It has been argued that, despite the long consultation process before its enactment, the importance of the Corporate Manslaughter and Corporate Homicide Act 2007 (“CMCHA 2007”) may lie only in the symbolic creation of a statutory offence of corporate manslaughter. Critically discuss whether and to what extent the CMCHA 2007 has eliminated the deficiencies of the pre-existing common law regime.

Note: One of my duties in the various places where I teach is to show students how to write essays – something most young people are not nowadays taught to do. What I like to do in class is to choose a question at random, discuss possible approaches, and then dictate an answer one paragraph at a time. Some of these answers are very short. Some amount to small dissertations. In this latter case, the students take turns at looking on-line for the information we decide is needed. It they cannot find it, I show them how to change the structure of what has already been written, or to strike out in a new direction.

It is a “writing masterclass” approach that makes use of my own strengths, and is often a welcome alternative to formal teaching. It fills up a long morning session. Everyone learns something, and the more attentive will improve their final grades by at least one step.

Here is an example of the finished product. Do not take it as a statement of personal opinion. It is an answer produced for a specific question, and it bears in mind what a possibly unknown examiner will appreciate, and what can be written to incorporate the sources found in class. SIG

PS – If anyone wants to engage my services as a teacher of these skills, please click on the image to the left. Though they are my niche subjects, Greek and Latin are not my exclusive focus as a teacher. I do much else besides.

PPS – If you are a student, and you have come across this in a frantic last minute search, I advise you not to copy and paste and submit. You will be found out in three clicks of a mouse. Examiners were not born yesterday.

The Corporate Manslaughter and Corporate Homicide Act 2007 (“CMCHA 2007” “The Act”) came into force on the 6th April 2008. In England, Wales and Northern Ireland, it creates the offence of corporate manslaughter. In Scotland, it creates the offence of corporate homicide. Unless otherwise stated, this essay will discuss the law only as it applies in the United Kingdom outside Scotland.

Juridical Persons and Criminal Responsibility in English Law

The twin foundations of English company law are incorporation and limited liability. Incorporation gives a company the status of a body corporate. It becomes an artificial or a juridical person, with rights and responsibilities separate from those of its shareholders. It can own property. It can buy and sell, and sue and be sued. Unless brought to an end by its owners or the authorities, it is immortal. This is trite law, and has been the case since the first company laws were made in the 1840s. But it is worth emphasising the total separation of the person of a limited company and the persons of its owners. Per Lord Macnaughten:

The company is at law a different person altogether from the subscribers to the memorandum…. (Salomon v A Salomon & Co Ltd [1897], p. 51)

Limited liability makes shareholders responsible for the debts of their company only to the amount of their paid-up investment in the company. They cannot be called on to pay the debts of an insolvent company beyond this amount.

Since the Salomon decision, exceptions have been made to Lord Macnaughten’s statement of the law. There are limited circumstances in which what is called “the corporate veil” can be pierced. These generally involve fraud of some kind. They are summarised per Lord Sumption:

“Piercing the corporate veil”… means disregarding the separate personality of the company. There is a range of situations in which the law attributes the acts or property of a company to those who control it, without disregarding its separate legal personality. The controller may be personally liable, generally in addition to the company, for something that he has done as its agent or as a joint actor. (Prest v Petrodel Resources Ltd [2013], para 18)

It is an established principle of English company law, per Denning LJ, that “[f]raud unravels all.” (Lazarus Estates Ltd v Beasley [1956], p. 712) However, most cases involving the corporate veil are concerned with financial derelictions. From time to time after Salomon, the question arose of what the law said about physical harm to natural persons. In many cases, the answer was simple. Criminal liability lay with the natural persons who, as agents of a company, could be held responsible for the harm. For purposes of finacial compensation, the company was responsible via the doctrine of vicarious liability. In many cases, though, limited companies were blamed for very substantial loss of life, but no uniquely responsible natural person could be identified, and the company itself was exempt from criminal liability. Several of these cases occurred towards the end of the twentieth century. These were:

