Select Committee on Home Affairs and Work and Pensions First Report


6  MANAGEMENT FAILURE

123. At the core of the proposed new offence of corporate manslaughter is a failure "in the way in which any of the organisation's activities are managed or organised by its senior managers".[148] We discuss the restriction of this failure to that by senior managers in the following chapter (Chapter 7). This chapter considers the concept of "management failure" expressed in the phrase "the way in which any of the organisation's activities are managed or organised". This phrase first appeared in the Law Commission's proposals (see para 18). The Home Office describes it as:

    "an approach that focuses on the arrangements and practices for carrying out the organisation's work, rather than any immediate negligent act by an employee (or potentially someone else) causing death".[149]

124. As noted in para 13 above, the proposal to move away from the identification principle, the basis of liability under the common law offence, was welcomed by most witnesses. Some, however, raised concerns about the concept of "management failure" which has replaced it. The Association of Personal Injury Lawyers, for example, believed that the draft Bill failed to clarify that "management failure" includes omissions as well as actions:

    "APIL is concerned that the definition of the offence contained within section 1(1) fails to appreciate instances where "senior managers" do not "manage" or "organise" activities, which eventually leads to a death. For example, a "senior manager" who does not in any way manage or organise the appropriate health and safety precautions for his employees may be exempt in respect of the offence as currently drafted because misfeasance is covered but nonfeasance is not".[150]

125. Some witnesses did not believe that "management failure" should be the basis of the offence. They preferred different approaches based on models for attributing liability in Canadian and Australian law (see table below).[151]

In Canadian law the conduct of the company's "representatives" (which includes employees, members, agents or contractors, as well as directors and partners), rather than its management, is the first consideration when determining liability. The offence is committed if, at the same time, senior officers who have responsibility for the aspect of the organisation's activities relevant to the offence have departed from a standard of care that could have been reasonably expected in the circumstances.[152]
Under the Australian federal Criminal Code Act 1995 (Commonwealth) liability can be attributed to a corporation where it is established either that a "corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with the relevant provision", or where the corporation failed to create and maintain a corporate culture that ensured legal compliance. Corporate culture is defined in the Act as "an attitude, policy, rule, course of conduct or practice existing within the body corporate generally or in the part of the body corporate in which the relevant activities takes place." Liability can be imputed where an individual committed the unlawful act reasonably believing that an authoritative member of the corporation would have authorized or permitted the commission of the offence.[153]


126. Disaster Action, for example, preferred the concept of "corporate culture" used in the Australian Criminal Code. They wrote:

    "In the case of The Herald of Free Enterprise, it may have been difficult for the prosecution to prove, beyond any reasonable doubt, that the way in which the organisation's activities were actively organised by its senior managers caused the deaths, rather than the act of the individual boson. It would have been possible to establish, however, the existence of a corporate culture that tolerated or led to non-compliance with health and safety provision".[154]

127. We have taken the pragmatic approach that since management failure has been the basis of proposals for a statutory offence of corporate manslaughter in the UK since 1996, it is probably too late to start to consider an entirely new model, such as one based on corporate culture, for such legislation. We note that this practical view has also been taken by the Centre for Corporate Accountability, who told us in oral evidence:

    "What you have got to recognise is the way this debate has developed in Britain. In 1994 the Law Commission came out with its First Report and then in 1996 was the key Law Commission Report which proposed a new offence of corporate killing and the concept of management failure was inherent in that particular Law Commission Bill. The Government in 2000 then supported that Law Commission Bill. Our view is that there are alternative ways of creating a new offence. In Australia the concept of "corporate culture" is used, in America a vicarious liability with a due diligence test is used. These are all perfectly possible tests that could apply but we are a practical organisation and clearly we had to engage with what was the offence that was really being discussed at the heart of Government and that was the offence which had the concept of management failure. Therefore, we have been looking at that offence, looking at management failure".[155]

128. We also believe that merely adopting models from other jurisdictions, with entirely different legal regimes, would be fraught with difficulties. We note that only one jurisdiction in Australia, its smallest jurisdiction, the Australian Capital Territory, has actually incorporated identical provisions to the Australian Code.

129. However, while we do not believe that the concept of management failure should be abandoned, we believe that one option the Government should consider when deciding how to overcome the problems of the senior manager test (see Chapter 7 below) is whether the draft Bill might benefit from introducing the concept of "corporate culture" in addition to that of management failure as a factor that juries should be permitted to consider when determining whether there has been a gross management failure. We believe it should. This is discussed further in Chapter 9.


148   Home Office, Corporate Manslaughter: The Government's Draft Bill for Reform, Cm 6497, March 2005, clause 1(1) Back

149   Draft Corporate Manslaughter Bill, para 14 Back

150   Volume II, Ev 244 Back

151   Volume II, Ev 10 and 69 Back

152   The relevant section of the Canadian Criminal Code reads: "In respect of an offence that requires the prosecution to prove negligence, an organization is a party to the offence if

(a) acting within the scope of their authority

(i) one of its representatives is a party to the offence, or

(ii) two or more of its representatives engage in conduct, whether by act or omission, such that, if it had been the conduct of only one representative, that representative would have been a party to the offence; and

(b) the senior officer who is responsible for the aspect of the organization's activities that is relevant to the offence departs - or the senior officers, collectively, depart - markedly from the standard of care that, in the circumstances, could reasonably be expected to prevent a representative of the organization from being a party to the offence."

Canadian Criminal Code Act, Section 22.1 Back

153   Australian Criminal Code Act 1995, Section 12 Back

154   Volume II, Ev 69 Back

155   Volume III, Q 55 [Mr Bergman] Back


 
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Prepared 20 December 2005