• Walkerton Case
o 7 deaths, 2300 ill
o Failure in risk management
o Regulatory failure failure to identify and manage risks associated with that
o Failure to enact a notification regulation. Protocol was set out in a guideline
rather than a legally binding regulation
o Government didn’t regulate private environmental laboratories (115)
o Important timeline was given to take 23 years but took 2 months instead
o Several warning sings but no action was taken to prevent it from happening.
o Government had a distaste for regulation
o LESSONS: (1) Privatizations should be accompanied by appropriate
regulations in some fields. Government should not leave the field but rather
become a referee instead of a player. (2) more defence should be paid to the
scientific experts. When human life is at stake expert risk analysis should
o Precautionary principle:
Tackles problem of absence of scientific certainty in certain areas of
risk and directs that this absence should not bar the risk taking of
precautionary measures in the face of possible irreversible harm.
Multibarrier approach = multiple failsafes
Walkerton showed that where public safety is at risk , the
precautionary principle resists devolution of the regulatory function to
Should apply to areas of scientific uncertainty
Case: 114957 Canada Ltée v. Hudson (town) (116.1)
• Rescricted used of pesticides as preventative action –
respecting precautionary principle.
• Foundations of the regulatory state
o Surrender of power to the commonwealth permitted the sovereign State to
pass laws for the protections of its subjects
o By virtue of deciding to enter the regulated field, the regulated person can be
taken to have accepted certain terms of entry.
o Precursor was laws dealing with public protection from ex. Adulterated or
o # of regulated offences during Industrial Revolution (Cory J. 13)
o Enacted to protect the unfavourable kids, and men & women who worked
long hours. Designed for those unable to protect themselves (13)
o FIRST regulate environment & people NEXT regulates products THEN
discharge from manufacturing process
o Cover every aspect of modern society from health & safety to equality and
social policy. 2
o Consolidated in 1960s70s , and entrenched by the 1980s
o Trudeau promoted a just society based on equal opportunities for all
canadians regardless of (1) economic region in which they lived, (2) language
o In 1980 average of 20,000 regulatory offences per province and in 1983,
97,000 federal regulatory offences. Reform Commission of Canada
concluded that regulatory offences were the premier instrument used for
o Instead of becoming a unified leviathan or omnipotent Big Brother, the
regulatory State was an extremely diverse and sometimes ineffective network
of values, processes, and accountabilities.
• Ontario Ministry of Environment (17)
o Regulatory body that: details prohibition on discharge of deleterious and
o Trudeau established extensive regulatory structure to curb, control and abate
o Case: Love Canal: people recognized that toxic chemicals had to be managed
and controlled according to acceptable levels of risk
• Diminished privacy expectations of regulated persons:
o Generally accepted that activities are regulated to ensure individual’s self
interest is compatible with the community’s interest in the actualizations of
• Listeriosis outbreak 2008 – maple leaf (116.2 to .3)
o Lack of regulatory requirement to report positive listeria tests
o Repeatedly saw warning signs but didn’t act because they weren’t required to
share the information
• Provincial commissions of capital markets govern current regulations.
• Disinterested Audit (15)
o Introduced by James Landis “prophet of regulation” in 1930
o Established profession of independent accountant
o Required for public companies
• Enron Scandal (15)
o Accounting diversified into financial consulting – caused conflicts in view of
o Can the auditing arm of an accounting firm have true independence when the
same firm is making profit from providing services to the same client.
o Ontario Securities commission uses its power to prevent this from happening
• Doubleedged sword of regulations
o The precision set out in regulatory standards was (1) welcome guidance (2)
but also created rigidity
• Deregulating risk
o Privatization recognized that government need not engage in vertical and
o Private sector failed in the level of its scientific knowledge when compared to
the cumulative knowledge of the government scientists. 3
o Case: Mad Cow: (18 to 9)
Regulations suggested but Margaret Thatcher liked governance by
Regulations on food wouldn’t make it obvious that it was meant to
protect human life.
o Stephen Breyer – leading thinker (19)
Worked to deregulate the airline industry
Book, Breaking the Vicious Circle on effective risk regulation
Economic regulation created because of market depression
Believed that regulation could bring a new scientific order
Case: Airline Industry (110)
• Proved that regulations would have a hard time replicating
• Had to be a balance between nonprofitable (dog) and good
• The end result of regulatory control over the choice between
dogs and plums has higher prices.
