Canada: Combined EPA/OHSA Fine Of $5.3 Million Upheld

The explosions that occurred at a propane facility in Toronto in 2008 are difficult to forget. The explosions resulted in the catastrophic death of a worker, damage to surrounding homes and an area wide evacuation.

On appeal an Ontario judge upheld a combined EPA and OHSA fine in the amount of $5.3 million, plus the 25% victim fine surcharge against Sunrise Propane Energy Group, a related company, and two corporate directors ("Sunrise Group").

The Sunrise Group was found guilty, after a fourteen day trial, of a total of seven charges under the Environmental Protection Act ("EPA") and Occupational Health and Safety Act ("OHSA").

The Sunrise Group claimed that the appeal must be allowed on the basis that the trial judge failed to provide sufficient reasons when convicting the Appellants. The law is clear that since the Supreme Court of Canada's decision in R v. Sheppard, 2002 SCC 26, that when delivering a verdict the trial judge is under an obligation to explain to the losing party why it lost and afford the basis for meaningful appellate review of his or her decision. However, the case law clearly established that a judge is not required to review every piece of evidence or explain each step of the reasoning process so long as the findings linking the evidence to the verdict can be logically understood. See R. v. R.E.M., 2008 SCC 51 and R v. Campbell, 2017 ONCA 209.

The judge's reasons must be read as a whole and in conjunction with the evidence, issues, submissions at trial, together with an appreciation of the purposes and function for which they were provided. See R. v. Villaroman, 2016 SCC 33.

As it relates to the Sunrise Group, the court found that the trial judge gave a comprehensive review of the evidence related to the charges and the findings of guilt.

While the Sunrise Group filed a comprehensive appeal on numerous issues we have only highlighted a couple of the arguments brought forward.

Strict Liability Offences

In R. v. Sault Ste. Marie (City), 1978 CanLII 11 (SCC), the Supreme Court of Canada explained that in strict liability cases the prosecution is absolved from the obligation of having to prove mens rea once they have established the actus reus of the offence beyond a reasonable doubt. The rationale was explained by Dickson J., at p. 1325, in the following manner:

The correct approach, in my opinion, is to relieve the Crown of the burden of proving mens rea, having regard to Pierce Fisheries and to the virtual impossibility in most regulatory cases of proving wrongful intention. In a normal case, the accused alone will have knowledge of what he has done to avoid the breach and it is not improper to expect him to come forward with the evidence of due diligence. This is particularly so when it is alleged, for example, that pollution was caused by the activities of a large and complex corporation. Equally, there is nothing wrong with rejecting absolute liability and admitting the defence of reasonable care.

In this doctrine it is not up to the prosecution to prove negligence. Instead, it is open to the defendant to prove that all due care has been taken. This burden falls upon the defendant as he is the only one who will generally have the means of proof. This would not seem unfair as the alternative is absolute liability which denies an accused any defence whatsoever. While the prosecution must prove beyond a reasonable doubt that the defendant committed the prohibited act, the defendant must only establish on the balance of probabilities that he has a defence of reasonable care.

The Sunrise Group was charged under section 14 of the EPA with discharging or causing or permitting the discharge of a contaminant into the natural environment, if the discharges causes or may cause an adverse effect.

The parties agreed that the offences being appealed are considered public welfare offences and fall within the strict liability category. The Supreme Court of Canada found that strict liability cases place an onus on the Crown to prove the actus reus of the offence beyond a reasonable doubt. Once the actus reus has been proven by the Crown the onus shifts to the defence to establish any available defence on a balance of probabilities. The application of strict liability means that the Crown does not need to disprove defences of acts of negligence – the defence must show that they had taken all reasonable steps to avoid the commission of the offence.

Proof of the Actus Reus

Sunrise Group alleged that the trial judge erred in finding that management and control of the facility established the actus reus of the offence. They take the position that the trial judge had to find the following:

1. proof of the cause of the explosion;
2. the cause was foreseeable;
3. the appellants failed to take reasonable steps with respect to the cause and;
4. their failure to take reasonable steps led to the explosion.

The court disagreed on the basis that such an argument conflates the mens rea and actus reus components of the offence. The actus reus defined in s. 14 of the EPA is the discharge of a contaminant into the environment which caused or may cause an adverse effect. The term "adverse effect" is defined in section 1 (1) of the EPA. There was no dispute that contaminants were discharged into the environment and that they caused or could cause an adverse effect.

The only issue was whether the Appellants were responsible. In Sault Ste. Marie, the actus reus of an offence of prohibiting the discharge or causing the discharge of polluted elements was defined, at p. 1329, in the following manner:

Also see R. v. Nitrochem Inc., [1993] O.J. No. 3336 (O.C.J), at paras. 20-22; R. v. Lopes, [1996] O.J. No. 96 (O.C.J), at para 15.

