First Conviction For Corporate Manslaughter
Following the recent conviction of Cotswold Geotechnical (Holdings) Ltd under the new corporate manslaughter legislation, health and safety law specialist Guy Bastable, a partner at BCL Burton Copeland, examines the legislation and sets out the implications for directors
On 15 February 2011, Cotswold Geotechnical (Holdings) Ltd became the first company to be convicted of corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007.
The conviction came two and a half years after Alexander Wright, a junior geologist and employee of the company, was killed while taking soil samples from the inside of an excavated pit.
Cotswold Geotechnical were fined £385,000, which amounted to 115% of their turnover for the year of the accident, payable over 10 years. This was notwithstanding the fact that the sentencing judge considered that the fine and payment plan might well cause the company’s liquidation. Mr Justice Field said that this was an unfortunate but unavoidable consequence of the serious breach.
The case sheds light on a number of aspects of the new law, not least in relation to the approach of the Court to sentencing. However, it remains to be seen whether the Act will lead to the successful prosecution of larger organizations.
The Corporate Manslaughter and Corporate Homicide Act 2007 came into force in April 2008. Previously it had been notoriously difficult to convict large companies of the common law offence of gross negligence manslaughter (which, until the Act, had been commonly referred to as ‘corporate manslaughter’), although there had been a number of convictions of small companies.
The Act removes the necessity under the old law to identify and establish the guilt of a ‘directing mind’ – a senior individual who could be said to embody the company in his actions and decisions. In a large or medium-sized organization, such an individual is often far removed from the events surrounding a death, making establishing his or her guilt for gross negligence manslaughter unlikely.
Instead, the Act concentrates on the way in which the organization’s activities are managed or organized, commonly referred to as a ‘management failure’, and whether that caused the death and was a gross breach of a relevant duty of care. Further, the way in which its activities were managed or organized by its senior management must be a substantial element of that breach. In addition, unlike the previous common law offence, significantly the Act allows the aggregation of failings by a number of senior management.
The effectiveness of the Act was not really tested by Cotswold Geotechnical, as the company was a very small organization (with only four employees at the time of sentence) and the judge found that the company’s sole director, Peter Eaton, was ‘in substance’ the company. Mr Eaton was on site shortly before the accident occurred and was directly implicated in the circumstances of the accident. In addition, the company’s approach to trial pitting, for which Mr Eaton was responsible, was found to be wholly and unnecessarily dangerous and to have ignored well recognized industry guidance. In such circumstances the company could well have been convicted of the previous common law offence of corporate manslaughter (which no longer applies to organizations in the light of the Act).
Investigations and prosecutions
It is important to note that corporate manslaughter and health and safety breaches are criminal offences that are prosecuted in the criminal courts, and that the police lead investigations into fatal accidents where such a serious criminal offence is suspected, working in partnership with the Health and Safety Executive, the local authority or other regulatory authority.
In addition, the prosecution of corporate manslaughter is the responsibility of the Crown Prosecution Service (CPS) in England and Wales. The CPS has issued guidance requiring police investigating fatalities to consider the possibility of a prosecution for corporate manslaughter, as well as looking at the actions of individuals for possible prosecution for gross negligence manslaughter under the common law. The CPS has also made it clear that investigations will have a far greater focus than before on the senior management and whether their acts or omissions contributed to the fatality.
The Act adds to the range of offences available to the police and the CPS when investigating/prosecuting an organization and its employees following a fatal accident. An investigation following a fatal accident will now be undertaken with a view to prosecuting:
- An organization for corporate manslaughter.
- An organization for breaching the Health and Safety at Work etc Act 1974 (HSWA).
- An individual for gross negligence manslaughter.
- A director/manager/etc for secondary liability in relation to a breach of the HSWA by the organization.
- An employee for breach of Section 7 of the HSWA.
