Officers and directors aren’t automatically liable just because their companies commit an environmental offence. They may be held personally liable for such offences under three theories: 1) They may be liable as principals—that is, the people who actually committed the act or failed to act when legally required to do so; 2) they may be liable as a party to the company’s offence; and 3) they may be liable if an environmental law specifically holds a company’s officers and directors liable for that particular offence. Applying these theories to real-life situations can be tricky. Here are two contrasting cases in which courts had to decide if CEOs should be held accountable for their company’s environmental violations.
FACTS
After extinguishing a building fire, the fire department smelled oil in the basement near the oil tank. When they inspected the outside of the building, they smelled oil in and around a catch basin and a ditch that led across a road and into a brook. They didn’t see any actual oil in the basement. But they noticed oil stains on the basement floor, oil in the ditch and a sheen on some of the water in the catch basin. The director of the company that owned the building put down absorbent pads by the catch basin and ditch. However, an environmental inspector ordered the company to hire an environmental site professional to clean up the site. The company failed to do so. The company and director were charged with releasing a substance harmful to the environment, failing to address the adverse effects of that release and failing to comply with the inspector’s order.
DECISION
The NS Provincial Court convicted both the company and the director.
EXPLANATION
The company was an owner and occupier of a contaminated site under the NS Environment Act and thus was liable for the violations. The director was acting as the company’s agent when he appeared at the building after the fire. He was also personally involved in the events that formed the basis of the violations. In fact, he spoke to the inspector about the need for a professional cleanup of the site and indicated that he’d take appropriate steps. In addition, the director was aware that vandals had been breaking into the building near a collapse in the foundation by the oil tank and could very well have caused the oil spill. But the director didn’t take steps to prevent vandals from getting in or ensure that the company took any reasonable steps to prevent an oil spill. Thus, the director was also liable for the violations, concluded the court.
R. v. Douglas Projects International, [2008] NSPC 76 (CanLII), Oct. 8, 2008
FACTS
A company used a wet scrubber system at its asphalt plant to reduce the emission of dust into the air. Overnight, the water in the lines to the wet scrubber froze. The next morning, the plant operator used a propane torch to melt the ice. Unbeknownst to him, some ice partially blocked a filter, reducing the water flow to the scrubber system. Once the water started flowing again, he started the plant. But he noticed a plume of dust coming from the plant. Environmental inspectors who happened to be driving past the plant also spotted the plume. They ordered the plant to halt operations. The operator immediately shut down the plant and fixed the problem within 10 minutes. Still, the company and a director were convicted of an environmental offence. The director appealed.
DECISION
The NL Supreme Court dismissed the case against the director.
EXPLANATION
The director could be liable if he was “in some manner personally involved in the commission” of the offence, such as if he exercised sufficient control over the events in question, explained the court. But there was no evidence that the director had personal knowledge of the problem of ice blocking the filter. In fact, he couldn’t have had such knowledge because the problem was a one-time, unforeseeable occurrence. The court also noted that the director had a duty to appoint a responsible person to oversee the plant’s operations and ensure that a proper system was in place to remedy any problems. He had fulfilled these duties: The plant’s operator inspected the wet scrubber system on a daily basis to ensure that it was working properly before the plant started operating. A production engineer also inspected the system weekly to ensure that it was in proper working order. And the systems in place had essentially worked. Thus, the court concluded that “the only evidence against him was that he was a director” of the company.
R. v. Pennecon Ltd., [1995] CanLII 5588 (NL S.C.T.D.), Dec. 8, 1995
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