82. Corporate Criminal Liability – The Move Towards Recognising Genuine Corporate Fault

Meaghan Wilkinson[*]
Citation: “Corporate criminal liability. The move towards recognising genuine corporate fault” [2003] CanterLawRw 5; (2003) 9 Canterbury Law Review 142

I. Introduction

The concept of corporate criminal liability has been problematic since its inception and the subjection of companies[1] to the criminal law eternally difficult. Questions as to how the law should respond when deaths, injuries or other wrongs are caused through corporate activity have recently received greater attention as a result of tragedies such as the Zeebrugge ferry disaster, the high number of deaths and injuries in the workplace, concerns about corporate pollution, and the accompanying realisation as to the impact corporations can have on our everyday lives. Despite public calls for corporations to be brought within the full scope of the criminal law[2] the various theories and mechanisms according to which a company may be held to have committed a criminal offence continue to be debated by academic lawyers, social theorists and legislatures. The essential problem with prosecuting a company stems from the dissimilarities between a natural person and a corporation. The criminal law was developed to punish and deter the wrongdoing of individual moral persons, whereas a company is traditionally and authoritatively said to be a ‘fictitious’ or ‘abstract’ entity, incapable of physical action, knowledge or intention.[3] Commonwealth jurisdictions[4] have traditionally approached this difficulty through a ‘nominalist’[5] perspective, that is, by treating the corporation as a mere collection of individuals and locating its criminal culpability derivatively through the culpability of individual actors. The two widely accepted common law bases of corporate responsibility — vicarious liability (whereby the corporation is held liable for the conduct of all its officers, employees or agents acting within the scope of their employment or authority) and the ‘identification approach’ (under which the actions and mental state of certain individual actors are treated as the company’s own) – both proceed from the nominalist conception of the ‘company’ as a fiction, unable to be conceived of as blameworthy in itself. These two models of liability have been criticized as failing to adequately capture the reality of criminal wrongdoing by the modern corporation. The requirement to first find a criminally culpable individual in order to impute liability to the company poses practical problems and, it is submitted, takes the wrong approach to the question. Commentators have suggested alternative mechanisms of liability, and in the United Kingdom and Australia corporate criminal liability has been a prominent item on the agenda for law reform. The alternative models tend to be based on what have been termed ‘holistic’[6] theories of corporate criminal liability, which focus on the organisational conduct and fault of the corporation as a whole in order to satisfy the requirements of the criminal law.[7] The idea is that corporate blame can be found in the procedures, operating systems or culture of a company. The most radical model of liability is that found in Part 2.5 of the Australian Criminal Code Act 1995, which came into force in all states in December 2001. Based on ‘realist’[8] theories of the company as a unique entity having an existence independent of its members, the Code enables Australian courts to examine a company’s corporate policy and culture and its organisational structure in order to find genuine (as opposed to derivative) corporate fault. This paper will review the historical development of corporate criminal liability and the dominance in the common law of the two traditional models of responsibility, before turning towards a discussion of organisational liability and an examination of the alternative proposals. The argument to be made favours the Australian Criminal Code model as the best available mechanism for the imposition of corporate criminal liability, with particular support for the idea that truly corporate mens rea can be found in criminogenic corporate cultures, and need not be reliant on the culpability of individual actors.

II. Historical Development

A corporation has long been recognized as a legal person – a single entity, distinct and separate from all the individuals who compose it.[9] As a consequence of its legal personality, a company has the capacity to enter into transactions with other persons, to hold property, to sue and be sued, and, if the jurisdiction so allows,[10] to incur criminal liability. Today, corporations are charged with and convicted of statutory offences under a wide range of legislation. The New Zealand Crimes Act 1961, with certain exceptions, imposes liability on ‘persons’. Section 29 of the Interpretation Act 1999 and s 2 of the Crimes Act 1961 define ‘person’ so as to include a corporation sole and also a body of persons, whether corporate or unincorporate. Anumber of other statutes contain provisions which deal specifically with the liability or punishment of corporations.[11]

There was a time, however, when it was believed that a corporation could not be indicted for a crime at all. The first recorded consideration of the issue appears to be in Suttons Hospital Case.[12] The writing of Blackstone in 1768 gives similar evidence of the reasoning behind this theory:

An aggregate corporation… cannot appear in person, being … invisible, and existing only in intendment and consideration of law. It can neither maintain, or be made defendant to, an action of battery or such like personal injuries; for a corporation can neither beat, nor be beaten, in it’s [sic] body politic. Neither is it capable of suffering a traitor’s or felon’s punishment, for it is not liable to corporal penalties, nor to attainder, forfeiture, or corruption of blood … Neither can it be committed to prison; for its existence being ideal, no man can apprehend or arrest it… Neither can a corporation be excommunicated; for it has no soul.[13]

A further problem with prosecuting a corporation was that a corporation, as a creature of the law, could only do such acts as it was legally empowered to do, so that any crime would therefore necessarily be ultra vires. A company was, under this analysis, legally incapable of committing a wrongful act. All of these objections have since been overcome either by legislation or by the courts.

The problem of a company appearing in court was eventually solved by the practice of having a representative enter a plea on behalf of the company.[14] Although a company may not be physically punished, put to death, or imprisoned, legislation now enables a court to sentence the offender to pay a fine instead of imprisonment in almost all cases.[15] For policy reasons the courts have demonstrated a willingness to read down mandatory penalties in order that a company will not be exempt from prosecution or conviction. In Police v Purser Asphalts and Contractors Ltd[16] the High Court held that a mandatory penalty of disqualification from driving applied to natural persons only, and this did not prevent a company from liability for carelessly using a motor vehicle.[17] Following this case the general principle is stated as being that where legislation expressly mandates a particular penalty which is applicable only to natural persons, a company may still be prosecuted, provided at least one other penalty (suitable to companies) is available.[18] The offences of murder and treason, which carry mandatory penalties of life imprisonment, are likely to be exceptions. The ultra vires doctrine, seems to have been ignored in both the law of crime and tort[19] and to apply to only in the law of contract and property.[20]

And, after a hesitant beginning, the courts have overcome the corporation’s lack of mental and physical faculties by imputing the acts, knowledge, and intention of its directors, employees and agents to the body corporate. Leading texts describe this process of ascribing human attributes to a company as entirely necessary for the criminal law to work. The actions and intentions constituting the actus reus and mens rea of the crime must, it is said, be those of a natural person, as a company cannot as a company per se itself commit the constitutive elements of the crime.[21] Thus the liability of a company for wrongs under the traditional common law approaches will always be derivative rather than original. Before considering the two ways in which a company may be held to be criminally liable it is proposed to briefly trace the development of the law of corporate criminal liability through certain significant decisions. The formative period in the development of corporate liability for crime was from about 1870 to 1930.[22] The earliest decisions were confined to prosecutions for nuisance in cases of non-feasance. There was seen to be no great objection in holding a corporation liable where a statute imposed a duty upon a corporation (or other person) to act and no action was taken.[23] In 1842 in Birmingham and Gloucester Rly Co[24] a corporation was convicted for failing to fulfill a statutory duty to remove a bridge which it had erected over a road.

Four years later, the ability to prosecute a company was extended to crimes of misfeasance. The growth of vicarious liability in tort made the imposition of criminal liability in cases of misfeasance possible. Leigh writes that despite authoritative opinion that the body of law relating to vicarious liability had no application to corporations, ‘this view failed to survive the appearance in significant numbers, of railway, canal and other bodies corporate. … The growing familiarity of the body corporate in the ordinary life of the community made it necessary to fit the corporation within some framework of liability’.[25] The corporation was therefore seen to be responsible for the acts of its agents and employees and in Great North of England Railway Co[26] a company was convicted for cutting through and obstructing a highway and thereby causing a public nuisance. Lord Denman CJ stated that a corporation could not be guilty of treason, felony, offences against the person or perjury, as these offences derived their character from the guilty mind of the offender and in any event were violations of the social duty belonging to natural persons:

[A corporation] which as such, has no such duties, cannot be guilty in these cases: but they may be guilty as a body corporate of commanding acts to be done to the nuisance of the community at large.[27]

In the latter half of the nineteenth century as corporate activity burgeoned into most fields of enterprise the (English) legislature naturally made corporations subject to public welfare statutes regulating their conduct.[28] Serious argument over the issue only arose when it was desired to hold corporations vicariously liable as an employer/master for regulatory offences which involved mens rea.[29] Developments in the law of tort which enabled a corporation to be vicariously liable for torts committed by servants which involved some form of malice,[30] as well as the enactment of the Interpretation Act 1889, which provided that the expression ‘person’ shall ‘unless the contrary intention appears, include abody corporate’,[31] combined to extend liability for offences involving mens rea in respect of which employers were vicariously criminally liable, to corporations. It was first held that a company could be convicted of an offence of absolute liability (selling an article of food not up to quality) in Pearks Bunston, and Tee Ltd v Houghton.[32] The courts went further in Chuter v Freeth and Pocock Ltd[33] where it was held that a company could be vicariously liable for giving a warranty through its agents and through them ‘believe’ (or not believe) that the statements contained in it were true. Twenty years later it was confirmed in New Zealand that where the commission of an act prima facie imports an offence, a company can be convicted even though proof of absence of mens rea is a defence (i.e. a strict liability offence).[34] At this stage corporate criminal liability did not, however, extend to ‘truly’ criminal offences of which mens rea was a necessary ingredient. Although the courts and the legislature had accepted that a corporation could be vicariously criminally liable for the acts of its agents and employees in the certain exceptional cases,[35] before a corporation could in some way be said to have a ‘mind’ and the ability to act personally rather than by procuration, it could not be made amenable to the full ambit of the criminal law.

The final stage of development was the extension of corporate liability to offences requiring affirmative proof of mens rea. The notion that a corporation could be ‘directly’ liable for committing a truly criminal offence emerged in three 1944 cases, which have been described by Welsh as ‘revolutionary’ in their effect.[36] In Director of Public Prosecutions v Kent and Sussex Contractors Ltd[37] it was held that a company could be charged with the offence of furnishing false information ‘with intent to deceive’ when the company’s transport manager sent in certain returns he knew to be false. The justices found that the offence included a mental element, that a corporation could not entertain criminal intent, and that this meant the company could not be made criminally liable for the offence. This finding was reversed by a Divisional Court where Lord Caldecote said:

The real point which we have to decide … is … whether a company is capable of an act of will or a state of mind, so as to be able to form an intention to deceive or to have knowledge of the truth or falsity of a statement … Although the directors or general manager of a company are its agents, they are something more. A company is incapable of acting or speaking or even of thinking except insofar as its officers have acted, spoken or thought … The officers are the company for this purpose.[38]

This reasoning was approved in the subsequent case of R v ICR Haulage Co Ltd[39] where the company was convicted of common law conspiracy to defraud. The conspiratorial intent of its managing director was imputed to the company. DPP v Kent and Sussex Contractors was treated as authority for the proposition that a state of mind could be attributed to a company. Stable J stated that the court was not deciding that in every case where an agent of a limited company acting in its business commits a crime the company is automatically to be held criminally responsible. Whether the state of mind and actions of a corporate agent are to be imputed to the corporation ‘must depend on the nature of the charge, the relative position of the officer or agent, and the other facts and circumstances of the case’.[40] In the third case, Moore v I Bresler Ltd,[41] it was held that a company could be convicted for making false tax returns with intent to deceive when the returns were made by agents acting within the scope of their authority — even though the agents intended to defraud the company itself. These decisions represented a radical change in the attitude of the courts towards the liability of companies for crime; in each case the corporation was held criminally liable for offences committed by human agents, in circumstances where, had the master or employer been a natural person, it could not have been convicted.[42] These were clearly not cases of vicarious liability but a kind of personal liability of the company itself. The three 1944 decisions were once criticized as putting the law of corporate criminal liability into a state of confusion in that it was not clear on what basis personal corporate liability was to be distinguished from vicarious liability.[43] Moore v Bresler Ltd particularly concerned commentators as the guilty acts were not, as in the other two decisions, performed or authorized by directors of the company, but by seemingly lesser agents (a general manager and a sales manager). The decision was said to result in an ‘undue extension of corporate liability by blurring the distinction in law of the agents of the corporation and the legal persona itself’.[44] The difference between the vicarious and the so-called personal liability of a corporation was to be further consolidated in subsequent cases — although it will be seen that to some extent the distinction remains blurred. It suffices to say at this point that the cases are generally regarded as establishing that a form of corporate criminal liability existed according to which the company itself was identified with the acts of certain officers, rather than being simply accountable for the transgressions of its employees.

III. Corporate Criminal Liability

The general position at common law today is that a corporation is in the same position in relation to criminal liability as a natural person, and may be convicted of crimes requiring mens rea. In New Zealand there are in fact very few crimes for which a company may not be convicted.[45] Examples usually given include perjury and bigamy, which are seen as only capable of being committed by a natural person.[46] The actual statutory wording of the offence is an important factor in considering whether criminal liability of a company was intended by Parliament.