• LESSONS: (1) regulations ought to focus on areas where
there is real scientific basis for their validity. (2) different
sectors reflect different values
o Globalization forced deregulations in some industrial sectors but at the same
time expanded regulations occurred in “framework” sectors such as
o In 1970s – environment movement gravitated toward a coercive model
o 1991 the first corporate officer in Ontario was sentenced to a jail term for the
disposal of hazardous waste without regulatory approval.
o Deregulation in 1990 reversed this.
o Lilico argued that regulation created complacency and an unrealistic sense
that markets could not fail (113)
o Authors’ point of view : scientific principles should play a pivotal role when
values at stake are human life and health. Science should always inform the
political and judicial debate. Deregulation in economic sectors does not and
should not require the abandonment of social regulation.
• Risk assessment is a scientific assessment of true risk. Is central to the working
• Risk management is the process of weighing policy alternatives in light of the results
of risk assessment and selecting appropriate control options including regulatory
1. Scientific assessment of risk is converted into codified laws or regulations
2. Once law is codified, risk management choices will continue to present
3. Dissemination and interpretation of policy decisions
• Authors’ POV: Courts primarily engage in risk communication and interpretation
through the enforcement of regulatory offences and judicial review. 4
• NASNRC Model/ Steps of Risk Assessment
1. Identify the potential hazard
2. Draw a dose/response curve
3. Estimate amount of human exposure
4. Categorize the result (bottom line)
• Case: R v. Edmonton (City) (119)
o Principles of risk management applied in environmental context
o PCBs released from overhead stadium lighting.
o Risk was assessed found that it was required for the Crown to call expert
evidence whether the chemical could cause adverse effect on the environment
and health & safety.
o Court concluded that there was no probability of an adverse effect on human
• Breyer says: Public and expert perception of risk assessment is very different
(knowledge gap). Ex. Toronto air pollution – carcinogens
o Leads to expenditure of valuable public resources in the wrong order of
• Difficulties in perception of risk assessment in daily life. (123)
1. If risk can me deferred, seems less certain when its actually the same risk.
2. Framing of the proposition can fool people. – Generally people will take risks
of positive gains but cautious of risk for negative gains even though the odds
at the same.
• AUTHORS’ THESIS: differential levels of deference to experts should be accorded
depending on the nature of the rights protected.
• Competition Act:
o A retailer who sells a product at a ‘bargain’ price must ensure that there are
reasonable quantities of that product. – involves risk assessment concerning
the prediction of consumer behaviour and available supply. (127)
o Introduced per se criminal offences for hardcore cartel behaviour including
• AUTHORS’ POV: More not less, reliance on good science and risk assessment.
• AUTHORS’ POV: crossdisciplinary comparison of risk management techniques is
• Essential elements of forwardlooking risk management: (128)
1. Time Horizon: period for exposure to risk?
2. Scenarios how will future event affect the value of investment?
3. Risk Measure: unit used to gauge risk?
a. Regulatory risk management requires methodology that prioritizes
different types of risk and permits a calculation on which a plan of
action can be based.
b. Benefit of using money: can be bridged across many fields and can
act as a common measurement.
4. Benchmarks: points of comparison?
• Case: Ford Pinto Case (129) 5
o Compared cost of increased safety to human harm/death.
• Risk assessment is only as effective as the extent of disclosure to consumers of all of
• Problem with using money as a currency is that there are incentives to turn fair
market into game theory.
• Some experts argue that the value of a human life is less than $5 million.
• Enterprise Risk Management (133)
o Applies risk management to the entire enterprise in a consistent manner that
avoids duplication and enhances efficiency
o COSO’S Framework
• Sets tone and provides basis for how risk is viewed and
addressed by an entity’s people.
• ensures that management has in place a process to set
objectives and that the chosen objectives support and align
with the entity’s mission and risk appetite.
• Identifies events that may effect the organization.
• Selects a set of actions to align risks with the entity’s risk
tolerances and appetite
• Development of policies and procedures
Information and communication
• Communication about risk is essential between many
• Entire entity is monitored and modifications made as
o Will become important for a firm that is outsourcing.
