First Corporate Manslaughter conviction - Feb 2011

Cotswold Geotechnical Holdings have been fined £385,000 after becoming the first company to be convicted under the new Corporate Manslaughter & Corporate Homicide Act following the death of Alex Wright in 2008, who suffocated when the 3.5m trench he was working in collapsed on top of him.

The prosecution’s case was that Mr Wright was working in a dangerous trench because Cotswold Geotechnical Holdings health and safety systems had failed to take all reasonably practicable steps to protect him. A spokesman for the Crown Prosecution Service commented, “In convicting the company, the jury found that their system of work in digging trial pits was wholly and unnecessarily dangerous”. Further it was established during the trial that the company ignored well-recognised industry guidance that prohibited entry into excavations more than 1.2 m deep.

The fine of £385,000, which must be paid over 10 years at £38,500 a year, is extraordinarily high for a company of this size, as it reportedly exceeds the company’s turnover of £330,000 in the year of the fatality. Clearly, this is intended to send a message to all UK companies to ensure that their health and safety systems are in order and they look after the welfare of their employees.

There was no person in the dock during the three-week trial as it was the company, rather than an individual, which was charged with corporate manslaughter. An earlier prosecution of Peter Eaton, the company’s Managing Director who was charged with gross negligence manslaughter, had to be dropped because he was found to be unfit to stand trial, which was in no small part due to the stress of the charges against him. Had he been found guilty of this offence, a prison sentence would have been one of the options available to the court.

The Corporate Manslaughter Act was introduced to address the historic difficulties of convicting larger organisations. Under the new Act, all the prosecution has to establish is that the fatality was “as a result of a failure at senior management level”. So in view of the fact that Cotswold Geotechnical Holdings are a small company run by a sole director, this case doesn’t truly test the Act’s full scope nor the extent of the fines, which sentencing guidelines suggest should start from £500,000, although in practice there is no limit under the Act. Therefore the real test will come when a significantly larger company with a complex management structure is prosecuted.

Legal experts had previously estimated the cost to a medium sized company to mount a robust defence to a corporate manslaughter prosecution would be in the region of £500,000. The fact that this relatively straightforward case, involving a very small company, took over two and a half years to reach court, and that the trial lasted three weeks, may indicate that the previous estimate needs to be increased.

This case not only highlights the need for even the smallest companies to have the appropriate insurance to meet the defence costs of such a prosecution, more importantly it demonstrates the benefit of a full and independent audit of existing health and safety management systems. Such an audit would at best provide an employer with the reassurance that they are doing the right thing, or at worst, point out areas of danger which can then be addressed.

If you would like more information on any of the above or how our health and safety division, Crown House (www.crown-house.co.uk), can help you manage your health and safety responsibilities, whether it is in the form of an independent audit or accredited training (please see attached supplement re forthcoming training courses) please do not hesitate to speak to you usual insurance contact or alternatively contact Jacky Millard on 01777 861861 – jackymillard@crownhouse.co.uk.