New Zealand differs from other Commonwealth jurisdictions in so far as a company has been held incapable of committing the offence of homicide.[47] The Crimes Act definition of both murder and manslaughter requires the ‘killing of one human being by another’.[48] It was therefore held in R v Murray Wright[49] that a company (a chemist business) could not be held liable as a principal offender on a charge of negligent manslaughter when the incorrect preparation of prescribed medicine was the cause of death.[50] It is thought that a similar conclusion may well be drawn in the context of most sexual offences[51] although the company might still incur criminal liability as a secondary party for offences it cannot commit as a principal offender.[52]

The Derivative Models

Given that companies may now be convicted of most offences, the question to be considered is how does the company commit them? More specifically, this paper aims to address the question of how concepts of individual moral fault in criminal offences might be applied to a corporate entity. All the Commonwealth jurisdictions have recognized that corporations are incapable of causing harm in breach of a criminal law standard and have found ways to attribute criminal responsibility to them. In the United Kingdom, Australia, Canada and New Zealand judges have developed two main techniques for attributing to a corporation the acts and states of mind of the individuals it employs. Both models proceed from the ‘nominalist’[53] view of corporations as fictional entities. The first is vicarious liability, where there is automatic liability for offences committed by officers, employees and agents acting within the scope of the authority or employment. The second model involves identification liability under which the liability of a more restricted range of company personnel is attributed to the corporation. It is the submission of this paper that neither of them is convincing.

Vicarious Liability (respondeat superior)[54]

This doctrine, which deems a company vicariously liable for the acts of any employee whenever an individual would be so liable, emerged in the law of torts in the nineteenth century. It is one of the fundamental bases of attribution in civil law. There was a traditional reluctance by the English courts[55] to apply the notion of vicarious liability in the criminal sphere as it is generally accepted as unjust to condemn and punish one person for the conduct of another without reference to whether the first was actually at fault.[56] The exceptions to this principle have already been discussed.[57] The most important exception is that relating to certain regulatory statutory offences where the legislature has imposed a duty on the employer or principal. This absolute duty renders an employer or principal liable for the acts of its employees or agents even if it has not authorized or consented to the commission of those acts.[58]

In Mousell Bros Ltd v London and North-Western Railway Co Lord Atkin articulated the general principle:

[P]rima facie a principal is not to be made criminally responsible for the acts of his servants, yet the Legislature may prohibit an act or enforce a duty in such words as to make the prohibition or the duty absolute; in which case the principal is liable if the act is in fact done by his servants. The question whether a particular provision imposes vicarious liability is one of construction, depending upon the object of the statute, the words used, the nature of the duty laid down, the person upon whom it is imposed, the person by whom it would in ordinary circumstance be performed, and the person upon whom the penalty is imposed.[59]

One leading text states that vicarious liability will not be imposed unless there are in the statute creating the offence very clear words imposing responsibility upon a defendant for the acts of its servant or agent.[60] In reality, whether a particular statute imposes corporate liability and whether the vicarious (or identification) doctrine will apply, is ‘rarely if ever spelt out’ so the process of interpretation is ongoing.[61] The purpose of the particular statute will be an important consideration as vicarious liability, it is argued, is always appropriate where to fail to hold an employer liable for the acts of its employee would be to ‘render nugatory’ the statute and thus defeat the will of Parliament.[62]

The general principle is that under the law of torts and under statutes creating liability employers are made liable vicariously for the acts and omissions of their employees occurring within the scope of their employment.[63] Where the corporation is vicariously liable it does not matter whether the employee (or agent) occupies a senior or junior position in the company.[64] There is no pretence that the act or omission is actually that of the company itself; the company is simply made liable for the fault of another.[65] This is the reason why Commonwealth jurisdictions have basically rejected vicarious liability in criminal law. It distorts the concept of fault, since the fault of an individual is readily transferred to the company without proof of the company’s misfeasance or malfeasance.[66]

It follows that the two major criticisms of the vicarious liability model are that it is both overinclusive and underinclusive.[67] The corporation is blamed whenever the individual employee is at fault, regardless of whether there is any corporate fault. And yet although the net cast by vicarious liability is wide, it also is limiting in that the liability must flow from that of the individual. In other words the doctrine confines the culpability to an individual, when the fault of the corporation itself may be much greater than that. Such criticisms are evidence that underlying the views of many legal commentators is a sense that there are other more authentic ways of conceptualising corporate fault than by only examining the culpability of its individual members. One further problem with the vicarious liability model is that its exact scope has recently been rendered uncertain. It may no longer be the case that a corporation’s criminal liability for breaching regulatory statutory duties is characterized as vicarious in the wake of certain decisions in the United Kingdom and a recent case in our Court of Appeal. This erosion of the base of vicarious liability, and the possibility of a new base of liability emerging, will be discussed later in the paper.[68]

The Identification Approach
Early Development

It has been seen that it was not until the 1940s that English law contemplated a form of corporate liability which could apply to serious offences categorised as truly criminal. The obstacle was of course that such offences required proof of a mental element of intention, knowledge, recklessness or subjective negligence. For the purposes of corporate liability for this type of offence the courts began to develop rules of attribution which in appropriate cases ‘identify’ the acts and knowledge of those in control of the company as those of the company. This ‘identification’ approach differs from the normal rules of agency in that it ‘effectively merges for legal purposes the individual and the company into one entity. There is thus only ever a bipartite relationship: the company and the third party’.[69] The identification theory has at various times also been called the ‘alter ego’,[70] the ‘organic’,[71] and the ‘directing mind and will’ approach. It applies when vicarious liability does not, and is the traditional common law method by which companies are held criminally responsible in Commonwealth jurisdictions.

The basis of the identification principle is that a company will be liable for a serious criminal offence where certain of its officers has acted with the requisite fault. The acts and state of mind of such officers are deemed to be the acts and state of mind of the corporation. The individual wrongdoers are identified as the corporation and so it is said that the corporation is personally, rather than vicariously, liable. The question has of course always been which natural persons involved in the affairs of the company can be held to be indicative of the intention or knowledge of the corporation as a whole? In the cases it is possible to find varying formulations of the test as to who can properly be characterized as the company. Commentators agree that the individual must be of some seniority in the corporation but it is submitted that Wells’s cautious description of the category of individuals as ‘certain key personnel’[72] is as far as one can go in terms of an accurate answer.

The origin of the identification principle actually lies in a civil case — Lennard ‘s Carrying Co Ltd v Asiatic Petroleum Co Ltd[73] — where it was held that, in order to prove that a corporation had ‘actual fault or privity’ the privity of the company’s manager was the privity of the company itself. Viscount Haldane LC based identification on a person ‘who is really the directing mind and will of the corporation, the very ego and center of the personality of the corporation’.[74] An even more vivid metaphor was drawn by Denning LJ in HL Boulton (Engineering) Co. Ltd v TJ Graham and Sons Ltd (another civil case) where his Lordship famously said:

A company in many ways may be likened to a human body. It has a brain and a nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such.[75]

It is one thing to attempt to apply concepts of individual moral culpability to a group entity such as a corporation, but entirely another to ascribe to a company actual human features. Although useful in its simplicity and tendency to be easily remembered, Lord Denning’s ‘brains’ and ‘hands’ test appears to be responsible for what has been termed the ‘grotesque anthropomorphism’[76] in this area of the law[77] – which perhaps inhibited the development of ideas of genuine corporate fault existing on the part of the corporation itself until more recent times.

The ‘Directing Mind and Will’

By the middle of the twentieth century attributing a mind to a company had been taken to allow a company to have intention for criminal law. The analogy of ‘brains’ and ‘hands’ was applied in the leading United Kingdom case of Tesco Supermarkets Ltd v Nattrass.[78] Tesco had been prosecuted under the Trade Descriptions Act 1968 for displaying a notice that goods were being offered at a price less than that at which they were actually being offered. A customer was sold a packet of washing powder at a price higher than that stated on the display notice after the shop manager of the particular supermarket branch (of which there were about 200) had negligently failed to notice that he had run out of the specially marked low-price packets. The Act provided a defence for a shop owner who could prove that the commission of the offence was caused by’ another person’ and that he took ‘all reasonable precautions… to avoid the commission of such an offence by himself or anyone under his control’. Tesco sought to distance itself from the store manager and submitted that it was his acts that had led to the breach. In examining the identity of the manager and whether he was in fact identified with the company itself the House of Lords applied the theory first developed in Lennard’s. Lord Reid described the principle of identification:

A corporation … must act through living persons, though not always one and the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company … He hears and speaks through the persona of the company … and his mind is the mind of the company.[79]

The House of Lords held that the branch manager could not be considered a controlling mind of the company (he was ‘another person’) and that the precautions taken by the board of directors were sufficient to count as precautions taken by the company. The question as to who in any given case would be acting as the company or possess the mind of the company was not succinctly set out. However, their Lordships did attempt to provide some guiding rules as to who might, for the purposes of corporate criminal liability, be properly characterized as the company.

Lord Reid said that the relevant personnel could only be ‘the board of directors, the managing director and perhaps other superior officers of a company [who] carry out the functions of management and speak and act for the company’.[80] Lord Diplock[81] stated that the question was to be answered by ‘identifying those natural persons who by the memorandum and articles of association or as a result of action taken by the directors or by the company in general meeting pursuant to the articles are entrusted with the exercise of the powers of the company’.[82]The most strict test was proposed by Viscount Dilhorne, who said that a company should only be identified with a person ‘who is in actual control of the operations of a company or of part of them and who is not responsible to another person in the company for the manner in which he discharges his duties in the sense of being under his orders’.[83] It was a question of law in any given case whether a person in doing particular things is to be regarded as the company or merely as the company’s employee or agent.[84] However, if the tests outlined were applied strictly, they would produce rather different results. There may be very few people in a company who are not responsible to others for the manner in which they discharge their duties, and Lord Diplock’s emphasis on the company constitution may in practice give little or no indication as to who effectively exercises powers in a large modern corporate structure. Looking at the formal rules may not be sufficient. Tesco was applied in New Zealand in Nordik Industries Ltd v Regional Controller of Inland Revenue,[85] where Cooke J identified the mind of a person he characterised as the ‘complete master’ of the company, with the mind of a company. It was stated in Nordik that (as with vicarious liability and the law of agency) the persons who are identified with the corporation must be acting within the scope of their employment or authority. That is, the conduct must occur within an assigned area of operation even though the particular wrongdoing may have been unauthorized.[86] One overriding criticism has been directed at the Tesco version of corporate liability: it is too restrictive. The personnel with whom the corporation is identified are those at the centre of corporate power. Any delegation of responsibility to a lower-level employee must be total with supervision over the particular area no longer supervised by those at the top.[87] It simply does not work for large firms where the management structure is too complex and the responsibility for any particular area of decision making too diffuse to say that the company has any one mind or brain.[88] The underlying thread in all the judgments in Tesco is that the individual who is the directing mind and will of the company will be very high up in the chain of command, if not a company director. However, many important decisions in large corporations are made at the level of branches or units or at the level of middle management.[89] Individuals who make decisions or control affairs at this level are, under the Tesco analysis, too far down in the company hierarchy for their crime to be identified with the company, and a conviction would thereby be avoided. In a small firm with a smaller and more concentrated management structure however, a controlling officer of senior standing in the company would be much less difficult to pinpoint. The directing mind is likely to be ‘on the ground’ — controlling contact with customers or passengers for example. In a large company on the other hand, the ‘suits are in the suites’ well away from directing operations which may impinge on workers or customers.[90] There is something wrong with a doctrine of corporate criminal liability which would enable a small company to be convicted in circumstances where a larger one would not. It is submitted that the bias is indefensible.

Attribution Liability

Advances in the identification theory were made however, after the decision in Meridian Global Funds Management Asia Ltd v Securities Commission[91] effectively extended the class of person who might be identified as the company by relaxing the strictness of the directing mind and will test. The Privy Council criticized the anthropomorphism underlying Tesco and formulated a broader more flexible policy-based attribution test. The Privy Council stated that whether an act is to be attributed to a corporation is a question of construction of the particular statute under which proceedings are brought, and that a statute may impose corporate liability in respect of an employee who could not be said to be the directing mind and will of the corporation under the company constitution. In other words, there was more than one formula under which the acts and knowledge of company officers could be attributed to a company.

Through its chief investment manager, Koo, and its senior portfolio manager, Ng, Meridian acquired a beneficial interest in a publicly listed company. This meant it was subject to the requirement in s 20 of the New Zealand Securities Amendment Act 1988 that every substantial security holder in a public company, disclosed this fact ‘as soon as the person knows, or ought to know’, to the public company and the stock exchange. Meridian had clearly acquired an interest within the meaning of the Act; the issue was whether it knew of the acquisition. The New Zealand Court of Appeal concluded that the appellant could be liable only on the basis of the identification principle. It was held that Koo’s knowledge of the transaction could be attributed to Meridian, as Koo was the directing mind and will of the company. The Privy Council upheld the decision but on conceptually distinct grounds, and Lord Hoffman, in delivering the judgment, took the opportunity to set out what he regarded as the general principles which apply in this area.[92]

Lord Hoffman said that there existed rules which determined whose acts and states of minds were to be attributed to the company. These he called the ‘rules of attribution’.[93] His Lordship stated that there are two main bases for attributing acts and knowledge to a company. Firstly, the primary rules of attribution which are provided by the company constitution and company law generally, enable acts of organs of the company (usually the board of directors or unanimous members) to be attributed to the company. So the acts of those identified as having the authority to bind the company under, for example, the Companies Act 1993[94] will prima facie bind the company. There are then secondary rules of attribution which are provided by general principles of attribution such as the law of agency and vicarious liability. These more general rules are equally applicable to natural persons. The two categories of attribution rules, taken together, are usually sufficient to enable the company’s rights and obligations to be determined. However, it was recognized that there are further special cases, typically in the criminal context, where the law requires that the state of mind of the company itself be shown. This is where the directing mind and will principle has come to be used. Such a principle is, however, just one of the special rules of attribution that may be used by the courts, and should not be misinterpreted as being a general principle for application in all cases.[95] The rule of attribution in these special cases should depend upon the relevant substantive rule of law in each case. If it is decided that a duty was intended to apply to companies but vicarious liability is excluded (by the requirement of a mental element) and it is obvious that insistence on the primary rules of attribution would defeat the intention of the Act, then the courts must design a special rule of attribution to make the Act work. In doing this, the court must ask the question: ‘given that [the substantive rule] was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company?’[96] So it is all a matter of construction. Whether a company is liable will depend on the interpretation of the statute and the policy behind the Act in question.[97] This means that, although in some circumstances the knowledge of the board of directors will be necessary to fix the company with knowledge, in others the knowledge of a much more junior employee may be sufficient.

