Corporate Deaths: Accident or Crime? - Does the UK have adequate law to hold corporations liable for corporate death?

University Degree Business and Administrative studies

Dissertation Proposal: Student No.: 00654442

LLB – P/T – 3

Part 1:

Corporate Deaths: Accident or Crime? – Does the UK have adequate law to hold corporations liable for corporate death?

A series of fatal incidents and disasters has given rise to an increasing perception that deaths resulting from gross negligence in the exercise of business activities comprise a category of unlawful conduct which has been neglected by the legal system1. No longer are these disasters seen as accidents, they are viewed as foreseeable and preventable. Companies are seen to be culpable and there is a desire to transmute moral blameworthiness into criminal liability.

However, there are many impediments to the criminalisation of corporate misconduct. Initial problem that is faced automatically revolved around a lack of consensus upon the correct way in which who to prosecute: a company or an individual? As the law stand it places too much emphasis on the identification doctrine: a company can be convicted of manslaughter only if an individual who is considered to embody the company is found guilty. In the absence of a single, authoritative interpretation of just who may embody a company, the courts have attempted to identify its ‘directing mind and will’ in each case2. The doctrine allows companies to escape prosecution simply because of the difficulty in identifying a single director (especially in large organisation) who can be prosecuted for manslaughter.

Another problem is that, despite the availability of incriminating evidence, prosecutions resulting from deaths at work are seldom3. In the main, such prosecutions have been left to the regulatory authorities, in spite of the fact that convictions under the Health and Safety at Work Act (HSWA) 1974 are generally perceived as a means of safeguarding public safety rather than as a means of attributing blame and punishing wrongdoers.

The primary aim of this proposal is to identify the problems/deficiencies associated with the widely-accepted mechanisms adopted, or canvassed, by English law for the establishment of corporate liability and to demonstrate the fact that why there is immediate need for radical reform in the current system of law. In the context of workplace deaths, the attempt is made to examine the roles and functions of the regulatory framework of the Health and Safety at Work legislation. In the light of this, the law commission proposal to create a new crime of corporate killing will be discussed and evaluated.

The main interest in this subject is the result of two sets of developments. First, there have been several disasters in recent years, in which large numbers of people have been killed. These have called for reform of the law of manslaughter, and failure to successfully prosecute has led to an apparent perception among the public that the law dealing with corporate manslaughter is inadequate. These disasters have included: the Herald of Free Enterprise disaster in which 192 people were killed, the King’s Cross fire in which 31 people died, the Clapham rail crash in which 35 people died and nearly 500 people were injured, the Southall rail crash in which 7 people died and 151 were injured4.

Secondly, there has been an increased awareness of the numbers of persons annually being killed and seriously injured in their place of work. In the last 10 years, 3,000workers and 1,000 members of the public have died in work-related incidents5. Most of these deaths result from corporate activities. Yet only 11 companies have been prosecuted for manslaughter, only three of which – all very small firms – were convicted6. The number of directors who have ever been jailed for such offence is just two. Statistics of fatal injuries and non-fatal major injuries at workplace for last 5 years from 1996-2001 demonstrates the following7:

Statistics for Fatal Injuries reported to both Health and Safety Executive and Local Authorities8:

Statistics for Non-Fatal Injuries reported to both Health and Safety Executive and Local Authorities9:

These deaths and injuries were the result of violent incidents – people were being crushed, electrocuted, asphyxiated, burnt, drowned, impaled and so forth10. The above figures merely represent reported cases. It is reported that each year, the total number of work-related death is likely to be over 1500, and the number of people die as a result of work-related illnesses such as asbestos-related disease is likely to be over 10,00011.

Part: 2

Having studied literatures (which will be discussed shortly) written by leading legal writers on this subject it can be concluded that the law in this area is unclear and uncertain, which shows the inadequacies of the criminal law in holding the corporate defendants liable for their corporate misconducts, which resulted in loss of several lives. There are several controversial issues which have given rise to major debate between academics, judges and lawyers. They seem to agree in some cases, however they have disagreements too.

