Occupational Health and Safety Act charges could proceed against an insolvent company even though it had obtained protection from its creditors under the Companies’ Creditors Arrangement Act (“CCAA”), an Ontario judge has decided.

Terrace Bay Pulp Inc. was charged with offences under the Ontario Occupational Health and Safety Act in relation to two separate incidents, one in which a worker was injured in the company’s wood-handling department, and one in which a worker died after an explosion blew part of the roof off of a mill.

Relying on certain sections of the CCAA, the court decided that the Ministry of Labour prosecution under the Occupational Health and Safety Act was “regulatory or prosecutorial in nature”, and the Ministry was not “acting as a creditor” with respect to the prosecution, even though the company could be fined if it were ultimately found guilty of the charges.  As such, the prosecution could proceed.

In response to the company’s argument that it would be costly to defend the charges, the judge noted that it was Terrace Bay’s decision as to whether it would incur the cost of defending the charges or not.

Terrace Bay Pulp Inc. (Re), 2013 ONSC 5111 (CanLII)…