The trial judge was found to have correctly concluded that the actus reus had been proven. The explosions occurred at a facility controlled by the Sunrise Group and staffed by their employees. The transfer of propane that led to the explosions was carried out by a driver employed by the Sunrise Group. It is important to note that all of these facts were conceded to in the Agreed of Statement of Facts.

Official Induced Error

Despite the trial judge finding that truck to truck transfers were prohibited at the Sunrise Group, the trial judge agreed that the comments of a TSSA inspector at a 2007 meeting induced the Sunrise Group into erroneously believing that they were permissible. However, the judge did limit this finding and concluded that the defence of officially induced error expired at the time the TSSA published its new Code Adoption Document ("CAD") in June 2007.

The Sunrise Group argued that the limitation was wrong and instead that the effect of the error extended to the date of the explosions and that June 2007 was an "artificial deadline." The Sunrise Group also argued that any TSSA inspector had the power to revoke existing Director's Orders even though, at trial, such authority was denied. The Sunrise Group alleged that the comments made by the TSSA inspector resulting in their belief that the Order had been revoked insofar as it applied to their business.

In determining this issue the judge took into consideration that Sunrise Group was not charged with breaching a regulatory practice in conducting truck to truck transfers. The issue of the transfers is significant when assessing due diligence. If the Sunrise Group were expressly prohibited from pursuing this practice but continued to do so, any defence of due diligence must fail.

The court found that the position of the Sunrise Group must be rejected. The trial judge did not concluded that the TSSA inspector gave the Sunrise Group permission to conduct truck to truck transfers at their facility: the TSSA inspector had no power to do so in the face of the pre-existing Director's Public Safety Order dated October 27, 2006. The trial judge found only that the Sunrise Group were led to mistakenly believe they could continue operating as they had previously. This led to their erroneous belief that truck-to-truck transfers could continue on their site.

When the CAD was released in June 2007, however, any misconception held by the Sunrise Group should have disappeared. The judge found that this was not an "artificial deadline" but instead a form of "sanitising" event that unequivocally informed the Sunrise Group that, regardless of the comments made by the TSSA inspector the practice of truck-to-truck transfers was clearly forbidden. Immediately upon the release of the CAD it was the responsibility of the Sunrise Group to cease the truck to truck transfers or seek approval for an exemption. The court found that there was no evidence that they did either of these things, or that they sought legal advice on the issue.

The Section 14 Conviction

The Sunrise Group argued that the highest fine amounted to $800,000: R. v. BP Canada Energy Corporation, 2009 CarswellOnt 10101 (C.J.). The Sunrise Group argued that $2 million in fines imposed were excessive and should be reduced. The court disagreed and distinguished the BP Canada case on the basis that it involved a gas leak that caused temporary physical ailments such as headaches, sore throats and nausea, accompanied by a disruption to schools and business and this case was far more serious.

The Breach of Order Counts

The Sunrise Group argued that the fines imposed for breaching an Order were excessive in light of the jurisprudence. The Sunrise Group relied on the following cases: R. v. Ryan, 2010 CarswellOnt 16363 (C.J.); R. v. Northern Breweries Ltd., 2009 CarswellOnt 18955(C.J.); R. v. Soares Auto Body Ltd., 2012 CarswellOnt 1075 (C.J.); R. v. Zebra Three Corporation, 2012 CarswellOnt 17324 (C.J.).

The court found that the cases relied upon by the appellants had no resemblance to the situation and that the magnitude of the event was unprecedented in Ontario, and its seriousness could not be understated. Failure to clean up the aftermath after being ordered to do so required a punitive sentence: R. v. 310 Waste Ltd., 2006 CarswellOnt 10285 (C.J.); R. v. Tenny, 2016 CarswellOnt 20742 (C.J.).

The OHSA Sentences

The court also concluded that the sentences imposed in respect of the OHSA offences to be appropriate. The trial judge correctly identified the aggravating and mitigating features of the offence and was cognizant of the case law. There is nothing in the trial judge's decision that indicated an error and the fine was consistent with other fatality cases: R. v. Enwave District Energy Limited, (unreported, 28 September 2004) (O.C.J.); R. v. Elderston Manor Estates, (unreported, 5 February 2008) (O.C.J.).

The appeal judge upheld the EPA fines in the amount of $5,020,000 (including $100,000 against each of the corporate directors). While the fine was unprecedented the appeal judge confirmed that there were a number of "aggravating factors" including the "widespread damage and effects caused by the appellants' (Sunrise Group) reckless behaviour in conducting truck to truck transfers absent the appropriate licence and having full knowledge of the risks. The OHSA fines amount to $280,000 and were also deemed appropriate.

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