Corporate manslaughter is part of the law of involuntary manslaughter. Involuntary manslaughter is the causing of death where death or serious injury was not intended – usually due to grossly negligent or reckless conduct. So when an individual, for example, a doctor, kills through gross negligence, a prosecution for manslaughter can, and sometimes does, follow12. Whereas, when companies kill and injure, however, the practice is different. Only three companies have been convicted of manslaughter.

There are two main reasons for this. The first reason for this relates to regulatory laws. The main body set up to enforce this legislation ...

This is a preview of the whole essay

Corporate manslaughter is part of the law of involuntary manslaughter. Involuntary manslaughter is the causing of death where death or serious injury was not intended – usually due to grossly negligent or reckless conduct. So when an individual, for example, a doctor, kills through gross negligence, a prosecution for manslaughter can, and sometimes does, follow12. Whereas, when companies kill and injure, however, the practice is different. Only three companies have been convicted of manslaughter.

There are two main reasons for this. The first reason for this relates to regulatory laws. The main body set up to enforce this legislation is the Health and Safety Executive (HSE), which has the power to notify companies that certain safety matters require attention, or to bring a criminal prosecution. In theory criminal prosecution for violation of a regulatory offence is possible, though, in practice it tends not to happen. The reason provided for this, as stated by G. Slapper13 is, workplace deaths are investigated by the HSE with the police playing no part after taking brief statements at the place of death. However, the HSE does not regard its primary function as being one of initiating prosecutions, but rather as one of ‘assisting and advising the generality of well-conducted companies, and of determining good practice’14, because they are under the impression that they are expert advisers rather than industrial police. This gives both companies and the public a false impression that the offences at issue are not “true crimes”, and unfortunately the HSE regards these offences as industrial accident rather than homicide15,

In an attempt to increase safety at work and prevent such ‘accidents’, the HSWA 1974 makes it an offence for an employer to breach a duty ‘to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all of his employees’16. The offences under the Act are drafted without any reference to whether a worker is killed or injured or not. The crime is simply the failure to maintain proper safety standards. D. Bergman has criticised the Act and demanded for the amendments17. He stated that as the law stands, it imposes almost all safety duties on companies18. That allows directors to escape from financial liabilities and reduces their individual safety obligations and criminal accountability.

Clarkson states that the HSE are under-manned and under-resourced, will only press charges in cases that it believes represent a flagrant breach of the 1974 Act19. When a prosecution is brought, it tends to be in the magistrates’ court (60%), as this is quicker and cheaper for the HSE. Under the current legislation the maximum fine is £5,00020.1 for all offences and to £20,000 for breaches of ss 2-6 of the 1974 Act20.2. D. Bergman claims that the HSE has a very poor record in prosecuting21. The marginalisation of corporate crime is supported by the procedure adopted at inquests, under which bereaved families do not have right to legal aid and when they are represented, often financed by a trade union, and the solicitors are usually more interested in civil compensation22. Company managers and directors with responsibility for safety are seldom called as witnesses23.

The second reason for the lack of criminalisation of corporate violence relates to the difficulty of obtaining a conviction under the present law. J Gobert and E. Mugnai allege that the English judges have always struggled to find an acceptable formula for holding companies accountable for their criminal wrongdoing24. In the famous case of Nattrass25 the House of Lords crafted what is known as the “identification” doctrine, under which a company is criminally liable only for offences committed by its directors, officers, senior managers and similar others who can be described as being the embodiment of the company26.1, i.e. company’s directing mind and will26.2.

The question is who is to determine company’s directing mind and will? The reasoning rests on a crude distinction between persons can be described as the “brains” of a company, and workers, who are said to be its “hands”27. This distinction was criticised by Stern, he called it, ‘another plastic and useless description’ – the company was liable only for the forbidden acts or omissions of its ‘brain’, and not for those of its ‘hands’28. However, in Meridian29 Lord Hoffmann took a different approach and stated, “…there is no such thing as the company … no Ding an Sich”. He refused to limit the identification doctrine to those representing the “directing mind and will” of the company and stated that in each case the court had to “fashion a special rule of attribution for the particular substantive rule”30.