  • In November 1987, a terrible fire at King’s Cross Underground Station. This killed 31 people. In his report on the fire, Desmond Fennell QC blamed London Underground for negligence. It had failed to guard against the risk of fire. It had given no single person overall responsibility for safety. (The Law Commission, 1996, p. 4)
  • In July 1988, the Piper Alpha oil platform disaster in the North Sea. This killed 167 people. In his report, Lord Cullen blamed the platform operator, which was a limited company, for gross negligence. (The Law Commission, 1996, p. 4)
  • In December 1988, a collision of three rush-hour trains at Clapham Railway Station. This killed 35 people and injured 500 others. In his report, Anthony Hidden QC criticised British Rail, where “concern for safety was permitted to co-exist with working practiceswhich … were positively dangerous…. [Further,] the errors go much wider and higher in the organisation than merely to remain at the hands of those who were working that day.” (The Law Commission, 1996, p. 5)

Corporate Killing

There were no corporate prosecutions in these cases, and others aftwerwards. The reason was that no individual natural person or persons could be identified with sufficient direct responsibility to be blamed for the disasters. An attempt had been made after the Herald of Free Enterprise sinking in March 1987. A large cross-Channel ferry had sunk off Zeebrugge, drowning 192 people. Here, a prosecution was attempted, against five senior managers and agains P&O, the owner of the ferry. At the trial, Turner J did confirm that a limited company could be found guilty of manslaughter:

…where a corporation, through the controlling mind of one of its agents, does an act which fulfils the prerequisites of the crime of manslaughter, it is properly indictable for the crime of manslaughter. (R v P & O Ferries (Dover) Ltd, 1990)

However, he eventually directed the jury to acquit, on the grounds that mens rea could not be attributed to the natural defendants, and therefore could not be attributed to the company itself. While the acquittal was unpopular, the reasoning was clear. It had clear authority. (Tesco Supermarkets Ltd v Nattrass [1971]) When it is difficult to find anyone who was positively negligent, or who the “controlling mind” of a company, it might be impossible to bring charges. This “identification principle” effectively nullified the common law offence of gross negligence manslaughter. In exceptional cases, a “controlling mind” might be found. Mostly, it could not.

Of course, the clarity of this reasoning was an unintentional reward to those companies that had a diffuse management structure. It was an invitation for them to become more diffuse still – decentralising and sub-contracting responsibility to the point where criminal investigators found themselves repeatedly clutching at shadows. The Law Commission was troubled by what it believed was a “shrewd and unscrupulous” concern to abolish anything approaching a “controlling mind” from health and safety. (The Law Commission, 1996, p. 6)

It was for this reason that the Law Commission suggested, in 1996, the creation of a new offence of “corporate killing.” This should broadly correspond to the individual offence of killing by gross negligence. As with the individual offence, corporate killing should only be found where a defendant’s conduct had fallen far below any reasonable standard of care. Unlike with the indvidual offence, corporate killing should be found without proof that the risk was obvious, or that the defendant was capable of appreciating the risk. (The Law Commission, 1996, p. 7)

CMCHA 2007

After a decade of consultation, and after several other notable corporate disasters, the British Government agreed, in 2005, that there was a need for “effective laws in place to prosecute organisations where they have paid scant regard to the proper management of health and safety with fatal results.” (Home Office, 2005, p. 1) This agreement is embodied in CMCHA 2007, s.1:

An organisation to which this section applies is guilty of an offence if the way in which its activities are managed or organised—

  1. causes a person’s death, and

  2. amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.

The rest of the Act spells out the details of how the new law is to apply. It applies to “corporations.” These are defined in s.25 not only as limited companies, but also as “any body corporate wherever incorporated.” This means every kind of limited company, as well as limited partnerships and trade unions and trade associations and charities and NHS Foundation Trusts, and even English and Welsh local governments. It also means the Police. It applies to foreign corporations operating in the United Kingdom, whether or not there are incorporated there. (s.25) Its reach is very wide. It applies to most employers above the level of the sole trader.

Perhaps the main feature of the Act is that it seeks to abolish the “controlling mind” requirement. S.1(4) allows blame to be put on “senior management” of an offending company, whether or not they could be proven to have been naturally responsible:

‘Senior management’, in relation to an organisation, means the persons who play significant roles in—

  1. the making of decisions about how the whole or a substantial part of its activities are to be managed or organised, or

  2. the actual managing or organising of the whole or a substantial part of those activities.

