Canadian Dredge & Dock Co. v. The Queen

Canadian Dredge & Dock Co. v. The Queen
Collection
Supreme Court Judgments
Date
1985-05-23
Report
[1985] 1 SCR 662
Case number
16422, 16425, 16435
Judges
Laskin, Bora; Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; McIntyre, William Rogers; Chouinard, Julien; Lamer, Antonio; Wilson, Bertha
On appeal from
Ontario
Subjects
Criminal law
Decision Content
Canadian Dredge & Dock Co. v. The Queen, [1985] 1 S.C.R. 662
Canadian Dredge & Dock Company, Limited, Marine Industries Limited, The J.P. Porter Company Limited, and Richelieu Dredging Corporation Inc. Appellants;
and
Her Majesty The Queen Respondent.
File Nos.: 16422, 16425, 16435.
1983: May 24, 25, 26; 1985: May 23.
Present: Laskin C.J.* and Ritchie*, Dickson, Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson JJ.
*Laskin C.J. and Ritchie J. took no part in the judgment.
on appeal from the court of appeal for ontario
Criminal law ‑‑ Corporate liability ‑‑ Conspiracy to defraud ‑‑ Whether or not liability arises where directing mind acting (1) in fraud of corporation, or (2) for his own benefit, or (3) contrary to instructions not to act illegally ‑‑ Criminal Code, R.S.C. 1970, c. C‑34, ss. 338(1), 423(1)(d).
Four corporate appellants appealed their convictions under ss. 338(1) and 423(1) (d) of the Criminal Code . The several counts in the indictment related to contracts between certain public authorities and the accused where the bids were alleged to have been tendered on a collusive basis, with the low bidders including in their costs compensation to be paid to the "high bidders" or "non‑bidders". Each company had a manager who conducted the business of the company relating to the submission of bids for tender. Corporate criminal liability was denied by the appellants, notwithstanding the position of these managers because these managers allegedly (1) were acting in fraud of the appellant‑employers, (2) were acting throughout for their own benefit, or (3) were acting contrary to instructions and hence outside of the scope of their employment with the appellants. Several companies also challenged the existence of any theory of corporate criminal liability for mens rea offences.
Held: The appeals should be dismissed.
Appellants are criminally liable in the circumstances by operation of the identification theory. The underlying premise of this theory is that the identity of the directing mind and the identity of the company coincide; the actor‑employee who physically committed the offence is the ego of the corporation. Therefore, even in mens rea offences, if the court finds the officer or managerial level employee to be a vital organ of the company and virtually its directing mind in the sphere of duty assigned him so that his actions and intent are the action and intent of the company itself, the company can be held criminally liable. The wrongful action of the primary representative, by attribution to the corporation, creates primary rather than vicarious liability. The identity doctrine merges the board of directors, the managing director, the superintendent, the manager or anyone else to whom was delegated the governing executive authority of the corporation, and the conduct of any of the merged entities is thereby attributed to the corporation. A corporation may, by this means, have more than one directing mind.
The directing mind, as a prerequiste to the theory's operation, must act within the scope of his authority, that is, his actions must be performed within the sector of the corporate operation assigned to him. The sector may be functional, or geographic, or may embrace the entire undertaking of the corporation. Terminological problems arise from the use of the phrase "scope of employment".
It is no defence to the application of the identification doctrine that a criminal act by a corporate employee cannot be within the scope of his authority unless expressly ordered to do the act in question. Such a condition would reduce the rule to virtually nothing. Liability can arise whether or not there be formal delegation, awareness of the board or directors, or express prohibition.
A corporation in reality has these elements: the legal entity, the personal shareholder, and the employee. By reason of the identification theory, the criminal penalty will extend, directly or indirectly, to all three which is quite unlike the situation of a natural proprietor where only two of these elements are present. Imposition of criminal liability is tolerable for a community where reality dictates corporate criminal accountability in certain circumstances.
Each company had a directing mind and the fact that he may have defrauded the corporate employer, acted in part for his own benefit, or acted in breach of instructions did not remove the company's criminal liability in the circumstances.
The presence of general or specific instructions prohibiting the conduct in question was irrelevant in determining the parameters of the identification theory. Since the corporation and the directing mind became one, the prohibition directed by the corporation to others is of no effect in law on the determination of criminal liability of either the directing mind or the corporation itself by reason of the actions of the directing mind.
