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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> St Regis Paper Company Ltd v R. [2011] EWCA Crim 2527 (04 November 2011) URL: https://www.bailii.org/ew/cases/EWCA/Crim/2011/2527.html Cite as: [2011] EWCA Crim 2527, [2012] Env LR 16, [2012] Lloyd's Rep FC 221, [2012] 1 Cr App R 14, [2012] PTSR 871 |
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ON APPEAL FROM EXTER CROWN COURT
Mr Recorder Bartlett
T200090276
Strand, London, WC2A 2LL |
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B e f o r e :
MRS JUSTICE NICOLA DAVIES
and
HIS HONOUR JUDGE GILBERT QC
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St. Regis Paper Company Ltd. |
Appellant |
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- and - |
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The Crown |
Respondent |
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WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr T Crowther (instructed by The Environment Agency) for the Respondent
Hearing date: 11th July 2011
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Crown Copyright ©
Lord Justice Moses:
"(g) intentionally to make a false entry in any record required to be kept under the condition of a permit."
The Higher Kings Mill plant had been granted a permit that set out how it should operate and the limits of the pollutants allowed to flow into the river. St. Regis was also convicted of offences under that Regulation.
"his acts can properly be said to be the company's acts and…his state of mind in carrying out his work can properly be said to be that of the company."
He cited Lord Diplock in Tesco Supermarkets Limited v Nattrass [1972] AC 153 at 187 in concluding the position of Mr Steer fitted him into the category described by Viscount Dilhorne (although the judge attributed it to Lord Diplock), namely that he was:-
"a person who is in actual control of the operations of a company or of part of them and who is not responsible to another person in the company for the manner in which he discharges his duties in the sense of being under his orders." (187G)
(I shall have occasion to refer to those passages again.) HH Judge Wassall was of the view that the Regulation created:-
"liability for a company in respect of the acts of an employee who could not be said to be the directing mind and will of the company but one who carried out management functions and in doing so was in actual control of the operations of a company in the area in question." (44)
He reached that conclusion not merely by interpreting the Regulation but fortified by his view that the purpose of the legislation:-
"across the area of environmental protection is to control the activities of companies seeking to profit from industry to ensure that the environment is adequately protected from the impact of those activities"
and that if the Regulation did not create offences applying to corporations through the acts of their employees it would emasculate the legislation (paragraphs 50 and 56).
"Normally the board of directors, the managing directors, and perhaps other superior officers of a company carry out the functions of management, and make decisions as the company – as the company. Their subordinates do not; the subordinates carry out orders from above, and it can make no difference that they are given some measure of discretion; but the board of directors may delegate some part of their management functions to subordinates, giving such a subordinate full discretion to act independently of their instructions without being accountable to his superiors. The intention of such a subordinate who is in actual control of the operations of the company, or part of them – in this case, of course, that part of the company which was the effluent treatment plant of the Higher Kings Mill site in Cullompton – and who is not responsible to another person in the company for the manner in which he discharges his duties in the sense of being under that other person's orders, he may then be attributable to the company … his intention may then be attributable to the company. It is for you to decide, applying those principles to the facts of this case as you find them, whether Mr Steer's intention was attributable to the company or not."
After directing the jury in relation to Mr Steer the judge continued:-
"Can Mr Steer's intention be attributed to the company so that his intention equates with its intention? The prosecution say he did not report on technical matters to anyone in the mill; he represented the company in technical documentation. It was he who got Mr Haydon and others to falsify the documents…" (42E-G)
Identification of the actions and intention of the technical manager with the appellant company
"the board of directors, the managing director, and perhaps other superior officers of a company [who] carry out the functions and management and speak and act as the company." (171)
Apart from Viscount Dilhorne's description (quoted in paragraph 3), Lord Diplock described them as persons who, by the memorandum and articles of association or as a result of action taken by the directors or by the company in general meeting pursuant to the articles, are entrusted with the exercise of the powers of the company (200). Lord Morris pointed out that the manager did not function as the directing mind or will of the company (180) and Lord Pearson described the manager as being in a relatively subordinate post and not one who was "in the position of managing the affairs of the company" (190).
"it is impossible to find a company guilty unless its alter ego is identified." (216B)
"The company's primary rules of attribution together with the general principles of agency, vicarious liability and so forth are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer. This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability. For example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person "himself", as opposed to his servants or agents. This is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself. How is such a rule to be applied to a company?
One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service. Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, i.e. if the act giving rise to liability was specifically authorised by a resolution of the board or a unanimous agreement of the shareholders. But there will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy.