In Meridian itself it was not necessary to consider who was the directing mind and will; the issue could be resolved on ordinary agency principles. Koo’s knowledge could be attributed to Meridian because the Securities Amendment Act was to be interpreted as saying that a company knows it has become a substantial security holder when that is known to the person who had the authority to do the deal.[98] Lord Hoffman believed that a contrary view would frustrate the policy of the Act (which was to ensure that disclosure took place quickly) by encouraging top-level management to delegate tasks involving knowledge of securities acquisition to others and to pay as little attention as possible to what its investment managers were doing.[99] Thus we can take from Meridian that questions of corporate criminal liability arising under statute are context-specific and must ultimately be governed by the terms and purposes of the offence creating provision, and that it is not necessarily the case that the relevant person whose acts are to be attributed to the company will be the most senior person in the organization. It is the nature of the functions performed by the individual that seems crucial.[100] A leading text opines that, as a result of Meridian, the identification approach is a ‘potentially powerful tool’ for holding companies liable.[101] Another commentator also states that the decision has led to a considerable widening of the potential scope for criminal prosecutions to be brought against companies.[102] The advantages Meridian has brought to the identification doctrine are obvious. There is no longer a ‘hunt for high managerial agents’[103] — unless of course a proper construction of the relevant law provides that only the acts and intentions of those embodying the directing mind and will of the company can be said to be those of the company. The Meridian approach does examine the corporate structure in more detail and seeks to ascertain those responsible for the area of activity in which the offence took place and to attribute responsibility to the corporation forthe conduct of relevant individuals.[104] Also, the decision on the facts demonstrates that where formal and effective authority within a company differ, the courts are able to attribute responsibility to the corporation based on actual as well as legal management structures.[105] The new approach can also be used to explain the discrepancies in the line of cases after Tesco Supermarkets Ltd v Nattrass.[106] Recall that in Tesco itself, a branch manager was not able to be identified with the company. On the other hand in Re Supply of Ready Mixed Concrete (No 2) [107] the House of Lords held a concrete supplier responsible when its employees had breached an undertaking while acting in complete disregard of the board’s instructions.[108] Other criminal cases have seen the acts and states of mind of a company secretary, a branch sales manager, and a marine superintendent (all low in the corporate hierarchy) being treated as those of the company. Lord Hoffman’s analysis shows that such decisions were not aberrations from a general rule but simply the result of a different (special) rule of attribution being applied to different substantive rules of law.

And yet as is always the case, the greater flexibility of the Meridian approach has brought with it greater uncertainty regarding who will be deemed the relevant person within the corporate hierarchy in any particular case.[109] The Meridian formula is likely to lead to difficulties. The policy behind the statute may, as in any case of statutory interpretation, be hard to find, and it is unlikely that the words of the specific provision will clearly state who constitutes the company for the purposes of the offence.[110] It is clear that for offences requiring mens rea not just any agent or employee acting within the scope of their authority or employment can be identified as the company; recourse to special rules of attribution is only necessary when it has already been determined that the general rules of agency and vicarious liability ‘will not provide an answer’.[111] Robertson writes that the effect of Meridian is to ‘replace a reasonably clear rule with a statement that there is no rule only the question: “given that this rule was intended to apply to a company, how was it intended to apply?”’[112] The answer might be different for each section of the Crimes Act 1961. Further, it is clear that the Privy Council’s attribution approach is subject to policy considerations that can both expand and limit the scope of the approach. It is submitted that not only the policy of the particular statute will be considered by the court. More general policy factors such as the need not to exempt companies from the scope of the criminal law or the need to avoid encouraging senior management to turn a blind eye to wrongdoing by lower employees will come in to play. It is submitted that the answer to the question of who is the company still lies in the concept of control – whether it be over the entire conduct of the company or only the matter with which the rule is concerned. And this is where Meridian does improve on Tesco. Meridian is more in tune with the realities of diffused organizational decision-making, than the more strict directing mind and will doctrine, which may well lead to no one being liable.[113] The requirement that the relevant individual whose acts and intentions will be attributed to the company be the brains or directing mind and will of the corporation must now be considered, in the light ofMeridian, to be merely one possible rule of attribution, rather than the single determinative criterion.

An Alternative Route

Meridian was applied by the New Zealand Court of Appeal in the recent case of Linework Ltd v Department of Labour.[114] There the Court of Appeal found that the acts and omissions of the foreman who was in effective charge of the worksite were properly attributable to the corporation; the individual was ‘the embodiment of the company … for on-site safety purposes’.[115] It is without doubt that the ‘rules of attribution’ test is the version of the identification approach that is law in New Zealand. Yet Linework Ltd appears to have a significance beyond its application of Meridian. As mentioned above, a new base of liability appears to be emerging in the context of statutory offences where it is unclear whether the vicarious or identification mechanism is to be applied. A more ‘direct’ liability seems to have been applied by courts in the United Kingdom and now, in New Zealand.

It was traditionally accepted that for the purposes of corporate criminal liability, the vicarious liability doctrine was confined to offences which imposed an absolute duty, while mens rea offences were governed by the identification doctrine. However, the vicarious liability doctrine has been applied in a number of cases in the United Kingdom[116] in the context of ‘hybrid’ (strict liability) offences, that is, where there is a defence of absence of fault. In New Zealand,[117] the courts have held employers answerable for the acts of employees in the context of strict liability offences, but Adams cautiously states that the lack of judicial discussion makes it ‘difficult to determine whether some of the principles of vicarious liability have been altered by the development of the strict liability class of offences’.[118]

The decision in R v British Steel plc [119] where the doctrine of vicarious liability was used to make a company liable in the context of a strict liability regulatory offence, was influential in Linework Ltd v Department of Labour, where, although the identification approach was the model of corporate liability adopted by the majority judgment, Tipping J suggested an alternative route to holding a company criminally liable. Tipping J’s model, in the view of the writer, seems to fall somewhere in between a vicarious liability model, and the identification approach.

In Linework Ltd the employer company was charged under s 6 of the Health and Safety in Employment Act 1992 for failing to ‘take all practical steps’ to ensure the safety of its employees while at work. An employee suffered an electric shock from exposed live wire voltage lines while attempting to resolve a line fault. The issue was whether Linework Ltd was liable for the acts and omissions of its foreman who failed to ensure the employee was not exposed to a hazard. In the High Court[120] Wild J held that this was not an instance of vicarious criminal liability and that ‘given that the Act applies to companies, liability in any situation simply depends on the rules of attribution’ .[121] The majority in the Court of Appeal accepted this approach and dismissed Linework Ltd’s appeal against conviction. In a separate assenting judgment Tipping J seemed to characterize the wrongdoing as a personal failure on the part of the employer. Section 6 of the Health and Safety in Employment Act is a strict liability offence, that is, one that would traditionally require fault by an individual actor who could be identified as the company. But, following the path taken in certain English decisions and that suggested by Professor John Smith in an influential article,[122] Tipping J suggested an alternative route to finding a company criminally liable:

The simple fact is that all practicable steps to ensure [the employee’s] safety were not taken. Both on the language of the Act and in accordance with its policy Linework as his employer was thereby in breach of its statutory duty to him. [T]his analysis does not depend on [the foreman’s] status within the employer company, nor upon concepts of agency or vicarious liability. It relies simply upon the proposition that once there has been a failure to take a practical step to ensure the employee’s safety, the employer is responsible for that failure.[123]

His Honour does not expand on this idea further and yet he appears to be suggesting an entirely new mechanism of corporate criminal liability, until now never used in New Zealand. The alternative route would make the company liable for what it failed to do; it would not be based, as current law is, on deriving liability from what an individual did or failed to do. The liability of the company would not be vicarious, nor would the concept of attribution appear to arise.[124] The method appears to be simply that in the context of a strict liability offence, by failing to properly carry out duties (such as ensuring the safety of employees) the company (or other employer) commits the actus reus of the offence and is therefore held liable. Tipping J’s analysis does not set as its terms of reference the conduct and mental state of a relative employee or agent; the focus is directly on the failure of the corporation. Because the employer has personally failed to do what the law requires it to do it is directly and not vicariously liable. Unlike other alternative methods of corporate liability which focus on corporate (as opposed to individual) wrongdoing, the judgment makes no mention of how to measure the fault of the corporation if a mens rea requirement needed to be satisfied. Perhaps that is the limitation of Tipping J’s alternative route to corporate liability; it only applies where there has been an omission to act and there is no need to prove mens rea. But then it must be kept in mind that his Honour put forward this more direct route as an alternative (on the facts) to the identification doctrine, which, as it has been seen, has typically been used where more than mere conduct needs to be transposed from the individual to the corporation.[125]

It is submitted that this Linework Ltd alternative is likely to be confined to offences under regulatory statutes, where a company has failed to comply with certain standards. The majority judgment in Linework Ltd favoured the more traditional route of deeming the relevant employee to be the embodiment of the company itself, but did not foreclose the possibility of some future adoption of Tipping J’s alternative. Even if the new approach is confined to regulatory offences of absolute or strict liability, where mens rea is not a positive requirement and so problems of ascertaining the mind of the company do not arise, the shift in emphasis from examining the conduct of a particular employee to simply asking whether the company had or had not ensured safety, provides a more suitable and direct mode of establishing liability, is also more conceptually satisfying and is in line with recent recognition in other jurisdictions and other academic circles of the company as a subject of the criminal law in its own right.

Criticisms – A Summary

A number of criticisms have been made against the two traditional common law methods of establishing corporate criminal liability. The vicarious liability doctrine is too limited in its scope as it is not appropriate for truly criminal offences, but also too wide in that it does not consider the fault of the corporate body. The Tesco version of the identification doctrine (which is still given significant attention in the United Kingdom, Australia and Canada) limits the search for the acts and intentions of the company to the top echelon of the corporate hierarchy, while the Meridian formulation, although less restrictive, is altogether uncertain.

A central aim of this paper is to take the analysis further and demonstrate that the entire approach of the courts in the attempt to locate the actus reus and mens rea of a corporation for the purposes of the criminal law is inadequate and needs to be reworked. This paper advocates a move away from models of corporate criminal liability which are derivative from the wrongdoing of one individual. Despite claims by commentators that, in contrast with vicarious liability, the liability of the corporation under the identification method is ‘direct’ and ‘personal’[126] it has been seen that the approach requires the court to first find intent or knowledge on the part of an individual before the corporation will be held liable. It is the opinion of the writer that this two-step process of finding culpability on the part of an entirely separate legal person (the individual) before it can attributed to another (the company) is not only conceptually unsatisfying[127] but does not work.

IV. The Search for the Individual – Practical Problems

As a result of numerous disasters involving large scale death and injury,[128] industrial pollution, and unsafe working conditions (to name but a few categories of corporate crime), there has been growing popular sympathy for the notion that corporations need to be held fully accountable for their activities. A mechanism of corporate criminal liability that would work in all cases of corporate wrongdoing is therefore essential. The derivative models of liability, in accordance with nominalist ideas of the company as a fictional entity, locate the culpability of the company in the natural persons who are its agents, employees or officers. This emphasis on individuals poses two main practical problems.

Firstly it may be difficult or even impossible to locate the culpable individual within a large corporate structure where individuals may actually be able to insulate themselves within extensive and complex decision making processes.

