Many would argue that legal
action against a company and its directors following a death at work was fully
justified. The case however does raise
important concerns regarding the prosecution of individual company directors.
In 2008 a maintenance worker for
Lion Steel fell from the roof to his death.
The company was charged with Corporate Manslaughter and offences under
section 2 of the Health and Safety at Work Act (HASAWA). Three company directors where charged with
Gross Negligence Manslaughter and offences under section 37 of the Health and
Safety at Work Act. In July the company,
which has a turnover of £10 million, pleaded guilty and was fined over £480,000
plus £84,000 in costs. The directors who
went to trial were acquitted in a plea bargain arrangement. The CPS presented evidence of a lack of
training, no risk assessment, no safe system of work and lack of supervision. The facts which lie behind this case should
be of concern to all directors and event company directors in particular for a
number of reasons.
Firstly the Crown Prosecution
Service (CPS) tried to establish a de facto ‘carte blanche’ duty of care for
all directors to all employees by virtue of their office. The judge ruled against it on this occasion,
but it does not mean that the CPS will not do this again. Previous attempts to establish a specific
Director’s Duty in law have not come to pass but it could come into place by
way of case law in a future case. Part
of the reason that it failed in this instance was that it was hard to establish
a direct link between the actions of the directors charged, one of whom was the
finance director, and the operative on the roof.
The case against the directors
did not fail. They entered a plea
bargain arrangement whereby they allowed a guilty plea of corporate
manslaughter against the company, in return for the charges against individual
directors to be dropped. It is not hard
to see why. The Directors were facing a
range of punishments including, custodial sentences of 2 years to life
imprisonment, fines and disqualification from holding a directorship for up to
15 years. Their trials and the threat of
a heavy custodial sentence could have been drawn out over four years possibly
resulting in professional and financial ruin even if they were found not
guilty.
It raises the disturbing question
as to whether the CPS deliberately brought these charges against the
individuals in order to leverage a corporate plea. If this is the case we could see more cases
of directors automatically potentially facing life imprisonment following a
death at work. And what of these
directors’ fiduciary duties to the company and its shareholders? Surely there was a conflict of interest in
sacrificing the company to defend their own cases.
Lastly the CPS did not rely on
witnesses. Instead it used documentation
and e-mails dating back to 2002 to support its case. This underscores the need for careful
attention to archiving of key documents to prove that directors are routinely
discharging their duty of care, from issuing and implementing a proper health
and safety policy to ensuring that there are safety files for each event.
The law of corporate manslaughter
was brought in to target companies and not individuals and yet it appears to be
having the perverse effect of encouraging the targeting of individual directors
in order to secure a conviction against the company.
Lion Steel was not a corporate
behemoth, its pre-taxed profits ranged from £187,000 to £317,000 and its
highest paid directors received £88,000 per year. It now faces a struggle to survive
commercially with such a hefty fine which they must pay within three years.
So what lessons can we derive in
the events industry? Firstly the events business
has had its fair share of fatalities; work at height and event construction
activity place us at the higher end of the risk scale as an industry. It is for this reason that the HSE have
decided to enforce safety at the construction of events (see previous
updates). The safety industry commentary
was critical of the CPS in targeting individuals in this way1. In the events industry it would be a lot
easier to establish a link between the actions of individual directors and the
activities on the event floor particularly with the portfolio structure of most
organising companies where senior directors are clearly responsible for
specific events. Any director who is
part of the structure of a venue management team would also have clear links
with operational activities which would be easy to establish in court.
Responsible organisers and venues
already proactively manage risk. This
case should prompt a shakedown of policy and procedures in those companies that
do not have robust risk management processes.
All companies should look carefully at their major incident handling
plans in terms of processes in place to defend the companies and its directors
against charges of corporate or individual gross negligence manslaughter
respectively.
Note.
1. Safety and Health Practitioner
August and September Issue, Health and Safety at Work October issue.