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We discussed that in Committee. The Government accepted that there was an argument, but felt that it was too complex to legislate with respect to unincorporated associations, or that there were not sufficient cases to warrant such a provision, because of the nature of partnerships. That creates an artificial distinction. As I recall from our previous discussions, only about a dozen cases a year were likely to fall within the ambit of the legislation.

I would feel uncomfortable if an event occurred that resulted in loss of life yet the business concerned did not fall within the ambit of the Bill merely because of the way in which it had organised itself—particularly given that a business can choose whether to incorporate itself or to operate on a different basis, such as a partnership, which we see in many fields. Taking the example of health services, GPs traditionally tend to operate as partnerships; the way that the profession has established itself may be a quirk of history. Several companies operate in the health sector, including in out-of-hours services. The Bill will catch a service provided by a company but not by a partnership, even though that is merely a function of how the business or enterprise has been organised. It is strange to have that fundamental distinction whereby one is caught and the other is not. We have addressed that fundamental problem at length and will continue to return to it. The Minister has accepted that unincorporated associations and partnerships are captured in several pieces of legislation. For example, the 1974 Act frames it in the context of the word “employers”.


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If a constituent came to me having lost a loved one and said, “Why did you choose to create this artificial distinction in the Bill? If this business had organised itself as a company, there would have been a direct remedy in terms of corporate manslaughter, but because it hasn’t there is no liability.” I would find that discussion very difficult, as we all would. That is why it is important that unincorporated associations and partnerships are brought within the scope of the Bill to provide a sense of justice and to ensure that we take the whole issue seriously and escalate its importance, while hoping that such events never occur. Depending on how the Minister responds and how the debate progresses, I will carefully consider whether to press amendment No. 1 to the vote.

Mr. Dismore: Amendment No. 1 is my amendment, but as the hon. Member for Hornchurch (James Brokenshire) has supported it, I should perhaps say a few words.

I am concerned that the original, broader, definition used, for example, in the Government’s 2000 consultation, which referred to “undertakings”, has been removed so as to exclude, in particular, partnerships and unincorporated associations. The amendment would rectify that. It has been suggested that for small businesses in this category, where prosecutions that have succeeded under the existing law are to be abolished, we would see cases brought against the named trader. As for large partnerships, it has been said that they are “low risk”, but that does not mean “no risk”. Organisations such as schools, clubs and even trade unions are outside the scope of the Bill.

In their response to the Select Committees on Human Rights and on Work and Pensions, the Government said that they would consider this further but appear to be sticking to the limited scope of the Bill as it stands. When they consulted in 2000, they accepted that to restrict the scope of the offence by excluding unincorporated bodies

Mr. Sutcliffe: I understand the importance that is attached to this issue, but my hon. Friend will be aware of the Law Commission report, which said that we must be very cautious about it. I am sure that he would not want small charitable organisations to be caught. I am committed to ensuring that we move forward, but I ask him to accept that this is a dangerous area and that if we get it wrong people could be caught by this offence who do not need to be caught.

7.15 pm

Mr. Dismore: Equally, the opposite problem, which was identified by the hon. Member for Hornchurch, is that we may not catch people who should be caught.

To avoid that risk of arbitrariness, the Government should reconsider the original definition of “undertakings”, on which they have more or less done a U-turn. The Minister sent me, as Chairman of the Human Rights Committee, a letter that tried to draw a distinction between a corporation and an unincorporated association. That is a false distinction, because the law already makes specific provision for organisations such as unions, schools and so forth. The Companies Act 1985 allows
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prosecution for other offences. Partnership law clearly sets out the legal status of partners and provides for the “comings and goings” of partners and their former, continuing or new liabilities. Some of those are very large organisations. The various education Acts clearly set out the collective duties of school governors, as a body; and a school itself can be liable through the education authority or directly, depending on its status. The law relating to trade unions permits legal action to be taken against them in civil and in criminal law, and individual officers have clear responsibilities too. All those bodies can be sued or prosecuted under existing law. That has not caused any difficulty, so why should there be difficulty in relation to corporate manslaughter?

There is no justification for this exclusion. The Human Rights Committee said that it could lead to our being in breach of article 14 of the European convention on human rights, when applied in conjunction with the right to life in article 2, because of the discrimination within the system whereby if one person was killed an offence would be committed, but if another person was killed in identical circumstances an offence would not be committed simply because one happened to be killed by a company and another by a partnership or by a trade union, school or other unincorporated association. That cannot be right.

We must have consistency in the law; otherwise—to adopt the argument about directors trying to avoid their liability—we might find all kinds of weird and wonderful organisations being set up to avoid liability by establishing themselves as something other than a company. That surely cannot be what my hon. Friend the Minister intends. While accepting his point about small charities, I hope that the Government will reconsider the definition to try to ensure that we catch all those who should be caught.