The second, more significant problem, which has been the cause of much public and academic outcry, is that the common law requires that criminal culpability reside in a single individual. A corporation is unable to be convicted in the instance where no one individual with the requisite degree of fault exists. This has caused most outrage in circumstances where corporate activity appears to have been the cause of death or serious injury and the corporation has been able to escape conviction for a truly criminal offence.[129] Indeed, it is the objective of enabling convictions of corporate bodies for serious criminal offences such as manslaughter that has driven many of the law reform proposals. The following discussion focuses on the ability to prosecute a corporation for serious crimes — particularly that of manslaughter. It is important to note at the outset that in this context, the requisite degree of fault for manslaughter is a high degree of negligence -a ‘major departure from the standard of care expected of a reasonable person’.[130]

The Rule Against Aggregation

As indicated above, the most significant practical problem with the identification doctrine’s individualistic approach is that it cannot deal with the situation where the culpability or fault which may be held to have caused death or injury is located in a number of people working within the company. For example, A and B and C may have each, within the scope of their employment, breached an ordinary standard of negligence, which, when combined, has resulted in a breakdown in the company’s system of safety checks and led to the death of a customer or worker. Seeing none of the individuals’ conduct was a major departure from a reasonable standard of care, no one of them could be convicted of manslaughter. Neither, under the identification doctrine, could their corporate employer. In many large organizations, task specialisation means that one individual actor (even a senior officer) may not have access to all the information on which to base a finding of knowledge or negligence. It is therefore sometimes argued that for the purposes of corporate criminal liability, the conduct and states of mind of individual representative of the corporation should be ‘aggregated’. This could involve taking the commission of the actus reus by one individual and matching it with the mens rea of another, or, if the offence requires a particular level of knowledge or negligence, by aggregating the knowledge or negligence of a group of individuals. The federal courts in the United States have accepted an aggregation model of liability, which allows the acts and mental states of more than one individual within a company to be combined to satisfy the element of the crime. In United States v Bank of New England it was recognized that collecting the knowledge of a number of employees is often appropriate since ‘corporations compartmentalize knowledge, subdividing the elements of specific duties and operations into smaller components. The aggregate of those components constitutes the corporation’s knowledge of a particular operation’.[131]

The doctrine has not, however, been adopted in any of the Commonwealth jurisdictions, which continue to rely on the identification theory for knowledge-based offences. This approach of having to anchor liability for grossly negligent acts in the actions of a single company representative can lead to results which are plainly unjust. An appalling example is the Zeebrugge ferry disaster, in which the Herald of Free Enterprise, an English Channel ferry, went out to sea with its bow doors open and capsized, with the result that nearly 200 people were drowned.[132] The official inquiry into the disaster found that errors had been made by the assistant boatswain, whose duty it was to close the doors; the officer in charge of one of the loading decks who had the duty to ensure the doors had been closed; the captain of the ferry, who had overall responsibility for the safety of the vessel and the people aboard the ferry; the senior master, who was responsible for implementing a safety system for the ferry; and the board of directors of the company who owned the ferry. The infamously damning report concluded:

There appears to have been a lack of thought about the way in which the Herald ought to have been organized … All concerned in management, from the members of the Board of Directors down to the junior superintendents, were guilty of fault in that all must be regarded as sharing responsibility for the failure of management. From top to bottom the body corporate was infected with the disease of sloppiness.[133]

The company and seven individuals[134] were prosecuted for manslaughter. However the trial collapsed after Turner J directed the jury to acquit the company and the other individual defendants. The apparent problem was proving that leaving the ferry doors open posed a ‘serious and obvious’ risk to those at the centre of the company’s operations, but numerous critics have said that the (Tesco) identification doctrine increased the likelihood of an acquittal. Colvin writes: ‘The acquittal of the company was made more likely because of the doctrine that corporate liability is derivative from individual liability … Ultimately, it was the primary requirement of finding an individual who was liable that stood in the way of attaching any significance to the organizational sloppiness that had been found by the official enquiry’.[135] The notion that the court might be able to use aggregation in the P&O European Ferries (Dover) Ltd[136] proceedings was dismissed summarily by the Divisional Court: ‘a case against a personal defendant cannot be fortified by evidence against another defendant’.[137] The argument for aggregation was also dismissed at the manslaughter trial.[138] The issue was considered in a more recent English Court of Appeal case, Attorney-General’s Reference Number 2 of 1999[139] which arose out of the 1997 train collision at Southall.[140] Rose LJ clearly confirmed that unless a single natural person’s conduct characterized as gross criminal negligence can be attributed to the company (via the identification theory), the company is not, in the present state of the common law, liable for manslaughter. On the facts, while the requisite intention could be found by aggregating the knowledge and intention of a number of persons, there was no single person with the requisite intent. As a result the company was found not guilty of manslaughter.[141]

In New Zealand Meridian is the leading authority on corporate criminal liability. There is in fact no mention in the judgment of a rule against aggregation and we must wonder if the decision on the facts would have been any different if the conduct element (acquiring the shares in the public company) was performed by a different person than the individual who satisfied the fault element (i.e. Koo, who knew of the acquisition and the duty to disclose).[142] Cases such as P&O European Ferries and Attorney-General’s Reference (No 2 of 1999) are not strictly binding on New Zealand courts. It should be remembered that the decision in Attorney-General ‘s Reference was that a company could be guilty of manslaughter only via the identification approach under the common law of England. Thus it is a decision that does not actually state the law as it is in New Zealand, where, according to R v Murray Wright Ltd, it is currently impossible for a company to commit the crime of manslaughter.[143] The case in its entirety may be regarded by New Zealand courts as not currently relevant to their jurisdiction. The general rule against aggregation set out in Attorney-General’s Reference is however of highly persuasive authority. Short of any legislative intervention, it is submitted that, if the question arose, these decisions may well be followed in New Zealand, at least in respect of corporate crimes which can be committed by gross negligence.[144] Even if the doctrine of identification is extended to include aggregation it is the opinion of the writer that this is not the appropriate mechanism for improving the law of corporate criminal liability. Such a doctrine would still fail to capture the reality of truly corporate fault, that is, culpability on the part of the corporation as a corporation. Under the doctrine of aggregation, instead of finding one person with whom the company can be identified, one finds a number of people. Colvin puts it succinctly when he writes that the question to be asked is ‘not whether responsibility can be constructed from bits and pieces of information about individuals, but rather whether it inheres in the organization itself’.[145] A scheme of corporate liability has to look further than to the individuals – it must enable examination of the corporation’s own structure.[146] This is the crux of the problem with the derivative models of liability; they do not adequately measure the culpability of the corporation in itself. It is submitted that the vicarious and identification approaches are conceptually inferior to alternative models which recognize that the legal entity that is a company can actually be properly conceived of as a culpability-bearing agent in its own right. On this view, truly corporate blame stems from the deficiencies and failings of a company on an organisational level, rather than from the wrongdoing of its officers and employees — which may or may not have been a symptom of the company’s culpability. Before consideration is given to the alternative models of corporate criminal liability, it is necessary to set out this realist notion of corporate personality more clearly.

V. The Corporation as a ‘Ding an Sich’

In Meridian Global Funds Management Asia Ltd v Securities Commission Lord Hoffman famously characterized the company as an entity, that does not, in truth, exist:

Judges sometimes say that a company ‘as such’ cannot do anything; it must act by servants or agents… But a reference to a company ‘as such’ might suggest that there is something out there called the company of which one can meaningfully say that it can or cannot do something. There is in fact no such thing as the company as such, no ‘ding an sich’, only the applicable rules. To say that a company cannot do something means only that there is no one whose doing of that act would, under the applicable rules of attribution, count as an act of the company.[147]

The case law and literature on corporate criminal liability is full of references to the company as a fictional abstract entity which exists only in minds and on paper. But critics of this nominalist perspective would argue that an organisation such as a company functions as a real entity in ways that are not reducible to propositions about the individuals who compose it.[148] The argument of many realists has been that a corporate entity is more than the sum of its parts. Colvin states that corporations can shape the outlook and channel the conduct of its members in a way that may not have been chosen or is even understood by any of the individual employees or officers.[149] We have seen that ‘corporations’ can possess knowledge that may be unavailable in total to any single individual. The obstacle has been, however, that the criminal law was developed as a mechanism for responding to individual wrongdoing. Crimes are traditionally committed by human, moral agents who can be held responsible and be blamed for their action. Alternative models of corporate criminal liability recognize that it is possible to hold responsible and blame a corporate body for its own acts, (more often) omissions, and a truly corporate mens rea. Corporations do not have a human soul or the ability to experience human emotion. It is submitted however that this does not mean that they should not or cannot be held morally responsible for their actions. As Clarkson points out, the law is prepared to hold ‘sociopaths’[150] responsible – for the simple reason that they do not lack cognitive capacity or the ability to engage in practical reasoning, or to exercise control over their actions.[151]According to Hart a responsible moral agent is one who is capable of reason and capable of exercising control, and choosing whether to comply with the law.[152] Companies have decision making processes; this is where company policies and procedures originate. Corporate wrongdoing will often be based on an omission – a failure to ensure a reasonable standard of safety or to take precautions. When a corporation fails to avoid causing harm or exposing people to risk we can see this as being essentially a failure in the choices the corporation as a whole – through its organization structures, procedural rules and policies – has made. Clarkson states that the choice between various courses of action can often only be fairly attributed to the company itself, as responsibility for standard procedures, (such as those relating to safety) are usually spread throughout the company.[153] It is recognized that when a crime occurs in the course of business, it is likely to be the result of a breakdown in more than one section of the company’s operation.[154] Corporate policies may be unreasonable or foolish in their very conception then inadequately supervised and incompetently carried out. We have seen that aggregation is not an available answer for holding the company fully accountable for all of these failings. Also, the relevant human agents may simply be acting in accordance with a system (or lack of it) which was set up long before they arrived on the scene.[155] The systems that a company has in place and the policies that it adheres to clearly demonstrate a corporate capacity to choose between what it considers right and wrong and to act accordingly, to think ethically in terms of what the consequences of the corporate action might be, and to give reasoned explanations to the outside world for its chosen course of action.[156] The policies, regulations and institutionalized practices of corporation are quite clearly evidence of corporate goals, intentions and knowledge that cannot simply be reduced to the goals, intentions and knowledge of individuals within the corporation. This is because corporate policy is typically the product either of a synthesis of a number of views put forward by different individuals (or even groups within the company) or a compromise among contrasting positions.[157]

In line with this theme is the argument that a ‘corporate ethos’ can be found in corporate policies.[158] An influential writer in this area is Laufer, who believes that ‘the dynamic of organizational processes, structures, goals, cultures, and hierarchies’ can combine and contribute to an ethos that permits – or even encourages – the commission of crimes.[159] This is one of the main problems with the identification approach; by focusing on individual decisions by individual personnel (usually managers), it fails to recognize that companies are complex and may create group norms and systemic pressures which is what actually leads to the commission of a crime.[160] When company policy or corporate ethos leads to law breaking it is easy to see that it is fair and appropriate that the company, just like any other culpable defendant, should bear responsibility and be punished for the crime charged. While a corporation does not have a human mind, it does manifest its intention via its complex organizational processes, which can be interpreted and assessed.[161]

An additional reason for recognizing a corporate entity as ‘a thing in itself is because this is how it is increasingly viewed by the public. Modern companies often use advertising to promote themselves as distinct, identifiable — almost human — entities in the interests of building their image. This ‘has reinforced the anthropomorphic perception of the company in the public mind — which in turn has lead to a public demand to apportion blame and to criminialise and punish companies for serious transgressions.’[162]

It is widely accepted that a company, once created, may acquire a character and a reputation. The reason the company in Meridian was prepared to take the matter all the way to the Privy Council was because of the concern of its parent company that a finding of breach of securities regulation was standing on the record against the subsidiary.[163] It is also well settled that a company can sue in defamation in respect of matters which can be seen as having a tendency to damage it in the way of its business.[164] In the infamous McDonalds case[165] the McDonalds Corporation went to record lengths[166] in demonstrating its own reality — and the damage it had suffered — as a result of severe allegations against the Corporation. Further evidence of widely held public perceptions that companies have an existence of their own and can commit crimes as entities distinct from the personnel comprising them can be seen in the public reaction to the Zeebrugge ferry disaster. Wells reports that ‘the relatives [of the deceased] were keen to see the company properly punished but not the particular individuals whose misfortune it was to be operating the ferry that… night’.[167] The bereaved and injured after the Southall train crash also reportedly wanted to see the stigma of a manslaughter conviction on the company’s (and the relevant individuals’) record.[168] Lord Cooke of Thornden seems to sum up the commonly held perception of corporations when he writes ‘to think of a company as a set of rules is helpful up to a point and does shed some light on the subject of company responsibility. Yet it also seems to miss something’.[169]

For the realist, the corporation does represent something beyond the individuals comprising it, and this opens up completely different avenues for attribution. The holistic theories this paper will now outline all locate genuine corporate fault in the procedures, operating systems, and culture of a company. It will be seen that generally a company’s failing will be in the lack of the preventive measures, for example to ensure safety or limit pollution. As distinct from company liability derivative from the wrongdoing of one individual, the realist models aim to capture the ‘corporateness’ of corporate conduct. [170]

VI. Holistic Theories

Specific Offences

Corporate Manslaughter – United Kingdom Draft Proposals

In response to the public disquiet about the lack of corporate accountability for numerous fatal accidents such as the capsize of the Herald Of Free Enterprise and the Kings Cross train disaster, the English Law Commission in its 1996 Report Legislating the Criminal Code: Involuntary Manslaughter, proposed anew offence of’corporate killing’.

In May 2000 the Home Office issued a further report[171] which, for the main part, adopts and resolves to implement the Law Commission’s proposals. The offence of corporate killing has not yet been enacted as law.[172] Unlike under the doctrine of vicarious liability and the identification approach, the company would be liable not for what its agents or employees had done or known or intended, but for the corporation’s method of organization, its policies and its practices. Both reports are highly critical of the identification theory that has long been followed in the United Kingdom.[173] This traditional model of liability is seen as the reason companies involved in major disasters have not been held accountable. The proposed corporate killing offence is a specific offence; a form of manslaughter that can only be committed by a corporation. In this way many of the problems associated with the ascertainment of corporate culpability such as proof of intention or recklessness can be overcome by special definitions only applicable to companies.

