THE CRIMINAL LIABILITY OF CORPORATIONS
Harvey Yarosky *
At one time it was felt that a corporation could not be convicted
of a criminal offence because, having no mind of its own, it could not
have the mens rea or “guilty intent” necessary to most crimes;
however it is fairly well established in England today, on the level
of the Court of Criminal Appeal at any rate, that a corporation can
be convicted of a criminal offence of which mens rea is an essential
element.’
In Canada, section 2(15) of the Criminal Code states that:
“Every one”, “person”, “owner”, and similar expressions include Her Majesty
and public bodies, bodies corporate, societies, companies and inhabitants of
counties, parishes, municipalities or other districts in relation to the acts
and things that they are capable of doing and owning respectively.
Sections 528-531 inclusive of the Criminal Code lay down special
provisions regarding the summoning and trying of a corporation, and
section 623 provides for the levying of a fine upon a convicted cor-
poration in lieu of imprisonment prescribed for the offence in ques-
tion.
What remains to be settled with more certainty and precision in
both England and Canada, however, is the nature of corporate liability
at criminal law. In what circumstances and on what basis can a cor-
poration, which is merely an abstraction, be deemed to have a guilty
mind? What or who constitutes the mind of a corporation? Since a
company can only think and act through the thoughts and actions
of human beings, whose thoughts and acts are to be considered those
of the company? Under what circumstances are the guilty criminal
acts of an officer or employee of a company to be considered the
acts of the company? Where are we to draw the line that divides
those persons whose actions can be attributed to the corporation itself
from those persons who are merely servants or agents of the corpora-
tion and whose criminal acts bind only themselves?
These questions are of ever increasing importance as the roles
both of the corporation and of the criminal law continue to expand
,.* Of the Montreal Bar.
I Although it was held in R. v. Cory Bros., (1927) 1 K.B. 810 that a company
could not be convicted of a felony, this decision has since been overruled. There
are some offences, of course, such as murder and bigamy, which can only be
committed by natural persons, and which corporations consequently cannot
commit.
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143
in our society. The leading authorities in England and in Canada are
discussed and an attempt is made to extract from them certain guid-
ing principles.
I- The Law In England
The dictum that paved the way for much of the subsequent
doctrine on the subject was that of Viscount Haldane in the civil
tort case of Lennard’s Carrying Co. v. Asiatic Petroleum Co., 2 where
he said:
“My Lords, 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 conse-
quently 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…
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 some-
body for whom the company is liable because his action is the very action
of the company itself.”
It should be noted that in this decision, where the company was
held liable in tort, Lennard, the person whose act was held to have
bound the company, was an active director of the company. As Vis-
count Haldane stated:
“… He appears to have been the active spirit in the joint stock company
which managed this ship for appellants.” 3
Viscount Haldane referred to the person in question as “the
directing mind of the company,” and in discussing generally what
persons may be considered, “the very ego and centre of the persona-
lity of the corporation,” he said:
“… 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… ” 3a
Lord Dunedin, in his judgment in the above case, said of Lennard:
“… he was the alter ego of the company. He was a director of the company.
I can quite conceive that a company may by entrusting its business to one
director be as truly represented by that one director as in ordinary cases
it is represented by the whole board .. .” 3b
The above remarks are the source of what has become known as
the ‘alter ego doctrine’ of responsibility. This doctrine is based on
the proposition that some officers of a company are much more than
2 [1915] A.C. 705 at 713.
3 Ibid., p. 712.
3a Ibid., p. 713.
3bIbid., p. 715.
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its agents or servants; they are the company itself. Their actions can
bind the company not upon the basis of agency or vicarious responsi-
bility, but because these persons are so close to the “very ego and
centre” of the personality of the corporation that their actions are
identified with it.
Three cases that extended the dicta in Lennard’s case into the
present governing doctrine were: Director of Public Prosecutions V.
Kent and Sussex Contractors Limited 4 ; Rex v. I. C. R. Haulage Co.
Ltd.,5 and Moore V. L Bresler Ltd.6
In D.P.P. v. Kent and Sussex Contractors Ltd., a company was
held criminally responsible under the Defence Regulations in that
with intent to deceive it produced false documents and furnished
false information for the purposes of the Motor Fuel Rationing Order
of 1941. The report refers to the officer of the company who signed
the misleading documents as “the transport manager of the respon-
dent company”, but gives no indication as to precisely what his
relationship was to the board of directors, or as to what role the
Board or any of its members played in perpetrating the offence.
