The Changing Paradigm: Freedom, Jobs, Prosperity

A Commentary on the Victorian Crimes (Workplace Deaths and Serious Injuries) Bill 2002

Ken Phillips

Ladies and gentlemen

I've produced a reasonably detailed analysis of the Victorian corporate manslaughter Bill, which is available for attendees at this conference along with copies of recent newspaper articles.

In this paper, I want to focus on the core structure of the Bill and why it is of concern. Please note that this is a lay person's attempt to understand what appears to be a contortion of commonly understood ideas of criminal liability and justice. But a lay understanding is perhaps what is needed. Every day, people in business make multiple commercial decisions believing that they act legally. If the nature of criminal law changes, what does that do to the decision-making processes? Have no doubt: this Bill is squarely aimed at the boardrooms of Australian business and the executives who run them. In fact, however, its legal reach is much wider than its stated intent.

The Victorian corporate manslaughter legislation is morally flawed. It is based on a sound objective, namely, to reduce workplace deaths and injuries, but its method runs the very real risk of increasing deaths and injuries.

The Bill's greatest moral danger is that it can lead to people going to jail for crimes committed by someone else. It legalizes the creation, prosecution and persecution of 'fall guys'. The outcome is likely to be severe distortion of behaviour in workplaces, with a related increase in deaths and injuries as a real possibility.

Why the Bill? What drives the motivations?

The Victorian Bill needs to be seen within the broader context of the global assault against, and demonization of, corporations. Anti-corporate campaigning is now a multi-billion-dollar global industry run by activist non-government organizations (NGOs) whose main claim to moral authority is that they are non-profit. The objects of their disaffection---profit-focused corporations---they describe as amoral at best, but mostly immoral.

NGO anti-corporatist campaign methodology has as its local level the brand-name destruction of specific companies (such as the recent Fairwear campaigns against well-known Australian clothing labels) while, in its global application it focuses on the demonization of corporations. The process has had high success over the last 10 years to such an extent that at the most recent WTO conference public comment was made that no CEO of any corporation dare any more to defend capitalism.

Globally and locally, corporations are 'on the nose'!

In the most complete demonstration of the success of anti-corporate campaigning, some corporations, frozen with fear, have turned to paying off NGOs in what amounts to acceptance of brand-name blackmail. Globally, anti-corporate NGOs now receive billions of dollars in funding from government, philanthropic business-funded organizations and from corporations themselves. Capitalism truly is in a public relations crisis because corporations have waved the flag of defeat.

It is this environment of corporate demonization that has made the Victorian corporate manslaughter bill possible.

The Structure of the Bill

A lay person's understanding of criminal law is that a person is held responsible for the actions over which they have direct control. As drivers of cars we will be held criminally liable if we cause the death of a person by negligent driving. We will go to jail, but our passenger will not go to jail on our behalf.

The Victorian corporate manslaughter bill breaks the tie between criminality and personal actions. It creates a new and different type of criminality.

This is achieved through two key steps. First, the Bill suggests that a collective of persons is capable of criminal activity. In this instance, the Bill chooses one legal form of a collective---the corporation---and declares that a corporation can act criminally. It does not include other collectives such as partnerships, trusts, the public service, not-for-profit bodies or unions. By omitting these other collectives, the Bill declares that only a collective organized as a corporation can act criminally.

For example the Bill's second reading speech states, 'It is the collective or organizational nature of corporate activity that will be included....' The Explanatory Memorandum states, 'The focus is on the organizational responsibility of the body corporate.' And '... offence involves derivative rather than direct liability.'

So the Bill looks at the organization and culture of a corporation and says that culture and organization commit criminal acts. The first step in prosecutions under the Bill is to demonstrate this new criminality by a corporate collective. The second step is that if a corporation is found guilty, then the Bill seeks to find who it is within the corporation who will be punished (by way of fine or imprisonment) for the corporation's crimes. This is where the idea of 'derivative liability' comes into play. In effect, the Bill declares who will be the 'fall guy/s' to go to jail for the criminal acts of the collective. The Bill predetermines that 'senior officers' will go to jail and then describes how the 'fall guy' senior officers will be nailed.

Common law and transference of liability

The proponents of the Bill say it is necessary because existing criminal common law does not capture wrongdoers in corporations. Is this a sustainable argument?

A lay understanding of common law is that there are two broad categories of law which are relevant to this issue: that of criminal law and that of civil law. Civil law largely relates to legal action for recovery of damages and usually involves financial restitution. Criminal law often involves imprisonment. In the case of civil actions, the level of evidence and certainty required to prove a case is much lower than that required under criminal prosecution. Under civil actions, the courts are frequently prepared to make an organized collective responsible for financial court orders. The law, however, is reluctant to make a collective criminally responsible not only because it seems impractical to jail a collective of persons, but also because the risk of jailing innocent parties is high.

This is based on sound reasoning accumulated over thousands of years of legal history and is founded in the distinction between a natural person and a legal person such as a corporation, church or trade union. Natural persons can steal, beat up, rape, blackmail, murder and so on, and they can do so in the context of seeking to further the interests of a collective, say a church or trade union or on orders from someone else in an institution. But in every criminal case, individuals have to be the instruments of the criminal act.

