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Legal Responsibility of Companies towards the Individuals - Essay Example

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The paper "Legal Responsibility of Companies towards the Individuals" narrates the case Law commission recommended the retention of the manslaughter by gross negligence. It discusses legal means by which a company can be brought to justice for the individual’s injuries and death…
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Legal Responsibility of Companies towards the Individuals
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Legal Responsibility of Companies towards the Individuals Introduction The conviction that the companies inflict is too large in cost in terms of injury and death of the workers they employ and the community at large.(Wells,C 1993)(1).These types of happenings have given rise to number of official inquiries and reports which led to significant criticisms. Recently Law commission recommended the retention of the manslaughter by gross negligence and has made proposals to facilitate the conviction of companies for that offence.(The Fennel Report,1988)(2).In the light of these events, a discussion on those legal means by which a company can be brought in to justice for the individual's injuries and death ,deserves great importance. The Legal Background Before analyzing the prosecution procedures against the companies it is desirable to know more about the criminal law under which these companies can be brought for justice regarding the injury and death. The criminal law is not only concerned with compensation between offender and victim but also with compensation orders and other reparative ideas conniving themselves as a regular adjunct of sentencing options. The criminal law is an ideological function, that it makes statements about the boundaries of tolerated behaviour. Arguments about deterrence may have fallen from favor as regards the punishment of individual offenders, but corporate bodies may be more susceptible to it. There is not a simple, linear relationship between the enforcement of criminal laws and perceptions of wrongful behaviour. Criminalization ,in its broadest sense is a complex and often fragmented process and any role which criminal laws have in relation to safety will reflect and reproduce, as well as create, attitudes to risk. (Wells,C)(3) ------------------------------------------------------------------------------------------------------------ 1 Celia Well, (1993) Corporations and Criminal Responsibility, Oxford University Press 2. The Fennel Report, 1988 Investigation into the king's cross underground fire p.499 3. Prof. Celia Wells Corporate manslaughter reforming Law Part B Corporations & the Risk of Criminal Liability 2 Legal means by which a company/corporate can be prosecuted for the injury and manslaughter A company is a legal person which can only act or form an intention through its directors or employees. Companies must have at least one director and a secretary and the company's Articles will authorize the directors or others to act on behalf of the company or to delegate those powers. A company is legally separate both from those individuals who are entrusted with acting on its behalf and also of course from all its employees who may carry out tasks in the course of their employment which can be regarded for some purposes as the tasks of the company. A company can commit offences ranging from the relatively trivial to the serious. It should be sufficient that there is evidence against the director or officer. Directors and officers can also be criminally liable as aid and abettors of the company's crimes or of the crimes of their fellow directors. The existing offense A company's liability may be established by a) Vicarious liability for the acts of a company's employees/agents. b) Non-vicarious liability by reason of the identification principle including offences requiring mens rea a) Vicarious Liability In Mousell Bros Ltd v London and North Western Ry Co [1917]2K.B. 836 (4)it was held that a corporate/company employer is vicariously liable for the acts of its employees and agents where a natural person would be similarly liable .Here it is to be remembered that it may require mens rea, yet impose vicarious responsibility. On the contrary, it may create strict liability without imposing vicarious liability (5) Normally, vicarious liability will arise from offences of strict liability. These --------------------------------------------------------------------------------------------------------- 4. Mousell Bros Ltd v London and North Western Ry Co [1917]2K.B. 836 5. Report on Corporate Manslaughter by The Crown Prosecution Service(Cps) 3 are offences which do not require intention, recklessness, or even negligence as to one or more elements in the actus reus. All traffic offences carry strict liability unless they expressly require fault. If an offence of strict liability is committed by an employee of a company in the course of his employment then the company may also be criminally liable. b) Offences Requiring Mens Rea - The Identification Principle Companies may be criminally responsible for offences requiring mens rea by application of the identification principle. This principle acknowledges the existence of corporate officers who are the embodiment of the company when acting in its business. Their acts and states of mind are deemed to be those of the company, they are deemed to be "controlling officers" of the company.