However, Viscount Caldecote said:
“I think that a great deal of Mr. Carey Evans’ argument on the question
whether there can be imputed to a company the knowledge or intent of the
officers of the company falls to the ground, because although the directors
or general manager of a company are its agents, they are something more.
A company is incapable of acting or speaking or even of thinking except in
so far as its officers have acted or spoken or thought.” 7
MacNaghten J. said:
“I am of the same opinion (as Viscount Caldecote) …
is true that a
corporation can only have knowledge and form an intention through its
human agents, but circumstances may be such that the knowledge and
intention of the agent must be imputed to the body corporate. Mr. Carey
Evans says that, although a body corporate may be capable of having know-
ledge and also of forming an intention, it cannot have a mens rea. 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. In my opinion, the submission made to the justices that the
respondents could not in law be capable of a criminal intention cannot be
sustained.” 8
Although at first glance one might think that MacNaghten, J.
was simply applying the law of agency, his words must be read in
It
4 (1944) 1 K.B. 146.
30 Cr. App. R. 31.
6 (1944) 2 K.B.D. 515.
TOp. cit., p. 155.
” Ibid., p. 156.
No. 2] THE CRIMINAL LIABILITY OF CORPORATIONS
145
the light of the remarks of Viscount Caldecote which indicate clearly
that officers who can bind a company criminally do so not merely
because they are agents, for “they are something more.” The learned
judge specifically mentions the “directors or general manager of a
company” because these officers are, by virtue of their positions,
much more intimately related to the heart of the corporate structure
than others who are merely agents or servants.
In R. v. I.C.R. Haulage Ltd., an appeal by the accused corporation
against a conviction for common law conspiracy to defraud was dis-
missed by the Court of Criminal Appeal. Here the fraudulent acts
were committed by a person who was managing director of the
accused company and the registered owner of all but one of the
issued shares (his wife owned the one remaining share). Stable, J.,
who delivered the judgment of the Court, declared that a company
could be indicted for a criminal offence 9 (with the exception of
offences such as bigamy, perjury and murder) and stated the Court’s
agreement with the decision and reasoning in D.P.P. V. Kent and
Sussex Contractors Ltd. He continued:
“We are not deciding that in every case where an agent of a limited company
acting in its business commits a crime the company is automatically to be
held criminally responsible. Our decision only goes to the invalidity of the
indictment on the face of it, an objection which is taken before any evidence
is led and irrespective of the facts of the particular case.
“Whether in any particular case there is evidence to go to a jury that the
criminal act of an agent, including his state of mind, intention, knowledge
or belief is the act of the company, and in cases where the presiding judge
so rules, whether the jury are satisfied that it has been so proved, must
depend on the nature of the charge, the relative position of the officer or
agent and the other relevant facts and circumstances of the case.
“It was because we were satisfied on the hearing of the appeals in this case
that the facts proved were amply sufficient to justify a finding that the
acts of Roberts, the managing Director, were the acts of the company and
the fraud of that person was the fraud of the company, that we upheld the
conviction against the company, and, indeed, on the appeal to this Court
no argument was advanced that the facts proved would not warrant a
conviction of the company assuming that the conviction of Roberts was
upheld and that the indictment was good in law.” 10
9 Supra footnote 5. Of R. v. Cory Bros. & Co., Stable J., said (at p. 36): “It
is sufficient in our judgment to say that inasmuch as that case was decided
before the decision in Director of Public Prosecutions v. Kent and Sussex Con-
tractors, Ltd. (1944) 1 K.B. 146, and as Chuter v. Freeth and Pocock, Ltd. (1911)
2 K.B. 832, was not cited at all, if the matter came before the court today the
result might well be different, as was pointed out by Hallett, J. in Kent and
Sussex Contractors’ case (at p. 157) this is a branch of the law to which the
attitude of the Courts has in the passage of time undergone a process of deve-
lopment.”
lOIbid, p. 39.
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The above case thus approves the decision in Kent and Sussex
Contractors, and adds the rather vague guiding comment that
whether or not the guilty acts of an officer will bind the company
must depend “on the nature of the charge, the relative position of
the officer or agent and the other relevant facts and circumstances
of the case.”