Instead of looking for an individual “controlling mind,” the courts are now able to look at management systems and practices. The common law offence of gross negligence manslaughter remains available as an alternative charge. So do prosecutions under the Health and Safety at Work Act 1974. This Act is a serious alternative, since prosecutions have no need to prove that breaches of its provisions caused any actual harm. (R v. Chargot Ltd (2009)) The CMCHA 2007 requires proof that a relevant breach of duty was a main cause of death. Indeed, the accepted practice when bringing prosecutions under the CMCHA 2007 is to add alternative charges under the 1974 Act. This is to raise the chance of a successful prosecution, when a jury may be reluctant to bring in a conviction for the more serious charges. (R v Coutts (2007))

Calls for Better Corporate Governance

The Health and Safety Executive welcomed the new law, arguing that it would motivate boards to evaluate their approaches to health and safety and their individual responsibilities, as it concentrated on the failures of senior management. (Select Committee on Work and Pensions, 2008). The Communication Workers’ Union North West agreed. The new law, it said,

will be a wake up call for employers, company bosses and organisations and the law will be a deterrent to employers who fail to meet the proper standards of health and safety. (Select Committee on Work and Pensions, 2008)

However, the CMCHA 2007 was not inspired just by that series of corporate disasters in the late twentieth century. It was one legal embodiment among many of a rising suspicion about the workings of large business and other corporations. In 1984, Bob Tricker coined the term “corporate governance.” His definition then was:

The governance role is not concerned with the running of the company, per se, but with giving overall direction to the enterprise, with overseeing and controlling the executive actions of management and with satisfying legitimate expectations of accountability and regulation by interests beyond the corporate boundaries. (McRitchie, 2009)

The key phrase here is “satisfying legitimate expectations of accountability.” Modern corporations are often very large organisations, operating across borders and richer than the governments in many of the countries where they operate. “Ultimately, a class of directors of global companies may emerge who transcend national boundaries, economic interests, and political barriers.” (Tricker, 2015, p. 476) There is a growing demand for these to operate ethically. People expect “more of companies than just making a profit for their shareholders while remaining within the law.” (Tricker, 2015, p. 25) This is the demand. The suspicion is that

greed seems to have replaced trust as capitalism’s driving force. Indeed, the dominant paradigm of corporate governance, agency theory, is rooted in the belief that people are utility maximizers who need to be controlled because they cannot be trusted. (Tricker, 2015, p. 473)

The CMCHA 2007 can be seen as a response to failures of corporate governance. When companies will not manage themselves effectively, it is the right and duty of the legal authorities to step in and to correct the deficiency with new laws. This is the view of James Harlow, who praises the British law and calls for similar laws to be introduced in the United States. (Harlow, 2011):

[The CMCHA 2007] makes clear that, as a doctrinal matter, corporations “are capable of committing crimes as grave as manslaughter.” With juries empowered to look more globally at corporate policies, corporations must “take a fresh look at their culture and ethos.” And perhaps most importantly, indictment and conviction for corporate manslaughter will almost certainly carry greater deterrent and punitive weight than liability for violating health and safety regulations. (Harlow, 2011, pp. 152-53)

Return of the “Controlling Mind”

Though welcomed by many as a step forward from the defective common law treatment of corporate criminal liability, it does seem that the Act’s significance is largely symbolic. I have mentioned that perhaps the main defect of the old law was the “controlling mind” principle. In theory, the CMCHA 2007 has abolished this principle. Its intention is to get round the procedural difficulty of prosecuting large organisations for systemic failings in health and safety. S.1(4) quoted above widens the scope of liability from the “controlling mind” – which effectively meant directors – to “senior management.” This being said, the Act may not have widened the scope as much as was hoped.

The Act goes after “senior management” who “play significant roles.” Their management has to amount to a “substantial part” of the organisation activities. James Gobert sees this as a path back to the procedural difficulties of the old law, in which individual responsibility was privileged above systemic failings. (Gobert, 2008, p. 428)

Moreover, the “senior management” test has been drawn very tightly. See s.1(3):

An organisation is guilty of an offence under this section only if the way in which its activities are managed or organised by its senior management is a substantial element in the breach referred to in subsection (1).

