Failure to take reasonable safety precautions and provide adequate training can result in hefty fines
In the Q4 2013 edition of Piling Canada, James Wishart wrote about the Ontario Court of Appeal decision in R. v. Metron Construction Corp. (Metron). In that case, the Ontario Court of Appeal handed out fines to corporate defendants for criminal negligence that were large enough to potentially bankrupt the companies. It was held that that the courts should not take companies’ financial situation into account when determining fines for criminal negligence. More recently, Canadian courts have continued to follow this approach by awarding large fines without consideration of the financial implications for the companies
In 2013, the Ontario Court of Justice convicted Sunrise Propane Energy Group Inc. for multiple regulatory offences under the Ontario Environmental Protection Act (EPA) and Occupational Health and Safety Act (OHSA). The judgement – R. v. Sunrise Propane Energy, 2016 CarswellOnt 3399 – pertained to an incident that caused propane explosions in Toronto in 2008 that killed a young worker and caused a fire.
There were a series of explosions that caused extensive damage to surrounding properties and injuries to neighbours. Some surrounding homes were left uninhabitable for over a year. Approximately 12,000 residents had to evacuate the area within a 1.6-kilometre radius. Local businesses were forced to close, and one nearby car dealership was completely destroyed. At the time of the explosion, there were two employees on site; one was able to escape with minor injuries, but the other was killed.
Unlike the Metron case, this case dealt with statutory fines rather than fines for criminal negligence. The defendants were convicted under the Ontario EPA as well as under the Ontario OHSA. Many of the charges were specific to the propane industry, but some of the charges will have implications for all industries, particularly when it comes to employee training and fines for individuals.
The main conviction with applications outside of the propane industry was the charge for failing to provide instruction, information and supervision to a worker to protect health. The company was guilty of the charge because no one provided the required training to the worker killed in the explosion. The company had three employees who trained workers and none of the three provided training to the employee. There was no documentation showing that the employee had been trained. The defendant argued that the documentation may have been destroyed in the explosion and the three trainers may not have remembered training the employee, but the court said that by showing that none of the three trainers remembered training the employee was sufficient.
On the charge of failing to provide instruction, information and supervision to a worker to protect health, the Crown proposed that Sunrise Propane pay a fine of $250,000. The court agreed with the $250,000 fine suggested by the Crown exclusive of any victim fine surcharges against the defendant Sunrise Propane Energy Group. The court found that the failure to provide training to be an aggravating factor for sentencing purposes, as such training would have been inexpensive and easily provided. Another aggravating factor was that the defendants had previously discovered another employee who had been working without the proper training.
The $250,000 fine took into account, as a mitigating factor, the fact that the defendants had no prior record. The court did not accept the Crown’s argument the clean record was the result of luck and should be discounted accordingly.
In addition to reinforcing the importance of employee safety and training, this case provides many cautionary lessons for employers outside the propane industry. If it is discovered that one employee has not been trained, a company must be extra vigilant to ensure that others are as well.
Furthermore, this case demonstrates the importance of not only providing adequate employee training but also ensuring that there are detailed records that the training occurred. Because there were not detailed records, the corporation was found not to have trained the employee because none of the trainers could remember training him and there was no record of training produced. This was enough to satisfy the courts that he had not been trained, because the worker was dead and could not testify himself. It is important to ensure records are kept so that, if the employee is unable to testify, fines cannot be handed out in the case that trainers forget.
The company was ned over $5 million for all the charges against them. It is important to remember that these payments are to be made for breach of statutes. These fines are paid to the government. They are independent of claims that are made by victims of the explosion. Victims of the explosion have brought their own claims for damages to surrounding properties, personal injuries and interruption for work. These victims may be able to recover far more than the $5 million in fines imposed by the government.
This case also has implications for individuals who are ned. In this case, there were two individual defendants who were ned in addition to the corporate defendant. The R. v. Metron Construction Corp. decision only stated that the ability to pay would not be a consideration for companies convicted of criminal negligence, not individual defendants. As a result, the court in this case did consider the individuals’ ability to pay; however, the Court rejected the individual defendants’ claims that they were unable to pay a substantial fine.
The defendants argued that each individual’s yearly income was relatively small, that one of the two defendants was a single father of four and that both individuals were also defendants in a pending civil lawsuit relating to the matter. The court did not agree that the individual defendants were unable to afford the fines. The primary reason was that the two individuals were secured business debtors of Sunrise Propane with total security of $1 million and were legally entitled to withdraw funds from the corporate bank account.
The implications of this case for individual defendants is that while courts will take individual’s financial situations into account, they will look at all money available to them. Individuals will need to demonstrate that they don’t have funds to pay the fines, and also that they will not have access to funds to pay the fine.
Kirk A. Vilks is an associate with Fillmore Riley LLP who practises primarily in the area of civil litigation, with a focus on construction and insurance litigation. You may reach him at 204-957-8358 or kvilks@fillmoreriley.com.
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