The outer limit of the delegation doctrine is, however, reached and exceeded when the directing mind ceases completely to act, in fact or in substance, in the interests of the corporation. The identification theory ceases to operate when the directing mind intentionally defrauds the corporation and when his wrongful actions form the substantial part of the regular activities of his office. In such a case, where his entire energies are directed to the destruction of the undertaking of the corporation, the manager cannot realistically be considered to be the directing mind of the corporation. The same reasoning can be applied to the concept of benefits. Unlike fraud, however, a benefit can be in whole or in part. Benefit, in the sense that the directing mind intended that the corporation should not benefit from any of its activities in the undertaking, is in reality quite different from benefit to the directing mind in single transactions or in a minor part of the activities of the directing mind.
Where the criminal act is totally in fraud of the corporate employer and where the act is intended to and does result in benefit exclusively to the employee‑manager, the employee‑directing mind, from the outset of the design and execution of the criminal plan, ceases to be a directing mind of the corporation and consequently his acts cannot be attributed to the corporation under the identification doctrine. Thus, the identification doctrine only operates where the Crown demonstrates that the action taken by the directing mind (a) was within the field of operation assigned to him; (b) was not totally in fraud of the corporation; and (c) was by design or result partly for the benefit of the company.
The factual basis for these "defences" to corporate criminal liability was not present here. The impugned activities formed a "share the wealth" project for the benefit of all concerned except the public authorities who awarded the contracts. In their activities the directing minds were acting partly for the benefit of the employing appellant and partly for their own benefit.
Although the directing minds of all four appellants practised and benefited from specific instances of fraud, they did not act wholly for their own benefit or wholly in fraud of their employer in the sense that the scheme was designed to deprive the appellants from all benefit. There was no evidence in the record of any plan amongst the directing minds or of a plan held by a single directing mind which involved the destruction of the undertaking of the appellant corporations or the undermining of their fiscal health. The conspiratorial directing minds, to the contrary, aimed to ensure their corporate employers an enhanced level of profits and in the process bettered themselves.
Cases Cited
Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153; Nordik Industries Ltd. v. Regional Controller of Inland Revenue, [1976] 1 NZLR 194; Moore v. I. Bresler, Ltd., [1944] 2 All E.R. 515; R. v. Parker Car Wash Systems Ltd. (1977), 35 C.C.C. (2d) 37, considered; R. v. City of Sault Ste. Marie, [1978] 2 S.C.R. 1299; R. v. Great West Laundry Co. (1900), 3 C.C.C. 514; Lennard’s Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705; Director of Public Prosecutions v. Kent and Sussex Contractors, Ltd., [1944] K.B. 146; R. v. I.C.R. Haulage, Ltd., [1944] K.B. 551; R. v. Fane Robinson Ltd., [1941] 3 D.L.R. 409; R. v. Ash‑Temple Co. (1949), 93 C.C.C. 267; R. v. Electrical Contractors Association of Ontario and Dent, [1961] O.R. 265; R. v. H.J. O’Connell Ltd., [1962] Que. Q.B. 666; R. v. J.J. Beamish Construction Co., [1966] 2 O.R. 867; R. v. St. Lawrence Corp., [1969] 2 O.R. 305; R. v. Spot Supermarket Inc. (1979), 50 C.C.C. (2d) 239; R. v. P.G. Marketplace and McIntosh (1979), 51 