There has been an ongoing debate over the level of fines imposed by the courts on companies that have been convicted of Corporate Manslaughter.
This issue has again been highlighted by the recent fine of £700,000 which was imposed on Baldwins Crane Hire Limited after it was found guilty of corporate manslaughter relating to the death of a crane driver in August 2011.
Under section 1 of the Corporate Manslaughter and Corporate Homicide Act 2007 (the “Act”):
“(1) An organisation to which this section applies is guilty of an offence if the way in which its activities are managed or organised:
(a) causes a person’s death, and
(b) amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.”
The Act was introduced on 6 April 2008 to make it easier for the authorities to successfully prosecute large organisations where a corporate management failing has led to death.
The Act looks at the way the company is managed as a whole and the systems it has in place to avoid any such accidents occurring. Courts now have a greater scope to prosecute companies for such an offence and the number of convictions is seen to be steadily rising.
In the Baldwins Crane Hire Limited (“Baldwins”) case the prosecution centred around an accident in August 2011 which led to the death of Mr Lindsay Easton, a driver of one of Baldwins’ cranes.
The accident occurred when the crane Mr Easton was driving failed to negotiate a steep curve and crashed into an earth bank. The crash resulted in the front of the vehicle being crushed and Mr Easton suffered multiple injuries which led to his death.
Upon investigation by the Health & Safety Executive it was found that braking system of the crane had not been properly maintained and only provided limited braking force. As a result of Baldwins’ failures to adequately maintain the crane they were found guilty of Corporate Manslaughter by Preston Crown Court and fined £700,000.
An aggravating factor in the company’s sentencing was that it was found on investigation of the other cranes in Baldwins’ fleet that several other cranes also had faults with their brakes or other systems. In addition, a Baldwins director had previously been fined £20,000, for issuing false crane test certificates and hiring out untested cranes in 1994.
The Act sits alongside existing Health and Safety legislation and is meant to act as a deterrent for companies and ensure the safety of the public.
There has been some criticism that the existing sentencing guidelines result in fines being imposed which are too low to act as an adequate deterrent. As a result new sentencing guidelines are being implemented from 1 February 2016.
These new guidelines allow for the courts to impose much larger fines on a company of up to £20m depending on its annual turnover.
The justifications behind the new guidelines are that the fines imposed must be sufficiently substantial to have a real economic impact which will bring home to management and shareholders the need to achieve a safe environment for workers and members of the public affected by their activities.
The courts have a wide discretion to increase the fines where they see fit and even if a fine could have the effect of putting the offending company out of business, this may be deemed an acceptable consequence of the sentence.
It is clear that the legislators and the courts intend to use the fines imposed on companies as a deterrent against breaching health and safety regulations.
Given the proposed increase in the level of fines companies may face for offences under that Act, it is likely that any short term financial gain a company receives through not following proper procedures will be more than cancelled out by the fines imposed.
Therefore, given the potential financial and PR consequences of being found guilty of an offence under the Act, it is more important than ever for a company to ensure that it has put into place adequate and robust health and safety systems to protect its employees and the general public.
To find out more about the issues raised in this post, or to discuss any issues that may be affecting you, get in touch today with Stephen Foster, Partner and Head of the Corporate and Commercial Department, at email@example.com, or by telephoning 0161 833 9211.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.