Criminal Law and Construction Accidents Bill C - 45 Amendments to the Criminal Code Finally Applied

Criminal Law and Construction Accidents Bill C - 45 Amendments to the Criminal Code Finally Applied Prepared for the Canadian Bar Association 2012 National Construction Law Conference J David Eaton Q.C. McInnes Cooper St. John s NL

- 1 - Introduction Construction related accidents are limited only by the imagination of the various people involved. The inherent dangers of some types of activities are well known and therefore the necessary steps to prevent harm to workers are also well known. Other times the dangers are not identified and therefore preventative measures are not taken. When things go wrong and workers are killed or injured investigations begin and charges follow in many cases. Depending on the seriousness of what went wrong those charges may include criminal negligence causing death or bodily harm. As a result of the Westray Mine disaster in 1992, and the failed prosecution that followed, the Criminal Code was amended in 2004 by Bill C-45. In the 8 years that have followed only two cases have made it to conviction under the C-45 amendments. The recent decision 13 July this year - from the Ontario Court of Justice in the Metron Construction case forms the basis for many of my comments. R v Metron Construction Corporation On Christmas Eve 2009, 6 workers who had been restoring a 14 th floor balcony on a Toronto apartment building climbed onto a swing stage to return to the ground. The platform collapsed and 5 workers fell to the ground; 4 were killed and 1 survived with serious permanent injuries. Only one of the 6 was properly attached to a safety line which prevented him from falling; he was uninjured. The swing stage had been rented and when delivered did not contain any information on its maximum capacity. It had no safety information or other product information. Testing after the accident revealed that the stage had not been properly constructed and would not have been safe for 2 workers with tools and materials. The stage was operated with only 2 life lines and the practice had been to only have 2 workers on the platform at a time.

- 2 - The site supervisor was on the platform and was killed in the accident. Toxicology results showed that he and 2 others who died had marijuana in their system at a level suggesting recent ingestion. It is not clear from the reported decision what, or how many, charges were brought against the Company, Metron Construction, and its owner/ceo Joel Schwartz. However, the end result had the company pleading guilty to one count of criminal negligence causing death. The owner pleaded guilty to OH&S charges and was fined $90,000.00 plus the mandatory 25% surcharge under Ontario law. The company and the Crown presented an agreed statement of facts but did not agree on the sentence so arguments were made and it was left to the judge to decide. The Crown requested a fine of $1,000,000.00 and the defence $100,000.00. There was only one prior case in Canada of a corporation being found guilty of criminal negligence since Bill C-45; that was the Quebec case of R v Transpave, [2008] J.Q. No. 1857. In that case the Court accepted a joint submission for a fine of $100,000.00. In R v Metron, 2012 ONCJ 506 (CanLII), Justice Bigelow of the Ontario Court of Justice was entering uncharted waters. Before proceeding to sentencing he first pointed to the facts supporting the findings of guilt. He concluded that: The site supervisor who was killed was a senior officer of the company. From there he concluded that the company was guilty of criminal negligence pursuant to ss. 22.1(b), 217.1 and 219 of the Criminal Code failed to take such reasonable steps to prevent bodily harm in that it: (1) directed or permitted 6 workers on the stage (along with various tools/materials) when they knew or should have known it was unsafe; (2) directed or permitted 6 workers to board the stage knowing that only 2 lifelines were available; and (3) that it permitted workers under the influence of drugs to work on the project. Recognizing that this was a guilty plea reached in the face of numerous charges and the facts presented to the judge were contained in an agreed statement of facts it is unfair to question

- 3 - whether Metron was guilty of criminal negligence. There are numerous reasons why both parties would have wanted to proceed on this basis. But there is something to be learned by looking at the combined effect of these sections. The offence of criminal negligence has been around for a long time. It reads: 219. (1) Every one is criminally negligent who (a) in doing anything, or (b) in omitting to do anything that it is his duty to do, shows wanton or reckless disregard for the lives or safety of other persons. (2) For the purposes of this section, "duty" means a duty imposed by law. In 2004, Bill C-45 made significant amendments to the Criminal Code. It added Section 217.1 which says: 217.1 Every one 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. Essentially, this provision now places a positive legal duty on everyone who has authority to direct how another person does work, and everyone who undertakes to direct how another person does work, to take reasonable steps (not all reasonable steps like many OH&S statutes) to prevent bodily harm to that person or any other person arising from the work. The undertakes provision would include those who, as a result of some contractual provision, have taken on some responsibility for how work is done. We must remember that criminal negligence requires more than simple negligence. It is clear from numerous cases that criminal negligence requires an element of fault that is sufficient to justify the imposition of a criminal sanction and the criminal stigma. For the most part each province s OH&S statute requires that employers take all reasonable steps to prevent harm to employees. The offence is a strict liability offence in which the prosecution must only prove that the employer fell short of the standard. Upon such proof the employer will be found guilty unless due diligence or an absence of negligence can be shown. Criminal negligence requires more.