Indeed, in Cotswold Geotechnical, as well as the corporate manslaughter charge, the company was originally also charged with an offence under the HSWA. In addition, Mr Eaton was charged with gross negligence manslaughter under the common law and an offence under the HSWA. In the event, Mr Eaton was too ill to stand trial for gross negligence manslaughter or the HSWA offence and, interestingly, the HSWA offence against the company was discontinued when the judge suggested that it might confuse the jury. This was despite the fact that the new Act positively anticipates simultaneous or sequential prosecutions for corporate manslaughter and a breach of health and safety legislation arising out of the same set of facts.
Nevertheless, Cotswold Geotechnical shows that the CPS is willing to deploy the full arsenal of applicable criminal offences following a fatal accident, and the CPS and the HSE will undoubtedly continue to target senior individuals with prosecutions for health and safety offences that carry significant sentences, including imprisonment.
The main sanction on conviction for corporate manslaughter under the Act is an unlimited fine. Individuals cannot be convicted of corporate manslaughter and, accordingly, no individual can be sentenced to a term of imprisonment under the Act, although directors and senior individuals can be sentenced to imprisonment if convicted of one of a number of health and safety offences. This includes secondary liability for breaches by the organization by reason of the senior individual’s consent, connivance or neglect.
In 2010 the Sentencing Guidelines Council issued its definitive guidelines for sentencing organizations for corporate manslaughter or health and safety offences that cause death.
The guidelines provide that there will inevitably be a broad range of fines reflecting the seriousness involved and the differences in circumstances of defendants, but goes on to specify that fines for organizations found guilty of corporate manslaughter may be millions of pounds and should seldom be below £500,000. For health and safety offences that cause death, fines from £100,000 up to several hundreds of thousands of pounds should be imposed.
The guidelines also provide that, while a fine is intended to inflict a painful punishment, it should be one that the defendant organization is capable of paying.
In Cotswold Geotechnical, representations were made on the company’s behalf that it was in a dire financial position; that it had barely broken even in the previous year; that it had limited assets and no reserves; and that the sole director had kept it afloat. However, this was insufficient to take it far below the £500,000 starting point for an organization convicted of corporate manslaughter. Mr Justice Field, while accepting that a larger fine would cause the company to be liquidated, fined the company £385,000 payable over 10 years even while acknowledging that the fine and terms of payment may well put the company into liquidation. Mr Justice Field said: ‘If that is the case it’s unfortunate but unavoidable. But it’s a consequence of the serious breach.’
The guidelines provide for payment by instalments, but in the case of a large organization the fine should be payable within 28 days. In the case of a smaller or financially stretched organization, it is permissible to require payment to be spread over a much longer period and there is no limitation to payment within 12 months (as is the case with individual defendants generally). An extended period for the payment of further instalments may be particularly appropriate for an organization of limited means which has committed a serious offence and where it is undesirable that the fine should cause it to be put out of business (as in Cotswold Geotechnical).
In Cotswold Geotechnical, Mr Justice Field also said that the fine marked the gravity of the offence and the deterrent effect that it would have on organizations to strongly adhere to health and safety guidance. If Cotswold Geotechnical appeal against their sentence, it will be interesting to see the approach of the Court of Appeal to sentencing an organization of such a small size. In any event, the approach to instalments makes clear the Court’s intention to extract the maximum fine possible – or even not possible – from organizations with limited means when sentencing following a conviction for corporate manslaughter. Bearing in mind the small size of Cotswold Geotechnical, in cases of serious breach, large organizations can expect much larger fines and very large organizations can expect fines in the millions.
The author, Guy Bastable, is a specialist corporate defence solicitor and a recognized leading expert in fatal accidents, corporate manslaughter and health and safety breaches. He is a partner in the Business Crime & Regulation department of London-based BCL Burton Copeland, a leading law firm in the areas of business crime and regulatory enforcement, providing advice and representation to organizations and individuals nationwide and internationally. BCL regularly advise in relation to the investigation and prosecution of allegations of corporate manslaughter, gross negligence manslaughter and health and safety breaches arising out of a fatal accident.