C.C.C. (2d) 185; R. v. Martin, [1932] 3 W.W.R. 1; R. v. McDonnell, [1966] 1 All E.R. 193; R. v. Fell (1981), 64 C.C.C. (2d) 456; New York Central and Hudson River Railway Co. v. United States, 212 U.S. 481 (1909); Egan v. United States, 137 F.2d 369 (1943); United States v. Basic Construction Co., 711 F.2d 570 (1983); The People v. Canadian Fur Trappers Corp., 248 N.Y. 159 (1928); State of Idaho v. Adjustment Department Credit Bureau, Inc., 483 P.2d 687 (1971); State of Louisiana v. Chapman Dodge Center Inc., 428 S.2d 413 (1983); Commonwealth of Massachusetts v. Beneficial Finance Co., 275 N.E.2d 33 (1971); R. v. Australian Films Ltd. (1921), 29 C.L.R. 195; Mousell Brothers, Ltd. v. London and North‑Western Railway Co., [1917] 2 K.B. 836; Morgan v. Babcock and Wilcox Ltd. (1929), 43 C.L.R. 163; Australian Stevedoring Industry Authority v. Oversea and General Stevedoring Co. (1959), 1 F.L.R. 298; Grain Sorghum Marketing Board v. Supastok Pty. Ltd., [1964] Qd.R. 98; Lamb v. Toledo‑Berkel Pty. Ltd., [1969] V.R. 343; Kehoe v. Dacol Motors Pty. Ltd., [1972] Qd.R. 59; Universal Telecasters (QLD) Ltd. v. Guthrie (1978), 32 F.L.R. 361; Trade Practices Commission v. Annand and Thompson Pty. Ltd. (1978), 19 A.L.R. 730; United States v. Hilton Hotels Corp., 467 F.2d 1000 (1972); Upholsterers International Union of North America, Local 1 v. Hankin & Struck Furniture Ltd. (1964), 49 W.W.R. 33; R. v. Waterloo Mercury Sales Ltd., [1974] 4 W.W.R. 516; Old Monastery Co. v. United States, 147 F.2d 905 (1945); United States v. Empire Packing Co., 174 F.2d 16 (1949); Standard Oil Co. of Texas v. United States, 307 F.2d 120 (1962); United States v. Carter, 311 F.2d 934 (1963); United States v. Ridglea State Bank, 357 F.2d 495 (1966); United States v. Beusch, 596 F.2d 871 (1979); United States v. Cincotta, 689 F.2d 238 (1982); United States v. Richmond, 700 F.2d 1183 (1983), referred to.
Statutes and Regulations Cited
Criminal Code, R.S.C. 1970, c. C‑34, ss. 338(1), 423(1)(d), 647.
Criminal Code Amendment Act, 1909, 1909 (Can.), c. 9, s. 2.
Maine Criminal Code, 9 Maine Rev.Stats.Anno., Title 17‑A, § 60.
Authors Cited
Andrews, John. "Reform in the Law of Corporate Liability," [1973] Crim. L.R. 91, 91‑97.
Archbold’s Pleading, Evidence and Practice in Criminal Cases, 41st ed., Stephen Mitchell, P.G. Richardson and J.H. Buzzard, eds., London, Sweet & Maxwell, 1982.
Australian Commentary on Halsbury’s Laws of England (4th ed.), vol. D, Sydney, Butterworths, 1976.
Burns, Peter. A Feature of Corporate Criminal Liability or Why the Brains of a Corporation Are Not Necessarily Its ‘Intimate Friends’ " (1977‑78), 2 Can. Bus. L.J. 474, 474‑476.
Caroline, M.W. "Corporate Criminality and the Courts: Where are They Going?" (1985), 27 C.L.Q. 237, 237‑254.
Clad, J.C. "The Criminal Liability of Companies", [1977] N.Z.L.J. 420, 420‑424.
Ewaschuk, E.G. "Corporate Criminal Liability and Related Matters" (1975), 29 C.R.N.S. 44, 44‑78.
Fien, C.M. "Corporate Responsibility Under Criminal Law" (1973), 5 Man. L.J. 421, 421‑439.
Fisse, W.B. "The Distinction Between Primary and Vicarious Corporate Criminal Liability" (1967), 41 A.L.J. 203, 203‑210.
Ford, H.A.J. Principles of Company Law, 3rd ed., Sydney, Butterworths, 1982.
Halsbury’s Laws of England, vols. 8 and 9, 1st ed., London, Butterworths, 1909.
Halsbury’s Laws of England, vols. 8 and 9, 2nd ed., London, Butterworths, 1933.
Halsbury’s Laws of England, vols. 9 and 10, 3rd ed., London, Butterworths, 1954.
Halsbury’s Laws of England, vol. 9, 4th ed., London, Butterworths, 1974.
Halsbury’s Laws of England, vol. 14, 4th ed., London, Butterworths, 1975.
Howard, Colin. Criminal Law, 4th ed., Sydney, Law Book Co., 1982.
Leigh, L.H. "The Criminal Liability of Corporations and Other Groups" (1971), 9 U. Ott. L.R. 247, 247‑302.
