Canada: Personal And Corporate Environmental Liability

All Canadian federal and provincial environmental legislation is backed up with stiff penalties, including jail terms, for those persons who contravene their regulatory requirements.

Corporate officers can be held liable for the company’s offences by virtue of having "acquiesced in or participated in the commission of the offence" or under the common law for having sufficient seniority and responsibility to qualify as the "directing mind" of the corporation in the commission of an offence.

In Ontario, the Legislature has gone a step further with respect to directors and officers and has included in the Environmental Protection Act:

Section 194(1) Every director or officer of a corporation that engages in an activity that may result in the discharge of a contaminant into the natural environment contrary to this Act or the regulations has a duty to take all reasonable care to prevent the corporation from causing or permitting such unlawful discharge.

The federal government has similar provisions in its environmental legislation, the Canadian Environmental Protection Act. Under Section 280 of that Act, any officer, director or agent of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence, and is liable to the punishment provided for the offence, whether or not the corporation has been prosecuted or convicted. That statute also imposes a positive duty on every director and officer to take all reasonable care to ensure that the corporation complies with the Act and its regulations, and any orders and directions of the Minister or enforcement officers and review officers exercising authority under the Act.

Corporations and their officers are not only liable to suffer stiff statutory penalties and fines, but may also be ordered to be responsible for expensive remediation measures. The legislation authorizes the environmental authorities to issue orders against current and past owners, occupiers and persons in "charge, management and control" of the offending operations or property. Company presidents and plant managers can, and have, found themselves in high-profile prosecutions or administrative proceedings in which millions of dollars are at stake, not to mention the legal costs required to mount an effective defence. The public crusade to clean up the environment now requires both the corporation and the individuals behind the corporation to be made accountable for pollution.

Strict Liability

The most disconcerting aspect of personal liability in the area of environmental law is the fact that environmental offences generally involve "strict liability". This means that an offence can be committed without there being an accompanying intent to break the law. Negligently failing to avoid the commission of an offence is sufficient.Therefore, the essential question becomes whether the particular individual participated in or was responsible for the acts or omissions which led to the offence being committed.

In the leading 1978 case of R. v. Sault Ste. Marie (City), the Supreme Court of Canada declared that the "permitting" aspect of the offence centres on the defendant’s passive lack of interference or, in other words, its failure to prevent an occurrence which it ought to have foreseen.The test is a factual one, based on an assessment of the defendant’s position with respect to the activity which it undertakes and which causes pollution. The due diligence which must be established is that of the accused alone. When an employer is charged in respect of an act committed by an employee acting in the course of employment, the question will be whether the act took place without the accused’s direction or approval, thus negating wilful involvement of the accused, and whether the accused exercised all reasonable care by establishing a proper system to prevent commission of the offence and by taking reasonable steps to ensure the effective operation of the system.

The cases which have been decided since that time adhere to the analysis expressed by the Supreme Court of Canada.

Due Diligence

No matter what the form of environmental liability, a director’s or officer’s best defence is to take steps to prevent environmental mishaps from occurring in the first instance. This doesn’t necessarily mean that one must be entirely successful in preventing environmental mishaps, but it does mean that one must be able to demonstrate that reasonable care or due diligence was exercised to prevent foreseeable occurrences. The courts have emphasized the need for corporations to establish proper internal systems to prevent the commission of offences and to ensure reasonable steps are taken to ensure the effective operation of such systems. Adopting an environmental policy is a good first step, but the senior officers of the corporation must also ensure that a programme is established to implement that policy, that it is funded appropriately and that individuals are assigned responsibility for implementing the programme and reporting on its execution.

Environmental Protection Programme

Although each corporation will have to develop a programme which reflects its specific needs and business environment, the following elements represent an outline of core aspects of any such environmental management programme:

One. Assign responsibilities, especially with respect to reporting through the chain of command.

Two. Identify environmental protection and employee health and safety concerns, which will involve performing environmental and health and safety audits.

Three. Establish management and employee training programmes, which will involve ongoing training and management through the use of outside consultants, attendance at seminars and conferences and participation in industry associations.

Four. Develop written procedures and manuals setting out specific responsibilities.

Five. Document actions, both in detailing accidents and incidents as well as with respect to recording communications through to the Board of Directors and governmental authorities.

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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