(5) But the decision in the leading case of Tesco Supermarkets Ltd v Nattrass [1972] AC 153(6) restricts such corporate liability to the acts of the Board of Directors, the Managing Director and perhaps other superior officers of a company who carry out functions of management and speak and act as the company. In the absence of any requirement of mens rea, if the statutory duty is breached, the company is criminally liable can be brought into justice, because the failure to comply with the duty imposed upon the company and not because of any vicarious liability, nor of the application of the identification principle (Crown v British Steel Plc [1995] CLR 654)(7). A statute may also impose a specific vicarious liability upon a company in its capacity as an employer for the acts of an employee (Griffiths v Stude Bakers Ltd 1924 1KB 102).(8) Now we shall explore the scope of Manslaughter which is considered to be the most happening legal means by which we can bring the companies to the justice. ------------------------------------------------------------------------------------------------------------ 5. The crown Prosecution Service, Corporate Manslaughter 6. Tesco Supermarkets Ltd v Nattrass [1972] AC 153 7. Crown v British Steel Plc [1995] CLR 654 8. Griffiths v Stude Bakers Ltd 1924 1KB 102 4 Manslaughter can be voluntary and involuntary manslaughter. In "voluntary manslaughter" all the elements of murder are present but the crime is reduced to manslaughter by means of a special defense, on other hand involuntary manslaughter by means of an unlawful act. Here the company can only be identified with an act or omission by one of its controlling officers acting within the scope of his office or authority, even though a company operates through the human agencies of its directors, managers and employees. Involuntary Manslaughter by gross negligence If the breach of duty amounts to 'gross negligence', a manslaughter prosecution could be instituted. Gross negligence enumerates "indifference to an obvious risk of injury to health; actual foresight of the risk coupled with the determination nevertheless to run it; appreciation of the risk coup/ed with an intention to avoid it but also coupled with such a high degree of negligence in the attempted avoidance as the jury consider justifies conviction, and inattention or failure to advert to a serious risk which goes 'beyond inadvertence' in respect of an obvious and important matter which the defendant's duty demanded he should address. (R v Prentice 1993 3 WLR 937)(9) It is difficult to predict circumstances in which a company could be convicted for corporate manslaughter. So it will normally be considered in the context of involuntary manslaughter by means of gross negligence (Casework Bulletin No.22, 2001)(10).In (P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 72)(11) it was held that a company may be properly indicted for manslaughter. The House of Lords laid down a four stage test for involuntary manslaughter by means of a grossly negligent act or omission in (R.v. Adomako (1995) 1 AC 171).(12) 1.) Did the defendant owe a duty of care towards the victim who has died ------------------------------------------------------------------------------------------------------------ 9. R v Prentice 1993 3 WLR 937 10. Casework Bulletin No.22, 2001 11.P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 72 12. R.v. Adomako (1995) 1 AC 171 5 2.) If so, has the defendant breached that duty of care 3.) Has such breach caused the victim's death Here the law of negligence must be applied to ascertain whether or not there has been a breach of the duty. 4.) If so, was that breach of duty so bad as to amount, to gross negligence warranting a criminal conviction It is to be remembered that there are a number of circumstances in which consideration may need to be given to indicting a company for manslaughter arising out of its operations. The victims of fatal accidents may be employees or customers of the company in question or members of the public. (13) A company may be a potential defendant by reason of its capacity, for example, as an employer, a supplier of goods, or as a contractor. Therefore, in right cases, it is to be considered that whether the company itself - in addition to any individuals - should be prosecuted for manslaughter but this depends on the following evidential requirements. 