On 3 July 2012, Lion Steel Equipment Limited became the third company to be convicted under the Corporate Manslaughter and Corporate Homicide Act and was fined £480,000. This latest case may now boost the confidence of prosecutors across the UK and spur on greater numbers of corporate manslaughter prosecutions. With a recommended starting point of £500,000 for fines following conviction, the stakes have never been higher.
Companies are advised to heed the lessons learned from the Lion Steel case so as to avoid facing a similar prosecution in future. We reflect upon the key lessons from the case and consider what this most recent prosecution shows us about the future for corporate manslaughter prosecutions.
To further complicate matters, as from 1st October 2012, the HSE’s ‘fees for intervention’ (FFI) scheme begins, with the risk that employers who are served contravention invoices will be ‘storing’ up possible bad character evidence which Prosecutors may seek to use in future corporate manslaughter prosecutions.
Further, following a warning earlier this year from South Wales Police that police forces across the UK are waiting to prosecute fleet operators under corporate manslaughter legislation, we consider whether there is a particular risk of prosecutions following work related road deaths.
The Lion Steel case
Steven Berry, a general maintenance worker at Lion Steel Equipment Limited, tragically died when he stepped on a fragile roof light and fell 13 metres to the floor below. Mr Berry had gone onto the roof to locate the source of a leak at his employer’s premises in Greater Manchester. The facts of the case seemed very similar to hundreds of other health and safety prosecutions yet, following a lengthy investigation, the CPS took the decision to charge Lion Steel with corporate manslaughter. In addition, three of the company’s directors were charged with gross negligence manslaughter.
Lessons to be learnt
The case provides a number of key lessons, not least arising from the way in which the prosecution case was brought, which is discussed below.
As a result of the accident in 2008, Lion Steel experienced business disruption throughout a period extending over four years between the accident and trial. In addition, the company received a substantial fine. Most significantly, however, the accident led to a tragic loss of life. The most obvious lesson to take from the case is the importance of recognising and dealing with safety risks; particularly those risks involved in activities that are ancillary to the day to day running of the business. Lion Steel’s focus had been on ensuring that safety systems were in place to protect employees working on the factory floor. The case with many companies is that risk assessments are undertaken for everyday tasks but the more infrequent activities, such as roof work or maintenance tasks, are not given the same attention.
Consider the paper trail
As is often the case, the prosecution’s evidence against Lion Steel was made up of alleged failings in the company’s internal documentation. Unusually however, the prosecution relied heavily on the company’s correspondence with its insurers, insurance brokers, risk mangers and safety consultants detailing health and safety concerns at the company over a period stretching back six years from the date of Mr Berry’s death. The prosecution alleged that those concerns were indicative of the way that safety was managed at the site and failures with the business.
During the trial, a director of the company’s insurance brokers admitted that the warnings given to companies in relation to health and safety weaknesses are often ‘hyped up’ to encourage companies to give more emphasis to issues identified. Regardless of however well-intentioned this practice is, those exaggerated warnings could end up being heard by a court which will take them at face value and conclude that this really was the state of safety management at the time.
As a result it is vital to ensure that correspondence with insurers and advisers contains an accurate reflection of the real situation so that if those documents are ever seen in a court room, the true picture can be presented.
Companies need to be aware that correspondence with their professional advisers is not legally privileged and that any letters, telephone notes or emails or other correspondence could form the basis of a prosecution years down the line. Senior management should ensure that the paper trail shows that they are actively dealing with any identified safety issues, that steps are taken to ensure any safety recommendations are actioned, and that those remedial actions are recorded as part of the paper trail.
Interestingly the prosecution were even intending upon calling the insurer claims inspector who undertook a post-accident investigation and made some unhelpful comments in a report. Such post-accident reports are common place and our advice is that where fatal accidents are concerned, extreme care should be taken to ensure that legal privilege is used where ever possible.
Consider reliance on external safety advisers (and the HSE)
The judge in the Lion Steel case was critical about how the insurers, brokers, other professional safety advisers and even the Health and Safety Executive failed to identify the critical issue in this case; the safety of employees going on to the roof.
This case should act as a warning for insurers and advisers that they need to ensure risks are identified and that companies are alerted about them. This is particularly important for tasks that are ancillary to the main activities of the business, the risks of which the company and its directors might find harder to identify.
Companies should take this case as a warning that they cannot necessarily rely on the advice of their network of advisers to identify safety risks; a company’s reliance on external advisers might not be enough to prevent a corporate manslaughter prosecution. Companies themselves must ultimately take responsibility for identifying hazards in the workplace.
Ensure that D&O cover is in place
As well as prosecuting the company, the CPS took the decision to charge three of Lion Steel’s four directors with gross negligence manslaughter. In a set-back for the prosecution, the judge was critical from the beginning that the CPS had “cast its net wide” in its prosecution of directors (one being a finance director and another heading up a sister site more than 50 miles away from the accident site).
The legal defence teams made successful half time submissions, which resulted in the judge deciding that there was no case to answer on the manslaughter charges against two of the directors. Following this, the CPS effectively withdrew all remaining charges against the directors after the company pleaded guilty to the Corporate Manslaughter charge.
It was (and still is) a concern that the CPS’s strategy for securing convictions would be to target both the company and directors in order for the CPS to maximise its negotiating power. In a future case, the prosecution might offer to discontinue charges against the directors if the company pleads guilty to corporate manslaughter. One can see how this might look like an attractive offer to individuals facing the risk of prison.
In light of the prediction that the CPS will continue to prosecute directors alongside companies, directors and senior management are advised to check that their company has D&O cover, which would fund their individual defences. It is also in a company’s interest that its directors are financially able to defend individual cases against them because if the directors cannot afford to fight the charges, the prospects of the company successfully defending the case may be seriously affected.
The future for corporate manslaughter prosecutions
In April 2012, the Attorney General indicated that there were as many as 50 cases where corporate manslaughter was one of the offences under consideration. In light of the judge’s criticisms of the Lion Steel prosecution, it will be interesting to see if the apparent trend of bringing weak prosecutions against individual directors for manslaughter, in addition to a corporate manslaughter charge, is continued.
Road safety and corporate manslaughter
In May 2012, fleet operators were warned by Sgt Gareth Morgan, supervisor of South Wales Police Driver Training, that police forces across the UK are waiting to prosecute an operator under corporate manslaughter legislation. This is not surprising given that the police and VOSA have been working together for some time to improve road safety, particularly in the wake of a fatality. The HSE and police are learning to work together following fatalities in all workplaces.
We have also recently seen increased co-operation between the HSE and VOSA to improve road and vehicle safety. Sooner or later, following an RTA fatality, the dots will join between the work of VOSA, the HSE and the police, accumulating in an investigation and possible prosecution for corporate manslaughter.
The likelihood of this occurring would increase in the event of a high profile, multiple-fatality RTA, where public outcry demands such a prosecution. The police would take primacy in any investigation, but the HSE and VOSA could be called upon to assist. Any damaging record that the HSE or VOSA hold in relation to the company, could be gathered by the police as evidence to support a prosecution. It seems that the pieces of the puzzle are fitting together and that operators are right to be increasingly concerned about corporate manslaughter in the wake of an RTA.