ONCA: Corporations aren't people

 R. v. 1222149 Ontario Ltd. 2024 ONCA 543 (CanLII)

In a sentencing appeal under the Provincial Offences Act, the ONCA made two holdings of interest to corporate defendants and their counsel:

1. Parity: It will generally be an error in principle for the sentencing court to compare corporate and individual defendants when coming up with a sentence; and,
2. Size: Where the size of a corporate defendant is a factor that must be considered on sentencing, what matters is the total size of the defendant, not just the location where the infraction occurred.

The appeal arose out of an OHSA prosecution, with typically disturbing facts:

a 16-year-old high school student suffered a spinal injury while working at a summer job at a Dairy Queen restaurant owned by the respondent. The injury occurred when the employee’s hair became entangled in the rotating spindle of the restaurant’s Blizzard machine. The employee was in the process of blending using the machine and had a question about upcoming orders on the board. She took her foot off the machine’s pedal and turned to ask someone. As she did so, her hair got caught in the spindle, which had not yet fully stopped rotating. She stepped back towards the machine and her foot accidentally tapped the pedal, pulling her further in. She and another employee heard a loud cracking sound in her neck. The other employee rushed to get the shift leader, who managed to untangle the employee’s hair from the spindle. The employee was stuck in the machine for seven minutes.

The machine was a blender with a rotating spindle to mix ice cream. It came with a plastic safety guard. Without the plastic safety guard, the moving spindle was exposed. At the time of the offence, the safety guard had been removed by the shift leader in contravention of the OHSA. 

The defendant was convicted on a charge relating to removal of the machine guard. The sentencing justice of the peace imposed a fine of $7500. In setting that fine, the JP made two findings that caught the prompted the Crown's appeals:

1. Parity Comparators: To ensure that like offenders receive similar offences ("parity") sentencing courts are supposed to consider the sentences imposed in similar cases. Here, the JP focused on one particular case, Scott, where a worker was injured by a dough machine. The fine imposed in Scott was $3,000. However, the defendant in Scott was an individual, not a corporation. 
2. Size of the Corporation: When sentencing a corporation, courts are required to consider their size and economic means to ensure that an economic penalty is sufficient to be "felt" by the defendant. While the defendant ran a total of seven stores, with 84 employees, the JP held that since each store was managed by "individual managerial personnel," the "blame" for the offence belonged at the local level. The JP sentenced the defendant as if it was a "small" business operating only the single store, with 12 employees.

The Crown appealed the sentence to a judge of the OCJ, which upheld the dismissal. The Crown appealed again.

The ONCA sided with the Crown on both questions:

1. Parity: The ONCA held that it is an error in principle to compare individual and corporate defendants.  The ONCA's reasoning rested on the fact that maximum fines for corporations were typically set much higher than for individuals (for example, in Scott, the maximum fine for the individual offender was $25,000, compared to $500,000 for a corporation), reflecting legislative desire to make a wider range of sentences available for corporations. Second, even where the legislation doesn't impose a higher maximum for corporations, "it is often, but not always, the case that corporations have more economic means than individuals. As a result, higher fines may be required to achieve specific and general deterrence in sentencing a corporation as compared to an individual." The ONCA went on to note that comparisons to individual defendants may still be appropriate in cases of "small, closely-held" corporate defendants.
2. Size: Since the purpose of considering a corporate defendant's size is to ensure that a fine is significant enough to be felt, the ONCA held that limiting the analysis to the location in question was an error. Only by considering the impact of a fine on the corporation as a whole can a sentencing court determine whether the fine would have the proper deterrent effect.

The ONCA went on to impose a new sentence. The Crown had asked for $75,000. The maximum fine was $2,000,000. The Court imposed a fine a $40,000, while noting that:

the 16-year-old employee was not provided training about using the guard on the machine. The guard was routinely removed by employees and shift leaders, putting multiple employees at risk. This was not an unforeseeable accident, but rather was a direct result of the practice at the store of removing the guard to speed up service to customers at the expense of employee safety. The injuries to the employee, while perhaps not permanent, were significant and had a significant impact on her quality of life for an extended period. 

In my opinion, this is one of those cases where a Court didn't necessarily follow its reasons to the proper conclusion.  On both questions, the ONCA's concern was that for corporate fines to be effective, they have to be calculated in reference to the defendant's economic means. However, like the courts below, the ONCA focused on the number of employees and storefronts -- but those are bad proxies for revenue, profit, cash-in-the-bank, or any other tool we could use to gauge a company's wealth. 

Forget whether a size should be measured 'locally' or 'globally' -- the logic of this decision demands that the 'size' of a defendant should be measured using a standard and relevant metric - perhaps EBITDA. 

And, extending that logic even further, why should it matter whether a particular commercial enterprise subject to a law like OHSA is run by a corporation, or a sole proprietor? What ought to matter is the economic size of the enterprise that gave rise to the infraction.