A PLAIN LANGUAGE GUIDE

 BILL C-45 - AMENDMENTS TO THE CRIMINAL CODE AFFECTING THE CRIMINAL LIABILITY OF ORGANIZATIONS

PDF Format (3.30 MB)

TABLE OF CONTENTS

BACKGROUND
SECTION I: CURRENT CANADIAN LAW

• Criminal liability generally
  
• Criminal liability of corporations
  
• Criminal liability of directors, officers and employees

SECTION II: CHANGING THE LAW UNDER BILL C-45

Why does C-45 refer to an organization rather than a corporation?
Who are the “directing minds” of the organization?
What does it mean that an organization is a party to an offence?
For whose physical acts is an organization responsible?
How does an organization become a party to a crime of negligence?
How does an organization become a party to an offence where intent or knowledge has to be proven?
Sentencing an Organization
How are organizations punished for committing a crime?
At what level should the fine be set?
What is corporate probation?

FOR MORE INFORMATION

Please note, the Bill was passed with no changes and came into force on March 31, 2004. Please refer to the Justice Laws Web Site for an up-to-date version of the Criminal Code.

BACKGROUND

The Government tabled Bill C-45 on June 12, 2003.  If passed, it will amend the Criminal Code to modernize the law with respect to the criminal liability of corporations and the sentencing of corporations.  The House of Commons Standing Committee on Justice and Human Rights held hearings into this subject in May 2002 and recommended that the Government table legislation.  The Government Response set out the principles that would be enacted in the Criminal Code. The passage of Bill C-45 will transform these principles into law.

Because the Criminal Code covers a wide range of crimes by all kinds of persons, the legislation employs more complex and specific language than that which was used in the Response.   This Guide outlines how the law will apply in the most common situations.  It is intended to assist the reader understand how the Government’s proposed legislation may affect them or the corporation they work for.

Section I provides background information on Canada’s current laws regarding corporate criminal liability.

Section II describes Bill C-45, by explaining who it applies to, which activities it pertains to, and what sentencing options exist under the proposed legislation.

Section I: Current Canadian Law

Criminal liability generally - The Criminal Code requires various elements to be proven before a person can be convicted of a crime.  The commission of a prohibited act by the accused – for example, causing bodily harm, counselling a person to commit an offence, driving while impaired, or touching a person for a sexual purpose, must first be proven.

The Crown must also prove that the accused had the requisite guilty state of mind in committing the offence.  A person cannot be found guilty of a crime if, for example, the court concludes that the person was suffering from a mental disorder at the time the act was committed or did not know of certain facts that give the act its criminal quality.  Depending on the offence, that state of mind can differ.  For example, the accused must:

• know a fact (e.g. that goods are stolen), or
• have a specified intent, either to achieve a certain outcome  (e.g. to mislead ) or to do a certain act (e.g. to intentionally apply force to another person). 

Some offences, however, are based on negligence and judged “objectively” so that the person’s conduct is itself proof of the necessary “criminal” fault. Some examples, as defined in the law, include:

• storing a firearm “in a careless manner”;
• operating a motor vehicle “in a manner that is dangerous to the public”; and
• showing “wanton and reckless disregard” for the lives or safety of others.

Criminal liability of corporations - Corporations are already subject to the Criminal Code. The definition in section 2 of “every one”, “person”, “owner” includes  “public bodies, bodies corporate, societies, companies”.  However, determining whether a corporation has committed a prohibited act and whether a corporation has the requisite mental state is far more complicated than for an individual.

Corporations can only act through their employees and agents. For example, although we commonly consider that a bank makes a loan, in actuality it is the bank employees who gather information, check out security, authorize the loan and transfer money to the customer’s account. The question becomes whether a bank making a loan to a borrower who uses the money for a criminal purpose like importing drugs, is committing a crime?  The bank has made a loan that is used for a crime, so clearly it committed a prohibited act. But did the bank know of the criminal purpose and intend to finance it?

Over the years, the courts have dealt with criminal charges against corporations and other groups of persons, such as trade unions, and case by case, they have elaborated rules for determining when a corporation should be convicted of a crime.

Basically, a corporation is guilty of a crime if its “directing mind” committed the prohibited act and had the necessary state of mind.  To be a “directing mind”, a person must have so much authority in the corporation that the person can be considered the “alter ego” or “soul” of the corporation (terms used in recent case law).  Determining who is a directing mind depends on the facts of each case, but generally the person must have authority to set policy rather than simply having authority to manage.  As well, the directing mind has to be intending, at least in part, to benefit the corporation by the crime.

In the above example, it is highly unlikely that the bank president and the board of directors would be aware of the loan.  The bank makes many loans every month.  If the borrower deceived the bank and no one knew of the criminal intent of the borrower, no crime has been committed by the bank.  But what if the bank manager or the regional manager knew?  Currently, whether they would be a “directing mind” would depend on how much authority they had to develop loans policy.  Moreover, they would have to be acting at least in part for the benefit of the bank and not for their personal benefit in order for the bank to be convicted.

Criminal liability of directors, officers and employees - Under current Canadian law, officers and directors of a corporation cannot be convicted of a crime for acts of the corporation solely because of their status as directors or officers.  If they are directing the corporation to commit crimes that will benefit the corporation, or are otherwise participating in criminal activities within the corporate context, they may be held criminally responsible.  In such circumstances, it is likely that the directors and officers would be charged with the offence jointly with the corporation.