SYMPOSIUM SERIES NO. 151 # 2006 IChemE CORPORATE MANSLAUGHTER AND HOW TO HANDLE A REGULATORY INVESTIGATION FOLLOWING SERIOUS INJURY OR DEATH Gary Lewis Solicitor Safety, Health and Environment Group, Hammonds Trinity Court, 16 John Dalton Street, Manchester, M60 8HS; Tel: 0870 839 5373, Fax: 0870 460 2910, Email: [email protected] The paper will discuss essential components of the proposed offence of Corporate Manslaughter by way of comparison against the existing offence of Involuntary Man- slaughter as it applies to Companies. How the new offence will apply in practice and the ramifications for larger corporations, who to date, have had effective immunity from prosecution. The second half of the paper will endeavour to demystify the conduct of a regulatory investigation and give practical tips on how to exercise a degree of control over the process. CORPORATE MANSLAUGHTER INTRODUCTION Incidents and accidents in the chemical industry tend to have associated with them high degrees of risk, having the potential to result in fatal or serious injuries. Hence even if injury does not result, fines tend to be towards the upper bracket in Magistrates Courts or referred to Crown Courts for sentence, given the obvious degree of risk resulting from deficiencies in management systems. Public demand for accountability of senior management of companies whose activi- ties have been indicative of disregard for health and safety legislation have been fuelled by disasters such as the Herald of Free Enterprise in 1987 and more recently the Southall, Paddington, Ladbroke Grove and Hatfield rail crashes. Deaths arising out of work activity remain at an alarming rate despite concerted targeting of high risk sectors by the enforcement agencies. The general perception of the public is that fines are too low and do not act as an deterent to companies who have not demonstrated a commitment to comply with health and safety legislation. COMPONENTS OF THE OFFENCE OF INVOLUNTARY MANSLAUGHTER The prosecution must make out four elements to secure a conviction: 1. That the defendant owed a duty of care to the deceased; 2. That the defendant was in breach of that duty of care; 3. That the breach might be categorised as gross negligence; and 4. That the breach was a substantial cause of death. 1 SYMPOSIUM SERIES NO. 151 # 2006 IChemE HOW INVOLUNTARY MANSLAUGHTER APPLIES TO COMPANIES The law artificially treats companies as a person but recognises the practical way in which companies operate via its directors, employees and/or agents. THE IDENTIFICATION ISSUE In R -v- Great Western Trains (June 1999) Mr Justice Scott-Baker ruled: “in any prosecution for manslaughter by gross negligence of a corporation it is necessary for a guilty mind to be proved and that there must, therefore be, a connection with guilt of an individual identified within the company”. Recognising the difficulty of identifying such an individual in a company with a complex and diverse management structure he went on to say “it is virtually impossible to bring a successful prosecution against a larger corporation particularly where, as here, the allegation is essentially based on a system failure”. R v Barrow in Furness Borough Council (March 2005) Mr Justice Poole ruled: “There are, as it seems to me, in the present state of the law relating to corporate manslaughter, considerable difficulties facing those who contemplate the prosecution of a local authority. For the reasons advanced by Mr Turner, a local authority is not, in all material particulars, to be equated with a commercial enterprise, of any size; still less perhaps with a very small corporation with few directors or a sole director. It is far from clear to me I confess that even the Chief Executive Officer would prop- erly be described as ‘the controlling mind’ of a council of elected members, but that is not something I have to decide. I am quite clear, however, that a third tier official in the position of Miss Beckingham could not reasonably be so described, even if delegated an exercise of a particular transaction such as this. The counts of manslaughter, as against Barrow Borough Council, must therefore fail.” The Barrow case is yet another example of how a diverse management structure can be seen to defeat the current offence but not necessarily in relation to a conventional corporate entity. AGGREGATION Notwithstanding some judicial interest in exploring the concept of aggregating individ- ual’s culpability together to form the culpability of the corporate entity (Meridian Global Funds Management Asia Limited v Securities Commission 1995). Under the current law as it stands, it is not possible to aggregate the culpability of a number of indi- viduals within a company’s management structure to demonstrate that the company has been grossly negligent in the way in which it conducted its business activity. THE OUTCOME OF THE COMBINED HURDLES OF IDENTIFICATION AND AGGREGATION To date there has not been a successful conviction of a “captain of