In a recent decision,1 the Court of Appeal for Ontario (the "Court") addressed two sentencing principles typically considered when sentencing for offences committed under the Occupational Health and Safety Act, R.S.O. 1990, c. O.1 ("OHSA"). The Court provided direction on how the size and economic scope of a corporate defendant is to be assessed and when sentences imposed on individuals may be used as precedents for sentencing corporations.
Background
In 2017, a 16-year-old high school student suffered a spinal injury while working a summer job at a local Dairy Queen. The injury occurred when the employee's hair became entangled in the rotating spindle of the restaurant's "Blizzard" machine. As a result of her injuries, the employee was hospitalized for two weeks and was unable to attend school for several months. Up to two years after the incident, she continued to suffer long-term physical effects including numbness, neck pain, and headaches.
At the time of the incident, the plastic safety guard that protected the moving spindle on the Blizzard machine had been removed by the shift leader. This was common practice at the store, especially during peak hours when the store experienced high traffic. The evidence at trial also showed that the injured employee had asked about the use of the plastic guard but was told by a shift leader that she was not required to use it. The employee had not received any training on the use of the Blizzard machine, nor been given a copy of Dairy Queen's employee handbook that addressed machine guarding and occupational health and safety awareness in general.
Charges and Lower Court Decisions
1222149 Ontario Ltd. o/a Dairy Queen and/or Embrun DQ Grill & Chill (the "Defendant") was charged with two counts under OHSA: (1) failing to ensure that the employee's hair was suitability confined to prevent entanglement with the rotating spindle as required by s. 83(1) of R.R.O. 1990, Reg. 851,2 and contrary to s. 25(1)(c) of OHSA,3 and (2) failing to ensure that the machine was guarded to prevent access to the exposed spindle as required by s. 24 of R.R.O. 1990, Reg. 851,4 and contrary to s. 25(1)(c) of OHSA.5
Following trial in front of a Justice of the Peace, the Defendant was acquitted on the first count but convicted on the second. A $7,500 fine was imposed.
The Crown appealed the sentence to a judge of the Ontario Court of Justice sitting in appeal. The appeal court affirmed the Justice of the Peace's sentencing decision. In sustaining the trial level sentence, the appeal judge concluded that—where a contravention was local—it was appropriate to consider only the Defendant's local commercial activity when determining a fit deterrent sentence. The Justice of the Peace had found that the offence was the result of local corporate neglect at a single store. Blameworthiness was therefore limited to that single place of business and a proper penalty was to be considered on the basis of the Defendant's local commercial activity.
The Decision and Analysis
The Crown then appealed the decision to the Court of Appeal for Ontario, which allowed the appeal and varied the sentence to a fine of $40,000 (plus victim fine surcharge). In doing so, the Court discussed two of the general sentencing principles typically applied when sentencing: the scope of the economic activity in issue, and parity in sentencing.
The sentencing principles to be applied in what are sometimes described as "public welfare offences" were set out in the leading case R. v. Cotton Felts Ltd.:
"The amount of the fine will be determined by a complex of considerations, including the size of the company involved, the scope of the economic activity in issue, the extent of actual and potential harm to the public, and the maximum penalty prescribed by statute. Above all, the amount of the fine will be determined by the need to enforce regulatory standards by deterrence."6
The factors enumerated in Cotton Felts are not a closed list and the court is entitled to consider other factors when crafting a fit and just sentence, including, for example, worker misconduct.7 Further, the common law requires courts sentencing offenders for breaches of regulatory standards to balance the principle of proportionality (a sentence must be a "fit" sentence relative to the seriousness of the offence) with the principle of parity (similar sentences should be imposed on similar offenders for similar offences, in the context of like, comparable circumstances).8
In Dairy Queen, the Court's analysis focused on the scope of the economic activity in issue and parity in sentencing.
- The size of the company and the scope of its economic activity
The Court reviewed and rejected the trial court and appeal court's approach to assessing the size and scope of the Defendant's economic activity. The lower courts had determined the size of the Defendant with reference only to the single Dairy Queen location where the offence took place.
