House of Commons - Home Affairs

Select Committee on Home Affairs Written Evidence

131. Memorandum submitted by Roy Thornley

INTRODUCTION

1. The core objective of a reformulation of the law on corporate manslaughter by criminal negligence is the creation of an effective vehicle to prosecute companies that fail to protect individuals from the risk of harm as a result of corporate activity.

2. The collapse of criminal trials against large organisations for causing death by gross negligence is evidence that present corporate manslaughter law has proven ineffective against large organisations. The only law that offers any consolation to those who seek justice for corporate manslaughter committed by such organisations is the Health and Safety at Work etc Act 1974. This robust piece of legislation achieves success against companies of whatever size and complexity where the common law has failed.

3. Companies convicted on indictment for offences against the Health and Safety at Work etc Act 1974 are subject to an unlimited financial penalty. And in terms of the new proposals, no matter the simplicity or complexity of its construction and/or the technical difficulties that will surely ensue during the prosecutorial process, the sanction for the offence remains the only sanction available against an organisation, namely an unlimited fine.

4. Thus if objectives are to be achieved, any new legal remedy must be constructed with clarity and in terms that enables corporations to understand conduct that will constitute criminal liability and one that allows the prosecution to pursue a case without unnecessary complicating factors. It must also reflect the seriousness by which many sectors of society view health and safety issues and take into account the State's legal duty to protect people against risks to their lives.

5. The Health and Safety at Work etc Act 1974 already imposes a duty requirement on an employer to ensure the health, safety and welfare of employees and a similar duty towards other persons. It is not an absolute liability, but the statutory defence is limited to proving that the accused company, given the circumstances and facts of the case, had done all that was reasonably practicable. It is a defence that is hard to prove, as in nearly all cases there is likely to have been something else that could have been done to prevent the particular harm from occurring.

6. It is believed that a new legal remedy should complement the provisions of the Health and Safety at Work etc Act 1974 and in consequence will be as equally severe. Prosecution has positive values. First, it serves to encourage the directing minds to take the steps necessary to ensure that dangers do not arise, or are quickly detected and corrected if they do. Secondly, it serves to deter others from pursuing a poor standard of health and safety management.

7. Presently the largest single barrier to the conviction of a large organisation for corporate manslaughter by gross negligence is the principle of identification. New law will see this requirement removed. However, it is argued that the Government proposal to create a new offence of corporate manslaughter includes an element, namely the provision to prove that a duty of care is owed by the defendant towards the victim that is considered unnecessary and inconsistent with current health and safety legislation. Secondly, the use of the term, "management failure" has the potential to cause difficulties of interpretation when prosecuting the offence. It is submitted that these difficulties may be overcome as follows:

Duty of Care

8. Under the provisions of the Health and Safety at Work etc Act 1974, individual and corporate employers are bound by a duty imposed by law to do all that is reasonably practicable to ensure the health and safety of employees and other persons. It is a duty that cannot be delegated and a liability that cannot be voided on the basis that the company at senior management had taken all reasonable steps to discharge its duty (R v British Steel Plc [1995] 1 WLR 1356). It is a duty generally satisfied through the provision of competent and qualified staff, working in a safe environment with adequate tools and material and the creation, implementation, and enforcement of safe systems of work.

9. It is suggested that new law should harmonise with existing health and safety legislation. Thus the proposal to create a new offence of corporate manslaughter should acknowledge the duty principle and impose on corporate employers a statutory duty of care towards employees and other persons whose health and safety may be affected by the organisation's activities.

10. No prosecution against an organisation for an alleged gross negligent act or omission against an individual has failed on the basis that the organisation in question did not owe a duty of care towards the victim.

Management Failure

11. It is submitted that the term, "management failure" and the interpretations applied thereto will be the subject of constant judicial debate, in similar terms to that which now exists in cases where identification of a person of real responsibility (controlling mind) sufficient to bind the company, is an issue.

A problem perceived

12. Government proposals centre on the conduct of senior managers to efficiently and effectively manage and organise their business activities in such a way that the lives of people who may be affected by their services are not unnecessarily put at risk.

