicit legal duty to ensure a safe workplace[3]. 

Where a corporation is found criminally responsible, a monetary fine is virtually the exclusive method of punishment.  Currently, in the case of summary conviction offences[4], the Code establishes a maximum fine of $25,000.00 for corporations.  There is no limit on fines for the more serious indictable offences.

Bill C-45

Changing the Legal Landscape:  Statutory Legal Duty Relating to Workplace Safety

Section 3 of Bill C-45 states that “Everyone who undertakes, or has the authority to direct how another person does work or performs a task is under a legal duty to take reasonable steps to prevent bodily harm to that person, or any other person, arising from that work or task”.  Bill C-45 imposes an explicit legal duty[5] on those who undertake or have the authority to direct how another person does work. Those individuals are expressly obligated to take “reasonable steps to prevent bodily harm to any person, or any other person (the public), arising from that work or task”.[6]  This means that corporations (by their representatives) or individual citizens who breach this positive legal duty through wanton and reckless disregard for workplace safety may be found criminally negligent.

The creation of this statutory duty of care is similar to the duty imposed on employers and supervisors to protect the health and safety of their workers, which is found in occupational health and safety legislation, however, the duty mandated by the Criminal Code is more onerous in two key ways:

(a) the legal duty to take all reasonable precautions to prevent workplace injury and promote safe workplace practices is now expanded to anyone who directs the work of others as part of their day-to-day activities.  This could include foremen, lead hands, managers, supervisors, contractors and in some circumstances co-workers.

 

(b) The Criminal Code offences, contrary to offences proscribed by the occupational health and safety legislation, carry the stigma and penalty of crime, including a permanent criminal record.

What is significant is the extension of liability to acts of individuals further down the organizational chain of command and potentially outside the chain of command to consultants and/or contractors as well as liability for harm to persons in addition to workers (i.e. public).

The interaction of the new statutory duty created by Bill C-45 and those duties imposed by the Occupational Health and Safety Act (“OHSA”) is unclear although the Federal Government has indicated that it does not intend to use its criminal law power to supplant or interfere with the provincial regulatory role in workplace health and safety.   It is uncertain, however, whether parallel investigations will by conducted under both statutory regimes or whether one government authority, either the police or the Ministry of Labour will assert primary authority.  One thing is clear, different standards will apply under each statutory regime[7].

Expanding Corporate Liability

Section 1 of the Bill amends section 2 of the Criminal Code by changing the definition of “everyone” and “person, etc.” to include “an organization”.  Bill C-45 defines organization as follows:

“Organization” means

(a) a public body, body corporate, society, company, firm, partnership, trade union or municipality or

(b) an association of persons that

i) is created for a common purpose,

ii) has an operational structure, and

iii) holds itself out to the public as an association of persons

The definition therefore extends to sporting organizations, not for profits, service clubs, charities, etc.

Organizational Liability:  “Representatives” and “Senior Officers”

In order to understand the new amendments to the Criminal Code, one must understand two key definitions: (1) representative and (2) senior officer.  It should be noted that the terms “representative” and “senior officer” cover broader categories of personnel than the pre March 31, 2004 concept of “directing mind” developed under the common law.

The amended Criminal Code defines representative as follows:

      “representative”, in respect of an organization means a director, partner, employee, member, agent or contractor of the organization.

The definition widens the circle of individuals whose actions may be considered to be acts of the corporation for the purposes of attributing criminal liability to the corporation.  As a result of the expanded definition, a corporation will be held accountable for the acts of virtually anyone who works for, or is affiliated with the company.

The amended Criminal Code defines “senior officer” as follows:

“senior officer” means a representative who plays an important role in the establishment of an organization’s policies or is responsible for managing an important aspect of the organization’s activities and, in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer.

Consequently, the amendments make corporations criminally liable for the actions of a senior officer who oversees the day-to-day operations even if they are not directors or executives of the corporation.  The amendments focus on the function of the individual rather than on any particular title when determining corporate liability.   Despite having said this, the definition makes it clear that the directors, the chief executive officer and chief financial officer are, by virtue of their positions, deemed “senior officers”.  Arguably, a corporation charged with an offence therefore could not submit that the individuals occupying these positions actually have no real role in setting policy or managing the organization and therefore are not senior officers.

Attributing Criminal Liability to Organizations

Section 2 of Bill C-45 amends Part I of the Criminal Code by adding new provisions or “attribution rules” regarding criminal liability of organizations for the acts of their representatives. The organizational liability rules in new sections 22.1 through 22.3 reflect a modification of the previous corporate criminal liability rules and seek to broaden the range of individuals whose actions and intentions can trigger criminal liability of the organizations they represent.