In Moore V. I. Bresler Ltd.,” the secretary of the accused company,
who was also the general manager of the company’s Nottingham
branch, acting together with the sales manager of that branch, sold,
with the object of defrauding the company, certain of the company’s
goods. The Secretary, who alone kept the accounts, and the Sales
Manager, made certain returns concerning purchase tax on the sales
which were false in material particulars and which were done with
intent to deceive, contrary to section 35 of the Finance (No. 2) Act,
1940. The company and the two officers were charged with appro-
priate offences under the Act. The company was convicted but the
conviction was dismissed by Quarter Sessions in appeal on the ground
that the sales were not made by the officers on behalf of the company
but rather in fraud of the company itself. On appeal to the King’s
Bench Division, the convictions were restored on the ground that the
officers were acting within the scope of their responsibilities in mak-
ing the sales and the returns, and the fact that they acted in order
to defraud the company did not render the company any the less
liable for their acts.
Viscount Caldecote, L.C.J. said:
“Sidney Bresler was the secretary of the respondent company and the general
manager of this Nottingham branch. It seems to me that, if either of them,
or both of them, together, sold goods which were the property of the respon-
dents and intended for sale, they were acting within the scope of their
authority; the sales which were effected were made by them as agents
and with the authority of the respondents.
“These two men were important officials of the company and when they
made statements and rendered returns, which were proved in this case, they
were clearly making those statements and giving those returns as the
officers of the company, the proper officers to make the returns. Their acts,
therefore, as, indeed, the Recorder seems to have been prepared to agree,
were the acts of the company.” 12
“Being a limited company, that company could only act by means of human
agents. It is difficult to imagine two persons whose acts would more effec-
tively bind the company or who could be said on the terms of their employ-
ment to be more obviously agents for the purpose of the company than the
secretary and general manager of that branch and the sales manager of
that branch.” 13
11 Supra footnote 6.
12 Ibid., p. 516.
1Ibid., p. 517.
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147
R.S. Welsh, writing in the Law Quarterly Review 14 criticizes the
decision in Moore v. Bresler Ltd. since “it is arguable that it results
in an undue extension of corporate liability by blurring the distinction
in law between the agents of a corporation and the legal person itself.”
Welsh’s remarks are worth quoting at some length. He writes:
“… and what of the sales manager in Moore v. Bresler Ltd. Is the sales
manager of the branch of a company the directing mind and will of the
corporation, the very ego and centre of the personality of the corporation ?
No doubt he is, as Lord Caldecote said, an “important official”, but is he so
important that his acts committed in the ordinary routine of his business
must be held to affect his employers with criminal liability ? The reasoning
of the Divisional Court suggest very strongly that their Lordships simply
applied the familiar test: “Were the agents acting within the scope of their
authority ?” If this is so, then the decision goes far beyond anything that
was decided in either D.P.P. v. Kent and Sussex Contractors Ltd. or R. v.
LC.R. Haulage Ltd. and is, it is respectfully submitted, fundamentally un-
sound. There can be no justification for the courts to extend to the field
of criminal law the doctrine of vicarious liability which was developed in
the totally different context of the law of tort.” 15
Welsh regards the approach taken by Winn, writing in 1929 16 as
more promising. Winn divided the acts of corporation servants into
three classes: 1) Acts directly authorized by the Board of Directors
as primary representatives of the company; 2) Acts of other officials
which are merely generally authorized acts; and 3) Unauthorized acts.
Those fully within class 1 are, according to Winn, “by direct attribu-
tion” an exercise of the corporate powers, no matter by whom they
may actually be performed. But acts falling within the second and
third classes, if they are to be regarded as corporate acts at all, can
be regarded so only by reason of the rule of respondeat superior,
so that the company should not normally be held criminally respon-
sible for them.
Glanville Williams, in his noted text Criminal Law ‘7 expresses
agreement with Welsh’s criticism of the decision in Moore v. Bresler.
Williams writes:
“1… Mr. Welsh’s criticism seems- valid that this is a confusion between
respondeat superior and the doctrine of identification. As he puts it, there
can be no justification for the courts to extend to the field of criminal law
the doctrine of vicarious liability which was developed in the totally dif-
ferent context of the law of tort.” is
Williams refers to the ‘alter ego doctrine’ as the distinctive fea-
ture of corporate responsibility. After pointing out the vagueness of
14 62 L.Q.R. 345.
15Ibid., p. 359.
16 3 Cam. L. J. 398.
17 London, 1953.
18 Ibid., p. 681.
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the test laid down in I.C.R. Haulage Ltd. he draws a distinction bet-
ween directive and executive servants.
