Canada: A Serving Of Guilt — How Breaching Canada's Food Supply Law Could Leave Your Company's Officers On The Hook

Did you know that the Canadian government can reach beyond your company's coffers and into your wallet for importing or handling food the wrong way? Canadian enforcement agencies have broad powers to pursue officers and directors when companies breach certain laws that govern the country's food supply. In some cases, the government can hold officers and directors responsible for the misdeeds of agents and employees. In such instances, pleading ignorance is insufficient to evade personal liability.

Export and Import Permits Act

The Export and Import Permits Act (EIPA) gives Cabinet the power to control which goods enter or leave Canada by means of control lists. Agricultural products like grains, sugar and dairy have been placed on control lists. Businesses that wish to import or export controlled goods must obtain the necessary permits to do so and not exceed their allotted quantity.

Breaching the EIPA could be a costly affair. The Crown can choose to prosecute infringements as a summary or indictable offence. Section 19(a) sets maximum punishment for summary offences at $25,000 and 12 months of imprisonment. However, when the Crown elects to prosecute an offence as indictable, section 19(b) allows judges to set fines at their discretion and imprison for up to 10 years.

Officers and directors cannot rely on the corporate veil to protect them. Section 20 of the EIPA makes officers and directors liable to fines and imprisonment, if they direct, authorize, consent to, allow or participate in contravening any provision of the EIPA. The corporation need not be prosecuted or convicted for directors and officers to be found liable.

In R v Joseph Martin, [1992] 1 SCR 838, aff'g (1991), 2 OR (3d) 16 (ON CA), the Supreme Court of Canada confirmed that infractions under the EIPA are strict liability offences like most public welfare infractions. Once the Crown proves that there was a contravention, the accused must demonstrate that reasonable care was taken to avoid the situation.

Safe Food for Canadians Act

Canada's food laws were recently strengthened in an effort to promote food safety and harmonize them with US laws. Passed in 2012, the Safe Food for Canadians Act (SFCA) consolidates the Meat Inspection Act (MIA), the Fish Inspection Act (FIA), the Canada Agricultural Products Act (CAPA) and the food provisions of the Consumer Packaging and Labelling Act (CPLA).  Overall the Act contains important provisions for importers.  For example, section 44 permits proof of liability based on corporate identifiers or addresses included on labels. Inspectors who have reasonable grounds to believe that goods were imported in contravention of the Act can order such goods destroyed, as per section 32(1). Although most of the SFCA is not yet in force, companies should be aware of its provisions for officer liability.

While the MIA, FIA, CAPA and CPLA imposed officer liability to varying degrees, penalties under the SFCA will be stricter, when the law comes into force. Section 39 of the SFCA lists a range of penalties up to $5,000,000 and two years imprisonment for most contraventions of the SFCA or its regulations. Section 39(3)(a) allows the court to impose a fine at its discretion, an imprisonment for a term of up to five years, or both, on a person who in contravening the SFCA  knowingly or recklessly causes a risk to human health. The SFCA does not set a cap on fines for such offences and any individual convicted under these provisions could be imprisoned for up to 5 years.  

According to section 39(4) officers or directors who direct, authorize, assent to, acquiesce to or participate in the infraction can be prosecuted.  Further, section 39(5) allows these individuals to be prosecuted for the wrongdoing of employees, agents or other mandataries of the company. An accused will only escape liability for the actions of others by showing that he or she was unaware of the actions or did not consent to them. Furthermore, the accused must also show that all due diligence was exercised to prevent commission of the offence.

Wrongdoing encompasses action and inaction. R v A & A Food Ltd and Giovanni Camporese, [1997] 120 CCC (3d) 513 (BC SC) concerned a company that marketed unlabelled cheese in its possession, contrary to provisions of the Canada Agricultural Products Act. The corporate accused and its director were both convicted. The Supreme Court of British Columbia upheld the director's conviction, noting that the director had the ability to ensure that the cheese had been labelled properly but failed to do so. 

Prepared with assistance from summer student Valerie Akujobi

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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