The first Corporate Manslaughter trial

Directors, managers and health and safety professionals have watched with interest the trial of Cotswold Geotechnical Holdings, says Elizabeth Hyde. The company is the first to be tried for Corporate Manslaughter.Cotswold Geotechnical Holdings was sentenced and fined £385,000 after being convicted of Corporate Manslaughter in the first case of its kind to be heard in England.

This is the first time that the new tests of corporate criminal liability have been tested in a courtroom and the jury in the case returned a unanimous verdict on Tuesday 15 February 2011 in less than 90 minutes.

The new law of corporate manslaughter is different to previous corporate manslaughter laws in that the company being prosecuted can now be charged in its own right; it’s no longer necessary for the prosecution to also convict a ‘directing mind’ of the company.

An organisation will be found guilty of the new offence of corporate manslaughter if it can be shown that the way in which its activities were managed or organised caused a person’s death and this amounted to a gross breach of a relevant duty of care owed to the deceased.

An organisation can only be found guilty of the offence if the way in which its activities were managed or organised by senior management was a 'substantial element' in the breach of duty. This will involve an analysis of the actions taken by those deemed ‘senior managers’ within an organisation.

Gross breach
The test to determine whether there has been a ‘gross breach’ of any relevant duty of care is whether the conduct in question falls far below what can reasonably be expected of the organisation in the circumstances.

In determining this issue, the jury will be required to consider whether the evidence shows that the company failed to comply with any health and safety legislation relating to the alleged breach and, if so, how serious the failure was and how much of a risk of death it posed. The jury may also be invited to consider the extent to which the evidence shows that there were attitudes, policies, systems or accepted practices within the organisation that were likely to have encouraged any such failure.

This will involve looking at senior management conduct, collectively and individually, to pinpoint the root cause of the failure to provide adequate practices and systems for managing the particular activities the organisation undertakes.

In the Cotswold case, the prosecution told the court that the deceased was left working alone in the 3.5m deep trench to 'finish-up' when the company director left for the day. The two people who owned the development plot decided to stay at the site as they knew that the Cotswold employee, Mr Wright, was working alone in the trench.

Muffled noise
About 15 minutes later they heard a muffled noise and then a shout for help. While one of the plot owners called the emergency services, the other one ran to the trench where he saw that a surge of soil had fallen in and buried Mr Wright up to his head. He climbed into the trench and removed some of the soil to enable Mr Wright to breathe.

At that point, more earth fell so quickly into the pit that it covered Mr Wright completely and, despite the plot owners best efforts, Mr Wright died of traumatic asphyxiation. 

There is well established industry guidance that prohibits entry into excavations more than 1.2m deep. In convicting the company, the jury found that its system of work in digging trial pits was wholly and unnecessarily dangerous and ignored that guidance by requiring employees to enter trenches up to 3m in depth.

While some have questioned the use of public money in convicting a small company of limited means, the conviction will doubtless be hailed by both the CPS and the HSE as a success. The physical stress of the process will not have been lost on those holding senior positions within Cotswold. Many questions do, of course, remain to be answered - for instance, the question of 'who is a senior manager' has not been clarified.

Sentencing Guidelines released in February 2010 suggest that a starting point for sentence should be £500,000 - but for a company which turned over around £300,000 in 2007 (according to the Geotechnical Services File 2008 published by Ground Engineering) the fine may effectively put the company out of business.

Sentence
Passing sentence, Mr Justice Field stated the company, which was described in court as being in a 'parlous financial state', could pay the fine over a 10 year stretch at a rate of £38,500 every year of that period. The company does not have to pay any costs. 

When passing sentence, Mr Justice Field added: ‘It may well be that the fine in the terms of its payment will put this company into liquidation. If that is the case it's unfortunate but unavoidable. But it's a consequence of the serious breach…’

Those remarks are not out of step with the first draft of the Sentencing Guidelines, which suggested that sentencing judges should not be too concerned if putting a company out of business was the outcome where a company was seen to have grossly failed in its health and safety obligations.

Interestingly, the Sentencing Guidelines do not refer to a fine being linked to turnover but, in effect, the sentencing judge has fined Cotswold Geotechnical Services 10% of its annual turnover for the next 10 years. This is exactly what the earlier version of the sentencing guidelines suggested - those draft guidelines were roundly criticised during the consultation process.

Recommendations
The reality is that if an organisation now suffers a fatality, it has to expect an intensive Police led investigation. The company needs to be prepared for what that entails by considering, in detail, its crisis response and management plans and making sure that every member of its organisation understands their role and responsibilities in such a situation.

There should no longer be any question that good health and safety is a main board issue; a company relying solely on a health and safety manager and their team is not enough.

In future, it’s recommended that every organisation’s board of directors includes health and safety as a standing item on the agenda for board meetings, to have a specific training budget allocated to health and safety and to ensure that both managers and directors are kept appraised of latest developments of health and safety law by subscription to appropriate resources.

Boards should pay particular attention to incidents that may come within the ambit of previous warnings or advice and pay particular attention to any recommendations made by the HSE in relation to the running of its activities. Directors can also find guidance in the HSE’s publication Leading Health and Safety at Work: Leadership action for Directors and Board Members (INDG417) which can be downloaded fromhse.gov.uk/pubns/indg417.pdfOrganisations should, therefore, be in no doubt that demonstrating a strong health and safety culture is now as strategically important as dealing with any other business risk.

Elizabeth Hyde is a solicitor-advocate at Eversheds LLP