In September 2008 Geologist Alexander Wright, an employee of Cotswold Geotechnical (Holdings) Limited died when a 12.6 foot (3.8 metres) deep unsupported trial pit that he was working in alone collapsed at a development site in Brimscombe Lane, near Stroud, Gloucestershire. On the 15th February 2011 at Winchester Crown Court Cotswold Geotechnical (Holdings) Limited became the first company to be prosecuted and convicted of corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007.
No one was in the dock for the three-week trial but the business denied corporate manslaughter. The company director Peter Eaton, 61, was seriously ill with cancer and had months to live, the court was told. He was unable to stand trial on a manslaughter charge but the jury was told to assess his conduct in reaching a verdict. The judge said that Peter Eaton was in substance the company and his approach to trial pitting was “extremely irresponsible and dangerous”.
In passing sentence Mr. Justice Field said the gross breach of the company’s duty to Mr. Wright was a “grave offence” The company was described in court as in a parlous financial state but nevertheless was ordered to pay the money back over 10 years at a rate of £38,500 per annum. The judge stated that the fine marked the gravity of the offence and that the fine would have a deterrent effect on companies to strongly adhere to health and safety guidance. The judge added a larger fine would cause the company to be liquidated and its four employees would lose their jobs. “It may well be that the fine in the terms of its payment will put this company into liquidation. If that is the case it’ is unfortunate but unavoidable…but it’s a consequence of the serious breach,”. The company was given 10 years to pay the fine, which represented approximately 115% of the company’s annual turnover at the date of the manslaughter.
In May of last year JMW Farms Ltd was fined £187,500 at Belfast’s Langanside Crown Court for safety failings, which led to the death of it’s employee Robert Wilson. Mr. Wilson was washing the inside of a large metal bin which was positioned on the forks of a forklift truck. He jumped onto the side of the bin which then toppled. He fell to the ground with the bin falling on top of him resulting in his death. The Recorder noted that for the year ending 30 September 2011 the company’s profits after taxation amounted to £1,379,737.00. Dividends were declared of £200,000.00 which the Recorder said gave some indication of a healthy, well capitalised company in a good cash position. The Recorder of Belfast said that the appropriate fine would have been one of £250,000.00. He reduced that by 25% to reflect the plea of guilty. He thereby imposed a fine of £187,500.00. He allowed the company 6 months to pay the fine and the costs of the prosecution (which amounted to £13,000.00 plus 20% VAT).
On 20 July 2012, Lion Steel Equipment Limited became only the third company in the UK to be convicted of corporate manslaughter and was fined £480,000, after a 20% discount, and ordered to pay prosecution costs of £84,000. It is the largest of the three organizations so far convicted of the offence; Lions Steel employs over 100 people. Lion Steel was charged following the death of an employee who suffered fatal injuries when he fell 13m through a fragile roof at its site in Hyde, Cheshire in May 2008. The company admitted the offence, part way through a trial, on the basis that all charges against its directors would be dropped (three directors had been charged with gross negligence manslaughter and health and safety charges).
The Corporate Manslaughter and Corporate Homicide Act 2007 creates a means of accountability for deaths caused by very serious management failings. Prior to the act coming into force, it was possible for a corporate entity, such as a company, to be prosecuted for a wide range of criminal offences, including the common law offence of gross negligence manslaughter, which prior to the act coming into force was commonly referred to as ‘corporate manslaughter’. Prior to the act coming into force in order for the company to be guilty of the offence, it was also necessary for a senior individual who could be said to embody the company (also known as a ‘directing mind’) to be guilty of the offence. This requirement under the old law presented real difficulties in the prosecution of mid sized and larger companies, were quite often the senior manager or director was normally removed from the events that led to the death of an employee; both in terms of the geographical location, and management structure of the company. History is littered with failed prosecutions under the old law, cases such as those following the Zeebrugge ferry and Hatfield rail disaster.
The new law has a far wider ambit, meaning a company can be convicted if it can be proven that there was a gross breach of duty of care by “senior management,” instead of just one individual. The current law does not require the guilt of an individual director or ‘directing mind’ to be proven by a prosecution. The new act was specifically drafted to address the difficulties of convicting individuals from larger organisations, and enables prosecutors to bring charges against organisations, ostensibly albeit not expressly against senior managers within a corporation’s management structure. It is made clear in the guidance that accompanies the Act that the legislation is designed to target those who cut costs by taking unjustifiable risks with people’s safety; further that it was the governments intention that the act was to complement other serious breaches of health and safety legislation and not to replace it. In short an organisation will be guilty of the offence if the way in which its activities are managed or organised results in a death and amounts to a gross breach of a relevant duty of care to the deceased. A substantial part of the breach must have been in the way activities were managed by senior management.
