Update on Canadian Corporate Criminal Liability

The Canadian Government has recently introduced amendments to the Criminal Code of Canada, R.S.C. 1985 c.C-46 (the “Criminal Code”), which effect when organizations and their representatives will face criminal liability for negligent conduct. Bill C-45, An Act to Amend the Criminal Code (Criminal Liability of Organizations), tabled by the Honourable Martin Cauchon, Minister of Justice and Attorney General of Canada, received Royal Assent on November 7, 2003 and was proclaimed and in force as of March 31, 2004.

Essentially, this Bill amends the Criminal Code to:

  • establish rules for attributing to organizations, including corporations, criminal liability for the acts of their representatives;
  • establish a legal duty for all persons directing work to take reasonable steps to ensure the safety of workers and the public;
  • set out factors for courts to consider when sentencing an organization; and
  • provide optional conditions of probation that a court may impose on an organization.

The Bill modernizes the law on the criminal liability of organizations to reflect the increasing complexity of today’s corporate structures. In addition, the Bill will hold organizations accountable when they commit criminal offenses.

The legislation makes organizations criminally liable:

  • as a result of the actions of senior officers who oversee day-to-day operations but who may not be directors or executives;
  • when officers with executive or operational authority intentionally commit, or direct employees to commit, crimes to benefit the organization;
  • when officers with executive or operational authority become aware of offenses being committed by other employees but do not take action to stop them; and
  • when the actions of those with authority and other employees, taken as a whole, demonstrate a lack of care that constitutes criminal negligence. The legislation also imposes a legal duty on all those who direct work, including employers, to take reasonable measures to protect employee and public safety. Wanton or reckless disregard of this duty causing death or bodily harm could result in a charge of criminal negligence.

The amendments introduced by Bill C-45 apply not only to corporations, but to all types of organizations, including non-share capital corporations, profit-making corporations, partnerships, and unincorporated organizations. Other key reforms include the imposition of criminal liability on organizations without the requirement that the criminal conduct or act of the organization be committed by a directing mind of the organization. The class of representatives of the offending organization who can commit or contribute to the offense has been expanded from directors and officers to all representatives who act on behalf of the organization, such as directors, partners, employees, members, agents or contractors of the organization.

Finally, under Bill C-45, a specific and explicit legal duty will be imposed on those who direct the work or task of others, to ensure that such individuals take all reasonable steps to prevent bodily harm at work. Employers should anticipate companion criminal investigation in cases of serious occupational health and safety and environmental regulatory breaches. Certainly in fatality cases, there would be pressure on a local Crown to file criminal charges against organizations and individuals implicated in the offense.

Scott D. Relf concentrates his practice in the areas of corporate commercial transactions, international law, and general cross-border business law. Specifically, Mr. Relf serves the needs of cross-border clients facing legal issues and challenges that arise in either the U.S. or Canada. Mr. Relf is a member of the Law Society of Upper Canada, the Michigan State Bar, the Illinois State Bar, and the New York State Bar.