Muir, I.A. Tesco Supermarkets Corporate Liability and Fault" (1973), 5 N.Z.V.L.R. 357, 357‑372.
Shorter Oxford English Dictionary, Oxford, Clarendon Press, 1959.
Stuart, Don. Canadian Criminal Law, Toronto, Carswells, 1982.
Waddams, S.M. "Alter Ego and the Criminal Liability of Corporations" (1966), 24 U.T. Fac. L.R. 145, 145‑153.
Welsh, R.S. "The Criminal Liability of Corporations" (1946), 62 L.Q.R. 345, 345‑365.
Williams, Glanville. Textbook of Criminal Law, London, Stevens & Sons, 1978.
Williams, Glanville. Textbook of Criminal Law, 2nd ed., London, Stevens & Sons, 1983.
Winn, C.R.N. "The Criminal Responsibility of Corporations" (1929), 3 Camb. L.J. 398, 398‑415.
Yarosky, Harvey. "The Criminal Liability of Corporations" (1964), 10 McGill L.J. 142, 142‑157.
APPEALS from judgments of the Ontario Court of Appeal, sub nom. R. v. McNamara (No. 1) (1981), 56 C.C.C. (2d) 193, dismissing appeals from convictions. Appeals dismissed.
Douglas Laidlaw, Q.C., and Roy Stephenson, for appellant Canadian Dredge & Dock Company, Limited.
John Sopinka, Q.C., and James Woods, for appellant Marine Industries Limited.
Marcel Piché, Q.C., and J. O’Reilly, for appellants The J.P. Porter Company Limited and Richelieu Dredging Corporation Inc.
Edward Then, Q.C., and John C. Pearson, for the respondent.
The judgment of the Court was delivered by
1. Estey J.‑‑The complex of convictions and acquittals which led to this appeal raises important issues fundamental to the liability of a corporation in criminal law. The procedural history from trial through appeal of some twenty accused on an indictment containing seven counts is not relevant to the disposition of the four appeals now before this Court. These are appeals by four corporate appellants from convictions under ss. 338(1) and 423(1)(d) of the Criminal Code, R.S.C. 1970, c. C‑34. Following a trial of some fifteen months duration, including an eleven‑day charge to the jury by the learned trial judge, Parker A.C.J.H.C., five accused were acquitted, the jury was unable to reach a verdict concerning two accused, and convictions were entered against the remaining thirteen accused on one or more of the seven counts. The thirteen accused who were convicted appealed convictions and sentences to the Court of Appeal. The Attorney General of Ontario appealed the sentence imposed on three of the accused. The Court of Appeal dismissed eight appeals completely and ordered new trials in the case of five appellants on some or all of their respective counts. Four appellants now appeal as follows:
(a) The appellant Canadian Dredge & Dock Company, Limited (hereinafter referred to as CD") appeals against the convictions entered at trial and confirmed by the Court of Appeal on counts 1, 3, 4, 5 and 6 and asks that the conviction be quashed or in the alternative that a new trial be ordered;
(b) The appellant Marine Industries Limited (hereinafter referred to as MIL") appeals against conviction on count 2 and asks that the conviction be quashed and a new trial ordered;
(c) The appellant The J.P. Porter Company Limited (hereinafter referred to as Porter") appeals against the convictions entered at trial and confirmed by the Court of Appeal on counts 1, 4, 5, and 6 and asks that the convictions be quashed or in the alternative that there be an order for a new trial;
(d) The appellant Richelieu Dredging Corporation Inc. (hereinafter referred to as Richelieu") appeals against convictions entered at trial and confirmed by the Court of Appeal on counts 1 and 3 and asks that the convictions be quashed or in the alternative that a new trial be ordered.
There is no cross‑appeal by the Crown against the order of the Court of Appeal for a new trial on count 7 in the case of the appellant MIL.
2. Leave to appeal to this Court was granted on the following questions of law:
Re: Canadian Dredge & Dock Company Limited v. The Queen and Marine Industries Limited v. The Queen:
Is the criminal liability of a corporation, when it is based on the misconduct of a directing mind of the corporation, affected because the person who is the directing mind is at the same time acting, in whole or in part, in fraud of the corporation, or wholly or partly for his own benefit or contrary to instructions that he not engage in any illegal activities in the course of his duties?
