Critically examine the legal means by which companies may be brought to justice for acts or omissions, which result in death or serious injury to individuals.
Introduction
The premise of the legal means in bringing companies or corporations to justice for their acts and omissions resulting in death or serious injury to individuals is the personality of companies distinct from its founders and officers. Companies are by law single entities, with separate personality from the individuals that make up the organisation. (Barrett, 2007) The implication is two-fold. Corporations can engage in transactions as an entity and it can sue or make claims against another entity. Concurrently, it can also be the subject of suit even for civil and/or criminal liability.
The options available in attaching liability to companies differ depending on the legal area applicable to the situation. Corporate law focuses on the regulation of the company’s relationship with the members of the organisation as contrasted with its responsibilities with parties external to the company. Civil and criminal laws apply to the dealings or relationship of the company with external entities. Civil law encompassing contracts, tort and restitution equally apply to individuals and corporations. The attribution of accountability or responsibility to corporations is relatively non-problematic because this area of law does not require the consideration of fault and even in tort law, particularly negligence, assessment of fault is objective in supporting liability. However, this is not true for criminal law, which heavily relies on the determination of moral fault to support the attribution of liability. Attributing criminal liability to corporations is problematic because the enforcement of liability is not through compensation but through a punishment system that applies standards in determining fault including intent, premeditation, and subjective carelessness. The problem emerges from the difficulty in applying these standards to corporations, which although given a separate identity, acts through the people making up the company.
Generally, three theories support the attribution of blame to corporations. First is the agency principle, which provides that the company assume liability for the acts or omissions of its employees acting as its agents. This principle attributes liability to companies so that responsibility for damages accrues to the corporation. Second is the blame attribution theory, which applies to all other situations that the agency principle does not cover. This theory identifies a particular layer of senior company officers as the brains of the acts or omissions committed by the company. The acts or omissions of these senior officers attribute liability to the company. This does not cover the acts or omissions of other employees below senior company officers. Third is corporate blame based on the culture, procedures and systems employed by the company. The first and second theories commonly equate individual and corporate culpability. The third theory recognises the differences between individuals and corporations in the attribution of liability. These theories comprise the framework for the attribution of civil and criminal liability to companies. (Glazebook, 2002)
As a problem area, the focus of the discussion is on the attribution of civil and/or criminal liability to companies for deaths and serious injuries. Although, civil and criminal law require different elements for the attribution of liability, these can co-exist. This means that companies can become liable civilly and criminally for the same act or omission resulting to deaths or serious injuries. Tort law is the means of attributing civil liability to companies for deaths and serious injuries. As long as the company is proven to have committed the act or omission leading to the death or serious injury, the company can be civilly liable to the claimant. This also may not prevent claimants from pursuing a separate criminal prosecution of the company. In criminal claims, attribution of liability to companies could be according to the rules of intentional acts or omissions or negligence, which is the common situation for corporations. The discussion focuses on negligence in attributing criminal liability to companies by considering the provisions of the Health and Safety at Work Act 1974 and the Corporate Manslaughter and Corporate Homicide Act 2007.
The paper has two general discussion sections, one is using civil law to bring companies to justice for deaths and injuries and the other is using criminal law to attribute criminal liability to companies for deaths and serious injuries. The discussion provides how to attribute civil and/or criminal liability to companies and identify the limitations or problems in doing so.
Attributing Liability to Companies under Civil Law
Four elements distinguish the operation of civil law in attributing liability to entities. First, the parties involved are private individuals. This means that the action depends on the assertion of rights by entities and claims based on expected duties or obligations. Pursuit of claims under civil law depends on the action of the entities or parties involved. Second, the courts determine civil claims by considering evidence of whether the party claimed to have caused harm or injury to the claimant did the act or omission resulting to the harm. The existence of rights and obligations between entities becomes the basis of the validity of the claim. Third, the remedy for civil liability is damages, which could be in monetary or non-monetary terms, as compensation for the injury or loss incurred by the claiming party. Fourth, the burden of proof to support civil liability is ‘preponderance of evidence’. This means that as long as a reasonable consideration of evidence shows proof of the act or commission, then this is enough to support the imposition of damages. (Sime & French, 2009)
Tort comprises one form of civil wrong. As such, the attribution of liability follows civil law rules. In attributing liability to companies, liability should emerge from acts or omissions considered as wrongful, such as when there is a duty to perform an act or to refrain from committing an act. (Steele, 2007) In the employer and employee relationship, the liability for the commission of an act or omission made by the employee accrues to the employer through vicarious liability due to the operation of the agency theory. In this situation, the employee becomes personally liable while the employer becomes vicariously liable.
