In a judgment handed down on May 30th, Global Fuels Inc. (“Global”) was ordered to stand trial on the charge of having conspired to fix the price of gas in breach of the Competition Act (R.S.C. (1985), ch. C-34). The Court of Québec laid the foundation for the interpretation of the new section 22.2 of the Criminal Code (the “Code”) on the criminal liability of organizations.
Legislative changes to the Code dated March 31, 2004, added, among other things, the concept of “senior officer” in section 2 and provided that organizations could be liable for the acts of “senior officers” pursuant to section 22.2. Before these changes, the prosecution had to rely on the “identification theory” to hold an organization criminally liable. This theory had established an organization’s liability by imputing the intent and acts of its “directing mind” when that person acted in the performance of his duties and in the interests of the organization. The concept of the directing mind required individual decision-making power over the organization’s policies, going beyond solely the senior management and the board of directors. A single organization could therefore have several directing minds, each associated with a separate and distinct sphere of activity or territory.
For the first time, a court has defined the scope of the new section 22.2 by holding that the definition of “senior officer” encompasses more than the individuals who formed the directing mind under the identification theory.
The Court adopted a fairly liberal interpretation of the definition of “senior officer”. In addition to noting that an organization can have several senior officers, the Court focused on the individuals’ duties and responsibilities rather than their capacity or title. Thus, [Translation] “a person may be considered a 'senior officer' and expose the organization to liability […] either through having an important role in the establishment of an organization’s policies or by being responsible for managing an important aspect of the organization’s activities” under section 22.2.
It is important to note the introduction of the criterion of the importance of the individual’s role, which did not exist in prior case law involving the directing mind. Even so, similar principles have been used to achieve similar results. Each case is unique; the characterization of a person as a “senior officer” may include an analysis of the [Translation] “person’s title in the business, as well as the duties he performs and the extent of his authority”, while the importance of the role performed or the aspect of the organization’s activities in question will be determined based on the facts, including [Translation] “the corporation’s entire organizational structure and activities”.
In the end, the Court of Québec did not limit the definition of “senior officer” to an organization’s senior management, thereby extending the concept to a larger pool of individuals than under the identification theory. It will be interesting to see how the jurisprudence evolves following this decision. It should also be noted that the Superior Court could arrive at a different conclusion at trial.
Authored by Stéphane Eljarrat.
If you have any questions regarding the foregoing, please contact Stéphane Eljarrat (514.841.6439), Jean-Philippe Groleau (514.841.6583) or Louis-Martin O'Neill (514.841.6547) in our Montréal office or Sandra Forbes (416.863.5574) or Matthew Milne-Smith (416.863.5595) in our Toronto office.
Davies Ward Phillips & Vineberg LLP is an integrated firm of more than 240 lawyers with offices in Toronto, Montréal and New York. The firm is focused on business law and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its clients, regardless of borders.
The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.