Mr. Davey: Liberal Democrat Members support the thrust of the thinking behind new clause 3. The hon. Member for Hornchurch (James Brokenshire) made the point very well in Committee. I am sure that the Minister sympathises, and he should consider its terms and at least table amendments in the other place. We also support amendment No. 1, in the name of the hon. Member for Hendon (Mr. Dismore), which seeks to achieve similar things to our amendment No. 22 and new clause 5. If I have a preference, it is for amendment No. 1.

The Government seem to be in two minds. When they issued the Home Office consultation document in 2000, they were happy that unincorporated associations and partnerships should fall within the ambit of the organisations that would be liable to the new offence. It is regrettable that they did a U-turn on that. In Committee, the Minister seemed open to the idea and did not close the door on it. If he has sympathy with the argument, he should take this opportunity to act, because such Bills do not come along every week. I am sure that he understands that, and I wish him well in his arguments in Whitehall.

The arguments that the Minister and his colleagues have used so far against including unincorporated associations and partnerships have been weak, to say the least. For example, the hon. Gentleman said in Committee that, according to the Health and Safety Executive, not many cases had arisen. Such an
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argument is frankly poor. It will not do any favours to a relative of someone who was killed as a result of gross negligence manslaughter by a partnership or unincorporated association. Relatives would not be impressed to hear that Parliament considered the matter but, because there were not many such cases, did not bother to legislate.

There is a perverse problem in that not legislating could create an incentive for companies to structure themselves as unincorporated associations and partnerships if they were trying to get out of health and safety legislation. Let us be clear: the rogue bosses, to use the Minister’s phrase when he spoke about correspondence from the CBI, will try to escape such control. They will structure themselves in order to do that. If the Minister is not careful, he will create a loophole, which the sort of companies that he mentioned will try to exploit.

The hon. Member for Hornchurch covered many other issues that I wanted to tackle, so I shall not repeat his comments. I shall simply consider a matter that I raised in Committee and that amendment No. 22 reflects. There could be small unincorporated bodies consisting, for example, of two individuals. Individual A could commit an offence of which individual B had no knowledge but was somehow found guilty through being part of the unincorporated body. I believed that there was a danger of unfairness.

On reflection, I was unwise to be so concerned because, in such a case, it is more likely that individual A would be charged with individual gross negligence manslaughter. The Director of Public Prosecutions would be unlikely to believe that it was in the public interest to prosecute individual B. The unfairness about which I was worried in Committee and led to my drafting amendment No. 22 is not such a problem. It is far more important to include unincorporated associations and partnerships in the Bill and I hope that the Minister accepts that.

Mr. Hogg: I shall be brief because I made my point in an intervention. I am largely persuaded by the comments of my hon. Friend the Member for Hornchurch (James Brokenshire) about amendment No. 1. He made a sound point.

However, I am much more troubled by new clause 3 because it is important to keep in mind that criminal liability should depend on a finding of culpability—fault. There is a serious distinction between the duties of the investing company and those of the operating company. They are not the same. For example, a land company might decide to invest in a hotel. The duties of the directors of the land company do not necessarily reach down to operating the hotel. It is not for the investor in the land company to ensure that, for example, the lifts operate or the hotel floors are kept free of grease so that people do not fall. It would be manifestly unjust to conflate the duties of the investor with those of the operating company.

However, I do not claim that there may not be circumstances in which that general principle should be displaced. I can imagine artificial constructions whereby it would be right to attach the liability of the operating company to the directors of the investing
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company. However, the new clause creates a presumption that the investing company could be liable for the failures of the operating company and I am uneasy about that. Again, for the avoidance of doubt, if I have an interest to declare, I do so because my wife is the chairman of an investing company.

Tony Lloyd: I fundamentally disagree with the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg). I understand his point—we need to avoid the unintentional consequence. However, it would be undesirable to create a presumption that it was possible to escape the impact of the law by erecting specific corporate structures. The creation of holding companies to avoid liability would make nonsense of what we are trying to achieve.

There is an increasing trend of international holdings companies—almost asset holding companies—coming to this country where we have, in many ways rightly, an open economy, buying into a company and taking little interest in it except for driving tough bargains on corporate objectives. The corporate objective is to maximise the return on assets in the quickest possible time. One of the problems almost exactly reflects what my hon. Friend the Minister read to us earlier when we considered P&O and the Herald of Free Enterprise. No hon. Member wants to create a structure whereby companies can avoid liability unintentionally—or even intentionally—while driving a tough bargain that goes against the safety case.

We must consider the logic of the case, even if the new clause is not correctly structured. We should also do that with amendment No. 1 and the debate about unincorporated and incorporated structures. I hope that the Minister will make it clear from the Dispatch Box that the Government remain seized of the matter. It is important to be reassured that it can be taken forward between here and another place and that amendments will be made to plug possible gaps, which the Government do not intend and no hon. Member wants.

Mr. Carmichael: I shall not detain the House long because I do not depart from what others have said. However, given that I tabled amendment No. 27, I should like to make a few comments about it. The wording is not original but comes from the Law Society of Scotland. I always have one eye on the fact that I may require its co-operation again in earning a living at some stage in future, and I therefore like to be helpful to it.