• Codification of Risk
o Five properties of harm
1. Invisible harms
• Harms may be missed because they seem invisible but cross
referencing with an outside source to make it visible. Ex.
2. Conscious opponents
• Having a brain behind the harm. Wanting to cause harm
3. Catastrophic harms
• Rare events with serious consequences. Not outside
4. Harms in equilibrium 6
• Imbalance that may be created due to an imbalance that may
be created in a competitive industry from varying levels of
5. Performance enhancing risks
• Departments responsible for compliance within an
organization must have credibility if the organization is to
resists performance enhancing risks.
• AUTHORS’ POV: the reduction of performance enhancing
risks related directly to compensation.
o Public opinion will be a prime motivator in the formulation of regulations in
accordance with democratic accountability.
• As electoral periods end , there tends to be a ‘lag’ between public
opinion and the enactment of regulation on any given issue.
o Impaired driving with a blood alcohol level ‘over 80’ os a criminal offence
not regulatory because of its serious threat to human life cause by impaired
driving, reflecting the risk assessment by the legislature.
• The consequences of conviction are more serious that an equivalent
regulatory offence but the defences are more restricted than in a
o Professor Scott argues that tort law is backward looking. Tort addresses
accidents – cant prove causation.
• Risk management and enforcement of regulations
o Risk management does not end with the mere passage of a regulation
prohibiting certain conduct.
o Environmental racism
• Deadly toxic waste sites are more likely to be found near First
Nations communities or communities of poorer people, people of
color or politically marginalized people.
• Risk interpretation (third aspect of risk management 143)
o Every time a court sentences an offender for violating a regulatory statute, the
court performs the role of communication of the risk of noncompliance.
o Assessment of the actus reus involves scientific evidence – combines the
central elements of risk assessment and management over time.
o Assessment of due diligence by way of defence incorporates industry
standards, technological standards, and choices about the management risks.
o The court of appeal of Ontario has ruled that the failure to remediate a
commercial site up to a pristine condition and beyond the regulators’ own
guidelines would cause a residual loss of value.
• Suggested approach toward judicial risk assessment and management
o A court should determine where there is a system in risk assessment and risk
management in place.
o A court should assess whether the risk system that is in place, integrates risk
assessment, management and communication.
o Does the risk system respect quality? 7
o A court in evaluating a given risk management scheme should ask whether it
recognizes scientific expertise in accordance with human values and
priorities. If the risk is to human life or health, a greater deference should be
accorder to scientific priorities.
• New riskbased regulatory approach
o AUTHORS POV: Argues that risk management techniques are central to the
new regulatory State.
• The codification of risk in regulations reflects riskassessment whereas due diligence
reflects risk management
• AUTHORS’ POV: argue that human need priorities are also a guide on choosing
which type of rule or principle will be appropriate. Where human life or safety are at
stake, ex ante rules may apply.
• AUTHORS’ POV: argue that there is precedent for the use of ex ante prior approval
to protect human life. Reference to human health and safety is not restricted to life
• AUTHORS’ POV: prevention of catastrophic harms justifies an ex ante approach.
Risk management that respects the value of human health suggests that the ex ante
model in areas such as food safety is the superior model.
• AUTHORS’ POV: argue that (1) governments and regulators ought to focus on
prevention of harm and the serving of human needs in order of their priority. (2) the
regulatory state should offer multiple models that reflect the different needs and
interests at stake within both the ex ante and the ex post world.
• AUTHORS’ POV: argue that a dual track dichotomy lacks flexibility and should be
replaced with a multiple models approach. Ex. The middle ground of a strict liability
offence in the area of misleading advertising has been eliminated. Authors’ think: it’s
a historical mistake because strict liability offers many advantages as a halfway
house between criminal and civil tracks.
• Ex Ante Rules
o Control of obscenity material accomplished by a system of prior restraint.
o Tries to prevent harm from occurring in the first place.
Uses a rational principled approach towards an issue in advance.
AUTHORS’ POV : Ex ante systems such as prior authorization of
search warrants play a vital part of our legal system.
Case: 911 Calgary – Toronto
• Illustrates need for regulation in those sectors that impact
human health and safety.
Uses a rational approach towards and issue in advance.
There is precedent for the use of ex ante prior approval to protect
Better suited to regulated actions that are simple. Stable and do not
involve huge economic interests.
