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Attractions Industry: An update on the UK’s corporate manslaughter laws

Opinion

By Stefan Puttnam

Related:  Corporate manslaughter laws (UK) and the amusement industry/ Anticipated Legal Issues in the Amusement Industry for 2011

As the first prosecution under the Corporate Manslaughter & Corporate Homicide Act 2007 (The Act) concluded on Wednesday 16th February, I thought that it was now appropriate to write a follow up.

It might be helpful to recap: initially the Government’s advisory body, the Sentencing Advisory Panel, was recommending that any company found guilty of the new offence should be fined as much as 10% of its annual turnover.  However the Sentencing Guidelines Council then proceeded to set out principles to guide courts in dealing with these matters. The advice was clear – punitive and significant fines should be imposed both to deter and to reflect public concern at avoidable loss of life:

"Fines for companies and organisations found guilty of corporate manslaughter may be millions of pounds and should seldom be below £500, 000. For other health and safety offences that cause death, fines from £100, 000 up to hundreds of thousands of pounds should be imposed."

It went on to state that the financial circumstances of the offending organisation must be taken into account when imposing fines.

In my original blog I asked what has happened to the threatened "10% of turnover" suggestion in respect of the level of fines to be imposed and suggested that the new guidelines may be a softened approach. 

One important complexity of the Act is that there has to have been a serious failure of "Senior Management" identified in order for a prosecution to be brought. The Company in this instance had a Sole Director, who was on site immediately prior to the accident. And in this case there was a clear link to Senior Management and initially charges were brought against the Sole Director as well as the Company. Although the Act itself does not allow for individual directors to be prosecuted, the "Senior Management" failure which has to be identified can lead directly to separate prosecutions for Manslaughter. In this instance owing to serious ill health on the part of the director, the separate prosecution was not tried. We will have to await the prosecution of a much larger organisation with a more complex managerial structure to establish how it is that ‘Senior Managers’ may be identified and how their conduct can potentially lead to a corporate being found guilty under the Act. 

So what was the outcome and did the courts follow the published sentencing guidelines?

The company in question was found guilty and the fine imposed was £385, 000.00 which is to be to be paid over 10 years with £38, 500.00 due every year.

As mentioned already the sentencing guidelines provide that the starting point for a fine in cases of Corporate Manslaughter should be £500, 000.00 however, when deciding the level of fine, account must be taken of the financial circumstances of the offending organisation. In the guideline the Council emphasises the need for a court to have full, accurate and reliable information and details the method for ensuring that it is consistently provided. It also states that when fixing the fine, a court should not be influenced by the impact on shareholders and directors, nor consider the costs of complying with other sanctions.  In this particular instance the annual turnover of the company was just £330, 000.

Now that a precedent has been set will future court decisions follow this example?

Although it is not possible to purchase insurance cover in respect of the actual fines most liability insurers provide cover in respect of defence costs following prosecution arising from an alleged breach of health and safety legislation. As the prosecutions for corporate manslaughter will invariably arise from a breach of health and safety legislation, it follows that prosecution defence costs provided by liability insurers should also apply manslaughter charges. This said, not all liability policies will have manslaughter defence costs included automatically. I would recommend that companies check their Employers’ and Public/Products Liability policies to ensure that defence costs are included following corporate manslaughter or a similar offence with such defence costs provided for individuals as well as for the company.  Cover may be limited and it is worthwhile checking the policy limit and seeking a higher limit where possible as defending this type of complex case can be very expensive. 

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