Re: J.P. Porter Company Limited and Richelieu Dredging Corporation Inc. v. The Queen
Was there any evidence that a directing mind of the applicant corporation was acting wholly or in part in fraud of the corporation during the period covered by the indictments herein or acting wholly or in part for his own benefit during that period or contrary to instructions that he not engage in illegal activities in the course of his duties and, if so, is the criminal liability of the corporation affected by any one or more of such circumstances?
3. These questions raise squarely the issue of corporate criminal liability in our law by reason of the so‑called indentification theory or otherwise. CD, particularly, does not accept the proposition that a corporation can be liable in criminal law for a mens rea offence by reason of the identification doctrine. It is submitted on behalf of CD and MIL that this is a doctrine originating in civil law and has not been properly and authoritatively brought into Canadian criminal law. Alternatively, the appellants CD and MIL submit that a corporation is not liable in criminal law when the directing mind of the corporation is, at the material time:
1. acting in fraud of the corporation; or,
2. acting wholly or partly for his or her own benefit; or,
3. acting contrary to instructions that he not engage in illegal action in the course of his duties.
4. In the case of the appellants Porter and Richelieu the submission is made that there is evidence to support a finding that the directing minds of the corporation were, at the times in question, acting in fraud of the corporation or wholly or partly for their own benefit or contrary to instructions not to comit illegal activities in the course of employment, or any one of these circumstances; and therefore the answer to the second question, supra, is said by these appellants to be the same as the answer to the first question.
5. In none of these appeals does the Crown concede that there is any evidence in respect of any of the appellants in support of any of the three separate defences alleged by these appellants to exist in law; or that these defences are known to the law.
6. The several counts in the indictment relate to contracts between certain public authorities and the accused for dredging in the St. Lawrence River and in some of the Great Lakes in the years 1967‑73 inclusive. Many issues were raised and disposed of at trial and in the Court of Appeal which are not covered by the two questions now brought before this Court. Only the issues raised in the two questions, supra, as they relate to these four appellants remain to be settled. It is not necessary in dealing with these remaining issues of law to restate the complex corporate history of the appellants, their ownership from time to time, the evidence concerning each appellant on each count, or the details of the operation of the bidding system with reference to which these charges arose. The judgment of the Court of Appeal examines all such matters in both a detailed and comprehensive manner and may be found at [sub nom. R. v. McNamara (No. 1)] (1981), 56 C.C.C. (2d) 193. The essential facts as seen by the Crown are summarized at pp. 249‑51.
7. Each of the appellants had a manager who conducted the business of the company relating to the submission of bids for tender dredging work. These managers were:
(a) for MIL, Louis DeRome who was the General Manager of dredging operations and who became Vice‑President of the company in 1967. He died in 1970 before these proceedings commenced;
(b) for Porter, Horace Rindress who became Vice‑President of Porter in 1959 and thereafter was made a Director in 1961 and President in 1969. Rindress testified for the Crown;
(c) for Richelieu, Rindress who became President after the company was acquired by Porter in 1972;
(d) for CD, Robert Schneider who was at various times a Director and Officer and the person in charge of dredging for the appellant. He held similar positions with the appellant's predecessor companies prior to that. Schneider testified for the Crown.
The respondent Crown asserts that bids were submitted in response to calls for tender by the Government of Canada or its agencies on a collusive basis. "Low bidders" were said to have included in their bids "costs" which would cover compensating payments to be made to co‑operating " high bidders" or in some cases, "non‑bidders". Other forms of compensation were sometimes arrangements which included subcontracts by successful bidders to the accommodation bidders or to other members of the alleged conspiracy.
It was the theory of the Crown that the consideration given for these co‑operative bids or withholding of competitive bids was included in the cost estimates of the successful bidders so that the public agency was paying a higher price for the work than it would have paid if the job had been bid competitively. When money was offered as the form of consideration, the amount was recorded on documents known as "score sheets" which were kept by Rindress, Quinlan*1 and Schneider; they would meet periodically to reconcile the commitments recorded on the "score sheets" and to settle accounts. If there remained a balance owing by one corporation to another, on some occasions a false invoice would be issued by the corporation to whom the money was owing or by some other corporation designated by it, which would then be paid by a cheque from the debtor company. In some cases, however, the balance was merely recorded and carried forward. As previously mentioned, in some cases Schneider and Quinlan devised schemes whereby they personally obtained the benefit of the pay‑offs without the knowledge of the corporation which they represented. From time to time the "score sheets" were destroyed when the accounts were settled.
