July last year saw conviction and sentencing in only the third successful corporate manslaughter prosecution since the Corporate Manslaughter and Corporate Homicide Act came into effect in April 2008. Lion Steel Limited was fined £485,000 and ordered to pay £84,000 in prosecution costs following the death of one of its workers Steven Berry, 45, when he fell through a fragile roof light while working on its site in Hyde, Manchester in May 2008.

Mr Berry fell around 13 metres from the roof which he had gone onto in order to repair a leak. The Court heard evidence that indicated when Mr Berry put his weight onto the fibreglass roof light it became detached from its fixings, twisted and created a hole through which Mr Berry fell.

The Company was prosecuted for corporate manslaughter and a breach of section 2 of the Health and Safety at Work etc. Act 1974 (HSWA). Three Directors, Kevin Palliser, Richard Williams and Graham Coupe, were also prosecuted for gross negligence manslaughter and a breach of section 37 of HSWA. At the time of the accident, one Director had operational responsibility for the company’s Hyde site at which the accident took place, whereas another was responsible for the company’s Chester site and the third was the Finance Director.

Questions may arise:

  • Did the case against Lion Steel and its trial provide any pointers to those involved in safety management policy and decision making?
  • Are companies and their lawyers any further forward in understanding some of the key provisions of the Act?
  • Why has it taken five years for the authorities to bring only three cases to a conclusion?

The trial

Over three years after Mr Berry’s fatal accident, in July 2011 the CPS announced that the Company and the Directors would be charged. Not guilty pleas were duly entered and the case was heard before His Honour Judge Gilbart QC.

Prior to hearing any evidence HHJ Gilbart severed the trial of the Company from that of the Directors. He did this in part because, as the Corporate Manslaughter Act did not come into force until April 2008, in the Company’s trial he was compelled to exclude any evidence of gross breaches of duty committed by the Directors before this date. This evidence, however, was relevant and required consideration by the jury in relation to the offences alleged against the Directors’ themselves.

Having severed the two trials, the trial against the Directors commenced in June 2012. However, at the conclusion of the Prosecution’s case against the Directors the Judge ordered that there was no case to answer in respect of the manslaughter charges against 2 of the 3. The Prosecution had not in his view put forward sufficient evidence upon which a reasonable jury properly directed could base a finding of guilt.

While the Prosecution had argued that each director personally owed every employee of the company a direct duty of care for their safety regardless of the relationship between director and employee and regardless of whether the director had any management responsibility for the work the employee did, the Judge rightly observed that the question as to whether an employer is in breach of its duties through vicarious liability is very different from asking whether the death of an employee has been caused by the gross negligence of a director. He went on to (re)state that the fundamental question is the degree of control and responsibility exercised by the director over the task and systems of work in question. So the familiar argument that all directors should have unlimited personal responsibility for all employees, which is raised on a regular basis in the House of Commons and elsewhere, was once again rejected.

It is also interesting to note that the Prosecution had called no Lion Steel employees to give evidence at the Directors’ trial, relying instead in the main on correspondence dating back to 2002 between the company’s insurance broker, insurer and external safety consultant to prove its case and to demonstrate each Director’s involvement in safety management at the Hyde site.

Following the collapse of these aspects of the case the prosecution and defence lawyers entered negotiations in respect of the charges which remained against the Directors and the Company. It was subsequently agreed that Lion Steel would enter a guilty plea to corporate manslaughter with all remaining charges being dropped, including those remaining against the Directors. What is less clear is whether the Company and the remaining Director would have been successful in their defence had the decision been made to continue on rather than to sacrifice the Company’s position, and whether the two Directors against whom the prosecution case had collapsed were involved in or happy with the company’s decision to plead guilty.

Interestingly, the offer to plead guilty "in return" for the dropping of other charges, had been made by the Company prior to the trial commencing but was rejected by the Prosecution as it wished to pursue the Directors. In his subsequent judgment the Judge noted that the "acceptability of the plea to the Crown altered after its main case against the directors had encountered real difficulty at trial".