“The only acts and mental states that will be imputed are those of persons
who are in control of the corporation. These will usually be the directors
but a manager is also covered if he has a controlling voice. In this respect
the decisions have gone beyond the restricted words of Viscount Haldane.
Thus it is settled in tort that ‘a general manager of the business is deemed
to be the alter ego of the company’ (Per Greer, L. J., in Fanton v. Denville
(1932) 2 K.B. at 329 (C.B.), and so also, it is said, is a person ‘having
authority from the board of directors to conduct the company’s business’,
(Per Lawrence, L.J., in Rudd v. Elder-Dempster & Co. (1933) 1 K.B. at
(C.A.). The last phrase must be read as applying only to people who
594
occupy a rather superior position in the structure, the work of an office
boy cannot be dignified as ‘conduct of the company’s business’. These were
civil cases. Turning to criminal cases, the persons spoken of as within the
doctrine in D.P.P. v. Kent and Sussex Contractors Ltd., were ‘the directors
or general manager’. In I.C.R. Haulage Ltd., the officer concerned was the
general manager. Whether the secretary of a company would in ordinary
circumstances be included is undecided.” 19
Although we must agree with the criticism by Welsh and Williams
of Moore v. Bresler insofar as that judgment tends to confuse the
distinction between the ‘alter ego doctrine’ or ‘doctrine of identifica-
tion’ on the one hand and the principle of ‘respondeat superior’ or
‘vicarious liability’ on the other hand, two facts should be noted. In
the first place the offences in question were statutory offences under
a wartime Act and one might reason that the normal criminal re-
quirement of mens rea would not apply with the same strictness as
it would to normal criminal offences. Secondly, and more important,
is that one of the two officers who committed the guilty acts was
not only the general manager of the company’s branch but also the
secretary of the company. His position in the company could thus
be considered important enough to link him to the primary organ of
the company and to connect his acts to the “directing mind and will”
of the corporation. Although the words of the judgment refer to the
sales manager of the branch as well, they are obiter because in fact
the former person was directly implicated in the acts even more than
the sales manager, and one cannot know what the court would have
done had the sales manager of the branch committed the illegal acts
alone. The decision itself, on the facts, does not necessarily conflict
with the alter ego doctrine. Perhaps it is the wording of the judg-
ment rather that the decision itself that should be singled out for
criticism.
The three English cases discussed above are referred to by L.C.B.
Cower in his text The Principles of Modern Company Law where
he says:
19 Ibid., p. 679.
No. 2] THE CRIMINAL LIABILITY OF CORPORATIONS
149
“In none of these criminal cases was Lord Haldane’s ‘organic’ theory referred
to in the judgments. But is seems clear that they were impliedly based on
his view that certain officials are the company and not merely agents of it.” 20
II- The law in Canada
The leading Canadian cases are discussed below in chronological
order. In Union Colliery Co. v. The Queen,21 the Supreme Court of
Canada affirmed a conviction of a corporation under section 213 of
the (old) Criminal Code for having omitted, without lawful excuse,
to perform the duty of avoiding danger to human life by anything
in its charge or under its control. A number of persons had been
killed in a train accident caused by the company’s neglect to properly
care for a bridge over which the train (belonging to a railway
operated by the company) had passed. Sedgewick, J., speaking for
the majority, cited The Queen v. The Great North of England Ry.
Co.,2 2 Whitfield v. South Eastern Railway Co.,23 and a dictum of
Lord Blackburn in Pharmaceutical Society v. London and Provincial
Supply Association,24 and then said:
“From these authorities it is manifest that a corporation can render itself
amenable to the criminal law for acts resulting in damage to numbers of
people, or which are invasions of the rights or privileges of the public at
large, or detrimental to the general well being or interests of the state. It
appears to one perfectly clear that the offence set out in the declaration
comes within this description.” 25
The Court strongly emphasized the public nature of the company’s
activities and the fact that the company had been granted a public
franchise to operate the railway. The decision does not throw much
light on the problem being considered here, however, since there is
no discussion as to what organs or officers of the company were
involved in the negligence.
In R. v. Canadian Allis – Chalmers Ltd.,2 6 the Ontario Supreme
Court (Appellate Division) quashed a conviction against a corpora-
tion under sections 247 and 248, of the Criminal Code for causing
grievous bodily harm by negligence in the operation of a dangerous
agency (in this case a construction crane). Orde, J. said:
“Unless one is to be made criminally responsible for the negligence of one’s
employees, I cannot see on what principle an individual owner could have
been convicted under the circumstances of this case. While the parallel
20 Second edition, 1949 at p. 138.
214 C.C.C. 400.
22 9 Q.C. 315.