Another consideration in accruing liability to companies is proof of fault, which means that the claimant should be able to prove that the defendant indeed committed the act or omitted to commit an act, whether this is with intent or negligently. However, it could also happen that liability could fall under strict liability. Rylands v. Fletcher (1868) involved the case of a company that built a dam or reservoir to support its mill business. During the excavation, the contractor and engineers run across vertical shafts. Thinking these to be abandoned shafts, the company continued with the excavation and filled this with water. After a few days, the shafts gave way and flooded the mine where the plaintiffs worked. The court held that the company is liable for the damage done and harm caused because even if there was no intention to commit harm, the engagement in an activity that is ordinarily safe but becomes dangerous when things go wrong, such as dammed water if released, gives rise to liability.
The last consideration in accruing liability to the company is proof that the claimant has indeed experienced the damage or injury, which should be proximate to the act or omission. This means that the chain of events commencing with the act or omission should be continuous to attribute liability to the company.
Attribution of civil liability to companies for negligence could be through strict liability or vicarious liability. The attribution of civil liability to companies could be indirect such as when the accrual of liability is through the actions of agents. It could also be direct as in the operation of strict liability where the company accrues liability for acts or omissions regardless of culpability. (Sime & French, 2009)
Relative to death or serious injury, negligence liability attribution to companies applies. Section 2(1) of the Unfair Contract Terms Act 1977 provides for the accrual of liability for death or personal injury that cannot be restricted because of contractual terms such as exclusion clauses. This means that even if there is a contract providing excluding companies from liability for death and injuries, if these happens, companies would still become liable. In employment contracts, companies become civilly liable for acts or omissions that could cause death or serious injury to employees and managers. In sales contracts, consumer protection legislations provide for the civil liability of companies for deaths or serious in injuries caused by intentional or negligent acts or omissions causing death or serious injuries to consumers or third persons because of defective products.
However, based on the trend, there is preference for the attribution of criminal liability to companies in the case of deaths, with civil liability consisting only of an accompanying or incidental liability. A compelling reason could be the more severe penalty in pursuing a criminal complaint against a company because of the possible imposition of a prison terms together with fines. As such, the case carries a greater deterrent value for companies and perhaps even a greater sense of justice for the injured parties. However, although companies have separate personality and subject to the imposition of criminal liability, the implementation of the penalty, particularly the prison sentence, is only through the personal liability. Meaning, in case of a prison term, the agent or senior officers personally liable will serve the sentence. In this sense, pursuing a civil claim against a company for damages could comprise a more direct means of attributing liability on the company.
Herald v. Rankin (2000) expresses the parallel deterrent value of pursuing civil liability. The case involved a claim for damages for serious injuries in the course of work. The issues not only revolved around the merits of the claim but also on the sufficiency of the existing compensation systems for serious injuries. The court increased the award of damages for serious injuries by one-third of the existing computation because of the extent of the damage, which in effect strengthened the awards system. However, although some commend the decision, others perceive the increase as reserved considering that damages involves full compensation encompassing both pecuniary and non-monetary damages as provided in the Livingstone v. Rawyards Coal Company (1880).
The issue with civil liability and damages is the computation of full compensation. H West & Sons Ltd v. Shephard (1964) articulated the necessary artificiality of computations in civil claims because of the lack of a simple or standard formula for computing the extent of pain and suffering in the case of serious injuries. Often, claimants expect more and respondents expect less. In effect, there could be differentiated satisfaction with the decision of the court. In the Herald case, the computation only concerned serious injuries and not death. This means that there could be a disparity in the civil award for serious injuries and deaths.
Although attributing civil liability to companies for serious injuries is less complex than pursuing criminal liability because of the rules on torts, particularly negligence that defines the civil liability of companies for injuries and deaths, there are also issues in attributing civil liability. One is the necessity of doing so through the personal liability under the agency principle or through the operation of the blame attribution theory in including a limited layer of senior officers as personally liable for the result of the act or omission. The exception is strict liability, where companies accrue liability regardless of culpability. Another is the enforcement of awards for damages, which requires clarifications for deaths and serious injuries.
Attributing Liability to Companies under Criminal Law
Attribution of criminal liability to companies for deaths and serious injuries through personal liability could be via the operation of the Health and Safety at Work Act or through corporate liability via the Corporate Manslaughter and Corporate Homicide Act 2007. These modes apply different principles of liability attribution to corporations.