Sentencing - judicial remarks and fine

Although a guilty plea had been entered to the corporate manslaughter charge and it was not necessary for the jury to consider whether, for example, the system of work being used at the time was adequate the Judge, in sentencing, made his feelings clear on the subject. He said:

"…The fact that Mr Berry, in the course of his employment, was up on the roof on his own, with no protective equipment, and with no measures taken to guard against falls showed that the system adopted for dealing with repairs was inadequate … In my judgement the risk of a fall through the roof was an obvious one, and those running the company should have appreciated it."

He went onto say:

"There is evidence that Lion Steel had been warned by an HSE Inspector in 2006 that warning notices should be erected to keep persons away from fragile roofs. That knowledge was within the company’s senior management when the 2007 Act came into force.

"I accept that the company had devised a way of working, intended to keep Mr Berry and others off the fragile areas … But what the company did not do is to train Mr Berry properly, or to equip him or others with equipment, in the form of a harness and line, which would protect him should such an accident occur. The absence of boards, or barriers defining routes, meant that there was nothing to dissuade a workman from taking a short cut, when any deficiency in the roof would cause him to plunge 13 metres to the floor below."

The Judge concluded that the Company had done "far less than what was required".

It does remain questionable, however, whether the weaknesses identified in the Company’s safety management systems and in their application would have been considered to be grossly negligent, had that decision been left to the jury. Similarly, although the Judge sought to emphasise senior management’s knowledge of the 2006 "warning" by the HSE, whether a jury would have considered that knowledge (and inaction) a substantial element in the breach, is open for debate.

In the event, it was not only the conduct of the Company which attracted criticism. The Judge made his views clear on the way in which the Prosecution case had been formulated and pursued citing it as "unrealistic" in some areas and "a source of concern" in others.

In sentencing the Judge was guided by the Sentencing Guideline Council’s Definitive Guideline on Corporate Manslaughter and Health and Safety Offences Causing Death, published in February 2010.

In considering the seriousness of the offence the Judge began by observing that "the risk of serious injury or death was obvious" and "the company fell short of the required standard, but had done something to address the risk, albeit not nearly enough. The measures required to address it (training, boards, barriers and a harness or line) would not have been expensive to install".

The Judge also considered the financial position of the Company. The Company provided the Court with three years of accounts and an expert accountant’s report, which concluded that "this is not a case of a company where the directors are creaming off large salaries" nor one "which had engaged in extravagance".

In mitigation the Company argued among other things that it had a good health and safety record and that it had stopped using its own workforce for roof repairs.

On the appropriate level of fine the Judge said:

"If a substantial fine were imposed with a short payment period, it would have a potentially severe impact on the company’s ability to sustain itself in business. I am very mindful of the 142 people who work at Lion Steel."

He went on to say that he:

"Would regard it as a most regrettable consequence, which would add to the terrible consequences of Mr Berry’s death, if the effect of an order of this court were to imperil the employment of his former colleagues and those who would have been had he lived."

The Judge imposed a fine of £485,000, which he ordered to be paid in four instalments of £100,000, £150,000, £150,000 and £80,000 on 30 September each year until 2015. The fine included a discount of 20 per cent for the entering of a guilty plea before the trial of the Company.

Prosecution costs were claimed in the sum of £163,857 which, given the Judge’s criticisms of the conduct of the Prosecution, were unsurprisingly reduced to £84,000. The Judge commented that he deemed:

"The time spent in preparation over three years was excessive, and some of the case presented was unnecessary and irrelevant."

As is the case in so many health and safety cases, there was a significant delay between the date of the accident and the case coming to Court, it taking over four years since Mr Berry died. In further criticism of the Prosecution, the Judge attributed the delay to "the failure of the prosecuting authorities to act promptly. It took over three years for any charges to be brought, a delay which I find unreasonable, and especially so when at that stage individuals were facing prosecution."

