Mental health law briefing 170 – The financial perils of a corporate manslaughter sentence

The Court of Appeal has recently rejected an appeal brought by the first company convicted of corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007[1] (the 2007 Act). In particular, the Court refused leave to appeal against a fine of £385,000 that had been imposed by the trial judge and considered “the fact that the company would be put into liquidation would be unfortunate, but… was unavoidable and inevitable.[2] Whilst this is the first case of its sort, the decision gives an indication of how the courts will approach sentencing in such matters.

The Facts

The case concerned an application for leave to appeal brought by Cotswold Geotechnical (Holdings) Limited (CGH) following their conviction of corporate manslaughter on 15 February 2011. The conviction arose out of the death of one of its employees, Alexander Wright, on 5 September 2008. Mr Wright was doing soil investigation work in a pit which had been dug to a depth of at least 3.5 metres in order to obtain soil samples and conduct tests. The evidence was that the pit was entirely unsupported and its subsequent collapse killed Mr Wright by traumatic asphyxia.

At trial CGH were convicted of corporate manslaughter contrary to s1(1) of the 2007 Act and fined the sum of £385,000 to be paid over a ten year period. CGH appealed the conviction and sentence.

The Court of Appeal rejected the appeal against conviction before going on to consider the leave to appeal against the sentence fine of £385,000. The fine given by the trial judge was a consequence of his consideration of the Definitive Guideline issued by the Sentencing Guidelines Council in relation to corporate manslaughter. From that guideline, the trial judge had noted that it was plainly foreseeable that the way in which the company conducted its operations could produce not only serious injury but death.[3] The Court noted that the standard by which the company had fallen short was found by the jury to have been gross. It was also noted that previous advice and guidance from the Health and Safety Executive on unsupported pits had not been followed by the company. The Court noted that in coming to his conclusions the trial judge had considered that the fine “would be sufficient to mark the gravity of the offence and to send the necessary message about the need for employers generally to attend to their duties to provide safe places of work.”[4] 

In considering CGH’s appeal against the fine, the Court of Appeal noted that the fine represented 250% of the company’s turnover which was to be paid over a 10 year period and accepted that there was therefore little prospect of the company surviving. The Court of Appeal was aware of the guidelines produced by the Sentencing Guidelines Council which indicated that account should be taken of the financial circumstances of the defendant organisation and that a fine is intended to inflict punishment, but should be one that the defendant is capable of paying, if appropriate over a number of years. While the Court of Appeal noted that guidance it also noted that the same guidance required the Court to consider “…whether the fine will have the effect of putting the defendant out of business. In some bad cases this may be an acceptable consequence.”[5] 

The Court of Appeal went on to find that, “The reality of this case is that the judge took a view, rightly, that in the circumstances as they appeared before him, and indeed as they appear before us now, the fact that the company would be put into liquidation would be unfortunate, but in our judgment, as in his, this was unavoidable and inevitable.”[6]

Comment

Due to CGH’s relatively small size as a company the court did not need to fully grapple will the more substantial issues under the Act i.e. whether the way a larger company manages its organisation did or did not cause a particular death and/or whether senior management failures led to a breach of the company’s duty of care. However what the case has shown is that the courts will not be shy in issuing substantial fines, even if it is made clear that those fines will ultimately lead to the company’s liquation.

As some of our readers will be aware the provisions in the 2007 Act concerning deaths in custody were brought into force in September. These provisions provide that organisations who detain individuals in  defined circumstances[7], including those detained under the Mental Health Act 1983, hold a duty of care to those individuals and thus specifically fall within the remit of the 2007 Act.

The recent court decision above therefore provides further warning that companies and their executive boards, including those that manage detained patients under the Mental Health Act, should have in place robust and transparent systems of management, particularly with regard to health and safety matters.

Andrew Parsons
andrew.parsons@rlb-law.com
© RadcliffesLeBrasseur


Footnotes

[1] R v. Cotswold Geotechnical (Holdings) Ltd [2011] EWCA Crim
1337, [2011 ALL ER (D) 100 (May)
[2] Ibid paragraph 33.
[3] Ibid paragraph 28.
[4] Ibid paragraph 30.
[5] Ibid paragraph 32.
[6] Ibid paragraph 33.
[7] See Corporate Manslaughter and Corporate Homicide Act 2007,
section 2(2).


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

Briefing tags ,