Within the meaning of the act a duty of care is an obligation that an organisation has to take reasonable steps to protect a person’s safety. Arguably the greatest similarity between the common law offence of gross negligence manslaughter and the ‘new’ statutory offence is that both take what amounts to a duty of care from the law of negligence at common law. The Act provides that whether a particular organisation owes a particular duty of care to an individual is a question of law to be determined by a judge. In making any such finding the judge uniquely will have to make various findings of fact prior to leaving the question of whether there has been a breach of that duty to a jury. The effect of this is that a judge has to determine an element of the offence prior to directing a jury. This rather unusual position is unique in English law.
The Act concentrates on management, or systemic management, failure and whether it was the management failure that caused the death and was a gross breach, or a substantial cause of the gross breach, of the relevant duty of care. The Act also allows for the summation of management failings by different senior managers within an organisation on the basis that they are causative of a gross breach.
Prosecutors often grapple with who precisely to bring a prosecution against; this is particularly true with offences alleged against a corporate entity. One of the first important steps to be taken by a prosecutor is to identify who is the legal person to be charged and whether there is provision within the law to support such a charge. The Act provides for a large number of organisations to be prosecuted. The Act makes provision for a prosecution to be brought in the name of a partnership not against individual partners, any fine is to be paid out of partnership funds. This approach is the same as that taken under the Companies Act and means that partnerships will be dealt with in a similar manner to companies and other incorporated defendants. The governments rational in extending the offence to partnerships was to ensure that a large group of employing organisations, in many cases already subject to health and safety law fall within the ambit of the offence and are not excluded simply by virtue of a decision not to incorporate for commercial reasons. Very large organisations are often sub divided into different subsidiary groups. Companies within a group structure are all separate legal entities and therefore subject to the offence individually and separately. In practice a duty of care is more likely to be owed by a subsidiary and not by a parent company. The Act applies to companies and corporate bodies operating in the United Kingdom regardless of whether the company is incorporated or registered domestically or internationally.
The Act is concerned with corporate liability and does not apply to directors or other individuals who have a senior role in the company or organisation. However, existing health and safety offences and gross negligence manslaughter continue to apply to individuals. Prosecutions against individuals continue to be taken where there is sufficient evidence and it is in the public interest to do so, Lions Steel id a good example. Prosecution decisions will be made by the Crown Prosecution Service (England and Wales), the Crown Office and Procurator Fiscal Service (Scotland) and the Director of Public Prosecutions (Northern Ireland). Individuals are not able to bring private prosecutions.
Corporate manslaughter and Health and Safety breaches are always initially investigated by the police where a fatality is involved. For work related deaths the Health and Safety Executive become involved, after the initial police investigation. In the case of a work related death there will always be an inquest by a coroner who in such circumstances is obliged to summon a jury. The outcome of an inquest, and the verdict returned by the coroner’s jury has a strong bearing upon whether or not the Crown Prosecution Service (the C.P.S. are responsible for prosecuting manslaughter cases in England and Wales) will consider bringing charges for either Corporate or Gross Negligence Manslaughter. There is a great deal that corporations and companies may do in the period leading to an Inquest which is of assistance if they then come to be prosecuted.
At the time of the Corporate Manslaughter Act coming into force the C.P.S. issued guidance the effect of which is to ensure that police authorities investigate incidents were fatalities have occurred so that a proper charging decision may be made in relation to both Corporate Manslaughter under the Act and gross negligence manslaughter under common law. The C.P.S. have made it quite clear that there will be investigations should be more focused on the senior management of companies and corporations to ascertain whether or not any criminal culpability lies with the management by virtue of there acts or omissions.
The ambit of offences now open to the C.P.S. to charge is enhanced by the coming into force of the Act. It is anticipated that most corporate manslaughter prosecutions will also allege at trial a breach of a Health and Safety provision. Just as it was the norm in the past for a HSWA 1974 breach to be charged alongside a gross negligence manslaughter charge, it is anticipated that most corporate manslaughter charges will also be charged alongside HSWA 1974 charges. The three successful prosecutions brought to date have proven exactly that. In the case of Cotswold Geotechnical the company was charged with an offence under the HSWA 1974, further Mr. Eaton was also charged with gross negligence manslaughter and an offence under the HSWA 1974. This situation was quite normal prior to the coming into force of the CMA and in point of fact the CMA expressly accommodates trial of corporate manslaughter as against a company, gross negligence manslaughter as against an individual, health and safety offences (as against a company), health and safety offences as against a director and health and safety offences as against an employee; all based on the same incident and facts.
The normal sentence for a conviction of any of the offences mentioned above is a sizeable fine. The sentences for a corporate manslaughter conviction in the Crown Court is an unlimited fine. A corporate manslaughter conviction does not result in an individual being convicted of a criminal offence and so no one is sent to prison, however traditionally the more likely conviction for a director is a failure in a directors duty, consent, connivance or neglect, or other obligation under the HSWA 1974, which does carry with it a term of imprisonment.