13. A problem perceived arises with the interpretation of management, within the term, "management failure". It is wholly accepted that in any organisation that delegation of responsibility is a necessary and accepted practice. Under the terms of the new proposals it would appear that a company will not be convicted of corporate manslaughter unless the person(s) to whom the authority is delegated has the discretion of independent control in the conduct of some of the company's affairs. The question is how far down the corporate ladder will the law allow, before corporate identity is lost and the organisation is no longer considered culpable?

Corporate Identity

14. It is suggested that whilst corporate labelling of employees as "director" or "senior manager" may define an employee's status in a company's management structure; it does not necessarily follow that those who are so described have the amount of control that their title may suggest. The individual may merely have a certain amount of managerial discretion working to the directives of the main board of directors. He may input ideas to assist formulating company strategic policy by submission of reports, but may have no say whatsoever as to whether any recommendations made will be acted upon. It is conceivable that in a large company, a finance director may restrict company expenditure on recruitment. This may prevent the head of human resources from engaging the most qualified and experienced person to fill an important role in the company. In consequence, the operations director may have to complete a task with fewer staff than is safe. The regional director is probably thus only able to do the best he can, working to boardroom directives that he has no overriding authority to change.

15. The difficulties of determining who represents the controlling minds of companies have been debated in the courts for many years. The following cases emphasise these difficulties and are listed chronologically.

16. Viscount Haldane in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd said: [199]

". . . its acting and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and the centre of the personality of the corporation."

17. Denning LJ in H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd said: [200]

". . . Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such."

18. Lord Reid in Tesco Supermarkets Ltd v Nattrass[201] said:

"It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent . . . If the principal has taken all reasonable precautions in the selection and training of servants to perform supervisory duties and has laid down an effective system of supervision and used due diligence to see that it is observed, he is entitled to rely upon a default by a superior servant in his supervisory duties . . ."

19. Turner J in P & O European Ferries (Dover) Ltd referred to management decision processes as follows: [202]

"Normally the board of directors, the managing director and perhaps other superior officers of a company carry out the functions of management and speak and act as the company. Their subordinates do not. They carry out orders from above and it can make no difference that they are given some measure of discretion. But the board of directors may delegate some part of their functions of management giving to their delegate full discretion to act independently of instructions from them. I see no difficulty in holding that they have thereby put such a delegate in their place so that within the scope of the delegation he can act as the company."

20. Hoffman L.J in El Anjou v Dollar Land Holdings PLC[203] stated that: [204]

". . . the directing mind is primarily identified by tracing the constitutionality of power under the articles . . . supplemented by a holding out of a person, or acquiescence in his exercise of controlling powers . . . different persons could be the directing mind for different purposes."

21. Rose L.J. in supporting Hoffman L.J said: [205]

". . . that the directing minds were usually the board of directors, the managing director and perhaps other superior officers who carry out the functions of management, and speak and act as the company under the articles or by authorisation of a general meeting of shareholders. However, the board could delegate its functions of overall direction—or part of them—to other persons with full discretion, so constituting those persons as directing minds . . . Particular circumstances could make non-directors the directing mind, and the directing mind could be found in different persons for different purposes."

22. Nourse L.J in Meridian Global Funds Management Asia Ltd and Securities Commission[206] said: [207]

". . . that the directing mind theory was a general principle applying to both civil and criminal cases . . . it was necessary in applying the directing mind test to identify the person who had management and control for the purposes of the particular act or omission in question in the case. In doing this the constitutional position under the articles and service contracts was highly relevant but not decisive."

23. Lord Hoffmann also in Meridian Global Funds Management Asia Ltd and Securities Commission said: [208]

". . . their Lordships would wish to guard themselves against being understood to mean that whenever a servant of a company has authority to do an act on its behalf, knowledge of that act will for all purposes be attributed to the company. It is a question of construction in each case as to whether the particular rule requires that the knowledge that an act has been done, or the state of mind with which it was done, should be attributed to the company."

24. It is against the background of these cases that the answer to the question of who is, or isn't a controlling mind and will of a company is presently determined. It is also believed that in terms of the new proposals the same arguments will apply when deciding who are the senior managers within the term "management failure". No one set of facts and circumstances can be totally similar to another, particularly when apportioning degrees of negligence by individuals within a large organisation. Thus apportioning blame in the largest of organisations such as the oil companies will be as difficult under the new law as it has proved to be under present law.