As the two legislations used to attribute criminal liability for deaths or serious injuries to companies, these have varying scopes and jurisdictions. However, because of the compatibility of these two statutes, this opens the possibility of using both legislations simultaneously to attribute criminal liability to companies. One distinction between the Health and Safety at Work Act and Corporate Manslaughter and Corporate Homicide Act is the limitation of the former in covering damages or injuries emerging from transportation, since received sufficient coverage in other laws. The limitation of the latter is the focus on liability for deaths attributed to companies in diverse situations involving gross negligence. Another distinction is the purpose of the health and safety legislation of covering personal injuries by preventing situations that cause injuries. As such, the legislations do not particularly focus on addressing liability for personal injuries but criminalizing acts that lead to personal injuries. The purpose of preventive since the operation of the law minimizes claims against companies for personal injuries by deterring companies from being negligent on their duty to prevent situations leading to personal injury. The corporate manslaughter legislation serves a purpose only when the gross neglect of duty leads to death. This means that other provisions likely to apply in case actual injuries were sustained. Last distinction is the non-mention in the corporate manslaughter legislation of personal liability when compared to the explicit mention of personal liability in the health and safety statute. This implies that the corporate manslaughter law constitutes the exclusive means of attributing criminal liability to companies for deaths caused by gross negligence. (Barrett, 2007)
Health and Safety at Work Act 1974
Section 37(1) of the Health and Safety at Work Act 1974 attributes liability to the companies or corporations for acts of omissions with consent or by neglect. This also sets out the parties personally liable including any “director, manager, secretary or other similar officer of the body corporate” or any other party acting the capacity of these officers. These officers are personally liable together with the company. Section 37(2) explains that the liability accrues when the acts or omissions are in connection with the exercise of the function of the officers. Section 36 and 37 also identifies secondary liability in case the primary liability accrues to another individual. Section 33(4) also provides for five different situations where officers of corporations could accrue personal liability to individuals. These situations are lack of license in operating as a company, violating the terms of the license, improper handling of explosives, violating a notice of prohibition, and misuse of specific information. Although the provisions do not explicitly mention deaths or serious injuries as the subject of claims against the company, these provisions could apply in considering deaths and serious injuries sustained in the course of work.
These provisions have applied for thirty years such as in the case of JJ Armour v. J Skeen (1977) that attributed criminal liability to the Director of Roads working under the Stathclyde Regional Council. This case commenced with the injury sustained by a boy who was thrown out of a forklift truck when this collided with a car with a third reel of newspapers reel above two clamped reels of newspapers. This case set out certain factors requiring proof to establish liability for injuries sustained by claimants. These factors include a show of violation of Sections 2 and 3 of the Health and Safety at Work Act, the existence of duty on the part of the respondent to know the facts comprising the violation, duty to act on these facts, neglect of duty since knowledge and action should have prevented the injury, and the neglect of duty caused the violation of Sections 1 and 2.
Despite these guidelines in attributing liability through negligence, no further guidance on the application of these rules emerged until the explanation given in R v. P and others (2007). Latham J reiterated the interpretation in Wotherspoon v. HM Avocate (1978) that section 37(1) does not necessitate the existence of wilful neglect on the part of the defendant and the factor of knowledge of material facts refers to the consideration of whether or not the defendant willingly ignored the material facts or actions on the material facts. This in turn constituted the test for a finding of neglect because of connivance. This case clarified that interpretation of neglect should be its ordinary meaning. This implies that using the facts of the JJ Armour case it is sufficient to show proof that the respondent knew of the unsafe work practices of employees of stacking unclamped newspaper reels. This is sufficient to support the duty to act on this fact and that the neglect of duty caused the injury to the claimant.
Moreover, although there was already a clarification of the manner of attributing criminal liability to companies under the Health and Safety at Work Act, the explanation of attribution seems to suggest the intention that the circumstances would prove the company’s non-violation of the law had it not been for the neglect on the part of management and that at least one corporate officer is culpable. If so, this created confusion on whether an officer charged can escape liability by stating that responsibility for the situation is shared with other officers who were not included in the complaint. As such, action towards the violation of safety standards at work could be rectified only via the cooperation or participation of the other officers. Nevertheless, the provisions provide different modes of attributing liability through neglect so that officers could accrue personal liability for consent, connivance or the simple interpretation of negligence in tort law.