Prior to March 31, 2004, an individual has been held criminally liable for his or her own criminal acts or omissions or those in relation to which it can be shown that he or she was a “party” to the offence.

Section 21 of the Criminal Code defines party liability:

21.(1) Everyone is a party to an offence who

(a) actually commits it;

(b) does or omits to do anything for the purpose of aiding any person to commit it; or

(c) abets any person in committing it.

(2) Where two or more persons form an intention in common to carry out an unlawful purpose and to assist each other therein, any one of them in carrying out the common purpose, commits an offence, each of them who knew or ought to have known that the commission of the offence would be a probable consequence of carrying out the common purpose is a party to that offence.

Section 22.1 defines two overlapping groups of individuals whose conduct could form the basis of a criminal offence attributable to an organization. Section 22.1 has been added to the Criminal Code and provides that in respect of an offence that requires the prosecution to prove negligence, an organization is a party to the offence if:

(a) acting within the scope of their authority

    (i) one of its representatives is a party to the offence, or

    (ii) two or more of its representatives engage in conduct, whether by act or omission, such that, if it had been the conduct of only one representative, that representative would have been a party to the offence; and

 

(b) the senior officer who is responsible for the aspect of the organization’s activities that is relevant to the offence departs – or the senior officers, collectively, depart – markedly from the standard of care that in the circumstances, could reasonably be expected to prevent a representative of the organization from being a party to the offence.

Unlike the law prior to March 31, 2004, section 22.1 will permit the aggregate of the acts and omissions and that state of mind of the organization’s representative and/or senior officers in finding organizational liability.  Therefore, the organization may be guilty of an offence based on the conduct of two or more representatives where their conduct in combination constitutes a criminal offence.[8]

Section 22.2 has been added to the Criminal Code and provides that in respect of an offence that requires the Crown to prove intent or recklessness (which is most of those offence contained in the Code) fault – other than negligence – an organization is a party to the offence if, with the intent at least in part to benefit the organization, one of its senior officers

(a) acting within the scope of their authority, is a party to the offence;

(b) having the mental state required to be a party to the offence and acting within the scope of their authority, directs the work of other representatives of the organization so that they do the act or make the omission specified in the offences; or

(c) knowing that a representative of the organization is or is about to be a party to the offence, does not take all reasonable measures to stop them from being a party to the offence.

Unlike section 22.1, criminal liability will not be attributed to the organization through an aggregate of conduct of its personnel.  Furthermore, a senior officer must be a party to the offence.

Consequences and Penalties for Violating Bill C-45 new amendments to the Criminal Code

Bill C-45 amends the current sentencing principles applicable to corporations convicted of criminal offences.  Bill C-45 increases the maximum fine on an organization for a summary conviction from $25,000.00 to $100,000.00.  There is currently no set limit on fines for indictable or more serious offences.  The new amendments require a sentencing court to consider the following factors when determining the appropriate sanctions on sentencing:

(i) any advantage realized by the organization as a result of the offence;

(ii) the degree of planning involved in carrying out the offence and the duration and complexity of the offence;

(iii) whether the organization has attempted to conceal its assets, or convert them, in order to show that it is not able to pay a fine or make restitution;

(iv) the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees;

(v) the cost to public authorities of the investigation and prosecution of the offence;

(vi) any regulatory penalty imposed on the organization or one of its representatives in respect of the conduct that formed the basis of the offence;

(vii) whether the organization was – or any of its representative who were involved in the commission of the offence were – convicted of a similar offence or sanctioned by a regulatory body for similar conduct;

(viii) any penalty imposed by the organization on a representative for their role in the commission of the offence;

(ix) any restitution that the organization is ordered to make or any amount that the organization has paid to a victim of the offence; and

(x) any measures that the organization has taken to reduce the likelihood of its committing a subsequent offence.

Reference to these factors attempt to ensure that the penalty imposed upon conviction reflects the seriousness of the crime committed.

Given the nature of the corporate entity, not all penal sanctions are applicable to or appropriate for an offending organization.  A corporation cannot suffer imprisonment.  As a result, Bill C-45 provides probation conditions that may have a profound impact on an organization’s business, if existing or prospective clients or employees decided not to deal with the company based on its conviction for a criminal offence.  Section 19 of Bill C-45 provide for the following additional probation conditions applicable to organizations:

(i) making restitution;

(ii) establishing policies, standards, and procedures to reduce the likelihood of subsequent offences (however, the court must first consider whether it would be more appropriate for another regulatory body to supervise the development or implementation of such policies, standards, and procedures);

(iii) communicating those policies, standards, and procedures to its representatives;

(iv) reporting to the court on the implementation of those policies, standards and procedures;

(v) identifying the senior officer responsible for compliance with those policies, standards and procedures;

(vi) provide in a manner specified by the court, the following information to the public 

        a. the offence of which the organization was convicted

        b. the sentence imposed

        c. any measures taken by the organization to reduce the likelihood of its committing future offences; and

        d. complying with any other reasonable conditions considered desirable by the court in preventing subsequent offences by the organization or to remedy the harm caused by the offence.

