Rudolf, Jenny; Bartl, Benedict --- "Sentencing Organisations for Causing Death or Serious Injury" [2005] ALRCRefJl 9; (2005) 86 Australian Law Reform Commission Reform Journal 36

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Reform Issue 86 Winter 2005

This article appeared on pages 36 – 38 & 71 of the original journal.

Sentencing organisations for causing death or serious injury

By Jenny Rudolf and Benedict Bartl*

The Tasmania Law Reform Institute (TLRI) is currently investigating the criminal liability of organisations for traditional crimes, particularly manslaughter and grievous bodily harm. While this project is principally concerned with when and how criminal liability should be imposed on organisations that cause death or injury, an associated and important aspect of liability is appropriate sentencing. It is the sentencing aspect of the project that is the focus of this article.

The traditional aims of sentencing are denunciation, retribution, deterrence and rehabilitation. All of these aims are important when considering an offender who has caused death or serious injury to another. Our society condemns such behaviour, and also has a desire for ‘just deserts’ and a wish to deter it. This is reflected by the stigma attached to, and the relatively severe sanctions imposed for, convictions of murder, manslaughter, grievous bodily harm, wounding and even assault. If an organisation causes the wrongful death or serious injury of a person it is important that it, like a person, be punished and publicly condemned for doing so. This public condemnation reaffirms the value we place on human life and the respect we demand for it. The important role that organisations play in our society makes it all the more important that they should not be above the reach of the law. Punishing an organisation’s harmful behaviour, just as we would any natural person who causes the death or serious injury of another, can therefore be particularly significant.

If a natural person is guilty of manslaughter or grievous bodily harm, a sentence of imprisonment is usually imposed. Imprisonment is, of course, a meaningless sanction for an organisation. The nature of organisations requires us to think more creatively about sentencing options that are appropriate to such bodies. While an organisation cannot be imprisoned, incapacitation can be achieved through a number of alternative sentencing options including dissolution and disqualification. Disqualification prevents an organisation from carrying out certain activities or denies it the right to enter into certain contracts. Dissolution and disqualification are not currently available as general sentencing options in Tasmania.

Fines as penalty

The type of sentence usually imposed on an organisation is a fine. The Tasmanian Criminal Code does not set out maximum penalties for the different crimes it contains. Rather, all crimes are punishable by a maximum of 21 years’ imprisonment. If an organisation is convicted of a crime this maximum is of little relevance, as an organisation cannot be imprisoned. However the Code provides (in section 389(3)) that punishment may also be by fine, and no limit is placed on the amount of such a fine; it is simply as the judge thinks fit in the circumstances of each particular case. This flexibility means that the level of fine imposed on an organisation is (in theory at least) able to be varied in order to meet the goals of sentencing in relation to the particular offender. The level of a ‘fine should reflect not only the gravity of the offence but also the means of the offender, and this applies just as much to corporate defendants as to any other’.¹ A $20,000 fine may be a very real deterrent to a small struggling organisation, while going virtually unnoticed by a large successful organisation. If the larger organisation is instead fined $2,000,000, it may effectively deter further breaches of the law. As the TLRI is unaware of any prosecutions of a corporation under the Criminal Code it is not known to what extent the Supreme Court would utilise this unlimited fining capacity. However, in many cases even very high fines may be ineffective in meeting the aims of punishment for a number of reasons:

• Denunciation. Fines are not usually viewed as a harsh sentence and so they are unlikely to be perceived as strongly denouncing a crime.

• Retribution. Fines are unlikely to really ‘punish’ organisations, particularly if they have capacity to pay. The potential punitive effect of a fine may also be readily reduced by the organisation passing the impact of the fine onto shareholders, employees, creditors, consumers and so on.

• Deterrence. It is often thought that corporations may be particularly susceptible to deterrence because they tend to make decisions on a cost/benefit analysis. However, when sentencing by fine for a serious crime courts must be wary of the ‘deterrence trap’. The deterrence trap is ‘the situation where the only way to make it rational to comply with the law is to set penalties so high as to jeopardise the economic viability of corporations’.² If a corporation is heavily fined and goes bankrupt, the fine may not be recovered, and perhaps few of the purposes of punishment will be met, particularly if the corporation is resurrected as a ‘phoenix company’.

• Rehabilitation. Financial penalties are unlikely to rehabilitate because they do not explicitly compel reform.

Difficulties

The sentence imposed in Denbo,³ the only successful Australian prosecution of a company for manslaughter, demonstrates some of the difficulties in sentencing corporations. An employee of Denbo, a small construction company, was killed when the truck he was driving down a steep section of a work site overturned due to brake failure. The faulty brakes on the truck were known to one of the company’s two directors who nevertheless directed that the truck continue to be used. Apparently in exchange for Denbo’s plea of guilty,⁴ the prosecution dropped manslaughter charges against the company’s director. Thus the company seems to have been used as a scapegoat by its director. Furthermore, although the company was convicted and fined $120,000, the fine was never paid as the company had been placed in liquidation. However, soon after the sentence, another company—Tooronga Constructions—was formed, registered to the same address as that to which Denbo had been registered, and commenced operations similar to those of its predecessor.⁵

Fines also may be particularly inappropriate when dealing with non-corporate organisations such as the Crown and charities.

