This new Act enables the jury, instead of pinning the blame on particular individuals within a corporate environment, to look at that environment itself, to assess its corporate culture and to review its internal practices and its general attitude to safety enforcement. By section 1(1), if “the way in which its activities are managed” amounts to a gross breach of a duty of care owed by an organisation to a person, who dies as a result, then the organisation will be guilty of corporate manslaughter (or, in Scotland, corporate homicide). The test will be one of “senior management” failure: see section 1(3). Among other factors, by section 8(3) the jury may “consider the extent to which the evidence shows that there were attitudes, policies, systems or accepted practices within the organisation that were likely to have encouraged any such failure [to comply with health and safety legislation] or to have produced tolerance of it”, but by section 8(4) they may also have regard to “any other matters they consider relevant”.
If convicted of corporate manslaughter, an organisation will face unlimited fines. Fines in recent health and safety cases have in any event been getting substantially higher. For example, in R v Balfour Beatty Rail Infrastructure Services Ltd [2007] Bus LR 77; [2007] ICR 354 a company which had pleaded guilty to a charge under section 3(1) of the Health and Safety at Work etc Act 1974 in respect of its involvement in a fatal rail accident was fined £10m (reduced on appeal to £7.5m) even though the judge had already thrown out a charge of corporate manslaughter (under the common law). An organisation convicted under the new Act must accept the risk of facing much higher fines, especially in the context of the fine of £120m recently imposed on British Airways for anti-competitive practices.
As well as being fined, an organisation which has been convicted of corporate manslaughter may be subjected, under section 9 of the new Act, to a “remedial order” requiring it to take such steps as may be specified by the court to improve its “policies, systems or practices” and so prevent future breaches, and if it fails to do so it commits a further offence. Moreover, by section 10, it can be required to name and shame itself by publicising the fact of its conviction, the details of the offence, the amount of any fine imposed and the terms of any remedial order.
In his talk, Gerard Forlin considered a number of issues in relation to the new Act. First was the question of its retroactive effect. Although the Act would only apply to fatal incidents occurring after 6 April 2008, the “management culture” whose failings were responsible for such an incident would obviously have been in place long before that commencement date. Corporations would need time to bed down the new health and safety systems which they would need to have in place to ensure compliance with (and avoid the risk of prosecution under) the new Act. Given the timeframe, it was unlikely that most large companies would have done this, if they hadn’t done it already, in time.
The second issue was the Act’s territorial ambit. By section 28, this is confined to England, Wales, Scotland and Northern Ireland. Though there was some prospect of this being extended in future, for example to cover the Euro-warrant zone, at present it would appear that a fatal accident in the UK caused by a company whose management failings occurred outside the UK would not result in a conviction for corporate manslaughter under the Act. In the context of a globalised economy, this seems anomalous. The likely consequence seemed to be that smaller, local companies would be caught in the net but the big, indifferent multinationals would continue to escape prosecutorial bite.
Thirdly, the new Act was expressly designed not to apply to individuals. By section 18, an individual (who obviously could not be guilty of corporate manslaughter on his own) could not be guilty of aiding, abetting, counselling or procuring the commission of an offence of corporate manslaughter. But the fact remained that individuals would be caught up in the investigative net, in assessing whether the senior management of the company was failing in its duties of care, and so forth. An organisation’s “senior management” was very widely defined, in section 1(4), to include any persons who “play significant roles in (i) the making of decisions about how the whole or a substantial part of its activities are to be managed or organised, or (ii) the actual managing or organising of the whole or a substantial part of those activities.”
One of the problems the Act was designed to solve was the difficulty of catching the “controlling mind” with his hand on the “smoking gun” in a large organisation. This was much easier in a small organisation, where a “hands-on” boss would make a relatively easy target for a manslaughter prosecution under the common law: see, for example, Attorney General’s Reference (No 86 of 2006) [2007] Bus LR 906; [2007] ICR 1047 (where, despite a plea of guilty, the Court of Appeal substituted a term of immediate imprisonment of 15 months, on the basis that two years would have been appropriate, and in spite of the fact that without the boss the business would probably go to the wall). By contrast, a large corporation could escape simply by reason of its dilution of responsibility across a cumbersome and labyrinthine management structure.