In February 2010 the Sentencing Guidelines Council issued a definitive guideline for Corporate Manslaughter and Health and Safety Offences Causing Death. The guideline was the first of its kind, dealing with organisations rather than individuals. The guideline is specifically drafted, to use the words of the guideline to cover a wide variation in culpability. The thinking in the guideline is in parts superficially counter intuitive, for example the guideline states that the range of seriousness in health and safety offences is greater than for corporate manslaughter however, where the offence is shown to have caused death a fine should seldom be less than £100,000 and may well be measured in hundreds of thousands of pounds or more. In practice there is a step change in the quantum of fine from an offence causing death and one which does not. In contrast because a corporate manslaughter offence requires a gross breach at a senior level, the level of seriousness is significantly greater than a health and safety offence, the appropriate fine, so the guidance states, will seldom be less than £500,000 and may well, dependent of the financial state of the company, be measured in millions of pounds. However, to date, none of the three convicted companies have topped the £500,000 mark. It is a principle of the guideline that a fine should be punitive and sufficient to have an impact on the defendant.
It has long been an established principle when sentencing an individual defendant by way of a fine, that the defendant ought to be able to pay the fine. The corporate guideline appears, on an initial reading, to have maintained that principal. However, the courts have not interpreted the guideline in such a way. In the Cotswold Geotechnical case at sentence there defence counsel made plain to the judge that the company was in a parlous financial state. In keeping with standard practice in health and safety prosecutions the court was appraised of the company’s previous three years accounts. In 2007, the year prior to the incident, the company had marginally stayed out of the red; and then only by virtue of the sole directors director’s contribution to the company. The company had no fixed or fluid assets. The financial condition of the company held little sway with Mr. Justice Field when it came to sentence. The judge fined the company £385,000 payable over ten years the judge stated that a larger fine would cause the company to go into administration he then acknowledged that the fine may well still put the company into liquidation if that is the case it’s unfortunate but unavoidable, but it’s a consequence of the serious breach. Arguably in this case the court’s order was too punitive, nevertheless the magnitude of the fine minded of the state of the company serves as a stark warning for small companies and other SME’s of the likely approach the court’s will take. Larger organisations would, without doubt, face significantly larger fines. A fine of such a size for such a small company marks a departure form the established principle that a fine should be commensurate with an individual’s ability to pay. It is a troubling concept that a court could fine a company out of business, along with the employees livelihoods that go along with it.
Ironically the first three successful prosecutions under the Act haven’t told us a lot about the operation of the Act and what to expect from future prosecutions. The Cotswold Geotechnical case was not a case that in any way tested the provisions of the Act. The company was very small with just four employees, the Court found that Peter Eaton was in substance the company. Further Eaton had been on site very shortly prior to the death of Alexander Wright, he was part of the failing that brought about the state of affairs which led to Mr. Wright’s death. Mr. Eaton was aware that the construction of the excavation pit was not in accordance with industry practice and established guidelines. In those circumstances it is quite possible that a conviction would have been achieved under the old common law offence. Equally JMW Farms was a small organisation employing a dozen or so people.
In Lions Steel there was no trial which could have explored some of the more challenging and uncertain aspects of the Act which still remain to be tested in respect of a larger company. For example, how will the courts determine the issue of who is a senior manager” within the meaning of the act for large. organizations? For healthcare organizations it is likely that Corporate. Manslaughter offences will remain focused on corporate senior managers as well as medical senior managers who are closer to the factual events leading to the breach of duty. How far up the Corporate hierarchy a person has to be before they become a senior manager” remains an unknown.
Lion Steel also demonstrated that the juxtaposition of a Corporate Manslaughter Act prosecution against a Company alongside a prosecution against an individual (for gross negligence manslaughter or section 37 of the Health and Safety at Work etc. Act 1974) is still something that will cause the Courts difficulties. In Lion Steel the case against the directors for individual offences was severed from the Corporate Manslaughter case and then discontinued. However, whether a prosecutor opts for Corporate Manslaughter or individual charges (or both), senior managers should remain alert to the fact that they will be targeted by investigations. Furthermore, until a large healthcare organization is actually prosecuted and tried in Court, enforcement agencies will, in the absence of any guidance to the contrary, continue to investigate all the way up the management structure of organisations whenever there is a fatality.
The Act will only be properly tested when a large company, with a complex management structure, whose directors are distant in the structural hierarchy from the operational employees who are responsible for the act that causes the death. Until there is a large company involved in a multiple fatality incident, it is unlikely we will see how the Act can cope with the type of case it was designed to deal with. The public’s confidence in the ability of the system to hold negligent companies to account will likely only return with the successful prosecution of a large corporation following a serious industrial incident.
The Attorney General commented in summer of last year that there are in the region of 50 cases under referral to the Special Crime and Counter Terrorism Division where Corporate Manslaughter is one of the offences under consideration.
Blog | 18 Feb 13