Canada: Corporate Criminal Conviction As Corporate Death Sentence? Court Says Companies Can Be Fined Into Bankruptcy For Workplace Accidents

Last Updated: September 23 2013
Article by Cheryl Edwards, Jeremy Warning and Daniel Mayer

On September 4, 2013, the Court of Appeal for Ontario released its decision in the sentence appeal in R. v. Metron Construction Corporation1 ("Metron"). Government prosecutors had appealed against the C$200,000 fine Metron received on July 13, 2012, after the company pleaded guilty to a charge of criminal negligence causing death. The Court resoundingly rejected the lower penalty as unfit, and increased the fine to C$750,000.2 The decision should interest all Canadian employers because, not only did the Court of Appeal nearly quadruple the Criminal Code fine, it held that, in appropriate cases, courts can essentially fine a company into bankruptcy for a Criminal Code conviction.

In addition to that chilling prospect, the decision contains a host of other notable developments arising from the application of the criminal negligence and sentencing provisions of the Criminal Code that were amended by Bill C-45 in 2004. This latest decision continues to make the Metron case a remarkable workplace health and safety case because it:

  • Confirms that corporate criminal liability can result solely from the actions of a supervisor;
  • Holds that a corporation cannot diminish its culpability based on the hierarchical position of the criminally negligent individual(s) within the organization; and
  • Finds that criminal negligence is a different and more serious offence than a breach of health and safety legislation and is expected to result in more severe sentences.

This Management Update discusses this latest decision and the potential implications for employers.

Background to the Case

The facts giving rise to the Metron case are as widely known as they are tragic. In September of 2009, Metron was contracted to restore concrete balconies on two high-rise buildings in Toronto. The work would be done from swing stages and Metron arranged for a number of swing stages for the project. Two of the swing stages had been secured from an Ottawa-based supplier. They were forty feet long in total and consisted of four ten-foot long sections connected by plates and bolts. These swing stages did not have any markings, serial numbers, identifiers or labels describing maximum capacity, as required by law and industry practice. They were also delivered without manuals, instructions or design drawings and, contrary to legal requirements, were not accompanied by a written report from a professional engineer stating that the swing stage had been erected in accordance with design drawings.

There were two lifelines for the swing stage to which workers could connect their fall harness and the normal practice was that only two workers would be on the swing stage at any one time. However, on Christmas Eve 2009, six workers were on a swing stage at a height of approximately 13 storeys. The swing stage collapsed and five of the workers fell to the ground. Four of those who fell were killed and the fifth, who survived, suffered serious injuries. The sixth worker, the only one connected to a fall arrest system, was not injured.

The Ministry of Labour and the police investigated the accident. The investigation determined that, prior to the accident, three of the four deceased, including the site supervisor, had consumed marijuana. Toxicological analysis determined that the level of marijuana in their systems was consistent with recent consumption. An examination of the swing stage determined that a significant cause of the collapse was its defective design and inability to withstand the combined weight of the six men and their equipment.

The Ministry of Labour laid a total of 61 charges against multiple parties under the Ontario Occupational Health and Safety Act ("OHSA"). After its own investigation, the Toronto Police Service also laid numerous criminal charges. Metron, its president, the project manager and another Metron official were each charged with four counts of criminal negligence causing death and one count of criminal negligence causing bodily harm.

On June 15, 2012, Metron pleaded guilty to a charge of criminal negligence causing death and its president pleaded guilty to four charges under the OHSA. As part of the guilty plea, it was agreed that Metron's site supervisor had been criminally negligent in three ways:

  1. Directing or permitting six workers to work on the swing stage when he knew, or should have known, that it was unsafe to do so;
  2. Directing or permitting six workers to board the swing stage knowing that only two lifelines were available; and
  3. Permitting workers under the influence of drugs to work on the project.

The C$200,000 fine imposed on July 13, 2012, followed a sentencing hearing in which there were highly conflicting positions taken on an appropriate sentence under the Criminal Code. The Crown sought a fine of C$1 million. Metron argued that the appropriate penalty was a fine of C$100,000. On that same date, the sentencing court accepted a joint recommendation from the Ontario Ministry of Labour Crown and Metron's president and imposed a C$90,000 fine on the company president for the four OHSA offences. The Criminal Code charges against Metron's president and the other company official were withdrawn as were all OHSA offences against Metron and the other company official.3

As part of the sentencing proceedings, it was agreed that Metron had taken a number of positive steps to further health and safety on the project. Those steps were numerous. They included requiring an engineering inspection before commencing work, arranging for swing stage and fall protection training for the Project Manager, Site Supervisor and workers on the project, conducting periodic meetings with workers to review safety requirements including the use of swing stages, performing weekly job site inspections, providing workers with a comprehensive safety manual and cooperating with the Ministry of Labour inspector during periodic inspections between October and December 2009. The level of fine imposed by the original sentencing court was widely questioned by commentators. The Crown appealed.