- 4 - Without getting into a long discussion about the actus reus and mens rea for criminal negligence, suffice it to say that the courts have consistently held that for criminal negligence there must be a marked and substantial departure from the standard of care expected of a reasonable person in the accused s circumstances. So wanton and reckless disregard for the lives and safety of others requires a marked and substantial departure to prove the actus reus and for the mens rea. The court will ask first whether a reasonable person would have foreseen the risk and taken steps to avoid it and then if the first answer is Yes, was the accused s failure to foresee the risk as a result of a marked and substantial departure from the standard of care expected from a reasonable person in the accused s circumstances. Looking at the 3 factors highlighted by the judge in Metron do the facts presented constitute a marked and substantial departure from the standard of care expected? If so is it each individual departure or the cumulative effect of the 3 things identified? The next question is how does this conduct get attributed to the corporate entity, Metron, to make it criminally responsible for the actions of the site supervisor employee? The answer to that must come from the amendments to the definition of parties to an offence which were introduced in C-45. Previously, to find a corporate entity guilty as a party to an offence, a person who qualified as a directing mind of the company had to commit the offence. And, previously, if several people engaged in different acts, and no one directing mind could be shown to have full knowledge of entire matter, there could be no conviction. C-45 addressed this by adding ss. 22.1 and 22.2; one addressed crimes of negligence, and the other crimes requiring a higher level of mens rea. 22.1 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

- 5 - expected to prevent a representative of the organization from being a party to the offence. 22.2 In respect of an offence that requires the prosecution to prove 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 offence; 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. I don t intend to deal with s. 22.2 the non-negligence change, as the typical construction accident scenario would fall under the criminal negligence component. Section 22.1 creates a 2-part test with each part having 2 alternatives. - If one person who is acting within the scope of his authority is a party to the offence the corporation is a party. Alternatively, if 2 or more representatives (acting within the scope of their authority) engage in conduct whether by act or omission such that if it had been the conduct of only one, that person would be a party to the offence then the corporation is a party. This provision connects the right hand and the left hand and attributes the acts or omissions of all representatives back to one person the corporation. - The second branch is focused on a senior officer. If a senior officer who is responsible for the aspect of the corporation s activities actually relevant to the offence departs, or 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 the corporation is a party. In Metron the site supervisor was found to be a senior officer. Senior officer and representative are defined in s. 2. As you can see, the definitions are quite vague and quite broad.

- 6 - "representative", in respect of an organization, means a director, partner, employee, member, agent or contractor of the organization; "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; To apply the test here we need a representative of the company as a party to the offence or in other words - a representative of the company committing criminal negligence. If the site supervisor s actions constitute criminal negligence that part 1 of the test is satisfied. Based on the definition of senior officer it seems to me to be somewhat questionable whether the on-site supervisor would qualify. However, that was not disputed so no judicial determination was needed. Concluding Comment on the Offence Since there was no issue taken as to whether a criminal offence had been committed we still do not have any decided case on the scope of these new provisions. We are still in guessing mode as to how broadly or narrowly the provisions will be interpreted. However, I have no doubt that this case will be used as a precedent. Sentence As the Court did have to deal with sentencing, what, if any, helpful hints did the Court provide in Metron. Again the starting point is C-45 which added s. 718.21 to the Code a specific provision dealing with sentencing of organizations. Some of s. 718.21 was part of the common law previously applied in sentencing organizations/corporations but some was new. 718.21 A court that imposes a sentence on an organization shall also take into consideration the following factors: (a) any advantage realized by the organization as a result of the offence; (b) the degree of planning involved in carrying out the offence and the duration and complexity of the offence; (c) 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;

