In some jurisdictions, due diligence excluded as a defence for AMPs
The use of administrative monetary penalties (AMPs) as a means of enforcing occupational health and safety (OHS) obligations, through a simplified process authorizing statutorily-imposed penalties against employers and other workplace parties, is growing in Canada. A recent penalty in Nova Scotia demonstrates just how high OHS-related AMPs can reach for a near miss, where no accident or injury has even occurred.
On July 12, ExxonMobil Canada was issued a $40,000 AMP by the body with jurisdiction in this sector: the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB). This significant penalty was issued following an incident last November, in which five workers on a drilling rig were almost struck and injured by a chain with swivel and shackle, weighing over 100 kilograms, which fell nearly 18 metres during a lifting operation offshore.
ExxonMobil was found to have failed to comply with section 25(a) of the Nova Scotia Offshore Petroleum Drilling and Production Regulations by failing to both maintain and operate equipment in a way that would have avoided the incident. An inspection revealed that the chain was not correctly fastened with the appropriate equipment, and certain equipment showed signs of corrosion and improper installation, leading to the near miss in question. Significant efforts to develop and implement corrective action were reportedly taken post-incident.
In Nova Scotia, AMPs can be imposed under Workplace Health and Safety Regulations pursuant to the Nova Scotia Occupational Health and Safety Act, in which case the maximum penalty for a third violation is set at $3000. This penalty can be imposed for each day of the contravention. These AMPs are subject to review or appeal.
Pursuant to a series of accords and regulations the offshore oil and gas industry is subject to separate, more onerous AMP regulations under which each of the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) as well as the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) may impose much higher AMPs than those imposed under the N.S. OHSA. In this system the board calculates an appropriate penalty beginning with a baseline penalty that is potentially increased or decreased by virtue of different criteria with corresponding gravity values. Examples of criteria which can mitigate the size of a Board- imposed AMP include promptly reporting the incident and attempts to mitigate the effects of a violation. Aggravating factors include previous violations, and suggestions of behaviour approaching negligence. These criteria are laid out in section 4 of the Canada-Nova Scotia Offshore Petroleum Administrative Monetary Penalties Regulations. A separate penalty amount can be issued for each day that a company is found to allow a violation to continue. Certain aggravating gravity values, as they are called, can potentially increase a board-imposed AMP for a corporation in the offshore oil and gas sector to a maximum of $100,000 per day.
These AMPs are also subject to independent review where requested by the recipient. However, it is important to note that the recipient of the penalty cannot defend against the penalty by establishing that due diligence was exercised to prevent a violation or that the recipient reasonably and honestly believed in the existence of facts that, if true, would exonerate the recipient. This is because the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (the statute under which the Regulations were enacted) specifically excludes due diligence as a defence. That act also provides for possible prosecution, where due diligence is specifically included as a defence.
Current use of AMPs across Canada
AMPs are proliferating as an OHS enforcement mechanism in Canada to encourage compliance with OHS regulatory requirements. Many Canadian jurisdictions continue to rely solely on OHS prosecutions as a means of enforcement of obligations, but AMPs are distinct penalties that have grown in use as additional or alternative means of enforcement, particularly in British Columbia. They are now commonly used in Nova Scotia, Manitoba, Alberta and the Yukon. They can be issued to various workplace parties, including employers, prime contractors, engineers, architects, supervisors, workers and OHS consultants (who the Nova Scotia government considers to be amongst the “workplace parties”). Employers are the principal recipients of AMPs.
The Canada Labour Code Part II governing the health and safety of federally regulated employers, was amended in June of 2017 to include the use of AMPs as a new enforcement mechanism for federal OHS officers. The use of such penalties under the Canada Labour Code has not yet been implemented, but a date these come into force is expected to be announced shortly.
An AMP in most jurisdictions simply requires that an OHS inspector (the same inspector auditing for compliance) gather proof of the alleged contravention and, at his or her discretion, serve a notice of penalty on the person or corporation. However, under some regimes the officer provides evidence of the contravention to a health and safety tribunal, workers’ compensation tribunal or the director of a government safety and health branch who determines if a penalty will be issued.
An AMP is very different from an OHS prosecution, which requires a court hearing or process where a prosecutor must establish that the alleged offence is proven beyond a reasonable doubt, and where a conviction and penalty can potentially be avoided through establishing the employer or other party’s reasonable care or due diligence.
It is worth a brief mention that in several Canadian jurisdictions providing for statutorily-imposed AMP’s, a due diligence defence is not expressly available on review or an appeal to seek to reverse or mitigate a significant AMP. In some, it is specifically excluded as a defence. Examples of where no due diligence defence is available include the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (as noted above) and the Canada Labour Code, when its OHS AMP penalty system comes into force. The majority of provinces permit an appeal or review process where one factor considered will be an individual or organization’s due diligence, assessed through the application of developed criteria tending to show the taking all appropriate or reasonable steps to avoid contravening the OHS provision in question. Lastly, under virtually all Canadian OHS systems permitting AMPs, where an AMP has been issued, OHS prosecution for the same matter will prohibited against the employer or other workplace party.
Caroline Spindler co-wrote this article. She is an associate in the Halifax office of Mathews Dinsdale & Clark. Spindler practices in all areas of workplace law, advising and representing employers on issues involving discipline and discharge, wrongful dismissal actions, grievance arbitration, human rights and workers’ compensation matters. She can be reached at [email protected]or (902) 334-0438.