Crown Appeal and the Ontario Court of Appeal Decision

The Crown appealed the C$200,000 fine imposed by the sentencing court on three grounds:

  1. The sentencing court erred in relying on the range of sentences found in OHSA jurisprudence;
  2. The sentencing court erred by determining the amount of the fine on the basis of Metron's ability to pay; and
  3. The sentence was manifestly unfit for the circumstances.

The Court granted each ground of appeal and its decision provides some helpful commentary on the law relating to corporate criminal liability in Canada. There is relatively little case law in this area, as compared to health and safety regulatory case law. Consequently, there are a number of important aspects to the decision relevant to employers and we discuss them below.

(a) Criminal Offences to be Treated Differently than Health and Safety Offences

The Court distinguished between regulatory health and safety violations and criminal negligence causing death. It held that health and safety legislation, such as the OHSA, is "designed to establish and enforce standards of health and safety in the workplace", whereas corporate criminal liability for criminal negligence "is intended to provide additional deterrence for morally blameworthy conduct that amounts to a wanton and reckless disregard for the lives and safety of others". The Court also noted that the offence of criminal negligence causing death is "one of the most serious offences in the Criminal Code" and is "at the high end of moral blameworthiness".

For the Court, the distinction between regulatory health and safety violations and criminal negligence causing death was underscored by the available penalties. The Court compared the sentencing provisions available under the OHSA and the Criminal Code. It noted that, under the OHSA, a corporation is subject to a maximum fine of C$500,000, per offence, which "contrasts significantly" with the availability of an unlimited fine for a corporation convicted of criminal negligence causing death.

Through this analysis, the Court determined that the C$200,000 sentence imposed by the sentencing court was the result of an error because it did not reflect "the higher degree of moral blameworthiness and gravity associated with [Metron's] criminal conviction [...] and the principle of proportionality". This finding likely means that, where circumstances are similar, employers can expect higher penalties to be imposed for criminal negligence offences than would be imposed for health and safety offences.

(b) Corporation Bound by Conduct of Supervisor

The decision also confirms the expanded scope of corporate liability under the Bill C-45 amendments. The Court of Appeal confirmed that Metron's site supervisor fell within the definitions of a "representative"4 and "senior officer"5 in the Criminal Code, meaning that his behaviour could attract corporate liability for criminal negligence. The site supervisor was not highly placed within Metron's corporate hierarchy. In fact, he did not work directly for Metron.

He had his own construction company and had been hired by Metron's Project Manager. However, the Court of Appeal commented that the "intent of Bill C-45 is to trigger responsibility by the corporation for the conduct and supervision of its representative". The decision, therefore, reaffirms that the behaviour of a person with a high degree of localized responsibility can attract criminal liability for an entire organization. Employers should be aware of how criminal liability was established against Metron because such localized responsibility is not unique to construction. Though it is not our intent to set out an exhaustive list here, it seems that the conduct of virtually any branch, store, area or plant manager, or others in similar positions, attract the same risks of corporate liability.

As it relates to sentencing, the Court held that the criminal negligence of the site supervisor was extreme: three times as many workers were on the swing stage when it collapsed than was usual practice and there were three times more workers than available lifelines – only one of which was engaged. The Court held that Metron could not distance itself from the site supervisor's actions as his role within the company could not serve to diminish the gravity of the offence. It appears that this latter finding may have been to address Metron's submission that the accident was not the product of a systemic course of conduct. The import of this particular finding is that, for the purposes of sentencing, the level of organizational responsibility held by the person(s) whose actions constitute the corporate criminal negligence is irrelevant. This should be seen as troubling by organizations as sentences imposed on corporations for criminal negligence will not distinguish between the conduct of a relatively low level representative and one in the upper echelons of the management structure. The degree of responsibility will be the same notwithstanding that criminally negligent conduct by someone at a lower level is less likely to represent systemic or organizational behaviour.

