Submission LEGISLATIVE ASSEMBLY FOR THE AUSTRALIAN CAPITAL TERRITORY STANDING COMMITTEE ON LEGAL AFFAIRS
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1 Submission to LEGISLATIVE ASSEMBLY FOR THE AUSTRALIAN CAPITAL TERRITORY STANDING COMMITTEE ON LEGAL AFFAIRS on CRIMES (INDUSTRIAL MANSLAUGHTER) AMENDMENT BILL 2002 February 2003
2 (AICD) is the peak organisation representing the interests of company directors in Australia. Current membership is over 16,600, drawn from large and small organisations, across all industries, and from private, public and the not-forprofit sectors. Membership is on an individual, as opposed to a corporate basis. AICD is a federation of seven State divisions, each of which is represented on a National Council. Overall governance of the AICD is in the hands of its Board of Directors which is comprised of the seven division Presidents, plus a Chair, Vice Chairs and a Treasurer. AICD has several national policy committees, focusing on issues such as law, accounting and finance, sustainability, taxation and economics, and national education, along with task forces to handle matters such as corporate governance. The key functions of AICD are: to promote excellence in director s performance through education and professional development to initiate research and formulate policies that facilitate improved director performance to represent the views and interests of directors to Government, regulatory bodies and the community to provide timely, relevant and targeted information and support services to members and, where appropriate, Government and the community to maintain a member s code of professional and ethical conduct to uphold the free enterprise system to develop strategic alliances with relevant organisations domestically and internationally to further the objectives of the AICD.
3 Submission Introduction AICD welcomes the opportunity to comment on the Crimes (Industrial Manslaughter) Amendment Bill 2002 (the Bill). Commentary AICD supports stringent occupational health and safety laws including corporate and personal liability for workplace death in appropriate cases and based upon fair legal principles. A significant law reform measure of the type proposed by the Bill should be justified by some practical need. There is nothing in the Minister s Presentation Speech or the Explanatory Memorandum which contains any statistics about the incidence of workplace death in the ACT. Nor is there any survey of the existing law in the ACT nor reference to any case in which existing law has been found by any court to be inadequate or where any suggestion for reform has been raised. The National Occupational Health and Safety Commission web site states that the only reliable and comprehensive sources of information on work-related deaths in Australia are its two work-related fatalities studies for the years and The more recent statistics show that the ACT had the lowest incidence of workplace death in Australia. We have not been able to find any more recent figures on the ACT Government web site. In his Presentation Speech the Minister states that corporations may be prosecuted for manslaughter under the Crimes Act 1900 but there are no fines available. Why not then amend the Crimes Act to provide for fines? Also if the penalties under the Occupational Health and Safety Act are regarded as inadequate, why not increase them? Victoria and Queensland have abandoned their proposals to introduce legislation of this type, although each Government has the parliamentary majority to do so. We understand that each Government intends to address the issue by reliance on existing laws or through some changes to OHS legislation. The Bill reminds us of the first Victorian Bill, the Crimes (Industrial Manslaughter) Bill 2000, which was part of a Discussion Paper issued in October This Bill was issued as an exposure draft and was not introduced into Parliament. It was significantly redrafted before being introduced into Parliament as the Crimes (Workplace Deaths and Serious Injuries) Bill 2001 on 21 November It was subsequently defeated in the Upper House in May The initial Victorian Bill was very widely drafted and effectively not limited to workplace death. The ACT Bill is also very widely drafted, not being limited in its application to bodies corporate as employers, which is the essential basis for industrial manslaughter legislation based on the principles established in Tesco Supermarkets v Nattrass [1972] A.C No
4 explanation is given why the Bill applies to individuals, to whom the Tesco principles do not apply. Not only does the Bill brings individuals within its ambit, it encompasses those involved in the running of unincorporated associations, and a wide range of incorporated bodies, including religious, charitable and educational organizations, including trade unions. Social and sporting bodies will also be involved. The Victorian Government was concerned about the effect upon the officers of not for profit organizations and specifically exempted them from the application of the Victorian Bill (Clause 14C(4)). As one example, we understand that one of the purposes of the Associations Incorporation Act 1953 is to allow not for profit bodies to take advantage of the benefits of limited liability and in particular to insulate committee members from personal liability. The Bill may cause considerable difficulties for the continued operation of incorporated associations and their officers. In conducting their activities they rely heavily upon public liability insurance which may not be available