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Our Capital Projects seminars are proving to be as popular as our Adjudication Update seminars. Our 4th, which will be chaired by Victoria Russell, takes place on 20 November 2007. The seminar features talks by Ken Shuttleworth, Chairman of the CABE design review committee for education, Dave Hampton, the carbon coach and Colin Harding of George & Harding, as well as our usual in-house Fenwick Elliott contributions. For further information please contact Marie Buckley.
Last November, Victoria Russell spoke on the variety of duties and liabilities of construction professionals. A copy of that paper can be found on our website. Meanwhile, Jon Miller, as set out below, summarised the corporate manslaughter legislation, which became law in July 2007.
The impetus for a new law on corporate manslaughter has been the number of rail and other transport disasters. Although fines have been imposed on companies involved in Hatfield (Balfour Beatty £7.5 million, Railtrack £3.5 million), Paddington (Network Rail £4 million, Thames Trains £2 million) and the Southall disaster (Great Western Trains £1.5 million), these fines did not prevent universal condemnation when companies and the individuals involved avoided manslaughter convictions. The public perception is that the courts have been too lenient.
The present legislation
The current Corporate Manslaughter and Corporate Homicide Act 2007 (the “Act”) received the Royal Assent on 26 July 2007. By section 1, the Act will apply to “organisations”. An organisation includes a company, Government departments and even the police force. Arguably, “organisations” will not apply to partnerships, sole traders and some unincorporated associations. Schools, clubs and parish councils, for example, are unincorporated associations and, as the bill is currently drafted, they will not be caught by its provisions. The reason for this is that, according to the Home Office, unincorporated associations have a constantly changing membership, and it is therefore difficult to taint them with the acts and omissions of their earlier members who were around when the fatality took place.
As expected, there was a considerable amount of lobbying going on as the bill went through the committee stage. The definition of “organisation” was extended to partnerships as civil liberties groups strongly argued that many partnerships have the same degree of permanency as modern companies.
Crown immunity
The Act, for the first time, will also abolish crown immunity as its scope will cover government departments, schools, the police force, etc. Section 11 makes it clear that government departments etc. are not to be treated as servants or agents of the crown. There are some narrow exceptions where a public body has to make strategic decisions when it comes to spending public money (strategic decisions taken by the prison services in respect of detainees, emergency services response times, allocating resources to riots, general policing, etc.), which are not covered by the legislation.
Although crown immunity has been lifted, this now is coming in for regular examination. The exception given to some public bodies/decision-making is said to avoid creating a level playing field between the public and private sectors where they perform the same roles.[1] The legislation was criticised because the immunity given to (say) the army would mean that it would not apply, for example, to the deaths of the four young soldiers at the Deepcut Barracks. This was revised by the application of the Act to the armed forces by virtue of section 12.
Individuals
Sections 11-14 make it clear the new offence of corporate manslaughter will not apply to an individual. The common law offence of manslaughter by gross negligence will be abolished insofar as it applies to organisations. Instead, organisations will be caught by the new corporate manslaughter act. This does not mean that individuals cannot be responsible for manslaughter if they commit manslaughter during the course of their employment – individuals will still be caught by the criminal offence of manslaughter.
The pressure group, Families Against Corporate Killers, has condemned the Act as “not fit for purpose and will not have any major effect in deterring negligent employers from injuring and killing people as it does not carry the threat of imprisonment for gross negligence”. The new Act makes the position clear; company directors cannot be imprisoned as a result of the gross negligence of their company.
The key feature of the Act is that there will be no need to find a single director or manager with a “controlling mind”. Instead, the focus will shift, and the jury will now examine the combined failings of senior management. An organisation will be guilty of the offence of corporate manslaughter:
“if the way in which its activities are managed or organised:
(a) causes a person’s death, and
(b) amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.”
A “senior manager” is someone who plays a significant role in making decisions about how the whole or substantial part of an organisation manages to organise or actually manages the whole or substantial part of the organisation’s activities. Many directors and senior managers will be directing a “whole or substantial part” of an organisation’s activities. However, it is doubtful as to whether site-based personnel will be deemed to be directing a “substantial part” of (say) a contractor’s business.