industry” arising out of the notable disasters involving large national companies. There is a common theme to be 2 SYMPOSIUM SERIES NO. 151 # 2006 IChemE gleaned from the successful convictions to date, namely that they have all involved direc- tors of small companies comprised of one or two directors because in that type of unso- phisticated business it is relatively easy for the prosecution to identify the so called “controlling mind”. THE DRAFT CORPORATE MANSLAUGHTER BILL The much heralded draft bill acknowledges the significant hurdles presented by the identi- fication and aggregation issues. It addresses those issues, in terms of the proposed new offence, by incorporating the requirement for a management failure on the part of senior managers focusing on the way in which a particular activity was being managed or organised collectively, as well as individually. An organisation’s senior management is defined by, “only those who play a role in making management decisions about, or actually managing, the activities of an organis- ation as a whole or a substantial part of it”. This is said to specifically include management at regional level within a national organisation. The intention is to criminalise under the offence management failings that can be associated with the organisation as a whole, which will capture different levels of respon- sibility depending on the size of the organisation. Therefore, the proposed new offence would not require identification of an individ- ual “controlling mind” and would allow the offence to be made out of where there was a systemic management failure which could be attributed to the acts or omissions of one or more senior managers within the management structure. Those two components of the new offence effectively reverse the observation by Mr Justice Scott-Baker in the Great Western Trains case in relation to both identification and aggregation. The proposed new offence would still require the prosecution to demonstrate conduct that falls far below what can reasonably be expected in the circumstances and that conduct had caused the death of the victim to secure a conviction. PROPOSED PENALTIES Organisations found guilty of corporate manslaughter would face an unlimited fine. In addition, the courts would be able to impose remedial orders, enabling the courts to require that specific remedial action be taken to address, within a specified time, the fail- ures that lead to death. STATUS OF THE PROPOSED NEW OFFENCE IN THE REGULATORY FRAMEWORK The objective of the new offence is to complement, not replace, other forms of redress such as prosecutions under health and safety legislation. THE RESULTANT EFFECT OF THE PROPOSED NEW OFFENCE Individual senior managers will not face individual prosecution in the event that the company is charged with the new offence, even if it was shown that they contributed to 3 SYMPOSIUM SERIES NO. 151 # 2006 IChemE the relevant management failure. They will remain liable to prosecution for individual offences including gross negligence manslaughter and under health and safety law, where it can be shown that their personal conduct amounts to an offence. Disqualification proceedings under existing legislation will also be possible in certain circumstances. His- torically disqualification proceedings have very rarely been utilised. Directors and senior managers could, however, still be the subject of a prosecution pursuant to Section 37 of the Health & Safety at Work etc Act 1974 in the event that it could be demonstrated that the offence, committed by the company, had been committed with the consent, conivence or neglect of a director or senior manager. Meanwhile directors of small companies managed by sole or joint directors remain vulnerable to individual prosecution for involuntary manslaughter. The result is a two-tier system of justice which differentiates between how directors and senior managers of large and small companies are punished in the event of culpability arising from a death caused by the company’s business activity. Undoubtedly the proposed new offence will not satisfy those who want to route out bad management by making individual directors accountable. The proposed new offence perhaps reflects the Government’s political dilemma in trying to appease the trade unions and the CBI who are at different ends of the spectrum in terms of individual directors accountability. In reality the only teeth that the proposed new offence would have over and above offences that are currently brought under existing health and safety legislation, which attract unlimited fines in the Crown Court for serious breaches of health and safety legislation, is the stigma and resultant negative impact on a company’s reputation as a result of being associated with significant management failings resulting in a conviction for corporate manslaughter. Many feel that the sanctions of an unlimited fine and the possibility of a remedial order, both of which existed under existing legislation, are unimaginative.