Clause 4(1) of the draft Involuntary Homicide Bill provides that an undertaking would be guilty of corporate killing if:

(a) a management failure by the corporation is the cause or one of the causes of a person’s death; and
(b) that failure constitutes conduct falling far below what can reasonably be expected of the corporation in the circumstances.

Clause 4(2)(a) recites: ‘there is a management failure by the company if the way in which its activities are managed or organized fails to ensure the health and safety of persons employed in or affected by those activities’. And in order to avoid problems of causation clause 4(2)(b) stipulates that a (management) ‘failure may be regarded as a cause of a person’s death not withstanding that the immediate cause is the act or omission of an individual’. Clause 5 states that the sanction will be a fine coupled with the possibility of a remedial order. Note that the offence does not require that the risk be obvious or that the defendant be capable of appreciating the risk. However, the Law Commission has stated that the offence will only be used where ‘the negligence in question [has] been very serious’.[174] The new offence removes the requirement to first convict an individual; and in this respect is a welcome change from traditional corporate criminal liability at common law. The problem of the non-aggregation rule therefore does not arise; the Law Commission in fact specifically rejected the method.[175] The main advantage of the new mechanism of liability is that it would mean large companies with very poor systems of safety would no longer escape prosecution simply because it is difficult to find a single director who can be prosecuted. The definition of ‘management failure’ is very broad and would actually allow a jury to assess the adequacy of an entire management system – the way the company (particularly in terms of its safety procedures) – actually operates and is organized. It is submitted that this is a more appropriate and more just way of attributing corporate blame, as it is the performance of the company as a whole that is assessed, rather than specific individuals either at the top of the corporate hierarchy or in the area of responsibility in which the wrongdoing appears to have occurred. The objective of the Law Commission was clearly to advance a mechanism of corporate criminal liability that would properly capture the full extent of corporate wrongdoing in fact scenarios such as that at Zeebrugge.[176]

Although this will obviously still involve difficulties inproving a management failure, the negligence in question is intended to be a truly corporate negligence not tied to findings of negligence against any associated individual.[177] A criticism of the corporate killing offence is that, despite the Law Commission’s assertions to the contrary, the focus is still on management and the way the corporations activities are managed or organized, and this tends to resurrect the same old problems of trying to ascertain which employees and which systems can be said to be those of the company.[178] It has been observed that the use of the term ‘management failure’ instead of’corporate failure’ is an indication that the concept is just a refinement of the directing mind and will idea; the law under the new offence would appear to still be looking for decisions made by certain managers or groups of managers.[179] A reading of their report would inform anyone that the intention is to move away from any such restriction, and yet there still remains the need to evaluate the conduct of certain individuals, such as those involved in the company’s safety performance. The Law Commission’s Report adopts Lord Hoffman’s position that companies are mere creatures of law, and discountenances any suggestion that companies are ‘real’.[180] Sullivan has pointed out that if the culpability does not inhere in the corporation as athing in itself, there can only be a ‘collective judgment’ on the performance of the relevant class of individuals; and this, it is stated, is nothing more than aggregation.[181]

It is clear that the English Law Commission aims to develop a new paradigm of corporate liability based on the concept of organizational liability which would bring a corporation per se to account for its acts of corporate mismanagement. However, by treating the company as a fictional entity as opposed to a culpability-bearing agent in its own right and by focusing on the performance of individuals[182] it is submitted that the proposed offence in fact represents an ‘aggregative notion’[183] of corporate fault. The doctrine of aggregation can be useful, and it realistically takes cognizance of the compartmentalization of knowledge within a corporation, but, arguably, it only goes halfway towards assessing the genuine corporate fault.

Corporate Manslaughter — States of Australia

There have been advocates of more strenuous enforcement against corporations in the area of occupational health and safety and reform proposals in relation to corporate industrial manslaughter recently under consideration in Australia. In October 2000 the Victorian State Government published for comment draft proposals of a bill to enact a specific offence relating to corporate manslaughter.[184] The Queensland Government also released a Discussion Paper on the issue of dangerous conduct in the workplace.[185] The proposals arose from dissatisfaction with the current operation of the occupational health and safety laws in these States, and public concern about the continuing occurrence of deaths and serious injuries in the workplace.[186] Both the State of Victoria’s draft Crimes (Workplace Deaths and Serious Injuries) Bill 2001 and the proposed new offence of ‘dangerous industrial conduct’ in Queensland are based upon the same theoretical model of corporate criminal liability which underpins the Australian Criminal Code.[187] That is, the proposed offences do not rely on corporate liability derivative from an individual, and recognize that corporations have their own ‘cultures’.[188] The Victorian Crimes (Workplace Deaths and Serious Injuries) Bill 2001 provides in clause 14A for corporate liability on the basis of ‘organisational’ liability. A corporation will be guilty of corporate manslaughter if it kills an employee or worker by ‘negligence’; that is, if the corporation’s conduct has fallen short of the standard of care that a reasonable body corporate would exercise in the circumstances and posed ‘such a high risk of death or really serious injury’ as to warrant criminal punishment.[189] Negligence can be demonstrated by certain organisational failures, such as inadequate supervision and control of employees and agents, inadequate internal communication systems, and failure to respond to dangerous situations of which an officer has actual knowledge.[190] Clause 14B also allows for the aggregation of the actions, knowledge and intention of a number of individuals as a means of showing corporate fault. The underlying theme is one of organizational blame-worthiness, and it would seem to allow for evidence to be heard concerning the systems and procedures a corporation has in place. The Victorian Bill has been extremely controversial and was strongly criticized by the business community.[191] It was ultimately blocked in the Victorian Upper House on May 29, 2002. Consideration of a new offence of ‘dangerous industrial conduct’ still continues in Queensland.

A criticism of the proposals to enact specific offences of corporate manslaughter – and this extends to the English Law Commissions recommendations as well – is that, although laudable in their objectives, they could lead to amarginalisation of the law of corporate criminal liability. By creating a new offence that relates only to corporate bodies, companies would therefore, at least in the area of grossly negligent conduct causing death, be removed from the ambit of general criminal law. It is a real possibility that such specific offences would not be regarded as ‘real’ crimes and so much of the law’s censuring and stigmatising role would be defeated.[192] The offence of ‘corporate killing’ or ‘corporate manslaughter’ might be assimilated into regulatory offences rather than into conventional crimes.

In addition, the failure to deal with all aspects of corporate liability in one go would mean that other forms of corporate crime[193] would have different rules — presumably those at common law. It is submitted that rather than creating specific crimes applicable only to corporations a better approach would be simply to create different bases of liability.[194] The difference between individuals and corporate bodies should not lead to their being convicted of different crimes, but rather different mechanisms for ascertaining liability for the same crimes, whether the crime involves failing to disclose a security interest, or causing someone’s death through criminal negligence. Specialised offences do provide clarity and certainty in the application of the law to corporations and targets the most serious kinds of behaviour. However, application of the same test to both individuals and companies will emphasise that corporate offences are not ‘poor cousins’ of crimes committed by individuals.[195]

Reactive Fault

A somewhat different approach to corporate criminal liability has been proposed by influential writers Fisse and Braithwaite, who accept the idea of an exclusively corporate culpability.[196] One of their central arguments is that an important perspective is lost if we always seek to represent corporate conduct as a function of human conduct.[197] The suggested approach is one of ‘reactive fault’, which focuses not so much on the commission of the actus reus but rather on the company’s reaction, or lack of reaction, to it. ‘Reactive fault’ is an ‘unreasonable corporate failure to devise and undertake satisfactory preventive or corrective measures in response to the commission of the actus reus of an offence’.[198] Liability would arise, after the criminal conduct had been committed and would be based on what the company did not do to fix the wrongdoing. This is obviously a radical departure from general principles of criminal law; the mens rea and actus reus would not be contemporaneous and the time frame for the commission of the crime appears to be open-ended. Fisse and Braithwaite describe the model as being both workable and uniquely corporate in its orientation:

Corporations can and do act intentionally in so far as they enact and implement corporate policies. Frequently, however, a boilerplate compliance policy will be in place, and it is rare to find a company displaying a criminal policy, at least not a written one, at or before the time of the commission of the actus reus of an offence. The position is different if the time frame of inquiry is extended so as to cover what a defendant has done in response to the commission of an actus reus of an offence. What matters then is not a corporation’s general policies of compliance, but what it specifically proposes to do to implement a programme of internal discipline, structural reform, or compensation. This reorientation allows blameworthy corporate intentionality to be flushed out more easily than is possible when the inquiry is confined to corporate policy at or before the time of the actus reus. [199]

If the court decides that a company has taken appropriate measures after, for example, charging a customer more than the advertised price of a product, then under the reactive fault analysis no liability will actually arise. Although this model may satisfy one of the main aims of corporate criminal liability – ensuring that companies remedy their defective policies and practices so as to prevent a recurrence of the wrongdoing[200] – the disadvantages are numerous. The main question which cannot be preemptively answered is what corrective measures and disciplinary actions will suffice to avoid liability? In a case similar to P & O Ferries would various reprimands and an agreement to install warning lights on the doors of their ferries have sufficed to avoid liability for the deaths of nearly 200 people?[201] A further obvious question, unresolved by Fisse and Braithwaite, is what would be the offence committed if it was found that the company failed to take sufficient ameliorative steps? For example, if a worker was killed during the course of his employment, would the company’s fault in not reacting appropriately mean that the relevant offence is manslaughter? If so, the jury would have to consider whether the company’s reactive fault, in whatever form it took, was equivalent in terms of moral turpitude to causing the employee’s death by gross negligence.[202] Sullivan believes this could lead to problems of ‘false labelling’: the prerequisites for the crime of manslaughter are well established, and unless a corporation can be held to have committed this offence, it should not have the moral censure of a manslaughter conviction placed on it.[203] It would seem unfair, for example, for a company to be convicted of wounding with intent to cause grievous bodily harm for failing to install a safety device or display warning signs after an employee was seriously injured at work. The reactive fault model is realistic in its acknowledgement of the need to examine the actions (which would accordingly evidence the intent) of the company as a whole. It would be effective in assessing true corporate policy as opposed to the corporation’s written rules which are not, in reality, adhered to. Fisse and Braithwaite’s recommendation that a company be subject to the same criminal offences as natural persons is, it is submitted, the right basis of any mechanism of corporate criminal liability. The reactive fault approach however, is too much of a departure from fundamental principles of criminal law, and therefore is not regarded by many as a tenable basis for corporate liability.[204]

Part 2.5 of the Australian Criminal Code

The Australian Criminal Code commenced general application to all Commonwealth criminal offences on December 15, 2001. As yet the limited criminal jurisdiction of the federal government of Australia has not allowed for the new law to be tested in a criminal prosecution of death or injury, but it has been described as ‘potentially constituting a radical shift in direction for Australian corporate criminal liability’ .[205] The Standing Committee of Attorneys-General from Federal, State and Territory Governments delivered a report on corporate criminal liability in Australia in 1993 which concluded that the Tesco approach was no longer appropriate in view of more diffuse governance structures and delegation to junior officers of corporations.[206] The Report instead favoured the adoption of a mechanism of corporate criminal liability which recognized independent corporate fault. The main objective of the Committee was to develop a model of liability which ‘as nearly as possible, adapted personal criminal responsibility to fit the modern corporation’.[207] This alternative model of corporate criminal liability is now found in Part 2.5 of the Australian Criminal Code, which applies to any offence, including those punishable by imprisonment.[208]

The Code’s approach clearly builds on a ‘realist’ rather than a nominalist view of corporations.[209] The Code puts into legislative effect what leading criminal law commentators have been suggesting for some time – that a corporation is capable of intent, and that this can be found in a criminogenic ‘corporate culture’.

Section 12.2 of the Code imposes vicarious liability upon the corporation for the physical elements of the offence when committed by any employee, agent or officer within the actual scope of employment. This means that, in contrast to the position under the identification doctrine, a corporation will be responsible for the actus reus of a crime regardless of the level of seniority of the offender within the company.

Section 12.3(1) states that advertent fault (intention, knowledge or recklessness) will be attributed to a corporation that ‘expressly, tacitly or impliedly authorized or permitted the commission of the offence’. Several (non-exclusive) means by which this authorization or permission can be established are set out in s12.3(2). The first two methods parallel the mechanism under the Tesco identification approach: the corporation will be liable through proof that the ‘board of directors’[210] or a ‘high managerial agent’[211] ‘intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorized or permitted the commission of the offence’.[212]

It is the following two means by which authorization or permission by the corporation may be established which truly capture the idea of genuine corporate fault. Under s 12.3(2)(c) and (d), the corporation will be taken to have authorized or permitted the commission of an offence if it is proved that either a ‘corporate culture’ existed which directed, encouraged, tolerated or led to non-compliance, or, that the corporation failed to create and maintain a ‘corporate culture’ that required compliance (with the relevant provision).

Corporate culture is defined as ‘an attitude, policy, rule, course of conduct or practice existing within the body corporate in which the relevant activities take place’. Factors expressed to be relevant in proving corporate culture include:

(a) whether authority to commit an offence of the same or a similar character had been given by a high managerial agent of the body corporate; and
(b) whether the employee, agent or officer of the body corporate who committed the offence believed on reasonable grounds, or entertained a reasonable expectation, that a high managerial agent of the body corporate would have authorized or permitted the commission of the offence.