23 1 E.B.E. 115.
24 5 A.C. 857.
25 op. cit., p. 404.
2648 C.C.C. 63.
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between an individual and a company cannot be carried to its ultimate limit,
because in the case of a company the negligence of the directors or of certain
officers must necessarily be treated as that of the company, yet there must
be a line drawn between those in authority -and those who are not. Without
saying where that line must be drawn (and it must depend upon the cir-
cumstances of each case, the character and magnitude of the company’s
business, and the authority delegated by the directors to the managing
officers of the company) I am not prepared to hold that the negligence of
a minor servant of the company, even though he may be invested with some
authority, such as that of a foreman over a gang of men, is to be regarded
as the criminal negligence of the company. I can see no reason for placing
a corporate body in any lower position in this regard than an individual… 27
R. v. Fane Robinson Ltd.,20 firmly established in Canada that a
corporation can be guilty of a criminal offence of which mens rea is
an essential element. The facts, briefly stated, were as follows:
Pursuant to an agreement with an insurance adjuster, the two direct-
ing officers of a garage company fraudulently added a certain sum
to a repair bill on an insured automobile, and on receipt of the money
from the insurer paid part of the additional sum to the adjuster, the
balance being retained by the garage company. The Alberta Court
of Appeal (Lunney J.A., dissenting) affirmed a conviction on the
ground that the culpable intention and illegal act of the two officers
were the intention and act of the garage company, which should
accordingly be convicted on both counts of an indictment charging
conspiracy to defraud and obtaining money by false pretences.
In holding the company liable Ford, J.A. said:
“In this view it is not necessary to disagree with the statement that criminal
law knows no such doctrine as respondeat superior. As stated by Viscount
Haldane, L.C., in Lennard’s Cairying Co. v. Asiatic Petroleum Co., (1915)
A.C. 705 at p. 713 :
“A corporation is an abstraction. It has no mind of its own any more that 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 …
his action must, unless a corporation is not to be liable at all, have been an
action which was the action of the company…” 29
The learned judge, in applying the above principle, stated:
“In my opinion George Robinson and Emile Fielhaber were the acting and
directing will of Fane Robinson Ltd. 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 pretenses are offences which a corporation
is
capable of committing.” 3o
27 Ibid., p. 81.
28 76 C.C.C. 196.
“D Ibid., p. 197.
3o Ibid., p.203.
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151
His Lordship also stated:
“It is perhaps unnecessary to add that a corporation like any other ‘person’
is entitled to all the safeguards which the law provides before any one can
be found guilty including, of course, that cardinal rule that guilt must be
proved beyond a reasonable doubt. 31
Thus in the leading Canadian case on the point, a Court of Appeal
decision rendered in 1941, before any of the three leading English
decisions referred to above, the test laid down is that of “the acting
and directing will of the company”; in that case the officers whose
acts were deemed to be those of the company were the active direc-
tors as well as president and secretary-treasurer of the company.
It is clear in this judgment that the doctrine of respondeat superior
has no’place in the criminal law.
In Rex v. Ash-Temple Co. et al,32 a group of companies engaged
as manufacturers in the dental supply business in Canada, were
charged with violating section 498(1) (d) of the Criminal Code by
unlawfully conspiring during the years 1930-1947 unduly to prevent
or lessen competition in dental supplies. It was alleged that they
were members of a trade association which, inter alia, maintained a
fixed price system. The Crown attempted to prove its case almost
entirely by documents found on the premises or in the files of the
accused companies, but the trial judge directed a verdict of acquittal
because there was no evidence implicating the accused in the alleged
conspiracy. The Court of Appeal held that the trial judge had properly
directed an acquittal. In delivering the judgment of the Court, Robert-
son, C.J.0. said:
“In considering the evidence on which the Crown relies, it is important to
remember that the accused are all incorporated companies. It is not sug-
gested by counsel for the accused that a company cannot be guilty of the
crime of conspiracy, having no mind of its own. It is well settled that a
conspiracy is one of the crimes that a company can commit and that the
necessary mens rea may be found in an officer, servant or agent authorized
by the company to act for it: R. V. LC.R. Haulage Ltd., (1944) K.B. 551;
Director of Public Prosecutions v. Kent Sussex Contractors Ltd., (1944)
I K.B. 146. The proof required, however, in the case of a company differs
somewhat from that required in the case of an individual. If the act relied on
is that of an officer, servant or agent of the company, there must be evidence
that he had authority from the company to perform the act. Mere possession
of a document by a company, in the sense that the document was on its
premises, and even in the company’s files, may not, without more, afford
grounds for an inference that its contents had come to the knowledge of
the Board of Directors, or of someone having authority from the company
to deal with the matters to which the document relates.
