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Bulletin | The HR Space

No Jail For Accused Directors, says Court of Appeal while actually increasing Risk of Jail Sentences for Directors

Fasken
Reading Time 3 minute read
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Labour, Employment and Human Rights Bulletin

The jail terms imposed on two directors following a workplace fatality were overturned on appeal. The $250,000 fine imposed on the company was also reduced. The results were good for the accused, but the reasoning in the decision will have broad implications for corporations and directors charged with safety offences. This is a cautionary tale to directors of corporations operating in Canada who neglect their health and safety responsibilities. 

What Happened in this Case?

An employee of New Mex Canada Inc. (New Mex) was assigned to operate an order picker. He was not provided with fall protection equipment, or safety work boots. There was no protective railing on the order picker platform where he stood while working. The employee was known to have a medical condition and had fainted twice before at work. He fell off the order picker platform and to his death. An investigation concluded the worker most likely became unconscious and fell head first onto the concrete floor below.

New Mex and two directors were charged and pleaded guilty to offences under the Occupational Health and Safety Act (OHSA). The company was fined $250,000 plus a 25% victim surcharge. The directors were sentenced to 25 days in jail and 12 months' probation in part because of their "moral blameworthiness". On first level appeal, New Mex's fine was reduced to $50,000 and a fine of $15,000 was substituted for jail time for the directors. The Court of Appeal agreed with the first level appeal results, but said the sentencing justice did not make a mistake when considering the moral blameworthiness of the directors in sentencing. [1]

What's the Problem?

The court's decision conflicts with prior decisions confirming moral blameworthiness is not relevant to sentencing for strict liability offences like those under the OHSA.[2] Sentencing for these offences should focus on the public harm the legislation is designed to address not moral blameworthiness. If moral blameworthiness is a factor in sentencing, harsher penalties could be imposed in certain cases. For example, if a director ignored health and safety issues raised in reports to the board of directors that might be seen as moral blameworthiness. It could result in a harsher penalty for the director, including a term of imprisonment. In fact, the court said that moral blameworthiness on the part of a director may be a proper basis for a term of imprisonment. This could be a fundament shift in sentencing where there has, until now, generally been a presumption that fines are an appropriate sentence in most cases for a violation of the OHSA.

The court's decision also creates uncertainty in the roles and responsibilities of supervisors and directors under the OHSA. The court said the directors were both part of the governance of the corporation and held roles as supervisors. The definition of supervisor under the OHSA is broad enough to include a senior officer, but their obligations under health and safety laws across Canada typically relate to operational matters. Directors also have important responsibilities under health and safety law across Canada. In contrast to supervisors, those obligations relate to governance, policy, and oversight. Not execution of operations. To intermingle the supervisor and director roles, drags the two individuals into the operational realm of the business in question where the failures clearly occurred. The concern is that a director who also holds a position as an officer of a corporation could face expanded exposure of directors and increased likelihood of a jail term that upon conviction.

This was a good news case for New Mex and its directions. However, the troubling comments of the Court of Appeal will inevitably be used by prosecutors across Canada in their efforts to obtain jail terms as appropriate sentences against directors.


 

[1] R. v. New Mex Canada Inc., 2019 ONCA 30.

[2] R. v. Timminco Ltd., 54 O.R. (3d) 21 (C.A.).

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