- 7 - (d) the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees; (e) the cost to public authorities of the investigation and prosecution of the offence; (f) any regulatory penalty imposed on the organization or one of its representatives in respect of the conduct that formed the basis of the offence; (g) whether the organization was or any of its representatives who were involved in the commission of the offence were convicted of a similar offence or sanctioned by a regulatory body for similar conduct; (h) any penalty imposed by the organization on a representative for their role in the commission of the offence; (i) any restitution that the organization is ordered to make or any amount that the organization has paid to a victim of the offence; and (j) any measures that the organization has taken to reduce the likelihood of it committing a subsequent offence. Keep in mind that under the Code there is no maximum fine for a corporation when found guilty of an indictable offence such as criminal negligence causing bodily harm or causing death. The fine is in the discretion of the Court under s. 735. For a summary conviction offence the maximum is $100,000.00 per count unless some other fine amount is specifically provided for the particular offence. Remember s. 737 of the Code provides for an automatic 15% victim fine surcharge unless it is waived by the sentencing judge on the basis of hardship. Justice Bigelow looked at the s. 718.21 factors. 1. Was there any advantage realized by the corporation as a result of the offence? The only evidence was that a $50,000.00 bonus had been offered to Metron if the project was completed by 29 Dec. The Court did not find that this constituted any advantage. 2. What degree of planning was involved in carrying out the offence and what was the duration and complexity of the offence? The conclusion was that this was a momentary lapse as there was no evidence that more than 2 workers had ever used the swing stage before. However, it was noted that the swing stage had been used for over 2 months in violation of a number of OH&S regulations. This was an aggravating factor. There was no evidence of planning or

- 8 - complexity. Planning and complexity will not likely be factors in construction criminal negligence offences but the duration may become a big factor. 3. Whether the organization had attempted to conceal its assets or convert them in order to show that it was not able to pay a fine or make restitution. Things got tangly here as Mr Schwartz had what seems to have been an inactive company which appeared to have been revived after the accident and taken over Metron s identity. However, on the evidence the Court was not satisfied that the revival of the inactive company was an attempt to hide assets. The judge also noted that as a result of the accident and the surrounding publications, Metron s good will and reputation had been significantly damaged and its value reduced. We must remember that aggravating factors must be proven beyond a reasonable doubt 4. The impact that the sentence would have on the economic viability of the organization and the continued employment of its employees. Metron had a profit of $112,000.00 in 2009 but had losses of $8,000.00 and $54,000.00 in 2010 and 2011. It was basically inactive. It had assets of about $600,000.00 in receivables, much of which was likely uncollectible. It had substantial liabilities but they were not quantified. It had on-going litigation both for and against. The defence submitted that the company could pay a fine of $100,000.00 in the reasonably near future but any fine significantly larger would likely put it under. 5. The cost to the authorities to investigate and prosecute. The only comment was that the guilty plea reduced the cost significantly a mitigating factor. 6. Any Regulatory penalty on the organization or any representative.

- 9 - There was none for the Company which seems to have been part of the plea arrangement, and the owner was fined $90,000.00 for OH&S charges plus the 25% surcharge applicable under the provincial legislation. 7. Whether the organization or any of its representatives involved in the commission of the offence had been previously convicted of any similar offences or regulatory offences for similar conduct. There were none. 8. Any penalty imposed by the organization or a representative for his/her role in the offence. There was none (the site supervisor died in the accident). The Court did not mention the remaining 2 factors: i) whether any payments had been made to a victim and what if any restitution might be ordered. ii) what measures the organization has taken to reduce likelihood of committing a subsequent offence. The result was a fine of $200,000.00 with the 15% Criminal Code VFS. Unfortunately, there was very little analysis done in the written reasons. The judge did not say that he specifically reduced the sentence - or fine - because of concern for the economic viability of Metron, however, that seemed to be the effect. He simply said that the fine should be substantially more than that recommended by defence counsel. While the sentencing judge did not provide much guidance for the future, as the sentence has been appealed by the Crown, the Court of Appeal may.

