On August 9, 2013, Mr. Justice Tôth of the Superior Court of Quebec handed down a long-expected decision in the matter of R. v. Pétroles Global inc.,1 the first ruling in Canada regarding an organization's criminal liability for an offence other than negligence that requires the prosecution to prove fault pursuant to s.22.2 of the Criminal Code. This section is based on the amendments made to the Criminal Code in 2004, which were designed, among other things, to facilitate the determination of the criminal liability and conviction of organizations, as well as to lay down new principles in matters of sentencing and probation orders for organizations. The Parliament wished to replace the identification doctrine previously developed in the case law, to the effect that only the "directing minds" of a body corporate could incur criminal liability on behalf of an organization. More specifically, one of the objectives of the amendments was to reverse the Supreme Court judgement in the Rhône2 case, which stood for the proposition that only those employees who have a decision-making authority in the adoption of an organization's policies formed part of the "directing minds" of the organization.
Since the 2004 amendment to the Criminal Code, a "senior officer" who is (i) acting within the scope of his or her authority, and is a party to the offence, (ii) acting within the scope of his or her authority, and directs the work of other representatives of the organization so that they commit an offence, or (iii) aware that a representative of the organization is or is about to be a party to an offence, and does not take all reasonable measures to stop him or her from being a party to the offence, incurs liability on behalf of the organization (provided such actions were committed with the intent at least in part of benefiting the organization). A "senior officer" is broadly defined to include a person who either "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".
The Global decision follows an investigation conducted by the Competition Bureau regarding the retail prices of gasoline in the Eastern Townships (Quebec). Two territorial managers and a General Manager of Global Fuels Inc. had already pleaded guilty to criminal charges relating to virtually the same price fixing allegations as were made against their employer Global in the present proceedings.
The Court held that under the supervision of Global's General Manager for Quebec, the territorial managers appeared to be required to manage, among other things, the corporate locations (service stations operated by a tenant representative) in their respective territories, set the prices of gasoline at their corporate stations, ensure maintenance repairs, and interview, hire, train and terminate tenant station operators. They were also assigned the task of applying the "economics" developed by Global's senior management – its Vice-President and its President – whose ultimate goal appeared to have been to maximize the profitability of the service stations. Neither the operators of the corporate locations nor the territorial managers derived any personal benefit from the gasoline sales.
Thus, since the territorial managers and the General Manager had already pleaded guilty, the only issue to be determined by the Court was whether Global's two territorial managers and the General Manager could be characterized as "senior officers" within the meaning of the Criminal Code, in order to attribute criminal liability to the corporation.
Justice Tôth first noted the principles applicable in the case law and doctrine before the 2004 amendments, and concluded that the legislature had intended to extend the criminal liability of organizations by discarding the requirement that the officer have a decision-making authority in the adoption of policies. According to the Court, the 2004 amendments went beyond merely extending the definition of "directing mind" developed in Rhône to officers who are not members of the corporation's board. Tôth J. held that while the Criminal Code maintains the theory of identification as a foundation for the establishment of the criminal liability of organizations, it also includes several new provisions which may be regarded as establishing a partial vicarious liability system. Tôth J. rejected Global's argument that the term "senior" adds a requirement to the definition of the Criminal Code that the officer must have some autonomy in exercising its decision-making authority, in order to incur his or her employer's criminal liability.
Justice Tôth also refused to apply the definition of "senior officer" found in labour law and cautioned against using the jurisprudence developed under the Labour Standards Act, a provincial statute. In the court's view, the definition of senior officer set out in s. 2 of the Criminal Code was sufficient in itself and it should not be interpreted by reference to labour law principles.
In conclusion, Mr. Justice Tôth held that the General Manager of Global was a "senior officer" under the Criminal Code, as the Court was satisfied that the evidence before it revealed that he managed an important aspect of the organization's activities. The Court noted that the General Manager supervised more than 200 service stations in Quebec, representing about two-thirds of the stations operated by Global, that he was then the third highest earner within Global, that he ensured the implementation of the "economics" developed by Global's senior management, and that he approved expenses exceeding $1,000 before recommending them to senior management. Justice Tôth also ruled that the requirement for approval of certain expenses by the Vice President did not take away the responsibilities of the General Manager. It should be noted that the Court made no determination regarding whether the territorial managers should be considered senior officers as well, since the decision regarding the General Manager was sufficient.
Global now has 30 days to appeal the decision. If it stands in appeal, the Global decision will mark a major shift regarding corporate criminal liability in Canada. As a result of the 2004 amendments to the Criminal Code, directors, senior executives and officers with decision-making power in the development of policies no longer are the only persons whose actions may engage a corporation's criminal liability. Criminal acts committed by other representatives, sometimes only responsible for day to day management, may also establish the criminal liability of organizations. Following the Global decision, where a representative who is responsible for the management of an important aspect of a business commits an offence (either of criminal negligence or a mens rea offence), the responsibility of the corporation may be triggered. Of course, whether a person is a senior officer in the first place remains a question of fact which depends on the specific circumstances of each case and the internal structure of each corporation.