Comment

This is the third successful prosecution for corporate manslaughter since the Act came into force in 2008. It follows the successful prosecution of Cotswold Geotechnical Holdings in February 2011, fined £385,000 following the death of one of its employees in a trench collapse, and JMW Farms Ltd in May 2012, fined £187,000 after a fatal fork lift truck accident in Northern Ireland.

It is clear that these still quite exceptional cases will continue to attract intense public attention and that any smaller companies involved in them will risk going out of business, through this attention and the attendant reputational damage, the size of the resulting fines, or a combination of the two.

But what else can we learn from the few cases so far brought and the even fewer number concluded?:

  • Did the case against Lion Steel and its trial provide any pointers to those involved in safety management policy and decision making?
  • Are companies and their lawyers any further forward in understanding some of the key provisions of the Act?
  • And why, for goodness sake has it taken five years for the authorities to bring only three cases to a conclusion?

In terms of pointers the Lion Steel case might provide to those involved in safety management, there are one or two beyond the unhelpfully obvious one most often identified by legal commentators (which is to remember to ensure that appropriate effort, focus and leadership is applied to safety management!):

  • The first is to be very careful about one’s response to guidance and warnings provided by the HSE and other regulators, as well as to that given by safety consultants and insurers. Although because of Lion Steel’s guilty plea the point was not played out before a jury, the Judge took the opportunity to hang his sentencing hat (or wig) in part on the knowledge at senior management level of a letter from the HSE in 2006 which suggested warning notices be considered for the roof. Had the company responded actively to that suggestion, whether by fitting signs or explaining in a logical way why an alternative course would be appropriate, that particular "gun" could have been rendered non-smoking. Equally, had the company, its insurers and its safety consultant engaged with each other in a more careful way then the Prosecution could have been denied some of its evidence.
  • The second pointer relates to the delineation and understanding of directors and other senior managers’ roles and responsibilities. This was an issue which in the absence of clear company job descriptions and budgetary authorities led to much wrangling in court. While one might argue that clear job descriptions and responsibility matrices and understanding in some cases make it easier for a prosecutor to pursue a particular director, the stronger argument if there is confusion and uncertainty in this area then the chances of a wide ranging prosecution are likely to be higher, not to mention the accident itself.
  • Finally, there was evidence in the Lion Steel case of different standards of safety being applied at the company’s two sites and the difference was a weakness in the company’s defence. Consistency and adherence to group standards would have improved both the company’s and the Directors’ positions.

Are companies and their lawyers any further forward in understanding some of the key provisions of the Act? We are yet to see a case in which the Court has been tasked with providing more detailed guidance on certain "grey areas" of the Act, e.g. the precise meaning of "senior management" and whether the test for "grossness" under the Act will set a lower bar than that developed before its introduction under the common law. That is largely because the corporate bodies so far convicted have been relatively small organisations with quite simple management structures.

We have, however, seen an acceleration in the number of corporate manslaughter prosecutions commenced in the past few months and, although there does not appear to be a "large" corporate defendant among these newly commenced cases, given more time the Courts will inevitably be required to explore and clarify certain provisions of the Act.

A combination of the traditionally slow pace of corporate manslaughter investigations - attributable sometimes to their sensitivity and complexity but more often to the under resourcing, inefficiencies and inexperience of investigating authorities - and the fact that some candidate cases may have involved corporate failings stretching back beyond the Act’s coming into effect in April 2008 will have been a factor in the small number of cases commenced to date.

However, with the recent commencement of at least four further prosecutions under the Act, variously concerning an electrocution at a nursery, a vehicle maintenance accident, the death of a young girl at a water sports park and a mining disaster, and reports of a further 60 or so cases under active consideration for prosecution by the CPS, it will not be long before the Act’s relatively slow adoption by the prosecutors is turned around.