*1 Quinlan played the same role with reference to the accused, McNamara Corporation Limited, as Messrs. Rindress and Schneider did with reference to the other corporate accused. Quinlan was the General Manager and Vice President of the Marine Division of McNamara Corporation Limited.
(At pages 250‑51.)
8. The theory of the defence to these charges, as advanced by the appellants, is simply that whatever may be the position of the guiding managers of the four appellants personally at criminal law, no criminal liability attaches to these appellants under any of the counts because these managers were either acting in fraud on the appellant‑employers, were acting throughout for their own benefit, or were acting contrary to instructions and hence were acting outside the scope of their employment with the appellants in question. As noted earlier, in this Court at least, several of the appellants also challenged the existence of any theory of corporate criminal liability for mens rea offences.
9. In his charge to the jury, the learned Associate Chief Justice discussed the three defences put in issue by the appellants and as set out in questions 1 and 2, supra, together with the application of the identification theory in Canadian criminal law. The Court of Appeal reviewed the law and concluded that none of these defences was known to the law or, alternatively, none was, on the evidence, applicable, and consequently the appellants CD and MIL were guilty as charged on counts now in issue. In the case of the appellants Porter and Richelieu, the Court of Appeal found that whether or not these defences existed in law, there was no evidence that the directing mind of these appellants, Rindress, had conducted himself so as to raise such defences.
10. The position of the corporation in criminal law must first be examined. Inasmuch as all criminal and quasi‑criminal offences are creatures of statute the amenability of the corporation to prosecution necessarily depends in part upon the terminology employed in the statute. In recent years there has developed a system of classification which segregates the offences according to the degree of intent, if any, required to create culpability.
(a) Absolute Liability Offences
11. Where the legislature by the clearest intendment establishes an offence where liability arises instantly upon the breach of the statutory prohibition, no particular state of mind is a prerequisite to guilt. Corporations and individual persons stand on the same footing in the face of such a statutory offence. It is a case of automatic primary responsibility. Accordingly, there is no need to establish a rule for corporate liability nor a rationale therefor. The corporation is treated as a natural person.
(b) Offences of Strict Liability
12. Where the terminology employed by the legislature is such as to reveal an intent that guilt shall not be predicated upon the automatic breach of the statute but rather upon the establishment of the actus reus, subject to the defence of due diligence, an offence of strict liability arises. See R. v. City of Sault Ste. Marie, [1978] 2 S.C.R. 1299. As in the case of an absolute liability offence, it matters not whether the accused is corporate or unincorporate, because the liability is primary and arises in the accused according to the terms of the statute in the same way as in the case of absolute offences. It is not dependent upon the attribution to the accused of the misconduct of others. This is so when the statute, properly construed, shows a clear contemplation by the Legislature that a breach of the statute itself leads to guilt, subject to the limited defence above noted. In this category, the corporation and the natural defendant are in the same position. In both cases liability is not vicarious but primary.
(c) Offences Requiring Mens Rea
13. These are the traditional criminal offences for which an accused may be convicted only if the requisite mens rea is demonstrated by the prosecution. At common law a corporate entity could not generally be convicted of criminal offence. Corporate criminal immunity stemmed from the abhorrence of the common law for vicarious liability in criminal law, and from the doctrine of ultra vires, which regarded criminal activities by corporate agents as beyond their authority and beyond corporate capacity. At the other extreme in the spectrum of criminal offences there are certain crimes which cannot in any real sense be committed by a corporation as a principal, such as perjury and bigamy, whatever the doctrine of corporate criminal liability may be. As a corporation may only act through agents, there are basically only three approaches whereby criminal intent could be said to reside or not reside in the corporate entity:
(i) a total vicarious liability for the conduct of any of its agents whatever their level of employment or responsibility so long as they are acting within the scope of their employment;
(ii) no criminal liability unless the criminal acts in question have been committed on the direction or at the request, express or clearly implied, of the corporation as expressed through its board of directors;
(iii) a median rule whereby the criminal conduct, including the state of mind, of employees and agents of the corporation is attributed to the corporation so as to render the corporation criminally liable so long as the employee or agent in question is of such a position in the organization and activity of the corporation that he or she represents its de facto directing mind, will, centre, brain area or ego so that the corporation is identified with the act of that individual. There is said to be on this theory no responsibility through vicarious liability or any other form of agency, but rather a liability arising in criminal law by reason of the single identity wherein is combined the legal entity and the natural person; in short, a primary liability. This rule stands in the middle of the range or spectrum. It is but a legal fiction invented for pragmatic reasons.