. Ibid., p. 200.
32 93 C.C.C. 267.
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“No attempt was made by the Crown to show, from the minute books of
any of the accused companies, that the Board of Directors had ever been
concerned either in the making or in the carrying out of the arrangements
upon which the charge of conspiracy is based. There is no evidence that any
officer, servant or agent of any of the accused companies had any authority
to act for the company in these or, for that matter, in any other matters.
There is no evidence of any circumstances that might make it more or less
probable that any document put forward as evidence had come to the know-
ledge of the board, or of someone authorized to act for the company. There
is no evidence that any officer, servant or agent of any of the accused
companies had any authority to act for the company in these or, for that
matter, in any other matters. There is no evidence of any circumstances
that might make it more or less probable that any document put forward
as evidence had come to the knowledge of the board, or of someone authorized
to act for the company. There is no evidence when or from what source such
documents as the copies of alleged minutes of the Canadian Dental Trade
Association came into possession of the companies with which they were
found.
“In a case where it is the companies who are charged, and no one else, and
where the companies, if anyone, are to be found guilty and be punished, the
criminal acts charged must be brought home to the companies as their acts.
That burden of proof is placed upon the Crown. In such a case as this it
would seem that there should be available evidence of the way in which
the accused companies carried on their respective business. . .
If the charge
is true, there should be abundance of evidence available of the conduct of
the accused in the carrying on of their respective businesses that would afford
support of the charge.33
The above case thus clarifies to a certain extent the burden of
proof encumbent upon the Crown in a criminal case against an
accused corporation. There must be proof before the court as to how
the company carries on its business, and the Crown must clearly
bring the guilty acts home to the company by linking them to those
directing officers whose acts can be attributed to it. It follows as a
corollary that should there be a reasonable doubt as to whether those
officers were aware of the criminal acts, the company would be
entitled to an acquittal.
In Regina v. Electrical Contractors Association of Ontario and
Dent,34 the Ontario Court of Appeal maintained a conviction against
an incorporated association of electrical contractors, and its president
and director, for having conspired to unduly lessen or prevent com-
petition in the purchase, sale, etc. of electrical equipment, contrary
to section 411 (1) (d) of the Criminal Code. Laidlaw, J.A., speaking
for the court, quoted from Viscount Haldane’s dictum in the Lennard
case, and then said:
13 Ibid., p. 279.
:14 [1961] O.R. 265.
No. 2] THE CRIMINAL LIABILITY OF CORPORATIONS
153
“The application of that principle and the extension of it to criminal law
appears in R. V. I.C.R. Haulage Ltd., (1944) K.B. (551 C.C.C. A.) and the
doctrine of earlier decisions was clarified therein. It was held that a company
could be indicted in an indictment for conspiracy (along with its managing
director and others) the fraud of the director being imputed to the com-
pany. 31
Further on the learned judge states that:
“In the instant case the intention of Dent as president and director of the
appellant corporation may be imputed to the appellant so as to be the
intention and will of the association…” 36
This decision is important because it reaffirms the doctrine of
identification as laid down in the Lennard case and adopted in
R. v. L.C.R. Haulage. It should also be noted that it is not the inten-
tion of an ordinary employee that is imputed to the company, but
rather that of Dent “as president and director of the appellant cor-
poration.”
The most recent Canadian case on the subject is H.M. The Queen
v. H. J. O’Connell Ltd., 7 a decision of the Court of Appeal of Quebec.
The trial judge had acquitted the accused company on charges of
forgery, issuing forged documents, fraud and conspiracy, in con-
nection with the execution of a contract between the company and
the Minister of Highways for the Province of Quebec for the paving
of certain highways in the District of Labelle. He found that one
Barthe, who was the foreman in charge of the work for the accused
company, and under whose direction the work was carried out, had
conspired with another co-accused, one Gouin (a subordinate employee
of the company) and others to establish a system (by means of
fictitious delivery receipts) which resulted in the Crown making pay-
ment for loads of asphalt that in fact were never delivered. Never-
theless, he acquitted the company, on the ground that it was not
criminally responsible for the guilty acts of Barthe and Gouin, their
acts, in other words, were not the acts of the company. In arriving
at his decision, the trial judge reviewed the authorities on the ques-
tion and summarized his view of the law as follows:
“I1 est ivident que le tribunal doit Atre convaincu que les officiers sup~rieurs,
c’est-B-dire les prisident, vice-president, etc., et surtout le bureau d’admi-
nistration, sans avoir commis l’offense personnellement, devaient n~cessai-
rement 6tre au courant des faits et gestes de leurs proposes ou agents.
