Criminal Liability in Regulatory Contexts Responses - Law ...

1.244 The identification doctrine in corporate liability is critiqued: ‘... it gives a perverse
incentive for companies to operate with devolved structures that insulate directors
(or equivalent persons) to a certain extent from knowledge of what their
managers or employees are doing when that knowledge might involve awareness
of offences being committed for the benefit of the company’ (para. 1.65, footnote
omitted). It is recommended that the statutory interpretation approach of Lord
Hoffmann in Meridian Global Funds Management Asia Ltd v Securities
Commission [1995] 2 AC 500 (PC on appeal from New Zealand) should be
adopted as the default setting but of course Parliament can ordain differently.
Individually tailored statutes such as the Corporate Manslaughter and Corporate
Homicide Act 2007 may be the way ahead and such solutions can get round the
difficulties found in the identification doctrine: see Part 5 of the Paper.
1.245 There should be an offence of ‘negligently failing to prevent a crime’ when a
company commits an offence and an individual director or equivalent officer does
not prevent the company from committing that offence. This recommendation is
subject to the withdrawal of criminal law in this respect: where, however, statutes
provide for liability of individuals for the offence which the company provides and
the individual did not consent to or connive in the offence, that liability should no
longer exist because it is ‘unfair’ (para. 1.86). The recommendation is tentative
and will come into play only if consultees believe it is needed after the withdrawal
of individual liability as stated above.
1.246 Criminal laws should not be drafted in the inchoate mode when there already are
offences of assisting, encouraging, conspiracy and attempt. Drafting offences in
the inchoate mode (e.g. preparing to commit terrorism) should be eschewed
because Parliament legislates against the background of inchoate offences (e.g.
creating the crime of terrorism automatically creates the offence of attempted
terrorism; if one has an offence of preparing to commit terrorism, one
automatically creates an offence of attempting to prepare to commit terrorism).
Such offences are too far removed from the core crime (here, terrorism).
Similarly, there should be no additional offences of fraud if the Fraud Act 2006
already covers the misconduct. That statute has a maximum sentence of ten
years’ imprisonment: there is simply no need for other fraud offences with lesser
maximum penalties.
1.247 One effect of the proposals is a new balance between civil and criminal law: the
former in regulatory situations should be considered first; criminal law is to be
used only when civil law does not aid in the enforcement of standards.
1.248 The matters covered by the Paper are highly important. As the Commission notes
(para. 1.10):
Areas of activity subject to regulatory enforcement can be very varied.
Examples are farming, animal welfare, food safety, waste disposal,
health and safety at work, the dispensing of medication, retail sales,
education, pensions’ provision, the governance of many professions,
banking and the giving of various kinds of financial advice.
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