This concept of ‘corporate culture’ focuses on blameworthiness at an organisational level — just as the other alternative models do — yet in a more detailed and tenable way. In the corporate culture provisions, the focus moves away from individual corporate agents to an examination of whether the corporation’s practices and procedures have contributed in some way to the commission of the offence. This means that there is no level in the corporate hierarchy beneath which attribution of liability to the corporation is impossible. Rather, the question is whether, given the corporate culture of the company, the commission of a crime could occur at any level.[213]

The court is able to look at what sort of behaviour was deemed acceptable within the corporation, as evidenced by the beliefs held by the employee committing the offence.[214] For example, a worker may testify that he or she believed that senior management either knew of his or her illegal activity, or would not have taken action to prevent it in any event. This is not as harsh for the corporation as it seems, as the court must determine whether the beliefs and perceptions held by the particular employee were in fact ‘reasonable’,[215] and this will depend upon the real way in which the corporation operates.[216]

In the Explanatory Memorandum to the Criminal Code Bill 1994 it is expressly said that the provisions were intended to catch managerial techniques which the traditional identification approach was simply unable to, for example when employees feel forced to meet production deadlines which necessarily entail breaches of safety legislation under the fear of losing their jobs.[217] Thus the Code takes a substantive rather than a formal view of a corporation. It looks to what actually happens in the corporation, not what is written in the corporation’s formal policies and procedures.[218] A criticism that can be raised here is that it will be quite difficult for prosecutors to produce evidence of the company’s ‘unwritten rules’. But, Laufer reminds us of the situation where the defendant is a natural person and argues that ‘attributing intention to a human from apparent behavior risks far greater error than the attribution of intention to an organisation from its course of conduct, policies, and practices’.[219] If negligence is the fault element of an offence, under s 12.4(2), negligence may exist if the company’s conduct is ‘negligent when viewed as a whole’, which can be specifically achieved by ‘aggregating the conduct of any number’ of the corporation’s employees, agents or officers. Section 12.4(3) goes on to say that corporate negligence may be evidenced by the fact that the negligent conduct was substantially attributable to:

(a) inadequate corporate management, control or supervision of the conduct of one or more of its employees, agents or officers; or
(b) failure to provide adequate systems for conveying relevant information to relevant persons in the body corporate.

On this basis, rather than looking for an individual who was sufficiently negligent, the Code focuses on whether the company as a whole met the standards expected of it. The provisions implicitly acknowledge that corporations have a corporate capacity ‘which can in some cases be far more powerful than that of any individual, and that they are subject to a distinctly corporate standard of care’.[220]

Although the Code still pays attention to ‘high managerial agents’ the focus is essentially on the general attitudes or environment within the corporation; it is the policies and practices which permeate the company (rather than the conduct or intention of senior officers) for which the company will be held liable. So despite criticism that the Code resembles the Tesco identification test with the focus remaining on those at the top of the corporate hierarchy,[221] the Code in fact simply enables examination of any evidence of the existence of a criminogenic corporate culture. Explicit or perceived senior authorisation of criminal non-compliance would obviously provide evidence of a strong kind.

It is submitted that the Australian Criminal Code contains the best currently available mechanism of corporate criminal liability. By focusing on the culture or ethos that is created by and permeates corporate operations and locating corporate intent in company policy the Code seeks to make a corporation liable for the wrongdoing it can truly be said to have caused or facilitated. The Code acknowledges the role that human agency plays in corporate activity, and enables the conduct, beliefs, knowledge, authorisations and even wilful blindness of human actors to be considered. But the emphasis is chiefly upon what went wrong at an organisational level – at the systems and rules which were or were not in place or followed. It asks, did the culture of the company encourage the commission of an offence or at least fail to provide mechanisms to ensure it was not committed? The Code, although yet to be fleshed out by judicial interpretation, encapsulates the notion expressed by many legal commentators that a company is more than its individual human components added together; that 2 + 2 = 5.[222]

VII. All Quiet on the New Zealand Front

In contrast to the other Commonwealth jurisdictions discussed in this paper,[223] New Zealand appears to have no immediate plans for legislative reform of the law of corporate criminal liability – not even in the area of corporate manslaughter, which has caused so much discussion overseas. The New Zealand Law Commission has not published a report on the topic. There have been some calls for reform however, from the New Zealand Council of Trade Unions, which in April 2002 demanded that consideration be given to enactment of a law of corporate manslaughter.[224] Given the recent law changes in the area of occupational health and safety however, it is submitted that reform in this particular area of corporate liability is unlikely. The Health and Safety in Employment Amendment Act 2002 received assent through urgency on December 20, 2002 and comes into effect from May 5, 2003.[225] It makes considerable changes to the law relating to the health and safety of company employees under the Health and Safety in Employment Act 1992. Fines for breach of the Act have increased from $ 100,000 to $500,000[226] and there is a ban on insuring against prosecutions under the Act.[227] This increase does demonstrate political recognition of the need for corporations to receive adequate penalties for criminal wrongdoing – at least in this specific area. The corporate criminal liability regime under Meridian remains the approach taken by the New Zealand courts. It is obviously a significant improvement on the more restrictive Tesco identification test, and in fact has even been likened to the Australian Criminal Code in certain respects – particularly in its examination of individual responsibility at any level of the corporate hierarchy.[228] This brings us to the question of whether reform is actually needed in this country. Initiatives in the United Kingdom and Australia have had the express objective of circumventing the strict and unrealistic directing mind and will test, which is no longer the overriding mechanism of liability in New Zealand. It may well be that for practical purposes, the flexible Meridian test is adequate, and would not lead to results entirely different to those under a legislative regime similar to that in Australia. Meridian’s refusal to acknowledge a corporate entity as anything more than the individuals who comprise it, however, renders the approach conceptually inferior to alternative models which enable the examination of entire corporate cultures and locate a genuinely corporate intent in company policy and practice. This limitation may lead to unjust results in the future, which may in turn force the type of change witnessed in other jurisdictions.

VIII. Conclusion

The application of the criminal law to corporate entities is never going to be a simple process. The law was designed to deal with the wrongdoing of individual persons for whom the acquisition of knowledge and the formation of intent are natural human abilities. And yet in the modern day corporations play an increasingly significant part in our lives; they simply cannot be exempt from the criminal law. The law of corporate criminal liability has traditionally viewed companies from a nominalist theory of corporate personality. The corporation is treated as a fiction, and therefore corporate liability can only be derived from the individuals who form a part of it. The models of vicarious liability and identification liability are both based upon this requirement of individual culpability. Vicarious liability is for the main part inappropriate in the criminal arena, with its automatic attribution of fault to an employer or principal without regard to any efforts to avoid wrongdoing on the part of the latter. It has been argued that the identification mechanism takes the wrong approach in locating the mens rea of a truly criminal offence not in the corporate body but in the entirely separate legal person of a company officer. In its classic (Tesco) form it is too restrictive and unrealistic while Meridian brings a new uncertainty to the law. There is no possibility of aggregating the mental states of a number of individuals to alleviate the disadvantages of these models. The assumption that corporate liability must be derivative has come under increasing attack from legal commentators and law reform bodies, who all attempt to locate criminal liability on an organisational basis. The way forward remains uncertain, but this paper has attempted to outline a number of possible alternative models of corporate liability that have been put forward. The proposed specific offences in the United Kingdom and Victoria contemplate considerable improvements to the law, with a move away from individualistic liability towards assessing culpability based on failures in management or company systems. The Victoria Draft Bill specifically provides for aggregation in cases of inadvertent fault. The reactive fault model is too radical a departure from fundamental principles of criminal law, and is unlikely to ever appear in legislative form. The provisions in the Australian Criminal Code go a further step by enabling assessment of the internal environment of a company in terms of what was expected of employees or implicitly authorized, and by equating such findings of corporate culture with the intentions of the company. Whether the law of corporate criminal liability in New Zealand will be subject to plans for reform in the near future is unknown; but there is no doubt that many New Zealanders (the writer is one of them) watch overseas developments with interest.

[*] The author is a solicitor practising in Wellington. This paper was written as part of the undergraduate Honours programme.

[1] This paper makes no distinction between ‘corporations’ and ‘companies’; the two terms will be used interchangeably. As a general rule, corporations other than companies will become criminally liable in the same way as companies: R v Church of Scientology at Toronto (1997) 116 CCC (3d) 1 (Ont CA) 69, 73. This paper concentrates on registered companies, however, the issues it deals with are also significant in relation to other types of corporate entities such as the Crown.

[2] T Woolfe, ‘The Criminal Code Act 1995 (Cth) – Towards a Realist Vision of Corporate Criminal Liability’ (1997) 21 Criminal Law Journal 257.

[3] A Beck and A Borrowdale, Guidebook to New Zealand Companies and Securities Law (7th ed, 2002) 85; R Grantham and C Rickett, Company and Securities Law — Commentary and Materials (2002) 287; Smith and Hogan, Criminal Law (10th ed, 2002) 201.

[4] This paper focuses on corporate criminal liability within the United Kingdom, Australia, New Zealand and to a lesser extent, Canada.

[5] E Colvin, ‘Corporate Personality and Criminal Liability’ (1995) 6 Criminal Law Forum 1, 1-2.

[6] C Wells, ‘Criminal Responsibility of Legal Persons in Common Law Jurisdictions’ (Paper prepared for OECD Anti-Corruption Unit – Working Group on Bribery in International Business Transactions, Paris, 4 October 2000).

[7] Colvin, above n 5, 3.

[8] Ibid 2.

[9] Saloman v Saloman & Co [1896] UKHL 1; [1897] AC 22; Lee v Lee’s Air Farming Ltd [1961] NZLR 325; see now Companies Act 1993 (NZ) s 15.

[10] A large number of European continental law countries have not been able, or are unwilling, to incorporate the concept of corporate criminal liability into their legal systems. See generally M Wagner, ‘Corporate Criminal Liability: National and International Responses’Commonwealth Law Bulletin (1999) 600.

[11] For example, Commerce Act 1996 (NZ) s 90; Fair Trading Act (NZ) s 45 (where it is necessary to establish the state of mind of the body corporate it is sufficient to show that a director, servant or agent of the body corporate, acting within the scope of that person’s actual or apparent authority, had that state of mind). As an example of a corporate punishment: Secret Commissions Act 1910 (NZ) s 13 states that the fine on conviction is $2000 for a corporation but $1000 or two years imprisonment for any ‘other person’.

[12] (1612) 10 Co Rep 23A, 32B.

[13] Blackstone, Commentaries on the Law of England (1769) Volume 1, 464-5. For a full discussion of the early bars to corporate criminal liability, see L H Leigh, The Criminal Liability of Corporations in English Law (1969) 3-14.

[14] See now Crimes Act 1961 (NZ) s 361 (‘Plea on behalf of corporation’).

[15] Criminal Justice Act 1985 (NZ) s 26(1). At common law where an offence imposes a mandatory penalty of imprisonment, a company cannot be convicted: Pharmaceutical Soc v London & Provincial Supply Assoc (1880) 5 App Cas 857.

[16] [1990] 1 NZLR 693.

[17] Ibid 696. Eichelbaum J said There would be a significant gap in the scope of s 56(1) [of the Transport Act 1962] if incorporated owners were exempt from prosecution’.

[18] A P Simester and W J Brookbanks, Principles of Criminal Law (1998) 187.

[19] Anonymous Case (No 935) (1701) 88 ER 518. In Northern Publishing Co Ltd v White [1940] NZLR 75 it was held that the doctrine of ultra vires gave no defence to an action in tort where the board of directors deliberately embarked on an activity beyond the memorandum of association and torts were committed in the course of that activity.

[20] Smith and Hogan, above n 3, 201. The extent of a corporation’s criminal liability for acts which are ultra vires does not appear to have been considered in any modern reported criminal case, but Garrow and Turkington’s Criminal Law in New Zealand VI.5 describes the view expressed by Ostler J in his dissenting judgement in OF Nelson & Sons Ltd v Police [1931] NZPoliceLawRp 12; [1932] NZLR 337 (that no crime involving mens rea can be committed by a corporation because any such crime is necessarily ultra vires) as ‘based upon a logical difficulty which the courts have overcome’. In his influential article ‘The Criminal Liability of Corporations’ [1946] 62 Law Quarterly Review 345, 347, R S Welsh states that to suggest that ‘any crime is necessarily ultra vires a corporation…rests on the fallacious supposition that civil capacity and criminal responsibility are governed by the same considerations’. He gives as an example the fact that a minor may still be criminally liable for obtaining credit by fraud, despite his or her lack of capacity to make certain contracts.

[21] H A J Ford, R P Austin and I M Ramsay, Ford’s Principles of Corporations Law (9th ed, 1999) 673; Grantham and Rickett, above n 3, 287.

[22] C Wells, ‘Tesco v Nattrass Revisited’ (1994) 57 Modern Law Review 817.

[23] Glanville Williams in Criminal Law; The General Part (2nd ed, 1961) 854, writes: ‘Though a notional entity is incapable of an act in its own proper person, it is not incapable of failing to act’.

[24] [1842] EngR 81; (1842) 3 QB 223.

[25] Leigh, above n 13, 17.

[26] [1846] EngR 803; (1846) 9 QB 315.

[27] Ibid 326.