The Bill does not introduce any new offences in respect of which any individual could be found criminally liable.  Government publications and press releases emphasize that the changes that the Bill C-45 amendments will make to the criminal liability of organizations.  The Government has said “Bill C-45 makes no change in the current law dealing with the personal liability of directors, officers, and employees.  Directors and officers like anyone else, are liable for all crimes they commit personally, whatever the context.”[9]

Establishing a Defence of Due Diligence

What constitutes due diligence (i.e. the corporation took all reasonable precautions in the circumstances to prevent the accident or injury in question) is determined on a case by case basis.  Generally speaking, due diligence may be established by demonstrating the development of a “proper system to prevent the commission of an offence”[10].   Factors relevant to determining whether there has been an exercise of due diligence includes:

a) whether the employer has appointed appropriate and sufficient supervisory personnel;

b) whether the employer reviewed the workplace for foreseeable health and safety risks;

c) whether the employer developed policies and procedures to protect workers against risks;

d) whether the employer implemented and maintained disciplinary guidelines; and

e) whether the employer received regular reports on the operation of the health and safety program.

Recommendations for Reducing Potential Liability: Advising

Bill C-45 sends a clear message that corporations must be proactive in health and safety matters. The legislative changes create a legal obligation to ensure workplace health and safety in all jurisdictions and if these obligations are not met and corporate representatives are “reckless”, criminal convictions are now the potential reality.

Organizations are well advised to perform compliance audits to determine the status of their current workplace policies, practices and procedures.  If current procedures and polices are not in compliance, develop a new compliance program keeping in mind that documentation of the organization’s efforts will be important with respect to proof of due diligence.  The following elements should be considered in establishing a proper compliance program and may well assist an organization in reducing the risk of potential liability:

(i) Appoint a compliance officer to ensure the compliance program is working and impose a reasonable standard of care on senior officers to stop or prevent potential violations;

(ii) Ensure that each senior officer, board member and supervisor is familiar with the provisions of the OHSA and new legal duty established by Bill C-45;

(iii) Establish appropriate policies, practices and procedures including, for example, a quarterly reporting system on health and safety in the workplace;

(iv) Establish appropriate crisis/emergency workplace procedures;

(v) Establish a comprehensive accident/incident investigation procedure;

(vi) Establish a complaint and response process regarding refusals to work due to hazardous conditions;

(vii) Establish immediate and ongoing compliance program training for any individual who could fall within the definitions of “representative of the organization” and “senior officer”;

(viii) Ensure that all consultants and/or contractors otherwise having the authority to direct the workforce within the terms of their contract are aware of the organizations policies, procedures and compliance program as a whole.  Consider appropriate indemnity provisions in consulting contracts to cover breaches of this nature;

(ix) Ensure that the workforce receives adequate training specific to the work being performed.  The training must not be too generic.  Document all training and ensure that those providing the necessary training are competent to do so;

(x) Ensure that representatives of the organization are familiar with any hazardous materials used in the workplace;

(xi) Ensure compliance with industrial standards (if any);

(xii) Meet with employees and ensure that they are informed of and understand their legal responsibilities imposed in respect of workplace health and safety;

(xiii) Where notice is given to a representative that a contravention of policy, procedure and/or the provisions of the OHSA has occurred, address and respond to the situation immediately; and

(xiv) Where directions are provided to rectify a contravention, implement and appropriate follow up to ensure continued compliance with the directions issued.

Final Thoughts

Bill C-45 imposes potential criminal liability on organizations for a wide range of offences including charges arising from workplace accidents or injuries. The severity of a Criminal Code violation cannot be overstated.  Potential criminal liability for workplace accidents and injuries emphasizes the importance that the Federal Government places on workplace health and safety.  It is essential that organizations ensure the development and implementation of appropriate workplace policies and procedures and ensure that all representatives of the organization understand and apply the policies and procedures.  Although a comprehensive compliance program will not provide a complete defence to criminal offences, it will demonstrate a measure of due diligence and may be considered as a mitigating factor by a Court when considering liability and assessing appropriate penalty. More importantly, a comprehensive compliance program is a measure of risk management which will assist in the prevention of workplace accident and injury.