Confining the offence to senior management has also attracted considerable criticism.[2] This is because it is only the failures of senior management that will render the company open to prosecution. Failures at other levels of management, no matter how serious, will not be caught. If an investigation found that death was caused by a number of failings at different levels, some at a senior management level and some at junior management level, any subsequent prosecution would only consider the acts or omissions of the senior management. Critics have argued that companies could make themselves “manslaughter proof” and immune from prosecution by delegating the safety responsibilities to below senior management level.
“Gross breach of relevant duty of care”
The organisation must owe the victim a “relevant duty of care”. This is defined by the civil law of negligence and in particular as:
- a duty owed to employees or any person performing services for the organisation;
- the duty owed as an occupier of premises; and
- the duty owed in relation to the supply of goods or services, or of any construction or maintenance operations or any other activity on a commercial basis or even the keeping of any plant vehicle or any other thing.
The law of negligence is constantly developing. In the construction industry, the courts have decided that a local authority building inspector firstly did and then did not owe a duty of care to the property owners when inspecting foundations. The duty owed by builders to subsequent purchasers of property has changed, whilst it is unlikely that the courts will still say that a subcontractor owes a duty of care to an employer.
The problem is that the civil law of negligence has to take into account factors which have nothing to do with the principles underpinning criminal law. The criminal law tries to protect citizens who are deprived of their rights to life, limb or property, whereas civil law decides whether one organisation or person should make redress to another. As to deciding whether there was a gross breach of the duty owed, the jury has to look at a wide range of factors, including how serious the breach of the health and safety legislation was, and how much of a risk of death that breach posed. They must also decide the extent to which accepted practice within an organisation would have encouraged the failure to comply with health and safety legislation.
It is difficult to define the standard of care to be expected of all organisations, bearing in mind the different functions a business will carry out compared with say a school or local authority. The law has fallen back on the law of negligence and health and safety legislation but as a result the standard required for conviction is vague. Consequently, there are alternative proposals to allow a judge to decide whether a relevant duty was owed and the jury to decide whether the “gross breach” could have been prevented had all reasonable precautions been taken.
Unlimited fines
Although companies cannot be imprisoned, they can be fined. It is expected that juries will look at the whole range of management conduct and working practices, rather than concentrating on individuals’ actions. The fine, however, will be set by the judge, not the jury. There will be no limit on the fines, and some commentators believe that fines as much as £20 million or even higher will result, even though judges do have a tendency to be conservative when imposing financial penalties. Also, with more companies in the dock, it will be easier for victims’ families to obtain compensation.
However, a prosecution for corporate manslaughter could only be instituted with the consent of the Director of Public Prosecutions. This will mean that individuals will not be able to commence a private prosecution.
Health & Safety at Work Act 1974
The fines imposed in the Hatfield, Paddington and Southall incidents were all imposed for a breach of health and safety legislation. According to section 3(1) of the Health and Safety at Work Act 1974:
“It shall be the duty of every employer to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, the persons not in his employment who may be affected thereby are not thereby exposed to risk to their health and safety.”
Failure to comply with this duty is a criminal offence, which is punishable by an un-limited fine. When deciding what is “reasonably practicable” the employer must weigh up the risk on one side against the sacrifice to him on the terms “time, trouble and money” to avert the risk.[3] One might ask whether the new Act adds anything. It allows for unlimited fines, in similar vein to the Health & Safety at Work Act. However, although a conviction of fine for breach of health and safety legislation attracts public criticism – a conviction for corporate manslaughter will have more impact.
Conclusion
The current Corporate Manslaughter and Corporate Homicide Act has been over 12 years in the making. It will make it easier to convict companies of corporate manslaughter as the emphasis will shift from trying to find an individual with a directing and guilty mind to looking at all a company’s procedures and operations. However, the effect of the Act would be the same as breaches of the Health and Safety at Work Act. Companies will face significant fines. Therefore, all commercial organisations should take steps now to review their business risks. For example, Design and Build Contractors should review their health and safety arrangements. Of course, that review should already have taken place, given the implementation of the new CDM regulations which are described below.
[1] This is one of the aims of the legislation according to the notes accompanying it at paragraph 18.
[2] See for example the Centre for Corporate Accountability commentary on the Corporate Manslaughter and Homicide Bill 2006.
[3] Edward v National Coal Board 1949. This is known in modern parlance as risk assessment.