Since the clarification of the interpretation of the application of Section 37(1) only came out in 2007, the applicability of this interpretation in actual cases is yet to be proven although a consideration of its applicability in theory seems to support clearer means of attributing liability to corporations and its officers for injuries sustained in the workplace because of negligence. Actual cases invoking this law should support the further assessment of the provisions.
Corporate Manslaughter and Corporate Homicide Act 2007
Provisions of the Corporate Manslaughter and Corporate Homicide Act 2007 support the attribution of corporate criminal liability to companies for deaths. Section 1(1) establishes the new offence for which companies could become liable. Liability accrues to companies when the act or omission constituting a criminal offence led to an individual’s death and this reflects gross violation of the duty of care of the company towards the deceased. Since the provision use the conjunction ‘and’, this means that these elements should exist together to successfully claim liability against a company. This means that the death should be caused by a gross negligence of duty, which begs the question on the factors comprising gross violation of the duty of care. This may be necessary to provide guidance on the proof necessary to attribute liability to companies. Section 1(3) adds that the attribution of criminal liability to a company happens in cases when control of the firm is via a senior management. This constitutes an important element in the attribution of criminal liability to companies. However, this limits the companies subject to criminal liability since only large companies are likely to have a distinct senior management aligned with the layers of senior officers under the blame attribution theory.
In application, the court proceedings for claims under the Corporate Manslaughter and Corporate Homicide Act constitute trial on indictment. Section 1(6) provides unlimited fine as the penalty for findings of corporate criminal liability for manslaughter. This is the aspect supporting corporate criminal liability. Since the penalty is unlimited fines, this can be attributed to the company unlike the operation of personal liability in the Health and Safety at Work Act. This also comprises the parallelism between corporate civil liability and corporate criminal liability for manslaughter.
This law enhance deterrence effect since claims under this law does not prevent plaintiffs from seeking remedies under Section 19 of the Health and Safety at Work Act 1974. This means that unlimited fines depending on the decision of the court could accrue to the company apart from the personal liability that senior officers or managers under the Health and Safety at Work Act.
As a law encompassing liability for deaths attributable to companies, this abolished manslaughter by gross negligence under common law. This means that companies can be brought to justice for deaths can successfully be made by invoking the provisions of the Corporate Manslaughter and Corporate Homicide Act together with applicable provisions of the Health and Safety at Work Act.
In practice, the successful prosecution of cases of corporate manslaughter is difficult to achieve. This could be because of the non-mention of personal liability and yet the need to prove gross negligence of duty. This appears problematic since proof of gross negligence necessitates personal liability since a company acts through its members. This means the need to clarify provisions of the law in actual cases to support applicability.
Gross negligence of duty implies the existence of a duty of care of the company towards the deceased and that there was breach of that duty via gross negligence. This constitutes a critical element of the attribution of liability to companies for deaths. Donaghue v. Stevenson (1932) clarified the absolute duty of care of companies to consumers. This case explained duty of care through the ‘neighbourhood principle’ or taking reasonable care in voiding acts or omissions that could likely injure neighbours in exercising reasonable foresight. Caparo Industries Plc v. Dickman (1990) further clarified the duty of care by identifying three key elements, which are 1) foresight of the damage or injury, 2) proximal link between the claimant and defendant, and 3) reasonable imposition of the duty of care of the defendant towards the claimant or plaintiff given the facts of the case. Although, these cases have been able to clarify the duty of care for purposes of attributing criminal liability to companies, the operation of the duty of care within the provisions of the corporate manslaughter law still depends on the clarification of personal liability. It is true that the determination of duty of care and gross negligence thereof could be proven through the testimonies of officers of the company and other witnesses this still involves the determination of the members of the organisation whose acts or omissions led to the breach of the duty of care causing an individual’s death. Without doing so, gross negligence of the company is difficult to prove. Difficulty in proving gross negligence then reflects on the success of the claim against companies under the corporate manslaughter law.
Attributing criminal liability to companies also involves the determination of mens rea or criminal intent. While Salomon v. Salomon (1897) has established the separate identify of corporations making these susceptible to criminal liability, the imposition of this type of liability involves the determination of criminal intent. This also necessitates the identification of members of the company responsible for the acts or omissions causing the death of an individual. This explains the difficulty in pursuing criminal liability claims against companies under the corporate manslaughter statute. The law does not mention personal liability and yet there is need to point of the guilty parties. The determination of criminal intent is difficult to prove without clarifying the issue of personal liability since it is difficult to determine criminal intent of companies, which are non-corporeal entities. Although many claims may have been filed against companies under corporate manslaughter, these did not prosper because of problems in proving criminal intent.
