Ontario regulatory statutes provide for a broad range of penalties, including fines and incarceration. the Court of Appeal’s recent decision in Ontario (Ministry of Labour) v. New Mexico Canada Inc. helped clarify the appropriate range of penalties for regulatory offences.
Background
A worker on an elevated forklift fell 12 feet to his death in a furniture warehouse. The forklift was open-sided and not equipped with fall protection equipment. The victim was wearing dress shoes, had no tether or safety harness and had received no health or safety training. It was known that the worker suffered from epilepsy, and the pathologist concluded that a seizure had precipitated the fall.
The employer, New Mexico Canada Inc., and the two sole directors of the Company were all charged with violations under the Occupational Health and Safety Act, and were ultimately sentenced for “the highest level of negligence” of $250,000 for the corporation, and 25-day intermittent jail sentences as well as 12 months of probation for each of the directors. On appeal, the provincial offences appeal judge reduced the corporate fine to $50,000, imposed a fine of $15,000 on each of the directors and set aside their incarceration sentences.
The Court of Appeal dismissed the Crown’s appeal citing the following principles of sentencing for regulatory offences.
1. Moral Blameworthiness
The principle of proportionality requires that a sentence be proportionate to both the gravity of the offence and the degree of responsibility of the offender. While typically the moral blameworthiness of a regulatory offended is lower than in criminal offences, as regulatory offences tend to be strict liability offences, when blameworthiness increases, so too can the penalty. In this case, the extreme negligence of the defendants for the safety of their workers exhibited a moral blameworthiness that could appropriately be considered in sentencing.
2. The Principle of Restraint
This principle holds that the sentence imposed should be a measured response, and the minimum intervention required in the circumstances and given sentencing objectives. Even if a sentence must be imposed for the public interest, or for general deterrence, even then it must be the least restrictive sanction that is appropriate.
3. Primacy of Fines over Incarceration
Incarceration is uncommon in regulatory sentencing, but this rarity cannot be used as a sentencing principle. In a regulatory context, fines are usually sufficient to achieve deterrence, but where incarceration is proportionate and necessary to achieve sentencing goals, it must be available as a sanction.
4. Non-interchangeability of Incarceration & Fines
The inability of, or hardship on, an offender to pay a fine is not a reason to impose a sentence of incarceration. Fines and prison sentences are not interchangeable and should not be treated as such. Here, the 25-day intermittent incarceration sentences imposed by the judge of first instance were erroneously substituted for fines that the directors could not afford. Though perhaps well-intentioned, this was an error in law which allowed for the sentence to be set aside.
5. Ability of Individuals in closely held corporations to Pay Corporate Fines
A fine imposed on a corporation is distinct from a fine imposed on a director, and should be imposed without regard to the other. Importantly, the court stated that directors are under no legal obligation to pay the fines of a corporation.
6. Post-Offence Compliance
Compliance with orders after the offence cannot be considered mitigating factors in sentencing. To hold otherwise would be to reduce the incentive to comply with regulatory requirements in the first place.
7. Fairness of Sentence: Proportionality & Parity
Deterrence is the primary sentence objective in regulatory offences. The ability of a defendant to pay must play a role in setting the quantum of the fine. The Court of Appeal framed the analysis this way: “What amount of fine is required to achieve general and specific deterrence, and would otherwise be appropriate bearing in mind the principles of sentencing, including proportionality and parity?”
In this case, the sentencing fine on the corporation of $250,000 was found to be proportional, given that a man died due to the company’s complete disregard for worker safety.
While the amount was proportional to the harm caused, the court considered the ability of the company to pay and compared that to other similar cases.
A lower fine would certainly make an impact in specific deterrence, but would not be very effective for general deterrence.
Disposition of this Case
Considering the totality of the circumstances, the appellate court found:
- The fine imposed on the corporation was demonstrably unfit
- The sentence of incarceration for each of the directors was entirely fit, and even preferable to the low fines imposed
- However, the Court of Appeal did not disturb the lower court’s judgment, given all the sentencing principles as well as the adverse economic consequences and personal challenges of each of the Directors almost six years after the offence.
A Word on Right-Touch Regulation
- “Right-touch regulation” attempts to strike the right balance between over and under regulation. The principles of right-touch regulation are worth keeping in mind in the context of sentencing, and in this case, also help to understand the Court of Appeal’s conclusions in this sentencing appeal. The principles include that the regulation should aim to be:
- Proportionate: Regulators should only intervene when necessary. Remedies should be appropriate to the risk posed, and costs identified.
- Consistent: Rules and standards must be applied fairly.
- Targeted: Regulation should be focused on the problem, and minimize side or unintended consequences.
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