This means that any actions that can be blamed on junior management are outside the scope of the CMCHA 2007. There is an obvious incentive for large corporations to delegate health and safety management lower down the chain of corporate responsibility, thereby frustrating much of the purpose of the Act. The first conviction under the Act was considered by the Court of Appeal in 2011. The defendant company had only eight employees. Per McCluskey J:

The true test… will come with a prosecution of a large company which has multiple directors which already purports to have compliant health and safety procedures. (R v Cotswold Geotechnical (Holdings) Ltd [2011])

Eight years later, we are still waiting for a proper consideration of the “senior management” test. Between 2008 and 2015, there were twelve successful prosecutions for corporate manslaughter. These were nearly all small or medium-sized companies, and many were attended by guilty pleas. Contrast this with the 63 convictions for deaths under other laws. (Fields & Jones, 2015, p. 216) In 2019, there was R v Perrott and CDFP 2019, a case heard in Exeter Crown Court. Here, the prosecution tried to rebut a defence of blaming junior management by insisting on a consideration of the supervisory function of senior management. Again, however, this was not a large organisation, and the prosecution failed. (Oldland, 2019)

Because there has been no prosecution of a very large company, there has been no proper consideration of the “senior management” test. Instead,

smaller organisations are more at risk of a prosecution for Corporate Manslaughter following a workplace fatality, not by reason of some corporate policy or culpable corporate indifference to risk at a senior level, but because it is easier to point the finger at those with a direct responsibility for supervising the very activity which gave rise to the accident. (Oldland, 2019)

We were promised a corporate manslaughter law to make sure the Herald of Free Enterprise fiasco was never repeated in the courts. Three decades after this, and twelve years after the law was made, we remain in some doubt of its effect. Many of the successful prosecutions could surely have been brought under the old law.

The Focus on Death

The stated purpose of the Act CMCHA 2007 is to punish corporate killings. The problem here is that deaths are a tiny fraction of the harms suffered in the workplace. In 2017-18, 144 people were killed at work in Britain. An estimated 555,000 workers suffered non-fatal injuries. (Health and Safety Executive, 2018) As said above, part of the driving force behind the Act was to improve corporate governance. The focus on death may be commendable for many reasons. But the statistical insignificance of death in the workplace severely limits the impact of the law as a signal to large corporations to improve their governance.

Furthermore, breaches of the CMCHA 2007 risk an unlimited fine. However, since the 1st February 2016, sentencing guidelines have been set. Fines depend on the size of an organisation, and range between £180,000 and £20 million. (Sentencing Council, 2016) S.10 does require offending companies to publicise convictions. This may have some deterrent and punitive effect. But, while these fines are likely to destroy the small companies that have so far been prosecuted, they are unlikely to have much deterrent effect on the big companies that the law was passed as a means of mending their ways.

Atomised Corporate Structures

Perhaps the main problem with the Act has not yet been realised. Because most prosecutions have been of small and medium-sized companies, there has not yet been any obvious scandal arising from the nature of much modern corporate business. Here we come back to the fact of limited liability mentioned above. Incorporation creates a legal person separate from the personalities of its owners. When these personalities are themselves artificial, the ultimate natural owners of a business can be insulated from financial loss by multiple layers of limited liability. The result is that a legal device intended to protect the assets of the owners of a business can be used to protect the “controlling mind” or the “senior management” of what, reasonably considered, is a single business.

We see this in Adams v Cape Industries (1990 Ch 433). This was a tort case involving the liability of a parent company for the acts of a subsidiary. The parent company was sued because its subsidiary lacked the resources to pay the damages awarded in an earlier action. The action failed, the Court of Appeal ruling that

we do not accept as a matter of law that the court is entitled to lift the corporate veil as against a defendant company which is the member of a corporate group merely because the corporate structure has been used so as to ensure that the legal liability (if any) in respect of particular future activities of the group (and correspondingly the risk of enforcement of that liability) will fall on another member of the group rather than the defendant company. (Adams v Cape Industries (1990) Ch 433).