The fact that the rule of attribution is a matter of interpretation or construction of the relevant substantive rule is shown by the contrast between two decisions of the House of Lords, Tesco Supermarkets Ltd. v Nattrass [1972] A.C. 153 and In re Supply of Ready Mixed Concrete (No. 2) [1995] 1 A.C. 456."
In Meridian the acts of the company's investment manager were attributed to the company by construing the New Zealand Securities Act 1988. Lord Hoffman emphasised that the origin of the quest for the "directing mind and will" of the company, was Lennard's Carrying Co. Ltd. v Asiatic Petroleum Co. Ltd. [1915] A.C. 705, and rested on the construction of s.502 of the Merchant Shipping Act 1894 which attributed the fault of the company to the:-
"person whose functions in the company, in relation to the cause of the casualty, were the same as those to be expected of the individual ship owner to whom the language primarily applied. Who in the company was responsible for monitoring the condition of the ship, receiving the reports of the master and ship's agents, authorising repairs etc.? This person was Mr Lennard, whom Viscount Haldane LC, at pages 713-714, described as the 'directing mind and will' of the company. It was therefore his fault or privity which s.502 attributed to the company." (509D-E)
"It therefore seems safe to conclude that Lord Hoffman (and similarly the members of the Court of Appeal (Criminal Division) in British Steel [1995] 1 WLR 1356 and in Gateway Food Markets Ltd. [1997] 2 Cr App R 40) did not think that the common law principles as to the need for identification have changed. Indeed, Lord Hoffman's speech in Meridian, in fashioning an additional special rule of attribution geared to the purpose of the statute, proceeded on the basis that the primary 'directing mind and will' rule still applies, although it is not determinative in all cases. In other words, he was not departing from the identification theory but reaffirming its existence."
The essential question, therefore, is whether HH Judge Wassall was right to construe Regulation 32(1)(g) as justifying a departure from the normal rule of attribution of liability to a corporation.
"It is an offence for a person –
(a) to contravene regulation 9(1);
(b) to fail to comply with or to contravene a condition of a permit;
(c) to fail to comply with regulation 16(1);
(d) to fail to comply with the requirements of an enforcement notice or a suspension notice;
(e) to fail, without reasonable excuse, to comply with any requirement imposed by a notice under regulation 28(2);
(f) to make a statement which he knows to be false or misleading in a material particular, or recklessly to make a statement which is false or misleading in a material particular, where the statement is made –
(i) in purported compliance with a requirement to furnish any information imposed by or under any provision of these Regulations; or
(ii) for the purpose of obtaining the grant of a permit to himself or any other person, or the variation, transfer or surrender of a permit;
(g) intentionally to make a false entry in any record required to be kept under the condition of a permit;
(h) with intent to deceive, to forge or use a document issued or authorised to be issued under a condition of a permit or required for any purpose under a condition of a permit or to make or have in his possession a document so closely resembling any such document as to be likely to deceive;
(i) to fail to comply with an order made by a court under regulation 35."
"The rule of attribution appropriate to a particular situation (e.g., the nature and level of conduct or knowledge which will be regarded as satisfying a requirement in a statute that a company should have done or known something) is in truth no more than a matter of interpretation or construction of the relevant substantive rule, according to its language, content and the policy: see especially per Lord Hoffman at page 507B-F (Meridian)."
Later he said:-
"It is a matter of interpretation of each subsection in the context of each piece of legislation what rule of attribution is appropriate under each. In the case of statutes dealing with activities such as selling or offering to sell, it is unlikely to be difficult to treat the company (as well as, in probability, the relevant salesman) as selling or offering to sell." (348B)
"The first principle is that a company is an entity separate from its members but, not being a physical person, is only capable of acting by its agents. The second principle is that a company in its capacity as a supplier of goods, like any other person in the capacity of taxpayer, landlord, or in any other capacity, falls to be judged by its actions and not by its language. An employee who acts for the company within the scope of his employment is the company. Directors may give instructions, top management may exhort, middle management may question, and workers may listen attentively. But if a worker makes a defective product or a lower manager accepts or rejects an order, he is the company." (465C-E)
"and this principle of the common law applies also to statutory offences, with this difference, that it is in the power of the Legislature, if it so pleases, to enact…that a man may be convicted and punished for an offence although there was no blameworthy condition of mind about him."
That principle seems to us to be the same principle as expressed in Meridian in relation to a corporation as opposed to what in 1889 was described as a master. For the reasons we have given, the statutory construction of the 2000 Regulations did not permit Mr Steer's dishonest intention to be attributed to St. Regis Paper Company. But Mr Crowther's reference to an application of those cases and in particular the apparent application of vicarious liability in Moore v I. Bresler Ltd. leads conveniently to consideration of his reliance upon a doctrine of vicarious liability in the instant appeal.
Vicarious Liability