Corporate Manslaughter and Corporate Homicide Bill

We have had a useful discussion on this amendment. I shall comment on one misconception that the noble Lord, Lord Henley, seemed to have in what was otherwise a very clear exposition on this amendment. Holding companies are not exempt from the offence, as the noble Lord perhaps suggested, but maybe he was not suggesting that. I want to make clear that they are not exempt from the offence. If they grossly breach the duty of care, they will be covered. In our view, the amendment goes further and imposes an offence where there is no breach of a duty of care, but a holding company has failed to prevent a subsidiary company committing the offence. I cannot offer the noble Lord any comfort on this amendment, as we do not believe such an offence is necessary or appropriate. As the Committee will be aware, each company within a group of companies will be a separate legal entity in its own right. A subsidiary company has its own legal persona, and the directors of such a company must act in the interests of that company. If the actions, or failings, of a subsidiary company cause the death of a person in breach of its duty of care, that company would properly be liable to the new offence. This reflects the way in which the current law of manslaughter works. For example, in the prosecutions that arose out of the Hatfield crash, it was a subsidiary of Balfour Beatty that was prosecuted. Amendment No. 19 would be a novel departure from what has been described as the accepted approach. The parent company in a group of companies is a separate legal entity and, as such, is not subject to any legal obligation to prevent those subsidiaries committing any crime. Clearly, there are reputational risks for any parent company if one of its subsidiaries is prosecuted, but that self-interest is quite different from having a direct legal responsibility for the way in which a subsidiary conducts its business. The amendment would require a parent company to take all reasonable steps to prevent a subsidiary committing the offence. What constitutes ““reasonable steps”” is not defined, so presumably the noble Lord would argue that that would be for the courts to determine. That would place holding companies in an unsatisfactory and, one might fairly argue, invidious position. The Department of Trade and Industry looked at the whole question of the civil liability of parent companies in advance of last Session’s Companies Act. Following consultation, the DTI concluded that it would not be appropriate to alter the law in that area. Its review concluded that it would be difficult to define when a parent company was using a subsidiary company abusively to reduce the risks of litigation. The same difficulties could and probably would arise in the context of the Bill. Under the existing criminal law, there are clear principles of secondary liability for holding one person to account for their contributory actions to another person’s crime, but such principles do not generally impose a duty to prevent criminality by others. The principles of secondary liability will apply to holding or parent companies in the case of the offence of corporate manslaughter as they apply elsewhere. We are not persuaded that there is a compelling argument for taking a different approach in the Bill. There is a further argument that could be advanced against this amendment which is worth mentioning. It was advanced by Douglas Hogg in another place. In some groups of companies, the parent company will be an investment company, holding a diverse range of subsidiary portfolios. The skills required for the directors of such a holding company will be very different from those required for the directors of a subsidiary operating company. The example of a land company investing in a hotel was cited. In such an example, the holding company would legitimately have no direct knowledge of how to run a successful hotel, so it would be unclear to the directors of such a company what reasonable steps it ought to take to prevent the operating company committing the offence. The amendment is not quite as simple in its desirability as the noble Lord, Lord Henley, has set out. I see some difficulties in approaching the issue in this way. With that in mind, I urge the noble Lord to withdraw the amendment.