The Court clarified that in most cases, where a corporate defendant's operations involve more than one location, the correct approach is to consider the corporation as a whole, not just the location where the offence occurred.9 The Court went on to determine that the trial court's error had a material impact on the sentence imposed, insofar as the Defendant was the owner of seven Dairy Queen establishments, not simply the one where the incident occurred. As a result, the size of the Defendant and the scope of it's economic activity were significantly larger than what had been considered by the Justice of the Peace at the time of sentencing.
The Court commented that a fine imposed on a corporate defendant must take into account its economic means. By treating the Defendant as a local operation with only 12 full-time equivalent employees, rather than a corporation that in fact ran seven establishments with 84 full-time equivalent employees, the Justice of the Peace understated the size of the Defendant and the scope of its economic activity and "artificially lowered" the quantum of fine required to achieve specific and general deterrence.10
- Application of the parity principle between individuals and corporate defendants
The Court also re-affirmed that sentencing ranges for individuals should not be unthinkingly used as a reference for sentencing corporate defendants. The Court noted that the maximum fine under OHSA for corporations is much higher than for individuals (at the time $500,000 and $25,000, respectively). This creates different sentencing ranges for corporations as compared to individuals. Further, the difference in maximum sentences under OHSA demonstrated a legislative intention that a broader range of penalties apply in sentencing corporations than individuals. Taking both of these facts together, the Court noted that as a result of the different sentencing range for corporations and individuals, parity will not usually be achieved where a sentence imposed on individuals is used as benchmark for a sentence imposed on a corporation.11
The Court noted that it may be possible that sentencing precedents for individuals are relevant to sentencing corporations.12 For example, the quantum of fine necessary to achieve specific and general deterrence for a small, closely-held corporation would be very similar to that appropriate for an individual. However, when a sentencing judge relies on a precedent involving an individual in sentencing a corporate defendant, the reasons must show that they turned their mind to the difference between individuals and corporations in terms of range of sentence and considered the quantum necessary to achieve specific and general deterrence for the corporate defendant.13
As such, the Court found that the Justice of the Peace and appeal judge erred in their application of the parity principle by treating sentences imposed on individual offenders as a reference for the appropriate sentence for the corporate Defendant. This error was found to have a material impact on the sentence imposed, as evidenced by the fact that the Justice of the Peace found a prior sentencing decision that imposed a $3,000 fine on an individual to be "very comparable" to the case before him.14
In formulating a more appropriate sentence, the Court took into account that the employee did not receive training in connection with the guard on the machine, the accident was foreseeable, and the employee's injuries were significant and long-lasting.15 A $40,000 fine was found to be sufficient for a defendant of the Respondent's size for specific and general deterrence.
Implications for Employers
This case clarifies the application of these sentencing principles in determining fines for corporate defendants under OHSA. In particular, it is a helpful reminder that where an employer operates at more than one location, the corporation's size and scope of its economic activity may be determined by reference to its operations as a whole, not merely in respect of the location where the contravention took place.
Footnotes
1. R. v. 1222149 Ontario Ltd. (Dairy Queen and/or Embrun DQ Grill & Chill), 2024 ONCA 543 ("Dairy Queen").
2. R.R.O. 1990, Reg. 851, s. 83(1).
3. OHSA, s. 25(1)(c).
4. R.R.O. 1990, Reg. 851, s. 24.
5. OHSA, s. 25(1)(c).
6. 1982 CanLII 3695 (ON CA) ("Cotton Felts") at page 294.
7. Ontario (Ministry of Labour) v. Hershey Canada Inc., 2006 ONCJ 420.
8. Ontario (Ministry of Natural Resources) v. 819743 Ontario Inc., 2013 ONCJ 128 at para 20; R. v. Lacasse, 2015 SCC 64 at para 58.
9. Dairy Queen at para 17.
10. Dairy Queen at para 16.
11. Dairy Queen at para 32.
12. Dairy Queen at para 34.
13. Dairy Queen at para 35.
14. Dairy Queen at para 36.
15. Dairy Queen at para 45.
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