Theoretically the new Act would produce a more level playing field. But prosecuting authorities investigating “the way in which [a company’s] activities are managed or organised” for the purposes of the new Act could only do so by looking at the conduct of individuals, eg by reading their emails (often the least guarded form of correspondence) and internal memos. Inevitably, this process would result in more individual prosecutions for other offences, even if (or perhaps especially if) the prosecuting authorities were unable to identify management (as opposed to individual) failures. And if they were able to find an endemic management failure, the person who would formerly have been prosecuted for negligence, or identified as the controlling mind, could now be the chief witness in the case brought against the company.
Another important issue was costs. The prosecution costs in the Balfour Beatty case (supra), which arose out of the Hatfield rail disaster, had amounted to some £12m, yet the costs actually awarded by the court were little over £600,000. The new Act would make such large scale prosecutions more likely (though not necessarily more successful) because its existence would encourage victims, their lawyers, representative organisations such as Families Against Corporate Killers (or FACK as it likes to be known), as well as politicians and the press, all to agitate for the police, CPS and HSE to “do something”. Simply defending such cases would become increasingly, perhaps prohibitively expensive; though if they resulted in an acquittal, the costs would then have to be met out of the public purse. In this respect the requirement, under section 17, for the consent of the Director of Public Prosecutions to any proceedings for an offence under the Act was an important safeguard.
A significant change wrought by the new Act was the removal (by section 11) of the Crown immunity previously enjoyed by government departments (though individual ministers and the Government itself would enjoy their own immunity). This may have been partly in response to a series of recent cases, including a fatal accident at the Royal Mint, which had resulted in inquest verdicts of unlawful killing but with no prosecution being pursued because of the employers’ Crown immunity.
Gerard Forlin concluded his survey by asking, rhetorically, what real change the new Act had achieved. No one would go to prison; it would be easier to prosecute, and more expensive to defend; companies would be fined, in ever large amounts, and they would in effect be told how to run their business; insurance premiums for everyone would go up; but there was every chance that the bigger corporations would either evade prosecution by relocating beyond the jurisdictional grasp of the Act, or ramp up the costs to such an extent that prosecuting authorities would be tempted to go for the easier cases (such as road fatalities, a third of which were work-related) or against easier defendants (such as the sort of hands-on boss who was prosecuted in the Attorney General’s Reference referred to above).
Forlin’s survey of the Act’s implications was very much informed by his experience as a practitioner representing and advising clients, particularly corporate clients. His view seemed to be that the Act in its present state was flawed and incomplete, probably as a result of a compromise between competing interests, and that it was likely to be developed and extended by further legislation. Its effectiveness in practice was hard to predict and it would be two or three years at least before its operation would be fully tested by the courts.
Shortly before publication he alerted me to a fundamental new development in advance of the Act coming into force. This was the publication by the Sentencing Advisory Panel, of proposed guidelines on the fines to be imposed on companies and organisations for corporate manslaughter. Under these proposals, which are subject to consultation until 7 February 2008, a first-time offender pleading not guilty could on conviction expect a fine equivalent to between 2.5% and 10% of its average turnover for the preceding three years (see Consultation Paper on Sentencing for Corporate Manslaughter, at para 60). For a large company with a turnover of, say, £5,000 million, this could result in a fine of £500 million for a single accidental fatality. This approach is intended to have a “consistently equal economic impact”, the punishment thus suiting the size of the criminal rather than that of the crime or victim; it is also intended to act as a powerful deterrent; but the likely effect, in Forlin’s opinion, will be that companies will be tempted to break themselves into smaller, self-contained units, or relocate themselves beyond the Act’s jurisdiction. One way or another, they will certainly need to put their houses in order and prepare themselves for a far more stringent (perhaps even draconian) health and safety regime.
Time will show how the new legislation works in practice. But of one thing we can be certain. Its various provisions, especially the novel test of management failure, with its catch-all vagueness, and the sentences imposed under the stringent new regime, are sure to be tested by the courts and, in due course, covered in the law reports.
Gerard Forlin is referred to in one directory as a “manslaughter specialist” who combines a “robust style of advocacy” with a “market awareness” and “great industry knowledge”. Another directory notes that he “has been involved in over 250 fatality cases and has appeared in the vast majority of major cases in [the health and safety] field in the last ten years”. His chambers address is 2-3 Gray’s Inn Square, London WC1R 5JH. His website is www.gerardforlin.com.
Paul Magrath is the Development Editor of ICLR and the Editor of the Business Law Reports. |