1. The Controlling Mind In order to prosecute a company of manslaughter it must be shown that a causal link existed between a grossly negligent act or omission by a person who is the "controlling mind" of the company and the immediate cause of death. The principle assumes that there are certain directors or senior managers of the company whose acts and states of mind can properly be regarded as those of the company itself. Those persons are to be identified as those who are entrusted with the powers of the company. Accordingly, the conviction of a company for manslaughter by gross negligence in the absence of evidence establishing the guilt of an identified human individual for the same crime is not possible.(Attorney General's Reference No 2 ,1999) (2000) 3 All ER 182(14) In Tesco v Nattrass (1971) 2 All ER 127 (15)it was decided that a person can ------------------------------------------------------------------------------------------------------------ 13. Report of The crown Prosecution Service,Self defense and Prevention of crime 14. Attorney General's Reference No 2, (1999) (2000) 3 All ER 182 15. Tesco v Nattrass (1971) 2 All ER 127 6 only be a controlling mind if they are a director or other superior officer, carrying out the functions of management, but if the board has delegated part of their functions of management, with full discretion to act independently, then in such circumstances the delegate can be considered a controlling mind . While considering the scope of controlling mind it should be noted that an individual is a controlling officer and to establish a causal link between such a person and a grossly negligent act or omission which has caused death. The prosecution needs to show an act, or omission, by a controlling officer created a dangerous situation. Whatever happens will disperse a company's structure, the more difficult it will be to attribute grossly negligent acts or omissions committed in the course of the company's operations to a controlling officer and, therefore, to the company itself. It must be noted that it is not possible to 'aggregate' the negligence of individuals in order to arrive at gross negligence. The prosecution must be able to prove that at least one controlling mind is guilty of manslaughter before corporate manslaughter can be considered. 2. Companies and Fatal Road Traffic Accidents Nowadays fatal road accidents involving road transport or transport companies invite much public anxiety. The House of Lords confirmed in R v Adomoko(16) that involuntary gross negligence manslaughter includes 'motor manslaughter'. But section 1 Road Traffic Act (17) specifically covers causing death by dangerous driving, unless the car has been used as a weapon, the charge against the individual driver should usually be one under the Road Traffic Act legislation. Where death has resulted from a road traffic accident caused by a defective vehicle you may need to consider whether the company, through one of its controlling officers, was responsible for any lack of maintenance of the vehicle concerned. ------------------------------------------------------------------------------------------------------------ 16. R v Adomoko (ibid) 17. Road Traffic Act (section 1) 7 A transport manager, for example, might be identified as a "controlling officer" of the company under the principle in Tesco v Nattrass. If he has been grossly negligent with regard to the maintenance of a vehicle under his care both he, and the company, may be prosecuted for manslaughter, if a fatal accident has occurred because of the dangerous condition of that vehicle. (R v CPS ex parte Waterworth (1.12.95)(18) If an employer, knowing or believing a vehicle to be in an unsafe condition, has ordered an employee to drive the vehicle and a fatal accident then occurred, consideration should be given to a charge of counseling or procuring death by dangerous driving. In such circumstances, but it should prove that the driver committed the principal offence, i.e. that he was aware that the vehicle was unsafe when he drove it. (R v Noel Martyn Loukes (1996) 1 Cr App R 444 (19) and R v Millward (1994) Crim L R 527) (20) Argument against the existing theory The "identification theory" of corporate criminal liability has been criticized for a long time. Critics of this approach have pointed out that it does not reflect the reality of the internal dynamics of corporations, particularly in the case of larger corporations. High-level corporate officials personally engage in the specific conduct or make the specific decisions that result in occupational health and safety violations or in serious workplace injury or death. Moreover they can, through actual policy decisions create or