[28] Leigh, above n 13, 21.

[29] Ibid 22.

[30] See, for example, Cornford v Carlton Bank [1900] 1 QB 22 (corporate liability for malicious prosecution); Citizens Life Assurance Company Limited v Brown [1904] AC 423 (corporate liability for libel).

[31] Interpretation Act 1889 s 2(1).

[32] [1902] 2 KB 1, 11 (Channell J): ‘…the Legislature has thought it so important to prevent the particular act from being committed that it absolutely forbids it to be done…[t]he master, who…has done the forbidden thing through his servant is responsible and is liable to a penalty…[E]xactly the same principle applies in the case of a corporation’.

[33] [1911] 2 KB 832.

[34] OF Nelson and Co Ltd v Police [1931] NZPoliceLawRp 12; [1932] NZLR 337, 345; [1931] NZPoliceLawRp 12; [1932] GLR 109, 116 (Sir Michael Myers CJ): ‘…the company must through its agent or agents show want of knowledge. The contrary view would lead to an anomalous result’.

[35] Welsh, above n 20, 136 categorically states the exceptions (already mentioned above) as being public nuisance, criminal libel, and statutory duties. Wishart’s analysis adds disobedience of court orders and trespass: D Wishart, Company Law in Context (1994) 136.

[36] Welsh, above n 20, 346.

[37] [1944] KB 146.

[38] Ibid 155-6.

[39] [1944] KB 551.

[40] Ibid 559.

[41] [1944] 2 All ER 515.

[42] Welsh, above n 20, 346.

[43] Leigh, above n 13, 35-8.

[44] Welsh, above n 20, 359.

[45] Purser Asphalts & Contractors Ltd v Police [1990] 1 NZLR 693, 695.

[46] R v ICR Haulage Ltd [1944] 1 KB 551, 554.

[47] In the United Kingdom, in P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 73, 84 Turner J held that a corporation may be found guilty of manslaughter (where a natural person guilty of the offence is the embodiment of the corporation and acting for its purpose in doing the act or omission which caused the death). This proposition had been tentatively put forward by Bingham LJ in R v HM Coroner for East Kent, ex part Spooner (1989) 88 Cr App R 10, 16 (a decision which arose out of the same proceedings). In Australia, the Supreme Court of Victoria first accepted that a corporation could be guilty of the offence of manslaughter (and convicted the particular company) in R v Denbo Pty Ltd, (Unreported, Supreme Court of Victoria, Teague J, 14 June 1994).

[48] Crimes Act 1961 (NZ) s 158.

[49] [1970] NZLR 476 (Court of Appeal).

[50] See criticisms of the decision in R A Green ‘Indications as to the Real Nature of the Criminal Responsibility of Corporations’ (1971) Victoria University of Wellington Law Review 85.

[51] Adams on Criminal Law, CA2.27.06 ‘Corporation’.

[52] The question as to whether a company could be guilty as a secondary party under s 66 Crimes Act 1961 to a charge of manslaughter was left open in R v Murray Wright Ltd [1970] NZLR 476, 483. As a general rule, a company may be held liable as a party to the offences of an individual: R v Robert Millar (Contractors) Ltd [1970] 2 QB 54; [197] 1 All ER 577 (CCA).

[53] Colvin, above n 5, 2.

[54] ‘Let the superior be held responsible’.

[55] A full scale vicarious liability principle is endorsed in the federal law of the United States: i.e. for offences involving both strict liability and subjective knowledge a corporation may be criminally liable for the acts of it officers, agents or servants who are acting within the scope of their employment and for the benefit of the corporation: See A Geraghty, ‘Corporate Criminal Liability’ (2002) 39 American Criminal Law Review 327.

[56] ‘It is a point not to be disputed but that in criminal cases the principal is not answerable for the act of his deputy, as he is in civil cases; they must each answer for their own acts, and stand or fall by their own behaviour’: Huggins [1790] EngR 401; (1730) 2 Ld Raym 1574, 92 ER 518.

[57] See Part II.

[58] Chisholm v Doulton (1889) 22 QBD 736.

[59] [1917] 2 KB 836, 846.

[60] Simester and Brookbanks, above n 18, 187.

[61] Wells, ‘Criminal Responsibility of Legal Persons in Common Law Jurisdictions’, above n 6, 4.

[62] Allen, Textbook on Criminal Law (3rd ed, 1991) in Simester and Brookbanks, above n 18, 188.

[63] Note that in New Zealand it is settled that there need not be a formal employer/employee or principal/agent relationship, provided authority has been vested in a ‘substitute’: Gifford v Police [1964] NZCA 28; [1965] NZLR 484 (Court of Appeal). If the substitute acts outside the scope of authority conferred, the defendant will not be liable: Jull v Treanor (1896) 14 NZLR 513.

[64] Ford, Austin and Ramsay, above n 21, 683.

[65] Ibid 675. This is the difference between vicarious liability and liability as a party to an offence; in the latter case, although the offence is committed by another, liability of the party arises from his or her own actions.

[66] Department of Justice Canada, Corporate Criminal Liability — Discussion Paper (2002) 3.

[67] These are the terms used in Colvin, above n 5, 8. 68 See below, ‘An Alternative Route’.

[69] R Grantham, ‘Attributing Responsibility to Corporate Entities: A Doctrinal Approach’ (2000) 19 Company and Securities Law Journal 168, 171.

[70] ‘Alter ego’ is in fact an inapt word for the doctrine – the central feature of the identification approach is that those committing the crime are not the ‘other self’ of the company, but the only self, as the company has no other physical existence: J Dine, Criminal Law in the Company Context (1995) 146. Also, Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153, 171-2; [1971] UKHL 1; [1971] 2 All ER 127, 132-3 (Reid L) (House of Lords): ‘The person who speaks and acts as the company is not alter. He is identified with the company’ (emphasis added).

[71] ‘Organic’ refers to the ‘organs’ of a company: the board of directors and the members in general meeting.

[72] Wells, ‘Criminal Responsibility of Legal Persons in Common Law Jurisdictions’, above n 6, 5.

[73] [1915] AC 705.

[74] Ibid 713. (Emphasis added).

[75] [1957] 1 QB 159, 172.

[76] Wishart, above n 35, 140.

[77] In Morris v Wellington City [1969] NZLR 1038, 1045, a city engineer was held to have acted in the name of and with the full authority of the Wellington City Corporation when he sacked a worker in contempt of a court order. In the opinion of the court he ‘was in this matter both the brain and the hand of the Corporation’.

[78] [1971] UKHL 1; [1972] AC 153 ER 127.

[79] Ibid 170.

[80] Ibid 171. (Emphasis added).

[81] Lord Pearson also thought that the constitution of the particular company should be a guiding factor.

[82] [1971] UKHL 1; [1972] AC 153, 200. (Emphasis added).

[83] [1971] UKHL 1; [1972] AC 153, 187. (Emphasis added).

[84] Ibid 170, 173 (Reid L).

[85] [1976] 1 NZLR 194, 202.

[86] See also Canadian Dredge & Dock [1985] 1 SCR at 701-4

[87] Wells describes the Tesco approach as imposing a ‘straitjacket’ on corporate responsibility, with its ‘tight pyramidal view of corporate decision making’: C Wells, ‘A quiet revolution in corporate liability for crime’ (1995) 145 New Law Journal 1326.

[88] Wishart, above n 35, 142.

[89] Colvin, above n 5, 15.

[90] M Jefferson, ‘Recent developments in corporate criminal responsibility’ (1995) 16 (No. 5) The Company Lawyer 146, 147. Gobert is also critical of the doctrine: ‘one of the prime ironies of [Tesco] is that it propounds a theory of corporate liability which works best in cases where it is needed least’ (meaning that directors and managers of small companies are likely to be directly involved in company affairs and therefore criminally liable in their own right): J Gobert, 14 Legal Studies 393, 401.

[91] [1995] 3 NZLR 7.

[92] Watts has called it the ‘most instructive discussion.of the role of the identification principle in company law’: P G Watts, ‘Company Law’ [1995] New Zealand Law Review 237.

[93] [1995] 3 NZLR 7, 11-6.

[94] The rules governing the way in which a company may enter contracts and incur other obligations are set out in the Companies Act 1993 (NZ) s 180.

[95] [1995] 3 NZLR 7, 12. Lord Hoffman noted that the anthropomorphism entailed in the phrase ‘directing mind and will’ had the tendency to be distracting.

[96] Ibid 12-3.

[97] Ibid 13.

[98] Note that this was the case even though Koo had acquired the shares for a corrupt purpose and had deliberately hidden the knowledge of the purchase from the managing director.

[99] [1995] 3 NZLR7, 16.

[100] R Grantham, ‘Corporate Knowledge: Identification or Attribution?’ [1996] 59 Modern Law Review 723, 743.

[101] P L Davies, Gower’s Principles of Modern Company Law (6th ed, 1997) 231.

[102] S P Robert – Tissot, ‘A fresh insight into the corporate criminal mind: Meridian Global Funds Management Asia Ltd v The Securities Commission’ 17 (No. 4) April 1996 The Company Lawyer 99.

[103] M Jefferson, ‘Corporate Criminal Liability in the 1990s’ The Journal of Criminal Law 106, 119.

[104] Australia Law Reform Commission, Civil and Administrative Penalties in Australian Federal Regulation, Discussion Paper 65 (2002) 5.

[105] Simester and Brookbanks, above n 18, 189.

[106] [1971] UKHL 1; [1972] AC 153.

[107] [1995] 1 AC 456 (House of Lords).

[108] [1995] 1 AC 456. The court justified its decision: to hold otherwise would ‘[allow a company] the benefit of arrangements prohibited by the Courts provided.. that the arrangements were negotiated by one or more employees, who had been forbidden to do so by some superior employee’.

[109] In the hope that the decision in Meridian would not lead to the abandonment of the more certain, and ‘valuable metaphor’ of the directing mind and will, Lord Cooke of Thornden writes: ‘Those who draft statutes and those who interpret them are entitled to have the benefit of an available general concept which can be applied in doubtful cases…To jettison the metaphor in favour of a purely ad hoc approach might not do much in the end for the certainty of the law’: ‘Corporate Identity’ in Company Law Writings —A New Zealand Collection (2002) 44.

[110] Jefferson, ‘Corporate Criminal Liability in the 1990s’ above n 103, 118.

[111] [1995] 3 NZLR 7, 12. Also, Lord Hoffman was careful to point out that it should not be assumed that whenever a servant of a company has authority to do an act on the company’s behalf that knowledge of that act will for all purposes be attributed to the company: at 167.

[112] R Grantham and B Robertson, ‘Corporate Knowledge – Two Views on Meridian’ [1996] 2 New Zealand Business Law Quarterly 63, 71.

[113] Grantham, above n 100, 73.

[114] [2001] NZCA 125; [2001] 2 NZLR 639.

[115] Ibid 648.

[116] For example, R v British Steel plc [1995] 1 WLR 1356; Tesco Stores v Brent LBC [1997] 1 WLR 1037; R v Gateway Foodmarkets [1996] EWCA Crim 1768; [1997] 3 All ER 78.

[117] For example, SM Savill Ltd v MOT [1985] NZHC 273; [1986] 1 NZLR 653.

[118] Adams on Criminal Law, above n 51, CA 2.27.06.

[119] [1995] 1 WLR.

[120] Linework Ltd v Department of Labour [2000] 2 ERNZ 225.

[121] Ibid 231.

[122] J Smith, ‘Health and Safety at Work’ [1995] Criminal Law Review 654.

[123] [2001] NZCA 125; [2001] 2 NZLR 639, 650.

[124] Ibid 651.

[125] Note however that according to the Health and Safety in Employment Act 1992 the employer’s failure to take all practicable steps to ensure safety under s 6 does not have to be intentional: s 53(b).

[126] R Grantham, ‘Attributing Responsibility to Corporate Entities: a Doctrinal Approach’ [2001] 19 Company and Securities Law Journal 168, 171; J Gobert, ‘Corporate Criminality: New Crimes for the Times’ [1994] Criminal Law Review 722, 723.

[127] J Hill describes the identification approach as ‘constructed upon a highly anthropomorphic and outmoded model of the corporation’: [2003] Journal of Business Law January Issue 1, 13.

[128] The often-cited examples are the Pipa Alpha oil rig fire in 1988 (167 deaths), the Clapham Rail crash in 1988 (35 deaths, nearly 500 injuries), the King’s Cross underground Fire in 1987 (31 deaths) and the sinking of the Herald of Free Enterprise outside Zeebrugge in 1987 (187 deaths). Examples closer to home include the Mount Erebus plane crash in 1979 (257 deaths) and the Cave Creek Disaster in 1995 (14 deaths) (although the group entity concerned in both of these incidents was the Crown).

[129] Often the company may be convicted under relevant regulatory legislation, such as the Health and Safety in Employment Act 1992.

[130] Crimes Act 1961 (NZ) s 150A, i.e. for breach of any of the specified duties in Part VIII of the Crimes Act (Crimes against the person). Also see s 145 (criminal negligence). Note that much of the relevant case law and literature on corporate criminal liability focuses on the ability to hold a company liable for manslaughter or other serious offence within the context of United Kingdom law. Unlike New Zealand, the United Kingdom still has criminal offences at common law. The considerations are, however, still relevant, as the standard of guilt required across the jurisdictions is, for all relevant purposes, the same: at common law a killing is manslaughter, even if it does not result from an unlawful act, if it is caused by ‘criminal’ or ‘gross’ negligence, that is, a high degree of negligence: R v Adomako [1994] UKHL 6; [1994] 3 WLR 288 (House of Lords).