to provide indemnity. Whilst the Bill may be characterized as one designed to prevent workplace death or to act as a deterrent, the reality is that it is about punishment not prevention. It also places the focus upon employers and their officers which is at odds with the mutuality of obligations approach enshrined in the Victorian OHS legislation and which has proved very successful in reducing the incidence of workplace death in that State. Occupational health and safety should be a shared responsibility. We see it as unfortunate that the Bill falls within the Industrial Relations portfolio. We appreciate that there may be reasons for this, but workplace health and safety should not be seen as an industrial relations issue We have the following comments about certain provisions of the Bill. The Bill 4 Section 7A, note 1 We have a copy of the Crimes Act 1900 (effective 17 January 2003) and there is no section 7A. This includes the latest amendments brought about by the Criminal Code We note that the Criminal Code came into force on 1 January We presume the Code will apply to Clauses 49C and 49D, if enacted, as both will not be a pre-2003 offence as defined in section 8 (1) of the Code. We have some difficulties with the application of the Code. Terms such as high managerial agent and corporate culture, conversational and imprecise as they are, should have no place in the application of the criminal law. Manslaughter is the second most serious offence in the criminal law, with severe penalties and attendant consequences. This requires more than imprecise concepts. We also point out that the terms high managerial agent and senior officer are inconsistent, an unsatisfactory basis when determining corporate liability under the Code. The term corporate culture is capable of an elastic meaning. It is not possible for an artificial entity to have an attitude a prosaic point but one which emphasizes the unsatisfactory definition. Why should criminal liability result from an
5 attitude, a subjective enough determination? Surely it is conduct which takes place which should be the determining factor The reverse burden of proof provided for by section 51(3) of the Code is inconsistent the standard burden of proof in criminal prosecutions. We believe that Part 2.5 of the Code should be reviewed not only to bring some definitions in line with those in the Corporations Act but also to make the drafting and its application more precise and equitable. Is it intended that Part 2.5 of the Criminal Code apply to government or a government entity? We assume that the Criminal Code picks up the definition of corporation in the Legislation Act 2001 includes a body politic or corporate. Part 2A Industrial Manslaughter 49A agent The concept of agent proved to be of great difficulty in the Victorian Bill. It has the potential to remove responsibility from the actual employer and move it elsewhere in the chain. No reason is given to justify this and our concern is that it is meant to get to a high profile employer. The definition does not reflect modern day business relationships in complex environments such as construction sites or joint venture activities. We submit that the definition be deleted or, at the least, that paragraph (b) be deleted. causes We have some uncertainties about this definition with its use of the word substantially to qualify the word causes. We note that the definition of murder in section 12 of the Crimes Act uses the word causes, but without the qualification of substantially. We query the inconsistency. We note that the general criminal law attributes homicide to D if D s act substantially contributed to the subsequent death of V (Howard s Criminal Law/B.Fisse 5 th ed. Sydney Law book co, 1990). Is this definition meant to be in line with the general criminal law or introduce a new standard eg anything upward of a 51% causation level? If this is the intention it is not explained why those who fall within the ambit of the Bill, either as an employer or officer, should be treated on a lesser basis than would be the case in a non-workplace situation conduct As the definition is a simple one line definition, which is straightforward, why could it not be reproduced verbatim for convenience? death Another straightforward definition which we suggest be reproduced verbatim for convenience. employer We refer to our comments about the definition of agent. We submit that paragraph (b) be deleted. We repeat our concerns that the definition will bring in individuals, either as a sole employer or on some joint basis such as the committee members of an unincorporated association or members of a partnership. There is no legal reason why this should be the case. government Again we cannot see why this straightforward definition should not be reproduced verbatim. However, as the definition picks up the Commonwealth, a State and New Zealand we query the legislative capacity of the ACT Government to cover any government other than itself. The Victorian Government intended that its Bill should apply to Ministers and Government operations and referred the matter to the Victorian Law Reform Commission because of advice it had received about its capacity to do so. The VLRC