(c) Employers Can Be Bankrupted By Criminal Penalties

The decision also provides guidance on how the economic circumstances of a corporate defendant will be treated at sentencing for a criminal conviction. The Court of Appeal clarified that ability to pay is only a relevant sentencing consideration when imposing a fine on an individual. It is not a proper consideration when sentencing an organization. However, when sentencing an organization, the Criminal Code requires the courts to consider "the impact that the sentence would have on the economic viability of the organization and the continued employment of its employees"6. Noting that the original sentencing court thought it was precluded from imposing a sentence that might result in Metron's bankruptcy, the Court of Appeal found that the sentencing court placed too much emphasis on Metron's ability to pay.

The Court considered a United Kingdom Guideline7 designed to guide courts imposing sentences on organizations under the Corporate Manslaughter and Corporate Homicide Act8 ("Corporate Manslaughter Act"). The Court looked to the decision in R. v. Cotswold Geotechnical (Holdings) Ltd.9 in which that company was sentenced to a fine of GBP£385,000 following its conviction for the workplace death of a young engineering student under the Corporate Manslaughter Act. The UK Guideline indicates that, in some cases, it may be an acceptable consequence for a corporate fine for a workplace accident to put a company out of business, and the sentence imposed in Cotswold was held to be appropriate notwithstanding that it would force the company into liquidation. Though neither the UK Guideline nor the decision was binding on it, the Court determined that they demonstrated a comparable approach to a similar offence.

Ultimately, the Ontario Court of Appeal adopted a similar approach to the impact of the corporation's economic circumstances on sentencing. It held that a corporation's financial viability was a factor to consider but it is in no way determinative. The Court suggested the factors that may be considered when weighing the impact of a fine on a corporation's economic viability could include "such matters as the importance of a corporation to a community or its value as a source of supply or as an industry participant". However, where the Court's decision most closely aligns with the UK approach is in the indication that, in appropriate circumstances, fining a company into bankruptcy may be appropriate. To that end, the Court wrote:

In the case of a corporation that is a significant employer, and whose viability is seriously threatened by the imposition of a fine, the quantum of the fine may be reasonably affected. In contrast, in the case of a corporation that carries on no or limited business and has no or few employees, the impact of a fine on the corporation's economic viability may be of little consequence.

If appropriate, the prospect of bankruptcy should not be precluded.

The Court of Appeal found that the public interest in the continued viability of Metron was not manifest.

This is a chilling development. Though serious offences require the imposition of serious penalties, it must be remembered that Metron's criminal liability was based solely on the actions of the site supervisor – actions that displaced a fairly significant number of positive steps taken by Metron that were inconsistent with a wanton and reckless disregard for the lives and safety of its workers. Further, the criminally negligent behaviour was not attributed to high ranking officials within Metron. Therefore, it appears possible that the criminally negligent behaviour of a single, low-level official could lead to a sentence that sends a company into bankruptcy, notwithstanding the absence of systemic conduct or the involvement of highly placed officials. It is all the more chilling because there is no due diligence defence to a criminal negligence charge and, as noted above, the corporate level at which the criminally negligent behaviour occurred is irrelevant and cannot diminish corporate culpability.

The passage above suggests that, when considering whether to impose a fine that will bankrupt a company, the courts will treat employers differently depending on their size and level of business activity. It appears that smaller employers with modest levels of business activity stand a greater risk of being subjected to a penalty that threatens the viability of the business than larger, more active employers. We anticipate that this approach will be refined and clarified by future cases to determine the kind of factors that must be present to have an appropriate case for a corporation to be fined into bankruptcy.

(d) Sentence Manifestly Unfit

As noted above, the Court of Appeal determined that the sentence imposed on Metron was manifestly unfit. In some ways, this finding incorporates some of the Court's other findings and considerations but, largely, weighs the fine imposed by the sentencing court against the totality of circumstances.

In weighing the circumstances, the Court of Appeal considered mitigating aspects of the case. These included that Metron realized no advantage by the offence, there was no evidence of planning or complicity and Metron had pleaded guilty thereby saving the time and resources that a trial would have consumed.

On the other hand, the Court also considered the aggravating aspects of the case and noted that six workers were involved – four of whom were killed and one who was seriously and permanently injured; the victims were young and some had families with young children; and that Metron had operated the faulty swing-stage scaffold for more than two months; and, as noted above, the criminal negligence of the site supervisor was extreme.

Interestingly, the Court considered the proportionality of the C$200,000 fine originally imposed on Metron in relation to the fine imposed on Metron's president under the OHSA. The Court noted that Metron's president was fined C$22,500 for each OHSA offence where the potential maximum penalty was C$25,000 per offence. By contrast, the Court held that the C$200,000 fine levied against Metron was at the lower end of OHSA fines for fatalities.

