The Criminal Code and Industrial Accidents: R v Metron Construction and the Ghosts of Westray
Deaths due to occupational causes outnumber homicides in Canada by about two to one. Many of these deaths stem from negligence, and critics charge that enforcement measures are lax. In a major departure, a record fine for corporate criminal negligence was imposed in R v Metron Construction Corporation, 2013 ONCA 541, after four Toronto construction workers fell to their deaths due to faulty scaffolding.
Metron is the first time a major penalty has been imposed under Section 22.1 of the Criminal Code, known as the Westray amendment. It creates criminal liability for an organization such as a corporation even when the responsible decision makers within it cannot be identified. It sends a message, but this may be undermined by the difficulty of actually collecting a fine in such a case.
Westray and its Legacy
Section 22.1 was aimed at overcoming the difficulty of getting criminal convictions against individuals in industrial cases. It was enacted in response to the disaster at the Westray coal mine in Nova Scotia, that killed 26 workers, amid charges of slipshod practices. A prosecution for manslaughter and criminal negligence causing death was launched against two of the company’s managers, but the prosecution was mishandled.
The purported aim of the Criminal Code amendments was to be able to charge a corporation for criminal negligence, when it was impossible to find any of its managers guilty beyond a reasonable doubt. Cynics might suggest that having such a law on the books diverts attention, and allows business executives to escape the risk of prison sentences in exchange for a fine.
There is little doubt that, for a wealthy business executive, the threat of a prison sentence would have a much greater deterrent effect than even a very large fine.
The Lower Court Ruling
A Criminal Code charge against a corporation can only result in a fine, and not a prison sentence. An action against the sole director and shareholder of Metron was tried at the same time as the lower court criminal trial of Metron (by the same judge), R v Swartz, . He pleaded guilty to a charge under the Occupational Health and Safety Act, RSO 1990, Chapter O.1 (“OHSA”) and was personally fined $112,000.
At the same time, Metron Corporation pleaded guilty to criminal negligence in R v Metron Construction Corporation, . Criminal negligence by a corporation can result in a fine of unlimited size. As stated in the Criminal Code, the fine “is in the discretion of the court” (Section 735(1)). The Crown had sought a fine of $1 million against the company, but Mr. Justice Bigelow imposed a considerably lower fine of $200,000. He relied on the range of penalties that have been imposed for similar offences under OHSA. He considered the Criminal Code provision to be aimed at the same type of effect as OHSA.
The Appeal: Distinguishing between Regulatory and Criminal Penalties
The Crown argued that the judge had erred in basing his calculation of the fine on what was typically paid under the provincial health and safety legislation. This did not take into account “the higher level of culpability inherent in criminal offences and the particular gravity of the offence of criminal negligence.”
Justice Pepall, writing for a unanimous Court, agreed with the Crown. She cited the Supreme Court’s decision in R v Wholesale Travel Group,  3 SCR 154, on the distinction between regulatory offences and criminal offences:
The concept of fault in regulatory offences is based upon a reasonable care standard and, as such, does not imply moral blameworthiness in the same manner as criminal fault. Conviction for breach of a regulatory offence suggests nothing more than that the defendant has failed to meet a prescribed standard of care. (219)
The implication is that a criminal charge should be laid when there is evidence beyond a reasonable doubt that a company deliberately followed substandard practices and cut corners on safety in order to save money, knowing that it significantly increased the risk of harm. When the risk materializes, in the form of serious injury or death, there is moral culpability.
How Large a Fine for Deterrence?
The Crown sought to de-emphasize the question of whether a very large fine was affordable. One of the sentencing principles in the Code, Section 718.21(d) includes “the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees.”
The court accepted that this is just one of the criteria, and its importance had to be weighed against the importance of denunciation and deterrence. Avoiding bankrupting the corporation is not a necessary condition in determining the fine. The court made reference to the UK, which has a crime of corporate manslaughter, and where sentencing guidelines and practice explicitly countenance driving a corporation into bankruptcy where there is a high level of moral culpability, stating that
It is apparent from this passage that the sentencing judge considered himself precluded from imposing a fine that might result in the bankruptcy of the corporation. In my view, this was an error. The economic viability of a corporation is properly a factor to be considered but it is not determinative. Certainly it is not a condition precedent to the imposition of a fine nor does it necessarily dictate the quantum of the fine. (para 108)
Will Large Corporate Fines Ever Be Paid?
The evidence at trial suggested that Metron Corporation may have no assets at all, and certainly not enough assets to pay such a large fine. The Crown introduced evidence that the owner of Metron also owned another company in the same business. The implication was that Metron’s client list could be transferred to another corporation that would not be liable for the fine. The Crown argued for piercing the corporate veil, but the judge did not accept the argument.
The reality is that industrial accidents often occur at the hands of closely held, under-capitalized companies. It is quite common for a single business to be compartmentalized into multiple corporations to get the most traction out of limited liability.
In this decision, the Court of Appeal explicitly stated that it is willing to impose a fine that will drive a negligent company into insolvency. Where the corporation is already insolvent, or nearly so, such a fine has little effect unless there is some mechanism to pierce the corporate veil and require the defendant’s parent company or controlling shareholder to pay it.
The drafters of Section 22.1 seem not to have thought of this, as there is no statutory provision for piercing the corporate veil in the event of a criminal offence by an insolvent company. This problem would arise again in the event that a criminal fine is found to be warranted in connection with the Lac-Mégantic railway tragedy. The corporation that operated the runaway train, a subsidiary of a larger holding company, is now insolvent.
Piercing of the corporate veil exists as a discretionary judicial remedy, but it “follows no consistent principle,” to quote the Supreme Court in Kosmopoulos v Constitution Insurance Co.,  1 SCR 2, para. 12.
The Court of Appeal did send a message with this sentence, that moral culpability in corporate criminal negligence calls for heavy penalties. However, if the law does not provide adequate mechanisms to enforce the penalty, any deterrent effect will be significantly weakened.
 The definitive Canadian study on this topic, written by Professor Harry Glasbeek nearly 30 years ago, warned that limited liability would undermine the effectiveness of fines. “Why Corporate Deviance is Not Treated as a Crime” (1984) 22 Osgoode Hall LJ 393.