6 reported in May 2002 with a report Criminal Liability for Workplace Death and Serious Injury in the Public Sector (it is available on the VLRC web site: A detailed report it is a very useful survey of public sector liability and we draw it to the Committee s attention. It contains a number of recommendations to make the application of the Victorian Bill apply to government in all its forms and these are recommendations that the Committee might care to consider. government entity Why is this definition different to that in section 121(6) of the Legislation Act? outworker Should not the two references to principal be to employer? senior officer This definition emphasizes the difficulties of applying this type of legislation to individuals and in attempting to bring in the concept of officer for a non-corporate entity, itself a contradiction in terms. As far as we are aware the Corporations Act definition has not been subject to any judicial consideration so the concepts of decision-making affecting the whole or a substantial part of a corporation s business or significant effect on financial standing are, to that extent, untested concepts. Whilst an interpretation may be placed upon them, ultimately it is for the courts to determine their application in the absence of more precise definition. We also make the point, that in larger companies it is not the senior officers who would in normal circumstances be involved in direct management activity of the type contemplated which would give rise to criminal liability. Senior officers in the small companies and medium size companies may be those most susceptible to prosecution. Focusing on senior officers may have a policy objective, but it involves a contradiction. It effectively allows all those who do not fall into the senior officer category to be as negligent as they like without fear of consequences even to the extent of ignoring company policies or instructions. The irony is that their conduct will be attributed to the company for the purpose of establishing corporate liability. serious harm This is another definition which might best be reproduced verbatim. volunteer We have concerns about this definition which go to the core of our reservations about the very wide application of the Bill. We submit that the Bill has to be limited to workplace deaths and to employees. worker We refer to previous comments. Paragraphs (b) and (e) should be deleted. It is not immediately clear to us why outworkers or apprentices/trainees would not be employees within the accepted meaning of that term. 49B Omissions of employers and senior officers (1) We have no difficulty with the concept of omission to act forming part of conduct. However we are far from certain about the meaning and potential application of paragraphs (b) and (c). Does paragraph (b) have a physical and metaphysical application? Does undertaking mean some part of the business operations of the employer?
7 We submit that an omission to act should only attract liability if it is unreasonable in the circumstances and based on direct knowledge or knowledge that ought reasonably be imputed. (2) The same comments apply in relation to senior officers with the exception that (c) is clearly inapplicable and should be deleted (3) This involves vicarious responsibility. If a corporation entrusts another person with a responsibility normally within the corporation s control and if that agreement is reached on a reasonable basis, no criminal liability should attach. Civil liability may well remain. We refer the Committee to the Second Reading Speech of the Victorian Attorney-General, The Hon Rob Hulls, said as follows in relation to the Victorian Bill: Consequently the offences have been carefully constructed so as to ensure that the liability of a corporation is direct rather than vicarious. Whilst vicarious liability of a corporation is important in the context of civil liability, vicarious liability should not be used as a basis for determining liability for serious criminal offences (Hansard Legislative Assembly Thursday 22 November 2001, 1925) In relation to directors we draw the Committee s attention to sections 198D and 190 of the Corporations Act 2001 where the principle of delegation and responsibility for it have statutory backing. Of particular note is section 190 (2). We also draw the committee s attention to section 189. As far as concerns companies and directors subject to Corporations Act jurisdiction of federal scope, we see it as essential that Territory or State legislation does not erode some of the important sanctions and safeguards of general application. In our submission subsection (3) needs considerable refinement before it could be considered to be in acceptable form. 49C Industrial manslaughter employer offence (b) We refer to our comments in relation to the definition of cause. (c) We submit that the words or any other worker of the employer be removed from paragraphs (i) and (ii) as they do not relate directly to the offence and could result in liability if the employer is neither reckless nor negligent in relation to the worker whose death results. Why is the maximum penalty 25 years imprisonment when the maximum penalty under section 15 of the Crimes Act is 20 years? This discriminates against individual employers for no reason that is apparent. The penalties should be consistent, whether 20 or 25 years. 49D Industrial Manslaughter senior officer offence We refer to our earlier comments about senior officers. We also submit that, as with the previous Clause, the words or any other worker of the employer be deleted from paragraphs (i) and (ii) of sub-clause (c).we repeat our comments in relation to the maximum penalty of imprisonment. Why is the maximum penalty 25 years imprisonment when the maximum penalty under section 15 of the Crimes Act is 20 years? On the face of it this discriminates against officers of companies for no reason that is apparent.