“Pour rlsumer la jurisprudence, une compagnie a le mens rea n6cessaire
pour 6tre trouv~e coupable d’une offense criminelle si l’offense a 6t6 com-
mise par un de ses officiers on le bureau de direction qui ont la responsa-
bilit6 de diriger les activit~s de la compagnie, mais elle ne peut pas 6tre
35 Ibid., p. 271.
36 Ibid., p. 272.
37 [1962] Q.B_ (Que.) 666.
Mc(;ILI LA W JOURNAL
[Vol. 10
tenue responsable de l’acte d’un employ6 subordonn6 qui n’dtait qu’un agent
local. Autrement dit, il faut qu’un concours de volont4 dans l’esprit des
administrateurs soit clairement 6tabli entre eux et leur agent en autorit6
pour trouver la compagnie coupable de la mbme fagon que l’agent serait
lui-mbme trouv6 coupable.38
The Crown appealed the acquittal of the company principally on
the ground that the trial judge had misdirected himself on the cri-
minal liability of a corporation for the acts of its agents. The Appeal
Court allowed the appeal and ordered a new trial. In giving reasons
for its judgment the Court of Appeal pointed out that although the
Criminal Code makes it clear that corporations may be guilty of
crimes, it contains nothing that sheds light on this particular problem.
It summarized the position of Barthe in the respondent company as
follows:
“In this instance, there is evidence to the effect that Barthe had complete
control over the operations of respondent in so far as they related to that
particular contract and to other operations in the same district. He could
refer problems to respondent’s head office but was apparently not expected
to do so. His responsibility extended to the point that he had discretion to
carry out minor contracts which could conveniently be executed in conjunc-
tion with the main contract and was not held to any precise accounting for
monies received by him under these contracts.” 39
After discussing leading authorities on the question, the court
stated what is in effect the ‘ratio decidendi’ of its decision:
“Under the circumstances, the Court of Appeal declares that it does not
know what the trial judge’s decision would have been had he not considered,
in the Court’s opinion incorrectly, that respondent could not be criminally
liable for the acts of an agent who was not a senior executive unless such
acts were known to its directors.” 40
In appreciating the O’Connell decision within the context of the
relevant jurisprudence, two points should be noted. Firstly the deci-
sion is essentially a negative one. WVhile the court disagreed with the
trial judge’s statement of the law, it did not substitute its own inter-
pretation. The Court of Appeal in this judgment did not present a
test that can be applied to determine whether the criminal acts of an
officer or employee of a company are to be attributed to the com-
pany. It merely held that in some circumstances a corporation can
be criminally liable for the acts of an agent who was not a senior
executive even though such acts were not known to the corporation’s
directors. Secondly, the decision stands for the proposition that in
38 Ibid., p. 666. Although the Appeal Court delivered a written 16 page judg-
ment, the decision is not reported in full, but is summarized in the “Arrbts
R6sum~s” section of the reports. However, the key passages of the judgment
are contained in the report.
39 Ibid., p. 667.
40 Ibid., p. 667.
No. 2] THE CRIMINAL LIABILITY OF CORPORATIONS
155
certain exceptional circumstances the board of directors of a com-
pany delegates such sweeping discretion and authority to a person,
other than one of the directors or one of the senior executive officers,
that such person acquires an authority co-ordinate with their’s, and
his acts and intentions within the area of his responsibilities become
the acts and intentions of the company itself. The Court of Appeal
the opera-
judgment clearly stresses Barthe’s complete over
tions in question and his complete freedom from supervision by the
head office. This is the only basis upon which the decision can be
reconciled with the principles laid down in the authorities that pre-
ceded it. To interpret the O’Connell decision in any other way would
be to ignore the leading jurisprudence and to erroneously confuse
the principle of identification with that of vicarious liability. In so
far as the decision might lead to an application of the simple principle
of agency to the problem of corporate criminal liability we respect-
fully submit that it would be unsound.