contribute to a corporate environment where subordinate managers, supervisors and employees feel encouraged or even compelled to cut corners on health and safety matters, even in the face of legal prohibitions or official corporate policy. Because of this long time pertaining critisms the Law Commission proposed a new law to close what was previously regarded as a legal loophole which allowed larger organizations to escape liability for manslaughter in consequence of death or injury caused by serious industrial negligence. ------------------------------------------------------------------------------------------------------------ 18. R v CPS ex parte Water worth (1.12.95 19. R v Noel Martyn Loukes (1996) 1 Cr App R 444 20. R v Millward (1994) Crim L R 527 8 The impending offense Changes to the corporate manslaughter laws were first proposed by the Law Commission in 1996 and were part of the government's election manifesto in 2001. The reason for the change is that it is widely-thought that the existing common law of corporate manslaughter is inadequate. For such a prosecution to succeed, the Crown must identify and prosecute an individual who acted as the 'directing' or 'controlling mind' of the defendant organisation. This makes it virtually impossible to convict large organizations. The Corporate Manslaughter and Corporate Homicide Act 2007 (2007 Act)(21) received Royal Assent on 26 July 2007.A company can be prosecuted for manslaughter in the course of its operations. The new legislation is intended to prosecute larger organizations for the corporate/company management's failure which may led to death, that of a substantial senior management contribution to the company's breach of duty. Gross breach of a duty of care : In determining whether there has been a gross breach of a relevant duty of care, it is to be considered that whether the organisation has failed to comply with health and safety legislation relating to the incident and how much of a risk of death was posed by it (section 8(2), The Corporate Manslaughter and Corporate Homicide Act 2007). The jury may also consider the extent to which there were attitudes, policies, systems or accepted practices in the organisation that were likely to have encouraged the health and safety failure or produced tolerance of it (section 8(3), 2007 Act). Senior management contribution: Senior management is defined as the persons who play significant roles in making of decisions about how the whole or a substantial part of the organization' activities are ----------------------------------------------------------------------------------------------------------- 21. Corporate Manslaughter and Corporate Homicide Act 2007 9 to be managed or organized; or the actual managing or organizing of the whole or a substantial part of those activities (section 1(4) (c), 2007 Act). Persons falling within this category will have their aggregated conduct examined to see if corporate managerial or organizational failings substantially contributed to the company's breach of its duty of care. Whenever we speaks about the prosecution of companies, a close observation on the scope of penalty on the companies and the procedure of investigation etc. are inevitable. Penalty Companies will be liable to a fine (section 1(6), 2007 Act) if they found to be offenders. The 2007 Act makes no provision for fining individual officers of the company. There is no limit on the Crown Court's power to impose financial penalties. Recent multi-million pound health and safety fines have set the benchmark, but given that the 2007 Act creates a statutory homicide offence, it is to be expected that corporate manslaughter fines will exceed health and safety penalties by a significant margin. Courts will also have the power to order remedial action (section 9, 2007 Act) and to make publicity orders requiring companies to publicize details of their conviction and the fine imposed (section 10, 2007 Act). Investigations The corporate/company manslaughter inquiries will be led by police investigators, with expert assistance from the Health and Safety Executive (HSE). As a result of the 2007 Act's requirement to prove senior management involvement as said above in the breach of duty, there will be an eager waiting for the scholars and critics to lay down a new connotation for senior management definition and to examine, whether their acts or omissions contributed to the fatality. Whatever it is, the directors convicted of safety offences will be liable to fines and disqualification as company directors. 