6 Identification Doctrine & Liability

Question 1

What kind of liability at tort is used to hold a corporation liable?

Answer 1

Vicarious liability. However, for this course we will focus on the torts that apply when vicarious liability is unavailable.

Question 2

What is the ratio from The Rhone v. The Widener?

Answer 2

Identification theory. Asked who is liable when vicarious liability is unavailable.

Specific to this case: Ship-owner liable if not prudent in supervising its employees; More discretion employee has, more likely employee possesses a directing mind/governing executive authority.

Question 3

How does one show what is in the “mind” of a corporation?

Answer 3

Identification theory. Concept of a “directing mind”. Must separate the “hands” of the corporation from the “brain”. Hands execute decisions; Brain makes the decisions.

Question 4

When is a person a “directing mind” of a corporation?

Answer 4

When they have “governing executive authority”.

Question 5

What is “governing executive authority”?

Answer 5

An express or implied delegation of executive authority to design and supervise the implementation of corporate policy rather than simply to carry out such policy. In other words, the courts must consider who has been left with the decision-making power in a relevant sphere of corporate activity.

Question 6

What is tradition/necessity’s role in a directing mind analysis?

Answer 6

If the provision of an employee’s discretion is based on tradition/necessity rather than a means of providing the discretion to act without supervision, does not qualify as a “directing mind”. The inverse is also true.

Question 7

How do you hold a corporation liable for criminal offences that may not have a mental element? (Recall three kinds of criminal offenses).

Answer 7

• Absolute liability offence: Doing the act is sufficient. Identification theory not relevant.
• Strict liability offence: Proof of due diligence is necessary to avoid conviction. Identification theory not particularly relevant; if employees acting diligently, likely executives have made it a priority.
• Mens rea offence: Requires a proof of a particular mental state to convict. Requires a “directing mind” analysis of the person who committed the offence.

Question 8

What is the ratio from R v Canadian Dredge and Dock Ltd.?

Answer 8

Three alternatives when discussing the potential liability of corporations for mens rea offences: 1) Complete immunity; 2) Agency principles; 3) Median rule.

Question 9

What is the principle of complete immunity re corporate criminal offences?

Answer 9

Corporate actors cannot form mens rea and therefore, are generally free from responsibility for crimes undertaken on their behalf by their employees.

Question 10

What are some exceptions from complete immunity re corporate criminal offences?

Answer 10

Criminal libel, criminal contempt, statutory offences, public nuisance.

Question 11

What is the “median rule” re corporate criminal offences?

Answer 11

Generally, the directing mind is also guilty of the criminal offence in question. The identification doctrine merges the directing mind with the corporation, but both are still guilty of the offence (with the exception of conspiracy).

Question 12

What are the general requirements for identification theory to operate?

Answer 12

The action must be:
1) Within field of operation assigned to them; 2) Not totally in fraud of the corporation; 3) By design or result partly for the benefit of the company.

Question 13

What is the ratio(s) from R v. Church of Scientology?

Answer 13

***Too much here for flash cards. Take time to talk through case and understand intricacies.

Question 14

How can the Charter be used as a corporation?

Answer 14

Five ways:
1) As of right: Freedom of expression, association, etc. 2) Public interest; 3) Residual discretion; 4) Big M exception; 5) Canadian Egg exception.

If you do not fall into one of these categories, you likely can’t raise a Charter argument.

Question 15

What is the Big M exception re corporations using Charter rights?

Answer 15

The idea that we ought not to wait for the right person to come along.  If it could be validly brought by an individual and happens to come up in a corporate case, then the corporation is able to bring up the invalidity of the law and challenge the constitution. Therefore, the corporation can protect themselves from being charged under a law that is unconstitutional to a person.

Question 16

What is the Canadian Egg exception re corporations using Charter rights?

Answer 16

If you are not charged with an offence but you are involuntarily brought to court you are entitled to challenge the law that brought you to court and is making you produce documents.

Question 17

What is Bill C-45 and what does it entail?

Answer 17

An act to amend the Criminal Code re criminal liability of organizations. Five highlights:

1) Distinguishes “directing mind” from “senior officer”. Senior officer is broader than a directing mind. Senior officer anyone who manages an important aspect of the organization’s activities.

2) “Corporations” vs. “Organizations”. Organizations broader than corporations. Partnerships are included in this group.

3) Convicting the senior officer vs. paragraph 22.2(c) - under the common law, directing mind will generally be convicted of the offence. 22.2(c) organization can be convicted even if senior officer did not commit any crime. Any senior officer has positive duty to take reasonable steps to stop the “bad thing” even if not in scope of their authority.

4) Activity-specific vs. paragraph 22.2(c). At common law, if directing mind acting outside scope of governing executive authority, but still within corp., no longer directing mind. 22.2(c) holds senior officers liable if they fail to report criminal activity to managerial authority even though outside scope of role.

5) Defenses: Intention to benefit organization must be shown by Crown. Defenses are easier to use under the statute than at common law.

Question 18

When should you use Bill C-45?

Answer 18

Pre-March 30 , 2004: Clearly no criminal offense, use common law.

Post-March 30, 2004: Clearly criminal offense, use Bill C-45. Ex. Fraud, theft, murder.

Post-March 30, 2004: Clearly no criminal offense, questionable what to use. DMac suggests common law BUT recognize might be required to apply Bill C-45 despite not being under the code.

Question 19

What is the ratio of 373409 Alberta Ltd. v BMO?

Answer 19

When the corporation is the plaintiff in a civil case, it is possible to use the identification doctrine for avoiding liability to the corporation.

Question 20

Where is fraud on the corporation not available?

Answer 20

REMEMBER THIS: Where there is a claim by the corporation AND the defendant wants to defend himself against that claim AND there is one person involved with the plaintiff who is the sole shareholder/officer/director, FRAUD ON THE CORPORATION IS NOT AVAILABLE.

Question 21

What is the ratio from Deloitte & Touche v. Livent Inc.?

Answer 21

The application of the identification doctrine is highly context-specific, and it is subject to a discretion in the Court to refuse to apply the doctrine where it would not be in the public interest to do so.

Question 22

What is the ratio from Christine DeJong Medicine Professional Corp. v DBDC Spadina Ltd.

Answer 22

The court declined to adopt a rigid application of the Canadian Dredge criteria in the context of a civil case, emphasizing that the corporate identification doctrines is one have roots in policy considerations.