- 10 - Lessons from this Case sentencing a company It is clear that from the company s perspective taking remedial action to prevent a repetition of the offence, making restitution to any victims and taking proper disciplinary action against the representatives can all be mitigating factors. These factors are easy to understand and apply. Whether there was any advantage realized by the company as a result of the offence is something that will likely be a factor in many criminal negligence cases. Taking short-cuts to save money will be considered an advantage under this heading. Bonuses to the company for early completion, or perhaps more likely, penalties for delays could be a factor if short-cuts are taken that affect safety. Bonuses to individuals to work longer or faster could be a risk factor as well. Perhaps the most difficult issue in sentencing an organization is the determination of the impact any sentence might have on the economic viability of the organization, or perhaps more importantly to the Court, its employees. It seems that the Crown was seeking a penalty that was way beyond the means of the company to pay. A fine that amounts to a death penalty to any organization can cause severe economic hardship on others something that sentencing is not intended to do. A significant reduction in the penalty can amount to no real penalty at all to the corporation again defeating the sentencing process. Reading this factor suggests that the court can reduce a fine that would otherwise be appropriate when it would so severely impact on the company s financial viability that survival would be unlikely. It should not be interpreted as an invitation to increase an otherwise appropriate penalty because the company is financially healthy and as a result the correct fine would not have any real impact on the company. Historically, in the criminal law sentencing process, where fines have been used, fines were never increased based on a greater ability to pay. This shows one of the main difficulties in sentencing a corporation. Unlike an individual, a corporation, or perhaps more precisely the shareholders of the corporation, can abandon the entity and start again getting a fresh start without any of the baggage of the prior entity. So how do we deal with this? The concept of restorative justice may be the answer. It is underdeveloped so far, but having the organization restore any damage it has done, and rehabilitate

- 11 - itself to become a productive entity benefiting more than the shareholders is much more beneficial than having the company pay the government a large sum of money. As one article suggests in its title Sentencing the Corporate Offender: From Deterrence to Corporate Social Responsibility (2010 56 C.L.Q. 294 Norm Keith) maybe the corporate social responsibility activities that many corporations are now promoting will become part of the sentencing process. How can the court make a corporate entity social responsible? Probation is one tool that is available. I have not found any cases where probation has been imposed on a corporate offender under the Criminal Code, but we have had cases in this province where probation has been imposed on OH&S offenders; the authority to do so coming from the Provincial Offences Act which adopts the Code provisions. However, I caution that there area has not been subject to any significant legal analysis. There are no corporate probation officers who can supervise corporations on probation. But that doesn t seem to be what is contemplated by s. 732.1 (3.1). Here is what it says: (3.1) The court may prescribe, as additional conditions of a probation order made in respect of an organization, that the offender do one or more of the following: (a) make restitution to a person for any loss or damage that they suffered as a result of the offence; (b) establish policies, standards and procedures to reduce the likelihood of the organization committing a subsequent offence; (c) communicate those policies, standards and procedures to its representatives; (d) report to the court on the implementation of those policies, standards and procedures; (e) identify the senior officer who is responsible for compliance with those policies, standards and procedures; (f) provide, in the manner specified by the court, the following information to the public, namely, (i) the offence of which the organization was convicted, (ii) the sentence imposed by the court, and (iii) any measures that the organization is taking including any policies, standards and procedures established under paragraph (b) to reduce the likelihood of it committing a subsequent offence; and (g) comply with any other reasonable conditions that the court considers desirable to prevent the organization from committing subsequent offences or to remedy the harm caused by the offence.

- 12 - (3.2) Before making an order under paragraph (3.1)(b), a court shall consider whether it would be more appropriate for another regulatory body to supervise the development or implementation of the policies, standards and procedures referred to in that paragraph. All of these things are restorative or rehabilitative rather than punitive. They are all designed to bring about correction rather than impose a financial penalty payable to the general revenue of the Province. We have youth probation officers and adult probation officers but we currently have no organization or corporate probation officers. But, they are not needed for all probation orders? Given that s. 732.1 (3.2) permits the Court to direct that a regulatory agency supervise the development or implementation of the policies, standards or procedures, corporate probation officers may not be necessary. In Regulatory and Corporate Liability From Due Diligence to Risk Management 1, the authors suggested that the Court could order the corporate entity to pay for the supervision as is done in some US states where they effectively have an embedded auditor or corporate monitor paid for by the corporation (instead of paying a fine) who reports back to the Court. They have done this in the fishing industry with offshore observers and dockside monitors with less than overwhelming success. In Canada probation officers do not report to the Court unless there is a breach and a charge is laid. Some work remains on this but it could be the way of the future. Gazing into the Crystal Ball I expect that we will now start to see more and more criminal negligence charges laid when industrial accidents occur. The construction industry is one of the industries that will be a prime target. That s bad news for our clients. 1 Archibald, Todd, Kenneth Jull & Kent Roach, Regulatory and Corporate Liability From Due Diligence to Risk Management, Canada Law Book

- 13 - I also expect that we will see probation used more frequently in the future. I think that companies placed on probation and who at the time of sentencing would choose probation over a large and potentially damaging fine will find that some of the conditions are quite strenuous and perhaps more costly than the fine when the complete cost is calculated. But that s just my speculation! St. John s, NL 29 September, 2012