10 Duties of company under statute law Health and safety legislation prescribes three types of duty for companies. These are: - Absolute duties; - Duties which are qualified by the term "practicable"; and - Duties which are qualified by the term "reasonably practicable". Absolute duties must be complied with. Practicable duties must be complied with if technically possible regardless of cost. Reasonably practicable duties take into account the risks and the costs of eliminating them. The Health and Safety at Work etc Act 1974 (HSWA 1974) contains provisions for securing the health, safety and welfare of persons at work, for protecting others and for controlling the keeping and use of dangerous substances. It contains provisions for the control of certain emissions into the atmosphere. It defines general duties for the self-employed, for persons in control of premises, and for designers, manufacturers, importers and suppliers of articles or substances for use at work. Most duties under HSWA 1974 are qualified by the term "reasonably practicable". Other health and safety legislation includes certain absolute and practicable duties. Keeping utmost care on performing these duties, employees must take reasonable care for that of other persons who may be affected by their acts or omissions at work. Breach of this may lead the prosecution of the company. Role of the Health and Safety Executive A person's actions or inactions, whether as an employer, manager or employee, may give rise to criminal or civil proceedings in relation to health and safety issues. Such proceedings may be taken against their company or organisation or in certain circumstances against them as individuals. Statute law is made by Parliament. In the case of health and safety law, duties are placed on, inter alia, both employers and employees. If there is a breach of statute a range of remedies is available to an Inspector, including the serving of notices and the bringing of a prosecution before a Criminal Court. If the 11 case is proven a penalty can be imposed by the Court as a punishment for the wrong that has been done. To enforce the legislation regarding this, the statutory body, Health and Safety Executive (HSE) is a established under the Health and Safety at Work Act 1974 (HSWA). It is responsible for making adequate arrangements for the enforcement of health and safety legislation, and has a role in investigations which follow a work-related death. Civil Laws which may bring the companies to justice for the injury caused Like Criminal Law, a company can also be prosecuted under the civil law for the redressal of the injury caused to the individuals due to the misconduct of the company. In English civil litigation system, the Civil Procedure Rules specify the procedure that it should be followed in English civil litigation proceedings. It provides for two forms of collective action: 1. Group litigation orders (GLOs) and 2. Representative claims. GLO is a case management tool designed to manage multiple claims efficiently. It does not ensure finality of claims but the potential claimants should opt in to the GLO proceedings, but a failure to do so does not prevent them bringing a claim at a later stage. However, subsequent claims brought might be delayed pending the outcome of the GLO. Where more than one person has the same interest in a claim, it may be brought as a representative action. In July 2006 the Department of Trade and Industry published proposals, entitled Representative Actions in Consumer Protection Cases, to allow designated bodies to bring actions on behalf of named consumers. It is also open to the court to order that a claim be continued as a representative action. Only the parties represented in the proceedings will be bound by the court's decision, although decisions 12 can be enforced against parties who were not represented with the court's permission.( European Litigation trends,2007) Criticism Civil proceedings action for the damages/compensation cannot be considered as the sign of the emergence of a 'compensation culture,' but it a civil and legal right. Where an individual has suffered injuries, a compensation award can help them to afford help and services to enable them to adjust and fully recover or make up for financial loss. But as per critic's view these criteria are not currently being met by the system. Thousands of people who have experienced accident or injuries through no fault of their own, often suffering disabling effects consider this system is a failure. It is extremely complex for an unrepresented individual to pursue a claim for compensation. They will need legal advice on their likely prospects of success and help collecting their evidence and putting their case, which may need to go to court. So pursuing a claim efficiently and effectively is likely to involve using legal services and incurring court costs at some stage. Secondly the complex financial and legal processes involved are often misunderstood by consumers, and consumers' needs can be misunderstood by the service providers. There is widespread mis-selling of legal and insurance products, and consumers are often induced into signing conditional fee agreements inappropriately. On