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In a recent Supreme Court of Canada decision, the court rejected a corporation’s constitutional challenge, in which it alleged that a legislative mandatory minimum fine constituted “cruel and unusual punishment”.

Corporation Challenges Mandatory Minimum Fine

A Quebec corporation had been found guilty of carrying out construction work as a contractor without holding a current license for that purpose, which constituted an offence under s. 46 of the Building Act.

As a result, the corporation was subject to a mandatory minimum fine pursuant to s. 197.1 of the Building Act and was fined $30,843.

The corporation challenged the constitutionality of the mandatory minimum fine in s. 197.1 of the Building Act on the basis that it offended its right to be protected against cruel and unusual treatment or punishment under s. 12 of the Canadian Charter of Rights and Freedoms (the “Charter”). Section 12 of the Charter states:

12. Everyone has the right not to be subjected to any cruel and unusual treatment or punishment.

In response to its constitutional challenge, the Court of Québec dismissed the corporation’s claim, concluding that expanding the protection of rights intrinsically linked to individuals to include corporate rights would trivialize the protection granted by s. 12 of the Charter. In any event, the court held that the minimum corporate fine at issue was far from being cruel and unusual and instead represented the norm in penal regulatory law. The corporation appealed the decision.

Subsequently, the Quebec Superior Court held that corporations were not covered by s. 12, instead finding that its purpose was the protection of human dignity, a notion clearly meant exclusively for “natural persons”. The corporation appealed.

On appeal, the majority at the Quebec Court of Appeal allowed the appeal and held that s. 12 could apply to corporations. It found that s. 12’s association with human dignity did not prevent its application to corporations, since other Charter rights which also protect human dignity — ss. 8 and 11(b) of the Charter — have been held to apply to corporations. Rather than looking at the purpose of the provision, it adopted a “tangible benefit” approach, focusing on whether a corporation could theoretically benefit from the Charter protection in question: “a corporation’s ability to derive a tangible benefit from it”. This resulted in the court’s conclusion that since corporations could face cruel treatment or punishment through harsh or severe fines, s. 12 could apply to them. However, the dissenting judge was of the view that s. 12 is concerned with human dignity, a concept inapplicable to corporations, stating: “[i]t would completely distort the ordinary meaning of the words . . . to say that it is possible to be cruel to a corporate entity”.

The Attorney General of Quebec and Director of Criminal and Penal Prosecutions appealed the Quebec Court of Appeal’s decision to the Supreme Court of Canada.

Supreme Court of Canada Rules Against Corporation’s Claim

The Supreme Court of Canada unanimously held that s. 12 of the Charter does not apply to corporations. With regard to the proper approach to the question, the majority of the court stated:

“To claim protection under the Charter, a corporation – indeed, any claimant – must establish that “it has an interest falling within the scope of the guarantee, and one which accords with the purpose of that provision” […] In order to make that determination, the court must seek to discern the scope and purpose of the right by way of a purposive interpretation, that is, “by reference to the character and the larger objects of the Charter itself, to the language chosen to articulate the specific right or freedom, to the historical origins of the concepts enshrined, and where applicable, to the meaning and purpose of the other specific rights and freedoms with which it is associated within the text of the Charter” […]. The approach is “generous, purposive and contextual” and should be done in a “large and liberal manner”.”

The majority of the court ultimately found that s. 12 of the Charter does not protect corporations from cruel and unusual treatment or punishment because the phrase “cruel and unusual” denotes protection that only human beings can enjoy. It reviewed prior case law on s. 12 and found that it was marked by the concept of human dignity, and the existence of human beings behind the corporate veil is insufficient to ground a s. 12 claim of right on behalf of a corporate entity, in light of the corporation’s separate legal personality.

The court, therefore, held that the protective scope of s. 12 is limited to human beings. As a result, the appeal was allowed and the corporation’s claim was dismissed.

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The business law team at Bader Law has decades of experience in helping businesses grow and expand. We are thorough, efficient, and focused on delivering the best possible outcome for every single client. Contact us online or at (289) 652-9092 to discuss your matter with a member of our team.