14. The position of the corporation in criminal law has been under examination by courts and lawmakers for centuries. The questions which arise are manifold and complex. They are not likely to be answered in a permanent or universal sense in this appeal, or indeed by the courts acting alone. Proceeding through the history of these issues in the criminal law adds perspective but no clear answer to the problem. The first edition of Halsbury’s (1909) summarizes the position of the law up to that point at vol. 8, p. 390, paragraph 858:
858. By the general principles of the criminal law, if a matter is made a criminal offence it is essential that there should be something in the nature of mens rea, and therefore, in ordinary cases, a corporation aggregate cannot be guilty of a criminal offence.
There were four exceptions in the early common law to corporate immunity: (1) public nuisance, (2) criminal libel, (3) absolute liability offences created by statute and (4) contempt of court. See also vol. 9, pp. 235‑36, paragraph 503.
15. The second edition of Halsbury’s, published in 1933, is in precisely the same words as the earlier edition. By the time of the publication of the third edition in 1954 the law had moved along.
521. Corporations. A corporation aggregate cannot be guilty of any offences (such as bigamy or perjury) which by their very nature can only be committed by natural persons; nor can a corporation aggregate be found guilty of a crime where the only punishment is death or imprisonment.
Apart from these exceptions, a corporation may be guilty both of statutory and of common law offences, even though the latter involve mens rea; and in the construction of any enactments relating to an offence punishable on indictment or on summary conviction, the expression person" includes a body corporate unless the contrary intention appears. A corporation can only commit crimes by or through its agents, some of whom must themselves be responsible for the crime. It is a question of fact in each particular case whether the criminal act of its agent is the act of the corporation, and whether the agent's state of mind, intention, knowledge or belief can be imputed to the corporation. It depends on the nature of the charge, the position of the officer or agent relative to the corporation and the other relevant facts and circumstances of the case.
(Vol. 10, pp. 281‑82, paragraph 521.)
See also Halsbury’s (3rd ed.), vol. 9, p. 90, paragaph 183. By the time the fourth edition appeared in 1974 the law had changed a little more. The learned authors of this edition had this to say (vol. 11, p. 30, paragraph 34):
34. Corporations. In general, a corporation is in the same position in relation to criminal liability as a natural person and may be convicted of common law and statutory offences including those requiring mens rea. There are, however, crimes which a corporation is incapable of committing or of which a corporation cannot be found guilty as a principal....
Criminal liability of a corporation arises where an offence is committed in the course of the corporation's business by a person in control of its affairs to such a degree that it may fairly be said to think and act through him so that his actions and intent are the actions and intent of the corporation. It is not enough that the person whose conduct it is sought to impute to the corporation is a manager or responsible agent or high executive; whether persons are the directing mind and will" of a corporation, so that their conduct in its affairs becomes the conduct of the corporation, must depend on all the circumstances.
See also Halsbury’s (4th ed.), vol. 9, p. 804, paragraph 1379.