this basis alone policy makers should be wary of extending conditional fee funding to other areas of civil law. CAB evidence is that the withdrawal of legal aid and the advent of conditional fees have contributed to a system which involves relatively high legal costs and delays. (Citizen's Advice, 2004) (23) Conclusion Since the prosecution of companies regarding the injury and death caused to the ------------------------------------------------------------------------------------------------------------ 23. Citizen's Advice,(2004 ), No win No Fee no chance, Citizen's Advice Bureau 13-12-2004 13 turned more vigilant regarding this. The result is improvement in accident frequency rate. In 2005 the accident frequency rate was 0.36 but it is improved to 0.31 in 2006. Each individuals has become persisting, directors and other higher official personals have operating company aims for zero accidents and injuries in 2007all fatalities and serious accidents are subject to corporate review by the Chief Executive and any lessons learnt are transferred across the Group.( Balfour Beatty Corporate Responsibility Report 2006)(24).Let us hope, the enactment of law regarding new offences and subsequent positive developments on the part of the companies may bring a better atmosphere in reducing the rate of injured and fatalities. ************************** ------------------------------------------------------------------------------------------------------------ 24. Balfour Beatty Corporate Responsibility Report (2006), Safety performance targets Bibliography Books and authors 1. Edgerton W. Henry. (Apr., 1927) Corporate Criminal Responsibility the Yale Law Journal, Vol. 36, No. 6 (, pp. 827-844 doi: 10.2307/790628 2. Howarth ,David Many Duties of Care-Or A Duty of Care Notes from the Underground ,Oxford J Legal Studies 26: 449-472. 3. Kretzmer,David (1984,spring) Transformation of Tort liability in the 19th centuary :The visible Hand, Oxford J Legal Studies, 46 - 87. 4. Kreutzer, David,(2006,Autmn) Transformation of Tort liability in the 19th centuary :The visible Hand, Oxford J Legal Studies, 5. Munkman,J (1995)"Employer's Liability", Twelfth Edition, Butterworths, 6. Sullivan,G. R. (Summer, 1995) Expressing Corporate Guilt Reviewed Work of Corporations and Criminal Responsibility by Celia Wells Oxford Journal of Legal Studies, Vol. 15, No. 2, pp. 281-293 7. Well, C,(1993) Corporations and Criminal Responsibility ,Oxford University Press Statutes 7. Companies Act 2006 8. Corporate Manslaughter and Corporate Homicide Act 2007 9. Health and Safety at Work etc Act 1974 (HSWA 1974) 10. Magistrates Court Act, 1980, section 46 11. Road Traffic Act, section 1 Journals and Publications 12. Attorney General's Reference No.2 of 1999 (2000), 3 All ER 182 13. BBC News online (2000) corporate killers face crackdown Tuesday, 23 May, 2000, UK 14. Balfour Beatty Corporate Responsibility Report 2006, Safety performance targets 15. Bergman, (1991) D Deaths at Work: Accidents or Corporate Crime, WEA, 16. Casework Bulletin No.22, 2001 17. Casework Bulletin No. 5 of 1997 18. Citizen's Advice,(2004 ), No win No Fee no chance, Citizen's Advice Bureau 13-12-2004 20. Criminal Law Review 551 (1993) Corporations: Culture, Risk and Criminal Liability', 21. EHJ November 2003, A case for culpability - is the law failing us Pages 328-331 22. Employer's Law magazine (2005) A Death Sentence Employers' Law 04 September 2005 23. Leckie David, Anwar Aisha (May 2005) .Bad company, The Journal, page 18 24. Occupational and Environmental Health Research Group, Stirling, (2005) FK9 4LA June 17th, Stiriling University 25. Environment, Health and Safety Committee [EHSC] (2000) Individual Legal Responsibilities for health and safety at work, London W1J 0BA Version 2 04/07/00 26. Health and Safety Commission, (2000) "Management of Health and Safety at Work Management of Health and Safety at Work Regulations 1999 - Approved Code of Practice", HMSO, 27. Practical Law Company (2007), corporate manslaughter: the new offence 11 December 2007 12:54 v3-4. Legal & Commercial Publishing Limited; 28. The crown Prosecution Service, Corporate Manslaughter 29. The Fennel Report, (1988), Investigation into the king's cross underground fire (499.1988) 30.) Wells, Celia, Corporate manslaughter reforming Law, Part B Corporations & the Risk of Criminal Liability Table of Cases 1. Crown v British Steel Plc [1995] CLR 654 2. Griffiths v Stude Bakers Ltd 1924 1KB 102 3. Mousell Bros Ltd v London and North Western Ry Co [1917]2K.B. 836 4. P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 72 5. Tesco Supermarkets Ltd v Nattrass [1972] AC 153 6. R.v. Adomako (1995) 1 AC 171 7. R v CPS ex parte Waterworth (1.12.95 8. R v Millward (1994) Crim L R 527 9. R v Prentice 1993 3 WLR 937 10. R v Noel Martyn Loukes (1996) 1 Cr App R 444 Read More
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