If fines, or at least fines as a stand-alone sanction, are often ineffective in sentencing organisations, can imposing other new or existing sentencing options help to meet the aims of sentencing?

Options for reform

In May 2004, Gebhardt J in the Victorian County Court imposed significant and imaginative penalties for four breaches of the Occupational Health and Safety Act 1985 (Vic) by Leighton Contractors Pty Ltd that resulted in a death and serious injuries to a number of workers.⁶ The fines for the first two counts totalled $325,000. The third count was adjourned with conviction subject to the conditions that the company pay $70,000 to two charities and $90,000 to the trust funds of the deceased worker’s children. The fourth count was adjourned with conviction subject to the condition that the directors meet with Victorian Worksafe representatives three times a year; that Leighton contribute $40,000 to the funding of a training program; and that Leighton approach Monash, Melbourne and Deakin universities to discuss the enhancement of the training of engineers in safe systems of work associated with the design of temporary structures for bridge construction. This type of order (that is, adjournments with or without conviction subject to conditions) are currently able to be made under section 7(f) of Tasmania’s Sentencing Act 1997. Community service orders and probation orders can also have flexible conditions attached to them and are, therefore, better able to address the varied aims of sentencing. However, it is suggested that utilising this potential effectively unnecessarily relies on the initiative and imagination of the individual judge, and in some cases may also be restricted by the limited charges in the case.

For these reasons, it may be desirable for the Sentencing Act to set out conditions specifically tailored to organisations that can be attached to community service and probation orders or adjournments of sentence (under section 7(f)). An example of this can be found in section 732.1 of the Canadian Criminal Code Act 1985:

‘(3.1) The court may prescribe, as additional conditions of a probation order made in respect of an organisation, that the offender do one or more of the following:

(a) make restitution to a person for any loss or damage that they suffered as a result of the offence;

(b) establish policies, standards and procedures to reduce the likelihood of the organisation committing a subsequent offence;

(c) communicate those policies, standards and procedures to its representatives;

(d) report to the court on the implementation of those policies, standards and procedures;

(e) identify the senior officer who is responsible for compliance with those policies, standards and procedures;

(f) provide, in the manner specified by the court, the following information to the public, namely,

(i) the offence of which the organisation was convicted,

(ii) the sentence imposed by the court, and

(iii) any measures that the organisation is taking—including any policies, standards and procedures established under paragraph (b)—to reduce the likelihood of it committing a subsequent offence; and

(g) comply with any other reasonable conditions that the court considers desirable to prevent the organisation from committing subsequent offences or to remedy the harm caused by the offence.’

The section also provides that before making an order under paragraph (3.1)(b), a court shall consider ‘whether it would be more appropriate for another regulatory body to supervise the development or implementation of the policies, standards and procedures referred to in that paragraph’.

This recognises that courts may not be the appropriate supervisory body in relation to policies, standards and procedures, particularly if the organisation is already subject to extensive regulation by government bodies such as Workplace Standards.

Subsection 3.1(f), mentioned above, is also interesting in that it specifically allows an adverse publicity order to be a condition of a probation order. The ability to make adverse publicity orders (independently of a probation order) already exists in various legislation and they clearly have the potential to punish, denounce and deter crimes by organisations, particularly organisations whose public image is important.

The TLRI’s Issues Paper, to be released in June, also considers the introduction of equity fines (which involve the issuing of shares in the company rather than the imposition of cash fines) and punitive injunctions (orders which require the convicted corporate offender to introduce specific internal controls, at the risk of a further punishment for failure to do so). Consideration is also given to increasing the maximum penalties for offences under the Workplace Health and Safety Act 1995 (Tas) (currently $150,000 for a corporation) and expanding the range of sentencing options available when punishing organisations found guilty of these offences.

* Jenny Rudolf is the Chief Legal Officer of the Tasmania Law Reform Institute.

Benedict Bartl is a Legal Officer with the Tasmania Law Reform Institute. He proposed the topic of this TLRI law reform project.

Endnotes

1. R v F Howe & Son (Engineers) Ltd [1998] EWCA Crim 3531; [1999] 2 All ER 249, 255 per Scott Baker J.

2. B Fisse & J Braithwaite, Corporations, Crime and Accountability (1993), 136.

3. R v Denbo Pty Ltd and Timothy Ian Nadenbousch (1994) 6 VIR 157.

4. S Chesterman, ‘The Corporate Veil, Crime and Punishment: The Queen v Denbo Pty Ltd and Timothy Ian Nadenbousch’ (1994) 19 Melbourne University Law Review 1066.

5. S Perrone, ‘Workplace Fatalities and the Adequacy of Prosecutions’ (1995) 13 Law in Context 94.

6. R v Leighton Contractors Pty Ltd [2004] VCC.