The major criticism about identification doctrine is the difficulty of defining the exact parameters of the notion of directing mind. Under this doctrine the very limited numbers of individuals are identified with the company substantially reduces the potential applicability of the criminal law, particularly in the context of large corporate entities in which the decision-making centres are fragmented and the persons closely identified with the corporation are seldom those performing the incriminating acts31. Clarkson stated that the doctrine might be appropriate for small owner companies where it is not too difficult to pinpoint a senior individual with whom the company can be identified32. The doctrine appears to benefit the larger entities and to the detriment of smaller companies. In this regard, the identification theory may be excessively restrictive and incapable of grasping the essence of what constitutes corporate wrongdoing.

The doctrine seems to be unclear and uncertain. It is not limited to directors33 or to employees of the company: in one case the mens rea of the company’s servant may be attributed to the company, but this ruling does not automatically apply to other crimes such as manslaughter34. It appears that as the law is not clear in this area, the judges are not clear too35.

In order to overcome the problems associated with the identification doctrine, it was thought that an aggregation doctrine would be more appropriate. James Gobert illustrates, “When a crime occurs in the course of business, it is likely to be the result of a breakdown in more than one sphere of the company’s operation....To capture the full extent of the company’s wrongdoing would require an aggregating of this failure”36. Under this doctrine it allows the acts and mental states of more than one individual within a company to be combined to satisfy the elements of a crime.

However, criticising the doctrine Clarkson37 states that, “As with the identification doctrine, it simply perpetuates the personification of company’s myth. Instead of finding one person with whom the company can be identified, one finds several people.” He stated that with large complex corporate structures the doctrine is ineffective in terms of deterrence in that it fails to give advance notice to companies of what they are expected to do to immunise themselves from the risk of criminal liability. In R v HM Coroner38, the notion that several innocent acts could combine to form an illegal one was rejected by the court.

The problem of English law in this area seems to be generated by a failure to develop criteria for the judging of collective process. An alternative device courts have recently started employing to circumvent the rigours of the identification doctrine has been that of vicarious liability. Under the expansive view of vicarious liability, the company is potentially liable for the crime of any of its employees or agents, if the crime is committed within the scope of employment39.

This doctrine is relatively well established in English law in relation to strict liability offences40.1 and also applies to hybrid offences which are prima facie strict liability offences but allow a due diligence40.2. However, it is clear that vicarious liability will not apply to all offences of strict liability41. Whether it does apply or not is a matter of statutory interpretation, taking into account the language, content and policy of the law, and whether vicarious liability will assist enforcement.

The advantage under vicarious liability is that it solves all the problems associated with the other doctrine such as finding a person sufficiently important in the corporation who has committed the crime. As long as someone is acting in the course of their employment has committed a crime the company can be held liable.

However, the doctrine of vicarious liability is often criticised on the ground that it is contrary to the fundamental percept of a justice system based on the punishment of individual to hold someone liable for the acts or omissions of his agent or employees. It is argued that the theory seriously distorts the doctrine of mens rea, since a person’s fault is automatically attributed to another person who has not himself committed any fault. The company may have done everything within its power to prevent the wrongdoing but if one decides to carry on prohibited activity, it does not seem justifiable to hold the company blameworthy for those actions or inactions42.

A possible compromise solution, as suggested by Clarkson43, is that proposed by the Council of Europe whereby a company would prima facie be vicariously liable for all offences committed by its employees, but would be afforded a due diligence defence if it could establish that the management was not implicated in the offence and had taken all the necessary steps to prevent the commission of the crime. The main objection to this approach is that it would convert all offences of mens rea committed by companies into hybrid offences with due diligence defence attached. However, Sullivan proposes one solution to this problem and suggests to limit the due diligence defence to “non-regulatory offences that carry a stigma”44.