In other words, it was not illegal for companies to organise their structures for the calculated purpose of avoiding liability. Commenting on this and other cases of the same kind, Jose Antunes says:

[W]hile the economic forms of enterprise organization have evolved in the direction of multi corporate structures, the legal forms of its organization have remained stuck to a statutory model designed and conceived exclusively for the case of single corporate enterprises… (Antunes, 1998-99, p. 207)

This particular loophole was addressed in Chandler v Cape plc ([2012] EWCA Civ 525), per Williams J:

It is true that generally the law imposes no duty upon a party to prevent a third party from causing damage to another…. However….there are exceptions to the general rule. (Chandler v Cape plc [2012], para 71)

The loophole was further addressed in Lungowe v Vedanta Resources plc ([2019] UKSC 20), where it was held that the specific actions of a parent company could make it liable for the torts of its subsidiary.

But these are partial attempts to deal with an issue that has arisen in tort cases. There remains no general principle for treating grouped corporate structures as a single entity. It remains unclear how these principles developed for tort law would apply in the criminal law of corporate manslaughter.

In conclusion, it can be said that the CMCHA 2007 was brought in to address specific and undeniable problems of corporate wrongdoing. More than a decade after its introduction, however, it cannot be called a resounding success. No very big company has yet been prosecuted, thereby settling the nature of the “senior management” test. The Act focusses on death, rather than on the more significant evil of perhaps serious injury. The diffuse and atomised nature of modern big business may make the Act difficult to enforce. This being said, if the Act really is of largely symbolic importance, symbols still count for something. The Act may be a first step towards reshaping the law in a better direction.

Bibliography

Lazarus Estates Ltd v Beasley (n.d.) [1956] 1 QB.

2007, C. M. a. C. H. A., n.d. s.l.:s.n.

Adams v Cape Industries (1990) Ch 433.

Anon., n.d. Health and Safety at Work Act 1974. s.l.:s.n.

Antunes, J. A., 1998-99. The Liability of Polycorporate Enterprises. Connecticut Journal of International Law, Volume 13, pp. 197-207.

Chandler v Cape plc (2012) EWCA Civ 525.

Fields, S. & Jones, L., 2015. Is the Net of Corporate Criminal Liability under the Corporate Manslaughter and Corporate Homicide Act 2007 Expanding?. Business Law Review, 36(6).

Gobert, J., 2008. The Corporate Manslaughter and Corporate Homicide Act 2007 – Thirteen Years in the Making but was it Worth the Wait?. The Modern Law Review, 71(3).

Harlow, J. W., 2011. Corporate Criminal Responsibility: A Statutory Framework. Duke Law Journal, 61(123), pp. 123-166.

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Lungowe v Vedanta Resources plc (2019) UKSC 20.

McRitchie, J., 2009. Reviews of Corporate Governance: Principles, Policies and Practices. [Online]
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[Accessed 08 April 2019].

Oldland, A., 2019. Corporate Manslaughter and the hand of Senior Management. [Online]
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[Accessed 25 April 2019].

Prest v Petrodel Resources Ltd (n.d.) Prest v Petrodel Resources Ltd [2013] UKSC 34.

R v Cotswold Geotechnical (Holdings) Ltd (2011) EWCA Crim 1337.

R v Coutts (2007) 1 Cr App R 6.

R v P & O Ferries (Dover) Ltd (1990) 93 Cr App R 72.

R v. Chargot Ltd (2009) 1 WLR 1.

Salomon v A Salomon & Co Ltd (1897) [1897] AC 22.

Select Committee on Work and Pensions, 2008. Third Report, London: House of Commons.

Sentencing Council, 2016. Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences: Definitive Guideline. [Online]
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[Accessed 11 04 2019].

Tesco Supermarkets Ltd v Nattrass (1971) UKHL 1.

The Law Commission, 1996. Legislating the Criminal Code: Involuntary Manslaughter (Law Com 237), London: HMSO.

Tricker, R., 2015. Corporate Governance: Principles, Policies, and Practices. 3rd ed. Oxford: Oxford University Press.

 

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