[131] 821 F. 2d 844 (1987) 855. In this case the jury was instructed that ‘if employee A knows one facet [of the currency reporting requirement], B knows another facet of it, and C a third facet of it, the Bank knows it all’: 85-6.

[132] The incident is discussed at length in many law journal articles, for example, D Bergman, ‘Recklessness in the boardroom’ (1990) 140 New Law Journal 1496; C Wells ‘Manslaughter and corporate crime’ (1989) 139 New Law Journal 931; D Burles, ‘The criminal liability of corporations’ (1991) 141 New Law Journal 609.

[133] United Kingdom, Department of Transport, Mr Justice Sheen, The Merchant Shipping Act of 1894: MV Herald of Free Enterprise – Report of the Court No. 8047 (1987) in Colvin, above n 5, 17.

[134] Two representatives of senior management, the senior master, the captain, and three other staff members who had been aboard the ferry.

[135] Colvin, above n 5, 18. Burles similarly states: ‘The failure of the P&O prosecution has since been attributed to a failure of evidence, but the law as it stands may have been a major hidden cause, as it is defined by rules of dubious sense’: D Burles, ‘The criminal liability of corporations’ (1991) New Law Journal 141 609, 609.

[136] (1991) 93 Cr App R 73.

[137] R v HM Coroner for East Kent; Ex Parte Spooner (1987) Crim. App. 10, 16.

[138] Stanley and others 19 October 1990 (CCC) transcript in English Law Commission, Legislating the Criminal Code: Involuntary Manslaughter (Law Com No 237) (1996) 6.50.

[139] [2000] EWCA Crim 91; [2000] 3 WLR 195.

[140] Seven passengers were killed and 151 injured, see S Trotter, ‘Corporate Manslaughter’ (2000) 150 New Law Journal 454; W Brookbanks, ‘Corporate Manslaughter: Attorney- General’s Reference (No 2 of 1999) [2000] EWCA Crim 91; [2000] 3 WLR 195′ (2000) 6 New Zealand Business Law Quarterly 228.

[141] [2000] QB 807-8. Note that the judge did convict the company of a statutory offence under the Health and Safety at Work Act (UK) and fined the company £1.5 million.

[142] In Equiticorp Industries Group Ltd (in stat man) v The Crown (No 47) [1998] 2 NZLR 481, 627-9, Smellie J accepted that, for the purposes of civil liability, the aggregation of the knowledge of a number of individuals would be possible.

[143] The New Zealand Court of Appeal has not revisited the decision.

[144] The above discussion focuses on offences of negligence rather than those of subjective fault. It would seem that, for the latter type of offence, aggregation is completely out of the question. Smith and Hogan, above n 3, 207: ‘[t]wo innocent states of mind cannot be added together to produce a guilty state of mind. Any such doctrine [of aggregation] could have no application in offences requiring knowledge, intention or recklessness’.

[145] Colvin, above n 5, 23.

[146] Wells, ‘Criminal Responsibility of Legal Persons in Common Law Jurisdictions’, above n 6, 7.

[147] [1995] NZLR 7, 12.

[148] This is a central argument of Wells, Corporations and Criminal Responsibility (1993) 88.

[149] Colvin, above n 5, 24.

[150] i.e. people who lack emotional understanding and a conscience.

[151] C M V Clarkson, ‘Kicking corporate bodies and damning their souls’ (1996) 59 Modern Law Review 557, 561.

[152] Hart, Punishment and Responsibility in Clarkson, above n 151, 567.

[153] Clarkson, above n 151, 568.

[154] Gobert, above n 126, 723.

[155] Wells, above n 148, 92.

[156] S Field and N Jorg, ‘Corporate Liability and Manslaughter: should we be going Dutch?’ [1991] Criminal Law Review 156, 159. The authors of this work draw on the philosophy of P French, in his work Collective and Corporate Responsibility (1984).

[157] J Gobert, above n 126, 723.

[158] See Bucy, ‘Corporate ethos: A standard for imposing corporate criminal liability’ (1991) 75 Minnesota Law Review 1095.

[159] W S Laufer, ‘Corporate Bodies and Guilty Minds’ (1994) 43 Emory Law Journal 647 in C M V Clarkson, ‘Corporate Culpability’ (1998) Web Journal of Current Legal Issues 10.

[160] Department of Justice Canada, above n 66, 6.

[161] Woolfe, above n 2, 263.

[162] L Dunford and A Ridley ‘No Soul to be Damned, No Body to be Kicked: Responsibility, Blame and Corporate Punishment’ (1996) 24 International Journal of the Sociology of Law 1, 7.

[163] Cooke, above n 109, 36.

[164] Derbyshire County Council v Times Newspapers Ltd [1992] UKHL 6; [1993] AC 534. See Defamation Act 1992 (NZ) s 6.

[165] McDonald’s v Steel Queens Bench Division No 1990- M- No 5724. The two defendants had published leaflets in the United Kingdom making allegations of blame against McDonald’s for starvation in the Third World, destruction of rain forest and knowingly selling food with a serious risk of damaging customers’ health, (they were found to be untrue). The case is discussed at length in Lord Cooke of Thornden, above n 109, 50-5.

[166] The judgment is 841 pages long: Lord Cooke of Thornden, above n 109, 50-5.

[167] Wells, ‘Manslaughter and corporate crime’, above n 132, 931.

[168] H Walker, ‘Criminalising companies – will it make a difference?’ (2001) 151 New Law Journal 1494.

[169] Lord Cooke of Thorndon, above n 109, 37.

[170] B Fisse and J Braithwaite, Corporations, Crime and Accountability (1993) 19-31.

[171] Home Office, Reforming the Law on Involuntary Manslaughter: The Government Proposals. The Government’s proposals actually go significantly beyond the Law Commission’s recommendations by suggesting that the offence of corporate killing be extended to non- incorporated organizations and that individuals associated with an offence of corporate killing should be exposed to penal sanctions. See B Sullivan, ‘Corporate Killing – Some Government Proposals’ [2001] Criminal Law Review 31.

[172] Since the publication of its May 2000 Report the Labour Government repeatedly refers to the introduction of the new offence of corporate killing as a manifesto commitment. The last available statement as to progress was by Hilary Benn on 7 November 2002: ‘The Government is committed to extending criminal liability for involuntary manslaughter to corporations, and will legislate when parliamentary time allows’: House of Commons Hansard Written Answers.

[173] Note that English law still follows the ‘classic’ Tesco identification approach rather than the ameliorated Meridian attribution formulation followed in New Zealand.

[174] Paras 8.50, 8.34.

[175] Paras 7.32 -7.35.

[176] ‘A major claim for the corporate killing offence is that it would be “P&O proof”’: C Wells, ‘The Corporate Manslaughter Proposals: Pragmatism, Paradox and Peninsularity’ [1996] Criminal Law Review 545, 550. An example of how the offence would work in relation to the ferry disaster is given: ‘It would probably be open to a jury to conclude that, even if the immediate cause of the deaths was the conduct of the assistant bosun, the Chief Officer or both, another of the causes was the failure of the company to devise a safe system for the operation of their ferries, and that failure fell far below what could reasonably have been expected’.

[177] Paras 7.21; 7.30; 7.31; 7.33; 8.40; 8.80.

[178] Wells, ‘The Corporate Manslaughter Proposals: Pragmatism, Paradox and Peninsularity’, above n 176, 552.

[179] Department of Justice Canada, above n 66, 8.

[180] Para 8.30.

[181] G R Sullivan, ‘The Attribution of Culpability to Limited Companies’ (1996) The Cambridge Law Journal 515, 531: ‘If a finding of corporate culpability is made in circumstances where it cannot be said of any individual member of the class that his conduct fell far beyond what could reasonably be expected and was also in a causal relationship to the death, we encounter aggregation by whatever name called’.

[182] Sullivan, above n 171, 33 sees the new offence as a focus on the ‘team performance’.

[183] A P Simester and G Sullivan, Criminal Law: Theory and Doctrine (2000) 253.

[184] Workplace Health and Safety, Proposals for a Crimes (Industrial Manslaughter) Bill — Explanatory Information (2000). (Note that the title of the bill was subsequently changed to the Crimes (Workplace Deaths and Serious Injuries) Bill 2001 in Hill, above n 127, 35.

[185] Queensland Government, Department of Justice and Attorney-General, Discussion Paper — Dangerous Industrial Conduct in Hill, above n 127, 35.

[186] Workplace Health and Safety, above n 184, 1.

[187] Hill, above n 127, 35.

[188] Workplace Health and Safety, above n 184, 12-3.

[189] The Crimes (Workplace Deaths and Serious Injuries) Bill 2001 s 14B.

[190] The Crimes (Workplace Deaths and Serious Injuries) Bill 2001 s 14B(6).

[191] Hill, above n 127, 36. The objection was mainly at the large increase in potential fines (the maximum fine for a corporation would be $5 million). 192Clarkson, ‘Corporate Culpability’ above n 159, 11; Jefferson, above n 103, 120 asks the valid question: ‘Manslaughter is a serious crime, but would corporate killing be?’

[193] For example, how would corporate pollution or the manufacture and distribution of dangerous consumer products be affected by the creation of this new offence?

[194] A Ashworth, Principles of Criminal Law (1999) 251.

[195] Clarkson, ‘Kicking corporate bodies and damning their souls’, above n 151, 571.

[196] See especially B Fisse and J Braithwaite, ‘The Allocation of Responsibility for Corporate Crime: Individualism, Collectivism and Accountability’ [1988] SydLawRw 3; (1988) 11 Sydney Law Review 468; B Fisse, ‘The Attribution of Criminal Liability to Corporations: A Statutory Model’ [1991] SydLawRw 23; (1991) 13 Sydney Law Review 277, 284-6; Fisse and Braithwaite, above n 170.

[197] Fisse and Braithwaite, Corporations, Crime and Accountability, above n 170, ch 2.

[198] Ibid 48.

[199] Fisse and Braithwaite, “The Allocation of Responsibility for Corporate Crime: Individualism, Collectivism and Accountability”, above n 196, 506.

[200] Clarkson, ‘Corporate Culpability’, above n 192, 7.

[201] Ibid.

[202] G R Sullivan, ‘The Attribution of Culpability to Limited Companies’ [1996] The Cambridge Law Journal 515, 526.

[203] Ibid.

[204] For example, Brookbanks, above n 140, 233; Clarkson, ‘Corporate Culpability’, above n 192, 7; Sullivan, above n 202, 525-7.

[205] Hill, above n 127, 16.

[206] Standing Committee of Attorneys – General, Criminal Law Officers Committee, Canberra, Model Criminal Code: Final Report Dec 1992, Chapter 2: General Principles of Criminal Responsibility (1993) 105.

[207] Ibid.

[208] Clause 12.1(2)

[209] Recall that realists regard corporations as discrete entities, independent of their individual members and capable of being criminally culpable in their own right: Woolfe, above n 2, 258; Colvin, above n 5, 1-3.

[210] Section 12.3(2)(a).

[211] Section 12.3(2)(b). ‘High managerial agent’ is defined in s 12.3.(6) to mean ‘an employee, agent or officer of the body corporate with duties of such responsibility that his or her conduct may fairly be assumed to represent the body corporate’s policy’.

[212] In the case of a ‘high managerial agent’, however, the corporation may escape the attribution of intention for the acts or authorisation of a renegade/maverick senior officer within the corporation, if the company can show it exercised due diligence to prevent the conduct.

[213] Hill, above n 127, 18.

[214] Woolfe, above n 2, 263.

[215] Section 12.3(4)(b).

[216] A corporation that has in place a genuine, efficient compliance system should not fear that an employee’s assertions that he or she believed the illegal conduct was permitted will be held to be reasonable.

[217] Criminal Code Bill 1994, Explanatory Memorandum, 44 in Hill, above n 127, 18.

[218] Australia Law Reform Commission, above n 104, 20.

[219] W S Laufer, ‘Corporate Bodies and Guilty Minds’ (1994) 43 Emory Law Journal, 648, 661 in Woolfe, above n 2, 264.

[220] Woolfe, above n 2, 270.

[221] Hill, above n 127, 19.

[222] The metaphor is used in Wells, Corporations and Criminal Responsibility, above n 148.

[223] It should also be noted that the Canadian Government has very recently has published proposals to reform the law of corporate criminal liability. Specifics are not given but the proposed reforms are intended to expand the group of individuals who may be regarded as the embodiment of the company so to include individuals who exercise delegated, operational authority, and, for crimes of negligence, for the acts and omissions of its representatives to be examined as a whole: Department of Justice Canada, Government Response to the Fifteenth Report of the Standing Committee on Justice and Human Rights — Corporate Liability (November 2002).

[223] R Macfie, ‘International Workers Memorial Day’ (2000) 4 Employment Law Bulletin 91.

[224] Workinfo, ‘Health and Safety in Employment Amendment Act 2002’.

[226] Health and Safety in Employment Act 1992 (NZ) s 49.

[227] Health and Safety in Employment Act 1992 (NZ) s 56.

[228] Hill, above n 127, 36.


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