In relation to manslaughter, the Law Commission published its report No. 237 in 199645. The Law Commission re-examined the law of corporate manslaughter and rejected both vicarious liability and identification – as appropriate tests of corporate criminal liability and proposed a new offence of “Corporate Killing”46. This offence would be committed when there was a management failure by the corporation which caused a person’s death and that failure constitutes conduct “falling far bellow what can reasonably be expected of the corporation in the circumstances”47. The offence is designed without reference to foresight or classical mens rea concepts in order to capture the distinctive nature of corporate wrongdoing. The proposed offence of corporate killing breaks the anthropomorphic link between corporate fault and human fault and thus constitutes a major advance in the conceptualisation of corporate crime48.

However, the major weakness of the Law Commission’s proposal, as pointed out by Clarkson is that it would only apply where a death has resulted but, it would have no effect on any other offences49, such as corporate injury and serious injury. It would be undesirable if a company were convicted of a crime if the victim happened to die but of no offence if he happened to live. As stated by Clarkson, the creation of a separate offence could mean that corporate killings would be perceived as different from ‘manslaughter’ or the new substitute offences50. It has to be noted that the Report51 does not deal with the fundamental problem, that of preventing employees and others from being killed or injured

However there is no universally accepted method to hold the corporations liable for their corporate misconduct. Some have suggested proportionate fining system. Whereas Chris Bell52 (health and safety adviser) suggested that fine alone may not send a sufficiently powerful message to the corporate world and the courts need to be able to send directors to prison. Supporting this views Bergman53 suggested that prosecution for death at the workplace should be tried only on indictment. Though some have suggested that adverse publicity is likely to be more deterrent than fines, which is often paltry.

Conclusion: With all things considered, the development of the law in this area will be impeded by the gross lack of consensus on the correct approach to adopt. Each of the above attempts to transport the company into the position of an individual in the court only serves to show that the problems in deciding which path to take are extremely complex. No answers can as yet be provided but the general consensus does seem to suggest that the older methods of the identification doctrine and the perceptions of the company itself are increasingly naïve and outdated, which demonstrates the urgency for radical reform in the current system of law.

Case list:

1. Adomako (1994) 99 Cr App R 362

2. Bolton (Engineering) Co Ltd v T. J. Graham & Sons Ltd (1957) 1 Q B 159, 172.

3. British Steel plc (1995) ICR 586.

4. Kite & others, The Independent, 9 Dec. 1994

5. Meridian Global Funds Management Asia Ltd v Securities Commission (1995) A.C. 500.

6. Moore v I Bresler Ltd (1994) 2 All ER 515

7. National Rivers Authority v Alfred McAlpine Homes East (1994)4 All ER 286.

8. R v HM Coroner for East Kent, ex parte Spooner (1989) 88 Cr App R 10

9. R v Northern Star Mining Construction, The Times, 2, 4and 5 February 1965

10. Seaboard Offshore Ltd v Secretary of State for Transport (1994)2 All ER 99.

11. Tesco Stores Ltd v Brent LBC (1993)2 All ER 718.

12. Tesco Supermarkets Ltd v Nattrass (1972) A.C. 153

13. Worthy v Gordon Plant (Services) Ltd (1989) RTR 7 (DC).

Statutes list:

1. Criminal Justice Act 1991, s 17(2) (c).

2. Health and Safety at Work, etc. Act 1974, s 2 (1), ss 2-6.

3. Offshore Safety Act 1992, s 4(2).

Bibliography:

1. Ann Ridley and Louise Dunford, ‘Corporate Killing – Legislating for Unlawful Death?’ 93, ILJ (1997) Vol. 26, No. 2.

2. Anne-Marie Boisvert in Uniform Law Conference of Canada, ‘Corporate Criminal Liability’, August 1999 –

3. British Safety Council, ‘Catching up with the law breakers’ – http://britishsafetycouncil.org.

4. C.M.V. Clarkson, ‘Corporate Culpability’, (1998) 2 WebJCLI – http://webjcli.ncl.ac.uk/1998/issue2/clarkson2.html

5. C.M.V. Clarkson, ‘Kicking Corporate Bodies and Damning Their Souls’, (1996) 59 MLR.

6. Centre for Corporate Accountability in TUC and CCA Campaign – http://www.corporateaccountability.org/campaign.htm

7. Centre for Corporate Accountability, Safety Statistics – http://www.corporateaccountability.org/stats_deaths.htm

8. Centre for Corporate Accountability, Safety Statistics – http://www.corporateaccountability.org/stats_majors.htm

9. Chris Bell, Health and Safety adviser in ‘Dying for action’, Guardian Unlimited –

10. David Bergman in NEWS & Features, ‘Corporations that cause death’ –

11. David Bergman, ‘Deaths at Work: Accident or Corporate Crime’ (WEA, 1991).

12. David Bergman, ‘Dying for action’, Guardian Unlimited –

13. David Bergman, ‘Work deaths soar as Labour dithers’, Guardian Unlimited – http://www.observer.co.uk/business/ethics/story/0,12651,887010,00.html

14. FETA News –

15. G.R. Sullivan, ‘The Attribution of Culpability to Limited Companies’, (1996) Cambridge Law Journal 515.

16. Garry Slapper, ‘Crime without Conviction’, (1992) NLJ 14 February.

17. James Gobert and Emilia Mugnai, ‘Coping with Corporate Criminality – Some Lessons from Italy’, (2002) Crim.L.R. 619.

18. James Gobert, ‘Corporate Criminality: New Crimes for the Times’, (1994) Crim.L.R. 722.

19. Law Commission No. 237, Legislating the Criminal Code: Involuntary Manslaughter, 1996

20. Michael Jefferson, Criminal Law, 4th ed., Financial Times-Pitman Publishing.

21. YZ Stern, (1987-88) 13 Jo. Of Corporation Law.

1 See, R v Northern Star Mining Construction, The Times, 2, 4and 5 February 1965 – in Ann Ridley and Louise Dunford, ‘Corporate Killing – Legislating for Unlawful Death?’ P. 93, ILJ (1997) Vol. 26, No. 2.

2 British Safety Council, ‘Catching up with the law breakers’ – http://britishsafetycouncil.org.

3 There have only been three successful prosecutions of a corporation for manslaughter – OLL Ltd, Jackson Transport (Ossett) and Roy Bowles Transport Ltd – and all were small companies.

4 The death figures for all the disasters are quoted from: FETA News – http://www.feta.org.uk/news_involmans.htm

5 David Bergman, ‘Work deaths sour as labour dithers’, Sunday February 2, 2003, Guardian Unlimited – http://www.observer.co.uk/business/ethics/story/0,12651,887010,00.html

6 Ibid.

7 The statistics include: Agriculture, Hunting, Forestry and Fishing, Extractive Utility and Supply Industries, Manufacturing Industries, Construction, And Service Industries.

8 Centre for Corporate Accountability (CCA), Safety Statistics – http://www.corporateaccountability.org/stats_deaths.htm

9 CCA, Safety Statistics – http://www.corporateaccountability.org/stats_majors.htm

10 D. Bergman, ‘Deaths at Work: Accident or Corporate Crime’ (WEA, 1991) P.3.

11 CCA in TUC and CCA Campaign – http://www.corporateaccountability.org/campaign.htm

12 See, Adomako (1994) 99 Cr App R 362 – CMV Clarkson, ‘Kicking Corporate Bodies and Damning Their Souls’, (1996) 59 MLR, P. 558.

13 G. Slapper, ‘Crime without Conviction’, (1992) NLJ 14 February, P. 192.

14 CMV Clarkson, Op cit No. 12, P. 559.

15 See, J. Gobert, ‘Corporate Criminality: New Crimes for the Times’, (1994) Crim.L.R. 722, p. 725.

16 S 2(1) – CMV Clarkson, Op cit, No 12, P. 558.

17 For detail see, D. Bergman, ‘Work deaths soar as Labour dithers’, Guardian Unlimited – http://www.observer.co.uk/business/ethics/story/0,12651,887010,00.html

