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Legal: Corporate killing crack down

A new corporate manslaughter act comes into force next month. Kennedys partners Danny McShee and Paul Carter assess the impact.

The new Corporate Manslaughter and Corporate Homicide Act 2007 comes into force on 6 April of this year, introducing a statutory offence of “corporate manslaughter” (“corporate homicide” in Scotland).
Straight off, it is important to emphasise that the Act is an offence-creating statute rather than a duty-setting one. The Act itself imposes no new health and safety obligations.

What the Act is designed to do is make it easier to prosecute organisations where their gross negligence leads to death.

Until now, there has only been a common law offence of corporate manslaughter. For a company to be convicted of that offence, two things must happen: an individual person has to be found guilty of gross negligence manslaughter, and they must be so senior within the company that they represent its “directing mind”. This requirement is known as the identification principle. While efforts have been made to prosecute big companies under the outgoing law - most recently the Hatfield rail crash - all these attempts have failed.

The new Act will abolish the common law offence and replace it with a statutory offence, creating a new framework for finding an organisation guilty of corporate manslaughter. An organisation will be guilty of an offence 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.

An organisation is only guilty if the way in which its activities are managed or organised by its senior management is a substantial element in the breach. However, an organisation will not be able to escape a conviction just because they were not involved in all of the directly causative aspects of the event. Just because, for example, a designer didn’t undertake the defective construction will not be a defence if their design, supervision etc involving senior management was grossly negligent and more than a de minimus cause of the death.

But what is an organisation, what is "senior management", and what is a gross breach?

Whereas the outgoing common law offence only applies to corporate bodies, the new offence will apply to a much wider group of organisations, including corporations, specified government departments, police forces and partnerships. Those designers who operate in partnership will therefore be exposed to a manslaughter offence for the first time.

“Senior management” is defined as the persons who play significant roles in: a) the making of decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised; or b) the actual managing or organising of the whole or a substantial part of those activities.

The inclusion in the definition of a person “actually managing or organising … a substantial part of those activities” is a major change. It is bound to catch a lower layer of management that, under the outgoing law, would not be classified as representing the directing mind. The other key point about the definition is that the new offence allows the prosecutor to aggregate the failures of a number of senior managers, rather than relying on the conduct of one single “directing mind”, as required by the identification principle.

Finally, the gross breach. Under the new Act, there must be a gross breach of the duty of care. This reminds juries that the offence is reserved only for the most serious cases. Under he current law, “gross” is defined as requiring some form of wilful or bad conduct (which includes the reckless disregard of risks), rather than just making mistakes.

And note that although the Act imposes no new liability on individuals the enforcing authorities can still prosecute senior managers and directors under existing laws, including individual gross negligence manslaughter or health and safety offences

The police will be the sole investigators of corporate manslaughter charges. If found guilty, the main sanction will be a potentially unlimited fine, although perhaps the worst sanction that will apply is the stigma and reputational impact of being branded a “corporate killer”. There will also be the potential for remedial and publicity orders.

It is likely that fines for conviction will be set at a very high level, possibly, in the worst cases many hundreds of millions of pounds.

For engineering firms the main concern will be the second part of the definition of senior management, catching people lower down the management chain than those regarded as the “directing mind” under the outgoing law. Prosecuting authorities will look at a much bigger slice of the workforce when considering whether the offence has been committed.

This is especially relevant to engineering firms, given that a number of different people are involved at different stages of the design/construction process, or indeed where they are involved in the ongoing checking and maintenance of critical structures (such as bridges, tunnels, railways etc).

The new offence does have a number of safeguards that are designed to restrict its use to cover the worst cases only, particularly the requirement for any breach to be “gross”. But it does seems likely that there will be more investigations and prosecutions for corporate manslaughter.

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