The doctrine of criminal intent is central to the law, and only natural persons can have criminal intent.

When a gang commits a crime, like a gang rape for example, only individuals are prosecuted and only individuals are sentenced. The courts may impose heavier sentences on people because they participated in gang rape, but it is not the gang which is committed for trial and it is not the gang which is punished according to law. Individuals are held responsible for their individual criminal acts.

The care which the law takes in applying this principle of criminal intent was demonstrated in a recent case involving a dispute between a labour hire company and a building union in Queensland. [Evenco Pty Ltd Australian Building Construction Employees and Builders Labourers Federation & Others Supreme Court Qld Appeal numbers 3536 & 3610 of 1999 delivered 2/4/2000]

The case concerned a 10-year campaign by a union to stop a labour hire company operating in Queensland by preventing the labour hire workers entering work sites. The labour hire company took a civil damages action against the union alleging inducement to breach of contract, won the case and achieved court orders against the union, restraining the union from action against the company. The union complied with the orders for some years, but then ignored the orders and resumed their campaign against the company. At this point, the issue ceased to be one of civil law and became criminal. Defiance of a court order is a criminal action with imprisonment, a fine, or both, as distinct possibilities.

One of the questions the judges had to consider in this case was whether the actions of the employees of the union (the union officials) were attributable to the union. That is, was the collective responsible for the criminal actions of the individual employees who breached the orders? Or were the individuals responsible and could the union avoid responsibility?

The court said the following.

'Looking at the doctrine developed in England from the Australian perspective, on the basis that what is involved is a criminal or quasi-criminal proceeding, the result arrived at there (England) is unattractive, insofar as it can make an absolutely blameless person vicariously liable for the unauthorized act of an employee; vicarious liability for criminal acts is the exception not the rule.' And '....making a blameless person liable for contempt is a surprising interpretation.'

Here the court is clearly reflecting on the fact that criminal liability should on principle be tied to personal actions.

In further comment, the court observed that a corporation under criminal law can already be liable for the actions of its senior officers. '....in some instances the law will test a corporation's liability on the basis of acts of certain senior officers, so that their acts are treated as its acts'

Certain principles appear clear as to how the common law already works. Collectives of any legal type can be held criminally responsible for the actions of their employees or agents but great care should be exercised to ensure that liability is not transferred to blameless persons. In the Queensland case, it was shown that the actions of the senior officer of the union were attrituble to the union---based on evidence of lines of communication and knowledge as to the restraint orders. $85,000 of fines were imposed for breaching the court orders.

In summary, it appears that existing law will under certain circumstances hold a collective responsible for the criminal actions of a person acting on the collective's behalf, but a collective itself cannot commit a criminal act.

A new idea of criminal liability

The Victorian manslaughter bill operates in reverse. It finds a collective---but only one organised as a corporation---capable of a criminal act and then seeks to find individuals in the corporation who will go to jail on the collective's behalf.

The Bill raises issues of justice. How is it possible for a collective to have criminal intent? If one type of collective can be declared by legislation to be capable of criminal intent or action are other types of collectives also capable of criminal action? Could legislation be created that declared a specific religious, social, political or sporting collective capable of criminal action? Once this Bill is passed, the conceptual extension into other areas is comparatively small even if political probability seems remote. For extension to occur, however, all that is required is sufficient public relations success in demonization of a targeted group and the group could then become subject to the same treatment being delivered to corporations under this Bill.

With this new and untested form of criminality, can anyone in an organization know who will be held liable? Can any senior officers know whether their actions today will be held to have been criminal in years to come? What are the new rules upon which one's actions will be judged? What are the new legal principles being set and what is the long-term impact of these on all persons in society?

On a practical level for example, would any insurance company be prepared to insure a collective for their criminal risk in this untested and new area of law?

The Victorian Bill looks very much like a dumping of the critical principle of criminal intent being tied to the actions of individuals. The threat to justice must be real. The practical ramifications can only be imagined.

The debate

In this short paper I've only sought to consider the core structure of the Bill. The Bill has many more problems in the detail than those dealt with here.

But a core question is paramount: why?

This is a Bill that introduces a quantum leap in criminal law. Its implications are vast and as yet not fully explained or discussed. When the Bill is criticized, the reaction of the proponents so far has been to attack the people asking the questions. Their responses come close to accusations that critics support bad workplace practices. But dismissing critics in this way as an attempt to steer attention away from the issues can only tend to confirm, rather than address, those original concerns.

The stated objective of the Bill is to reduce workplace deaths and accidents, an objective we all strongly endorse. The fact, however, is that existing legal processes already hold corporations criminally liable, albeit in a particular way. The proponents of the Victorian corporate manslaughter Bill have neither adequately educated the community about why the existing common law fails, nor adequately explained how or why this Bill will improve the situation. Patient delivery of clear arguments may achieve better results for them than moral posturing and ritualistic indignation.

People need to know where they stand. People want and deserve clear and consistent application of comprehensible law. Only when this is in place can we sensibly turn our attention to reducing workplace deaths and injuries.

Thank you.