Rules used to regulate economic decisionmaking. 8
Blunt ‘one size fits all’ (22.2)
Not well suited to areas where technological change moves rapidly, as
the prior approval may lag behind the technological progress.
Rules may suffer from being either overinclusive or underinclusive
due to the static nature of the legislative process.
o A rule entails an advance determination of what conduct is permissible,
leaving only factual issues to be determined by the frontline regulator or
o Economists says that rules are more likely to be found in areas where the
sanction is simple damages or where transaction costs are low.
• Ex Post Principles
o Tendency to create dual tracks that separate intentional and serious crimes
from civil tracks.
o Regulatory offences follow a basic ex post model.
The regulation or statute sets the standard, and if one breaches the
standard, then one can be prosecuted after the fact.
o Example: Criminalization of obscenity, telecommunications industry.
o Occurs only subsequent to a violation of rules and it often triggered by a
o A principle may entail leaving both specification of what conduct is
permissible and factual issues for the frontline regulator
o Can be broad or very specific.
o Disabled persons may not have the resources to enforce their rights in an ex
o Case: Re Cartaway Resources Corp
Two securities brokers breached requirement of Act by relying on
exemption, which they weren’t entitled to.
No rules in place so the court had to nail them on general principles
o A principlebased approach is best suited to an environment that requires
o An overly specific approach would allow things to fall through the cracks.
o Each sector ultimately is enforced ex post if there is a breach of the rules or
o Advantage: Detailed and precise codes can be posted in the workplace so
that everyone either knows the standards or can consult the code when
• Balance between Ex Post and Ex Ante Systems
1. Government and regulators ought to focus on prevention of harm and the
serving of human needs in the order of their priority. Prevent harm of in the
a. Regulators should focus on fixing the big problems that cause the
most harm, by developing strategies that operate at the operational
risk level. 9
b. The application of harm theory puts a given industry into the proper
context when considering the role of regulations.
c. In terms of invisible harms, ex post would be problematic.
d. In terms of conscious opponents, ex ante could fail. Use ex post
instead ex. Use of surveillance, informants and confessions.
e. In terms of catastrophic harms, ex ante would be justified ex.
Contingency plans, and backup systems.
f. In terms of harms in equilibrium, a robust ex post enforcement of
both ex ante and ex post rules will level the field
g. In terms of performance enhancing risks, the compensation, which it
is directly related to, is ex post. (12.6)
2. The regulatory state should offer multiple models that reflect the different
needs and interests at stake within both the ex ante and ex post world.
a. AUTHORS’ THESIS: A matrix of four models should guide
regulators in different circumstances.
b. AUTHORS’ POV: Main point is that we should be governed by
principle, unshackled from historical anachronisms.
c. AUTHORS’ POV: some occupational worker protection law should
be ex ante and the reason it is not is an historical anachronism. Some
occupational law should be ex post.
1. A menu of regulatory approaches should be acknowledged and available
2. Principles should be articulated for making choices within these
3. These approaches should be applied with an alert sensitivity to subject
matter, the human needs at stake and the economics of a given case.
PARDIGM Ex Ante Ex Post
RulesBased: Most intrusive. Detailed rules in Regulation
Ex. Securities law governing
Harm related: imposing disclosure and insider
detailed technical rules in trading.
Ex. Operation of 911
emergency service as part of
Principles Based: Imposing of licensing terms General principles for
(Maximum flexibility) framed in reasonable conduct contained in
Ex. Securities brokers should
not act in a conflict of
interest with a client. 10
• Case: R vs. Pierce Fisheries case – pg 22.15
o 26 “short lobsters” out of 50,000 pounds
o no knowledge of the fact by employees
o absence of mens rea
o court viewed the offence as one that was not truly criminal with little stigma
o prosecution did not have to prove any level of knowledge
Law Reform Commission of Canada (23)
• Represented some of the best theoretical thinking about criminal law in its day.
• Was concerned about the proliferation of new offence such as misleading advertising,
which never gained entry into the Criminal code.
• Distinguishing feature of criminal law: acts forbidden by law and revolting to the
moral sentiments of society.
• LRCC’s perspective was to emphasize the importance of social reform in the
community as a primary mechanism and to use criminal law as