8 49E Court may order corporation to take certain actions We submit that this Clause be removed from the Bill. Not only is it double punishment, it introduces the concept of denunciation and ongoing sanction into the criminal law for the first time and clearly places companies, particularly public companies, in a uniquely exposed position. A substantial fine and the media publicity surrounding it will surely have the desired effect. We also point out that: Requiring information to be placed in annual reports or issuing notices to shareholders is a matter that should be the province of the Corporations Act. Given the likely lapse of time between the date of the incident giving rise to the offence and conviction, no thought seems to have been given to the effect a publicity order may have upon shareholders, employees and clients of a business. Notices to shareholders and in newspapers: what is the point of it? Is it calculated to cause shareholders to sell their shares and clients to withdraw custom? What about consequences to shareholders, employees and creditors? Overall this Clause may have consequences far beyond the imposition of a penalty pursuant to Clause 49C and the additional costs of complying with any order(s) made under this Clause. Conviction under either Clause would comprise an event of default under most property leases, equipment leases, borrowing instruments and other financial accommodation as well as standard and special purpose trading contracts etc. The consequences of any conviction triggering events of default clauses should not be underestimated The traditional role of the criminal law has been to impose punishment, commensurate with the offence, with publicity, through the media or general knowledge, providing attendant public opprobrium. The punishment once imposed and incurred is the end of the matter. It appears that the purpose of this Clause is to cause immediate and continuing harm to companies well beyond the ambit of accepted principles of criminal punishment. The intention of this Clause comes out through the possibility of an order to carry out a community service project, quite unrelated to the offence. Again this is a major departure from accepted principles of corporate punishment. In reality the potential penalty for an employer corporation found guilty of industrial manslaughter is $5M. Why the penalty for the offence is a maximum $1.25M and the potential cost of an order under this Clause is $3.75M is not explained. It would be preferable to make the penalty under Clause 49C $5M and remove this Clause from the Bill. Summary AICD strongly supports stringent occupational health and safety laws including corporate and personal liability for workplace death. However, a significant law reform measure of the type proposed by the Bill should be justified by some practical need. We consider that this need has not been made out, particularly since recent statistics show that the ACT had the lowest incidence of workplace death in Australia.
9 If the Government considers that fines should be instituted, the most effective way of achieving this outcome is to amend the Crimes Act to provide for fines. Alternatively, if the penalties under the Occupational Health and Safety Act are inadequate they can be increased. These approach are broadly consistent with the approach which Victoria and Queensland now appear to be taking after abandoning their proposals to introduce specific industrial manslaughter legislation. Like the first Victorian Bill, the Crimes (Industrial Manslaughter) Bill 2000, the proposed ACT legislation is very widely drafted and effectively not limited in its application to bodies corporate as employers. This is the essentially the basis for industrial manslaughter legislation based on the principles established in the Tesco Case. No explanation is given for why the Bill applies to individuals, to whom the Tesco principles do not apply. The Bill also encompasses those involved in the running of unincorporated associations, and a wide range of incorporated bodies, including religious, charitable and educational organizations, including trade unions. As we previously mentioned, the Victorian Government was concerned about the effect upon the officers of not for profit organizations and specifically exempted them from the application of the Victorian Bill. Finally, the Bill would appear to be aimed at punishment not prevention and that is at odds with the mutuality of obligations approach promoted in most OHS legislation. Occupational health and safety should be a shared responsibility
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