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27 March 2019
The jail terms imposed on two directors following a workplace fatality were overturned on appeal and the C$250,000 fine imposed on the company was also reduced. While the results were good for the accused, the reasoning in the decision will have broad implications for corporations and directors charged with safety offences. This is a cautionary tale for directors of corporations operating in Canada who neglect their health and safety responsibilities.
An employee of New Mex Canada Inc was assigned to operate an order picker. He was not provided with fall protection equipment or safety work boots and 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 that the worker most likely was unconscious and thus 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. The company was fined C$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".
In the first appeal, New Mex's fine was reduced to C$50,000 and a fine of C$15,000 was substituted for jail time for the directors. The Court of Appeal agreed with the first-instance appeal results but said the sentencing justice did not make a mistake when considering the moral blameworthiness of the directors.(1)
The court's decision conflicts with prior decisions, which had confirmed that moral blameworthiness is not relevant to sentencing for strict liability offences like those under the Occupational Health and Safety Act.(2) Sentencing for these offences should focus on the public harm which 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 considered moral blameworthiness, which could in turn 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 fundamental 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 Occupational Health and Safety Act.
The court's decision also creates uncertainty in the roles and responsibilities of supervisors and directors under the Occupational Health and Safety Act. The court said the directors had both been part of the governance of the corporation and held roles as supervisors. The definition of 'supervisor' under the Occupational Health and Safety Act 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 would drag 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 on conviction.
This decision was positive for New Mex and its directors. However, the Court of Appeal's troubling comments will inevitably be used by prosecutors across Canada in an effort to obtain jail terms as appropriate sentences against directors.
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