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]
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| 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]
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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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