Corporate Manslaughter and Corporate Homicide Bill

I appreciate the spirit in which the new clause was moved, although I did not realise what the hon. Member for Hornchurch (James Brokenshire) had threatened to do if he does not hear the answer he wants. I shall do my best, because it is a threat that I would not want him to pursue, although that decision will be in his hands. The amendments in the group are aimed at two different ideas: the liability of holding companies and extending the offence in unincorporated bodies, as well as the issues relating to Scotland. The new clause, which was proposed by the hon. Member for Hornchurch, raises interesting questions. It is not aimed at making a holding company liable for corporate manslaughter when that has been committed by one of its subsidiaries, but it suggests a new offence of not taking all reasonable steps to prevent the offence from being committed. The basic position is that each company within a group is a separate legal entity, with its own rights, liability and assets. Each company has a distinct legal personality and the directors of each company must act in the interests of that company. For the offence, that means that the company that owed the relevant duty of care to the victim will be prosecuted. That reflects the current law. For example, in the Hatfield case, a subsidiary of Balfour Beatty was prosecuted, rather than the parent organisation. If we are going to go down the route of holding one person to account for failing to prevent another from committing a crime, the circumstances in which that liability applies need to be defined with care. The proposal in the new clause is that the holding company must have taken ““all reasonable steps””, but what reasonable steps would those be? Companies within a group structure are separate entities and do not owe obligations to prevent others from committing a crime. Unsurprisingly, being members of one group, the holding company will not want to see members of the group prosecuted, as that would inevitably impact on the reputation and standing of the group of the whole. The coverage of the Hatfield case made little distinction between Balfour Beatty and its subsidiary. But that self-interest is very different from identifying concrete steps that a parent company ought to be taking in respect of its subsidiaries, where the consequence of failing to take those steps is a criminal offence. Consultation by the Department of Trade and Industry preceding the recent companies legislation looked at whether changes should be made to the liability of parent companies in the civil law, but it was decided not to change the law. The report considered that it would be difficult to define when subsidiaries were being used abusively to reduce risks of litigation, because no other jurisdictions made parent companies automatically liable, and because of the lack of evidence that companies had used group structures abusively. Similar considerations arise in the context of the new offence. The criminal law has specific principles of secondary liability for holding people to account for their contribution to another’s crime, but it does not generally impose a duty to prevent the criminality of others. We are not satisfied that that would be appropriate in this case. Secondary liability for the new offence is not disapplied in respect of other companies, such as holding companies. That will undoubtedly be a high test to satisfy, but the consequence of the new clause would be to place an undefined duty on holding companies in respect of their subsidiaries, which would be left to the courts to flesh out. That would be very unsatisfactory. The other aspect of the amendments is the question of unincorporated bodies. Such bodies do not have a separate legal personality, but there are none the less a wide variety of statutory provisions and offences that apply, particularly in the regulatory field. It is of course absolutely vital that such regimes apply comprehensively to all employers and businesses. However, the lack of legal personality does not mean that such bodies cannot at present be prosecuted for the common law offence of manslaughter, so the question is whether to extend the offence to a new class of organisation. The Law Commission was cautious about doing so. It recognised that there may be many similarities between incorporated and unincorporated bodies in practical terms, but felt that the nature of the body meant that there was an important difference. In the Law Commission’s words:"““Many such organisations are for practical purposes indistinguishable from corporations, and it is arguable that their liability for fatal accidents should be the same. However, we have concluded that it would be inappropriate for us to recommend such an extension of the offence at the present time. Under the existing law the individuals who comprise an unincorporated body may be criminally liable for manslaughter, as for any other ""offence; and, by contrast with the law relating to corporations, the question of attributing the conduct of individuals to the body itself does not arise. In this respect the law will be unaffected by the replacement of manslaughter with the offences in the draft Bill of reckless killing and killing by gross carelessness.""It would clearly be wrong to extend the offence to all unincorporated bodies, because there are many such bodies (for example, a partnership of two individuals, employing no-one) that would be unfairly disadvantaged by being charged with the corporate offence (which does not require foreseeability) rather than that of killing by gross carelessness (which does). Any extension of the offence beyond incorporated bodies would therefore raise intractable problems as to the kinds of unincorporated body that ought and ought not to be included. But there has been no consultation on any proposal to this effect, either in the consultation paper or in any other form. We think it would be wise to await experience of the operation of our proposed corporate offence, in the context of the kind of organisation for which it is primarily designed—namely the commercial corporation—before considering whether to extend it further.””"