Even prior to the enactment of the corporate manslaughter law in 2007, the same difficulties emerged in the crime of corporate manslaughter attributable to companies under common law. It was only in 1994 that a claim against a company for corporate manslaughter succeeded. This case made Active Learning and Leisure Ltd as the first company prosecuted for corporate manslaughter. A canoeing incident taking lives of four teenagers preceded the filing of a claim for corporate manslaughter against the company. (Jacobs, 1996) The factor that likely enabled the prosecution of the company is that a single proprietor owns the company. This means that by analogy, the determination of criminal intent lies only on the acts or omission of the sole owner acting in behalf of the company.
Since this precedent case, there were only three other cases involving the successful prosecution of companies for corporate manslaughter. These cases added the three companies Jackson Transport Limited, English Brothers Limited and Teglgaard Hardwood Limited as firms held liable for corporate manslaughter. The size of management team and the scale of operation of the company comprise the common denominator for these four companies. All the companies have sole or small management groups making it easy to determine criminal intent and breach of duty of care by considering the actions of the owners and/or managers. Since this is the key factor determining the success of the prosecution, this points to the weakness in attributing corporate manslaughter against companies. This weakness appears to have carried over to the new corporate manslaughter legislation. The clarification of personal liability and the applicability of the provisions to companies in general and not only to individually owned or small group managed firms comprise the areas for improvement in the new legislation enabling the attribution to companies of criminal liability for deaths.
Using the overlaps between the health and safety and corporate manslaughter statutes is a solution but only in part. Since the health and safety law covers acts or omissions that could lead to deaths or serious injuries, its provisions could be used to attribute corporate criminal liability for injuries or deaths. However, the basis of claim is neglect of duty for the acts or omissions that created an unhealthy and unsafe work environment. Nevertheless, this cannot cover all the situations envisioned by the corporate manslaughter law. Although allowable civil claims could compensate for these issues, there remains the need look into the weaknesses of the new corporate manslaughter law.
Conclusion
There are various ways of attributing liability to companies for deaths and serious injuries. This could be through either civil or criminal law. Attribution of civil liability to companies for negligence could be through strict liability or vicarious liability. The attribution of civil liability to companies could be indirect such as when the accrual of liability is through the actions of agents. It could also be direct as in the operation of strict liability where the company accrues liability for acts or omissions regardless of culpability. Attribution of criminal liability to companies for deaths and serious injuries through personal liability could be via the operation of the Health and Safety at Work Act that focuses on preventing personal injuries or through corporate liability via the Corporate Manslaughter and Corporate Homicide Act 2007 covering deaths. Nevertheless, a common principle traversing both civil and criminal law is negligence. Although using civil or criminal liability and using both could support the attribution of liability on companies for deaths or serious injuries, there are limitations and problems in practice leading to need for further assessment of these means, when considering that deaths or serious injuries possibly attributable to companies are common occurrences.
References
Secondary Sources
Barrett, B. (2007). Liability for safety offences: Is the law still fatally flawed?. Industrial Law Journal, 37(1), 100-118.
Glazebook, P. R. (2002). A better way of convicting business of avoidable deaths and injuries. The Cambridge Law Journal, 16(2), 405-422.
Jacobs, Y. (1996). Safety at adventure activities centres following the Lyme Bay tragedy: What are the legal consequences. Education and the Law, 8(4), 295-306.
Sime, S., & French, D. (eds.) (2009). Blackstone’s civil practice 2009. Oxford: Oxford University Press.
Steele, J. (2007). Tort law: Text, cases and materials. Oxford: Oxford University Press.
Legislations
Corporate Manslaughter and Corporate Homicide Act 2007
Health and Safety at Work Act 1974
Unfair Contract Terms Act 1977
Court Cases
Caparo Industries plc v. Dickman, 2 AC 605 (1990)
Donoghue v. Stevenson, AC 562 (1932)
H West & Sons Ltd v. Shephard, AC 326 (1964)
Heil v. Rankin, 2 WLR 1173 (2000)
JJ Armour v. J Skeen (Procurator Fiscal, Glasgow), IRLR 310 (1977)
Livingstone v. Rawyards Coal Company, 5 App. Cas. 25 (1880)
Rylands v. Fletcher, L.R. 3 H.L. 330 (1868)
R v. P and others, The Court of Appeal, (Criminal Division) (11 July 2007)
Salomon v. Salomon & Co Ltd, AC 22 (1897)
Wotherspoon v. HM Avocate, JC 74 (1978)
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