18 A company is treated differently – a legal entity which is distinct from its directors.

19 C.M.V. Clarkson, Op cit, No. 12, P. 559.

20.1 Criminal Justice Act 1991, s 17(2) (c).

20.2 Offshore Safety Act 1992, s 4(2).

21 D. Bergman in NEWS & Features, ‘Corporations that cause death’, Page 2of 2 – http://macdonald.butterworths.co.uk/news/getarticle.asp?newsid=921

22 CMV Clarkson, Op cit, No.12, P. 560.

23 G. Slapper, Op cit, No. 13, P. 192.

24 James Gobert and Emilia Mugnai, ‘Coping with Corporate Criminality – Some Lessons from Italy’, (2002) Crim.L.R. 619.

25 Tesco Supermarkets v Nattrass (1972) A.C. 153.

26.1 James Gobert and Emilia Mugnai, Op cit, No. 24.

26.2 See, Denning LJ in HL Bolton (Engineering) Co v T. J. Graham & Sons (1957) 1 Q B 159, 172.

27 The terms “brain” and “hands” derive from the civil law judgement of Denning LJ in HL Bolton, Ibid

28 YZ Stern, (1987-88) 13 Jo. Of Corporation Law 125, 130.

29 Meridian Global Funds Management Asia v Securities Commission (1995) A.C. 500, at P. 507.

30 Meridian case, Ibid.

31 Anne-Marie Boisvert in Uniform Law Conference of Canada, ‘Corporate Criminal Liability’, August 1999, P.4 of 29 – http://www.law.ualberta.ca/alri/ulc/99pro/ecrliab.htm

32 For example, Kite & others (OLL Ltd), The Independent, 9 Dec. 1994.

33 As Lord Diplock thought in Nattrass, Op cit, No. 25.

34 See Moore v I Bresler (1994) 2 All ER 515, Worthy v Gordon Plant (Services) (1989) RTR 7 (DC). Compare them with Nattrass, Op cit, No. 25, in contrast see, OLL Ltd, Op cit, No.32.

35 In Nattrass, Lord Reid put too much emphasis on ‘the company’s directing mind and will’. Whereas, Lord Diplock laid down so-called ‘Table A’ test. However, in Meridian Lord Hofmann stated that the emphasis should not be on the phrase ‘directing mind and will’ and stated that the focus should be on a person’s conduct that can be attributed to the company.

36 J. Gobert, Op cit, No. 15, P. 723.

37 C.M.V. Clarkson, ‘Corporate Culpability’, (1998) 2 WebJCLI – http://webjcli.ncl.ac.uk/1998/issue2/clarkson2.html

38 R v HM Coroner for East Kent, ex parte Spooner (1989) 88 Cr App R 10.

39 J. Gobert, Op cit. No. 15, P. 722.

40.1 Offences dealing with matters such as pollution, food and drugs and health and safety at work – see, National Rivers Authority v Alfred McAlpine Homes East (1994)4 All ER 286 (pollution) and British Steel plc (1995) ICR 586 (health and safety).

40.2 See Tesco Stores Ltd v Brent LBC (1993)2 All ER 718.

41 See Seaboard Offshore Ltd v Secretary of State for Transport (1994)2 All ER 99.

42 See Law Commission No. 237, Legislating the Criminal Code: Involuntary Manslaughter, 1996, para 7.29.

43 C,M,V. Clarkson, Op cit. No. 37, Page 9 of 14.

44 G.R. Sullivan, ‘The Attribution of Culpability to Limited Companies’, (1996) Cambridge Law Journal 515, P. 544.

45 Law Commission No. 237, Op cit, No.42.

46 Ibid, Pt VIII (1996).

47 Ibid, cl 4 (1).

48 J. Gobert and E. Mugnai, Op cit, No. 24, P.622.

49 C.M.V. Clarkson, Op cit, No. 12, P. 569.

50 C.M.V. Clarkson, Ibid.

51 Law Commission No. 237, Op cit, No.42.

52 Chris Bell, Health and Safety adviser in ‘Dying for action’, Guardian Unlimited –

53 Michael Jefferson, Criminal Law, 4th ed., Financial Times Pitman Publishing, P.215.