16. At common law there was no difficulty in finding liability in a corporation in the law of torts, even though the state of mind of the corporation was established by imputing to that corporation the intentions and the conduct of its servants and agents. Thus, in the law of torts, the courts from the earliest times found vicarious liability in the corporation on the principles of agency. On the other hand, the common law of England has shrunk back from the application of the doctrine of vicarious liability for the determination of corporate liability in criminal law for the acts of its agents (with the four exceptions already noted). This led to an irrational result, namely: general corporate immunity from liability under the criminal law at a time when the corporation, for a variety of reasons, had become the principal vehicle of commerce in the community. The state itself, through corporate and taxation legislation particularly, had actually promoted or at least facilitated this result. Early in the century the courts began to dismantle the principle of corporate immunity in the criminal law. Procedural and other obstacles to the imposition of corporation criminal liability were overcome. See Leigh, The Criminal Liability of Corporations and Other Groups" (1971), 9 U. Ott. L.R. 247, at pp. 248‑49. Perhaps the last major procedural impediment, the impossibility, as seen by some courts, of punishing a corporation when the only statutory sanction imposed was imprisonment (for example, R. v. Great West Laundry Co. (1900), 3 C.C.C. 514 (Man. Q.B.)), was removed in 1909 by The Criminal Code Amendment Act, 1909, 1909 (Can.), c. 9, s. 2 (the predecessor to the present s. 647 of the Criminal Code ) which allowed the substitution of a fine in lieu of any punishment where a corporation is convicted. Ironically, the destruction of the most difficult barrier, the attribution of mens rea to a corporation, began in earnest in a case in civil law: Lennard’s Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705. The House of Lords was concerned with a corporation's civil liability for damages under a statute which afforded a defence where such loss occurred without its fault in privity". At issue was whether the fault" of a director who was active in the operations of the corporation, was in law the fault of the corporation itself. The Lord Chancellor, Viscount Haldane, laid down the general principle of corporate liability which is still the guiding principle in United Kingdom law (at pp. 713‑14):
... a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co‑ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company. ... [W]hatever is not known about Mr. Lennard's position, this is known for certain, Mr. Lennard took the active part in the management of this ship on behalf of the owners, and Mr. Lennard, as I have said, was registered as the person designated for this purpose in the ship's register. Mr. Lennard therefore was the natural person to come on behalf of the owners and give full evidence not only about the events of which I have spoken, and which related to the seaworthiness of the ship, but about his own position and as to whether or not he was the life and soul of the company. For if Mr. Lennard was the directing mind of the company, then his action must, unless a corporation is not to be liable at all, have been an action which was the action of the company itself within the meaning of s. 502. It has not been contended at the Bar, and it could not have been successfully contended, that s. 502 is so worded as to exempt a corporation altogether which happens to be the owner of a ship, merely because it happens to be a corporation. It must be upon the true construction of that section in such a case as the present one that the fault or privity of somebody who is not merely a servant or agent for whom the company is liable upon the footing respondeat superior, but somebody for whom the company is liable because his action is the very action of the company itself.
17. Convictions were thereafter sustained under a variety of statutes including those establishing offences requiring proof of the element of mens rea, the courts applying the words of the House of Lords in Lennard’s case, supra, in attributing to the accused corporation the actions of the directing mind". See Director of Public Prosecutions v. Kent and Sussex Contractors, Ltd., [1944] K.B. 146, at pp. 155‑56, where Viscount Caldecote C.J. said:
The offences created by the regulation are those of doing something with intent to deceive or of making a statement known to be false in a material particular. There was ample evidence, on the facts as stated in the special case, that the company, by the only people who could act or speak or think for it had done both these things,...
Macnaghten J., in a concurring opinion, expressed the principle in broader terms (at p. 156):
If the responsible agent of a company, acting within the scope of his authority, puts forward on its behalf a document which he knows to be false and by which he intends to deceive, I apprehend that, according to the authorities that my Lord has cited, his knowledge and intention must be imputed to the company.
See also R. v. I.C.R. Haulage, Ltd., [1944] K.B. 551 to the same effect.
18. These general principles found application in the courts of this country in a series of cases. In R. v. Fane Robinson Ltd., [1941] 3 D.L.R. 409, the Court of Appeal of Alberta set aside an acquittal of two companies where two of its directors and officers conspired with another to defraud an insurance company by inflating the charges made by the defendant company to the insurance company for automobile repairs. Ford J.A., for the Court, found, at p. 415, that the two officers were the:
. . . acting and directing will of [the accused corporation] generally and in particular in respect of the subject‑matter of the offences with which it is charged, that their culpable intention (mens rea) and their illegal act (actus reus) were the intention and the act of the company and that conspiracy to defraud and obtaining money by false pretences are offences which a corporation is capable of committing.
In so doing the Court followed the United Kingdom authorities, including Lennard’s, supra, and found the company criminally liable stating, at p. 410:
...if the act complained of can be treated as that of the company, the corporation is criminally responsible for all such acts as it is capable of committing and for which the prescribed punish