The point of the hon. Member for Hornchurch (James Brokenshire) about constituents coming to a surgery and asking why their husbands, sons, daughters and so on cannot have the satisfaction of a prosecution of their case strikes at the heart of the matter. Earlier, the Minister spoke at length about the purpose of the Bill. Surely we do not want its purpose to be defeated by a fairly artificial distinction.

Although the distinction is artificial, it is also real. Under Scots law, the constitution of a partnership has a separate legal personality, distinct from the individual partners who comprise the partnership. In the dim and distant past, I prosecuted several health and safety cases and the distinction is especially important in sectors in which small and medium-sized enterprises
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predominate. That applies especially to construction, agriculture and sometimes the fishing industry. All those sectors operate predominantly through partnerships, if not sole traders. The small and medium-sized enterprise sector does not excel in its regard for health and safety law.

Ann McKechin: Does the hon. Gentleman agree that the Scotland Act 1998 specifically provides for the term “business association”? It declares that aspects of regulation and control are specifically reserved to Westminster, and it would therefore be more than appropriate for them to be covered by he Bill.

Mr. Carmichael: I am grateful to the hon. Lady because when the Law Society of Scotland first provided me with amendment No. 27, I queried its choice of the term “a business association”. Its understanding was the same as the hon. Lady’s and, having checked, I believe that the term is perfectly proper and places the matter clearly within the Chamber’s competence.

I make only one further point, about evasion. We heard at some length in the earlier debate about the remedies that are available to people who have operated as directors of limited companies and other incorporated bodies under the Company Directors Disqualification Act 1986 and so on, but no similar protection is available to the public in terms of partners. It is much easier for a legal entity to reconstitute itself as a partnership than it is to do so a limited company. Those who are most likely to seek a way out of the provisions will be the first to cotton on to that, so I hope that the Minister has some words of comfort about that.

7.30 pm

Mr. Sutcliffe: I appreciate the spirit in which the new clause was moved, although I did not realise what the hon. Member for Hornchurch (James Brokenshire) had threatened to do if he does not hear the answer he wants. I shall do my best, because it is a threat that I would not want him to pursue, although that decision will be in his hands.

The amendments in the group are aimed at two different ideas: the liability of holding companies and extending the offence in unincorporated bodies, as well as the issues relating to Scotland. The new clause, which was proposed by the hon. Member for Hornchurch, raises interesting questions. It is not aimed at making a holding company liable for corporate manslaughter when that has been committed by one of its subsidiaries, but it suggests a new offence of not taking all reasonable steps to prevent the offence from being committed.

The basic position is that each company within a group is a separate legal entity, with its own rights, liability and assets. Each company has a distinct legal personality and the directors of each company must act in the interests of that company. For the offence, that means that the company that owed the relevant duty of care to the victim will be prosecuted. That reflects the current law. For example, in the Hatfield case, a subsidiary of Balfour Beatty was prosecuted, rather than the parent organisation.


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If we are going to go down the route of holding one person to account for failing to prevent another from committing a crime, the circumstances in which that liability applies need to be defined with care. The proposal in the new clause is that the holding company must have taken “all reasonable steps”, but what reasonable steps would those be? Companies within a group structure are separate entities and do not owe obligations to prevent others from committing a crime. Unsurprisingly, being members of one group, the holding company will not want to see members of the group prosecuted, as that would inevitably impact on the reputation and standing of the group of the whole. The coverage of the Hatfield case made little distinction between Balfour Beatty and its subsidiary. But that self-interest is very different from identifying concrete steps that a parent company ought to be taking in respect of its subsidiaries, where the consequence of failing to take those steps is a criminal offence.

Consultation by the Department of Trade and Industry preceding the recent companies legislation looked at whether changes should be made to the liability of parent companies in the civil law, but it was decided not to change the law. The report considered that it would be difficult to define when subsidiaries were being used abusively to reduce risks of litigation, because no other jurisdictions made parent companies automatically liable, and because of the lack of evidence that companies had used group structures abusively. Similar considerations arise in the context of the new offence.

The criminal law has specific principles of secondary liability for holding people to account for their contribution to another’s crime, but it does not generally impose a duty to prevent the criminality of others. We are not satisfied that that would be appropriate in this case. Secondary liability for the new offence is not disapplied in respect of other companies, such as holding companies. That will undoubtedly be a high test to satisfy, but the consequence of the new clause would be to place an undefined duty on holding companies in respect of their subsidiaries, which would be left to the courts to flesh out. That would be very unsatisfactory.

The other aspect of the amendments is the question of unincorporated bodies. Such bodies do not have a separate legal personality, but there are none the less a wide variety of statutory provisions and offences that apply, particularly in the regulatory field. It is of course absolutely vital that such regimes apply comprehensively to all employers and businesses. However, the lack of legal personality does not mean that such bodies cannot at present be prosecuted for the common law offence of manslaughter, so the question is whether to extend the offence to a new class of organisation.

The Law Commission was cautious about doing so. It recognised that there may be many similarities between incorporated and unincorporated bodies in practical terms, but felt that the nature of the body meant that there was an important difference. In the Law Commission’s words:


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