25. If the term "management failure" remains, there is a fear that corporate employers could avoid liability for death caused by corporate activity, by arguing that other persons, who cannot be identified as senior managers of the company, caused the death.

26. The result will be corporate manslaughter law that remains inadequate to prosecute large and complex organisations for corporate manslaughter by gross negligence.

RECOMMENDED ALTERNATIVE

27. It is believed that removal of the term "management failure" from the definition and replacing it with the term "corporate criminal negligence" will alleviate the problem identified.

28. In order to reflect the above observations I invite your consideration of changing the wording of the Government's proposal as follows:

The Offence

29. An organisation to which this section applies is guilty of the offence of corporate manslaughter, if the organisation by corporate criminal negligence caused death to another person.

30. Corporate criminal negligence will be proved when the conduct of the corporation, either through act(s), or omission(s) fails to comply with a duty imposed by law, is a significant cause of death.

31. Corporate criminal negligence will occur when the organisation, through the acts, or omissions of its employees (as a collective entity), fails in its legal duty to ensure the health and safety of persons in such a manner that shows a wanton and reckless disregard for the lives and safety of other persons.

32. The act or omissions being performed within the scope of their employment and to which the organisation derives some benefit.

33. The burden of proving that the corporation did all that they could to prevent the fatality rests on the defence.

34. The burden of proof that the organisation did not owe a legal duty to the deceased rests on the defence.

Derives some benefit (see 32 above.)

35. It is believed that difficulties may arise by using the word "profit" in the definition of gross breach. See 3(2)(b)(iii) of the Bill. There is no guidance to say how this word should be interpreted. Consequently it may lead to a general assumption that in order to find an organisation guilty of the new offence, evidence will be required to show that a financial profit was achieved as a result of a failure to comply with regulations or guidance.

36. Using the phrase "derives some benefit", allows for flexibility when determining the criminal liability of an organisation for the illegal acts of its employees. This would allow for organisations to be deemed to have received a benefit, if the acts or omissions of employees was intended to benefit the corporation, or the corporation received an incidental benefit from an employee's conduct. The conduct may arise through either individual or collective acts or omissions. This accords with the rules of general corporate criminal liability within the jurisdiction of the United States of America. [209]

Jurisdiction

37. Large organisations increasingly look to the wider global market to achieve greater profitability. Potential markets will vary widely, depending on the type of industry; some may operate in the poorest of countries. It is likely that the requirements of some countries will not be so demanding of robust health and safety standards as our own. In consequence, policy makers of British companies, operating on foreign shores but working from headquarters in England and Wales, may decide corporate policy that denies, to a gross negligent degree, the level of safety to which employees and others would be entitled under English and Welsh health and safety legislation.

38. Accordingly, I believe that the offence should include organisations whose gross negligent decisions made from headquarters in England or Wales contributed significantly to a death abroad.

Scope of the Offence—Exclusions

39. It is appreciated that there will be many divergent views, when considering the organisations that should be exempt from the new corporate offence. However, it is surely agreed that there must be very extenuating circumstances, if the Government are to excuse an organisation from criminal accountability for allegedly causing death by gross negligence.

40. Few people would disagree that justice requires that corporations be punished where death or serious injury results, where the conduct of the corporation has been seriously blameworthy in the circumstances. This is the notion of retribution—the vindication of the victim(s) in recognition of the violation of their rights.

41. The public are unlikely to understand why, for example, organisations responsible for police or prison custody of persons, should not be the subject of a rigorous criminal inquiry, in circumstances when it is alleged that organisational gross negligent conduct contributed significantly to the death. A similar argument could apply to the armed forces and to Crown bodies.

42. Accordingly, it is suggested that organisations, as employers, who are already subject to a duty imposed by law, under the Health and Safety at Work etc Act 1974, should also become accountable under the new corporate manslaughter proposals.

43. Public inquests and independent reports, generally work to agreed terms of reference. However, organisations subject to scrutiny by such enquiring bodies are unlikely to have their accountability tested in a criminal court. This appears an inadequate alternative to examination of a corporation's conduct in the criminal courts. It does not allow for the objective assessment of a jury, who given the facts and circumstances of the case, may find the corporation's conduct criminal and demanding of punishment.

23 August 2005