It is seen from this review that the doctrine of identification was
enunciated by Canadian Courts before the English cases of Kent and
Sussex Contractors and I.C.R. Haulage. It should also be noted that
prior to the O’Connell decision in 1962, in every case in which a cor-
poration was convicted of a criminal offence requiring mens rea, the
guilty acts were committed by directors of the corporation.4 1 There
seems to be no reported case where a company was held liable for
the acts of persons other than directors. 42
III – Conclusions
It is submitted that the following propositions constitute a correct
statement of the law as it exists today.
(1) The basis of corporate liability at criminal law for the acts
of officers or employees is the doctrine of identification or alter ego
rather than the principle of respondeat superior or vicarious liability.
(2) The proper test to be applied in determining whether the acts
of an agent are to be considered those of the company is whether
41 In O’Connell, subsequent to the Court of Appeal’s decision, the company
pleaded guilty in the Court of Sessions of the Peace.
42In Regina v. Bruin Hotel Co. 109 C.C.C. 174, the Alberta Supreme Court
(Appelate Division) affirmed a conviction of the accused company by a magis-
trate for an offence under the Alberta Liquor Control Act. However, the judg-
ment does not indicate clearly to what extent the directing officers or the com-
pany were implicated in the commission of the offence
(it merely refers to
“the manager or the business”). Moreover the offence in question is not really
a criminal offence. It was created by a provincial statute, which imposed an
absolute prohibition.
McGILL LAW JOURNAL
[Vol. 10
or not the acts can be linked to “the active and directing will of the
corporation”, the “directing mind and will of the corporation” and
“the very ego and centre of the personality of the corporation”. Only
where the officer who committed the guilty acts can be brought
within this definition can his guilty mind be ascribed to the company
itself and his criminal offence be imputed to the company.
(3) Although the capacity of an officer or agent to bind his
company criminally is not the same in each case, and must depend
on his relative position, the character and magnitude of the company’s
business and structure, and the authority delegated by the directors
to the managing officers of the company, there must be a clear line
drawn between those who are in authority and those who are not.
(4) Ordinarily, the only persons capable of binding a company
criminally by their acts are the Board of Directors, one of its mem-
bers, or one of the senior executive officers of the corporation.
Normally, only these persons are sufficiently close to the very heart
and centre of the corporate organism and personality as to be
identified with it.
(5) In exceptional circumstances however, where the directors
have delegated sweeping authority to a person who is not a mem-
ber of the Board and who does not hold one of the senior executive
offices in the company, the criminal acts of that person within the
area of his authority may bind the company. But this can only be
so when the person in question is so important in the corporate
structure as to have an authority that is co-ordinate with that of
directors and the senior executive officers. Only then can his acts
be linked to the “directing mind and will of the corporation” and
consequently be identified with the corporation itself. This test
should be interpreted restrictively.
(6) The burden of proof is always on the crown in criminal
cases, and it is always encumbent upon the crown to prove beyond
a reasonable doubt that the person whose acts are alleged to be
those of the company properly comes within the rules outlined above.
The temptation to apply the principle of vicarious liability to
this problem must be resisted most strenuously. Certain judicial
pronouncements indicate a carelessness in this regard. This concept
is satisfactory in civil law where one seeks to assure that companies
will be held responsible for the wrongful acts of servants committed
within the scope of their functions just as natural employers may be
held civilly responsible for the wrongful acts of their employees.
However it has no place in criminal law, where the illegal act carries
with it a certain moral (or rather immoral) connotation and the con-
No. 2] THE CRIMINAL LIABILITY OF CORPORATIONS
157
sequences are usually much more serious. A person found guilty of
a criminal offence is not only liable to imprisonment, but acquires
a criminal “record” for the rest of his days and the social opprobium
that usually accompanies it. Thus the principles of liability and rules
of evidence are generally far more stringent in criminal law. There
is for instance a fundamental difference in the degree of culpability
and the degree of proof necessary to establish civil negligence on
the part of someone responsible for an automobile accident as opposed
to what is required for a conviction of criminal negligence against
him. These fundamental distinctions and the rules following from
them must not be lost sight of when we approach the problem of
corporate liability in the criminal courts.
A criminal conviction against a corporation can affect adversely
a large number of innocent shareholders and it should not occur
except through the criminal behaviour of its highest officers. It is
hoped that this problem soon will come before the Supreme Court
of Canada in order that the governing principles may be firmly and
definitively established by the highest court in the land.