The Court emphasized that denunciation and deterrence were key factors to consider when determining an appropriate sentence and found that the C$200,000 fine failed to send the requisite deterrent message about the paramountcy of worker safety. Indeed, the Court noted that a fine in that amount could even be seen by some companies as a "cost of doing business". For employers, the key takeaway from this part of the decision is that the Court held that there is a meaningful general deterrence aspect to sentencing for criminal negligence offences arising from workplace accidents. When coupled with the Court's finding that criminal negligence represents greater moral blameworthiness, employers can expect that sentences imposed for criminal negligence are likely to be substantial and with the individual circumstances of a company playing a lesser role in determining an appropriate sentence.

How Do Corporations Respond to Metron? Practical Tips for Employers

This case represents the most recent decision relating to corporate criminal negligence in Canada since passage of the Bill C-45 amendments to the Criminal Code in 2004. The fine imposed is the highest ever meted out to a corporation under the Criminal Code for a workplace accident and it is the first decision in which an appellate court has detailed the application of the Criminal Code sentencing provisions for organizations. In addition, the case presents a stark reminder to employers that, where appropriate, criminal prosecutors and the courts will use the criminal law to punish egregious workplace behaviour of company representatives, and such punishment may threaten the viability of the corporation.

The case should also remind employers to vigilantly ensure that all those in positions of authority at its work sites – whether industrial, construction, mines, service or of another nature – are abiding by all expected workplace safety standards. Steps that could be taken in this regard, especially for higher risk activities and sites, align closely with certain court-developed due diligence principles, and would include:

  • Ensuring that supervisory personnel have been provided with, are trained in and fully understand applicable company policies and procedures addressing the health and safety risks at the workplace;
  • Reviewing and qualifying the safety related background and experience of anyone who will hold a position of authority within the company before the person is hired and starts work. This would include contract personnel hired for oversight of a specific task, installation or project;
  • Ensuring ongoing monitoring of job sites and locations by supervision, and reporting on that monitoring to more senior management of safety or HR personnel. This provides an additional layer of documented oversight of work sites and projects;
  • Ensuring that all visits to the workplace, by more senior management or another party (such as safety personnel or a consultant), are thoroughly documented and include any discussions or concerns about health and safety, and corrective action;
  • Ensuring senior management or third party follow-up to achieve prompt corrective action respecting noted safety deficiencies – especially high risk concerns;
  • Incorporating job or site health and safety compliance into the performance standard, measure and review for all supervisors. This would focus on their safety monitoring activities, not just the job or site's accident record; and
  • Taking immediate action to address any supervisor's sub-standard health and safety practices.

Technically, such steps would not provide the corporation with a full defence to a charge of criminal negligence under the Criminal Code that is constituted solely by the actions of a supervisor, as occurred in Metron. This is because, again, the defence of reasonable care or due diligence does not apply to crimes of intent. However, a strong record of positive corporate compliance and monitoring behaviour will, in our experience, prove influential when the police or prosecutors are considering criminal negligence charges and whether the circumstances warrant pursuing them against the corporation.

Whether the last word on Metron has been written remains to be seen. Metron could seek to appeal the decision to the Supreme Court of Canada. It is not clear if Metron will do so or, if it does, whether that Court would agree to hear Metron's appeal. Metron has 60 days from the date of the decision to seek leave to appeal to the Supreme Court.


1 2013 ONCA 541 (CanLII).

2 The Criminal Code imposes a 15 percent surcharge to the fine meaning the total penalty imposed is C$862,500.

3 The criminal negligence charges against the project manager were the subject of a preliminary inquiry. In January 2013, the court determined that there was sufficient evidence for the charges to proceed to trial. That trial is anticipated to begin this fall.

4 "In respect of an organization, means a director, partner, employee, member, agent or contractor of the organization", Criminal Code, R.S.C. 1985, c. C-46, s.2.

5 "A representative who plays an important role in the establishment of an organization's policies or is responsible for managing an important aspect of the organization's activities and, in the case of a body corporate, includes a director, its chief executive officer and its chief financial officer", Criminal Code, R.S.C. 1985, c. C-46, s.2.

6 Criminal Code, R.S.C. 1985, c. C-46, s.719.21(d).

7 Corporate Manslaughter & Health and Safety Offences Causing Death, Definitive Guideline, Sentencing Guidelines Council, February 2010.

8 2007 (UK), c.19.

9 [2011] EWCA Crim 1337, affirming 2011 W.L. 2649504.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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