Since corporations are persons under the law, they can commit offences.
There are two types;
- Incorporated
- Unincorporated
We note that unincorporated associations are not persons known by law and as such criminal responsibility of the members involved is personal against such members. I.e. the members themselves are said to be criminally responsible for the acts committed.
Under section 2 of the Interpretation Act cap 3, the word person is defined to include any company
or association or body of persons corporate or unincorporated. Therefore,
Companies and Associations can commit crimes and be prosecuted.
There are several issues to consider in relation to the liability
of corporation;
- Offences normally require Mens rea, how does one locate the Mens rea of a corporation?
- What kinds of crimes can a
corporation commit since some crimes are personal e.g. murder or rape.
- Whose act can make the corporation
liable? Who must have committed the crime?
- If a corporation is accused
to have committed a crime, how can it be brought to court?
- If a corporation is
convicted, how can it be punished?
We note that some statutes specifically create offences for corporations e.g. under the Companies Act, where the company can commit an offence if it makes false statements in its accounts.
Under the Factories Act
the Company commits an offence if it doesn’t fence off dangerous machinery.
Under the Weights and Measures Act, the company commits an offence if it has
bad measuring scales.
NOTE: Corporations cannot be liable for personal crimes e.g. rape, bigamy, murder.
However, there are crimes of vicarious liability whereby if a servant commits an offence then the company is liable.
Where the company is liable for an offence, the summons is directed to the manager or secretary and if convicted, usually it is fined because it cannot be arrested or imprisoned.
In R. v. I.C.R.
Haulage Ltd [1944] 1 All ER 691
An appeal by the accused corporation against a conviction for
common law conspiracy to defraud was dismissed by the Court of Criminal Appeal.
Here the fraudulent acts were committed by a person who was managing director
of the accused company and the registered owner of all but one of the issued
shares (his wife owned the one remaining share).
Stable, J., who delivered the judgment of the Court, declared that a company could be indicted for a criminal offence (with the exception of offences such as bigamy, perjury and murder).
How to locate corporate mens rea?
The Doctrine of Identification
When a corporation is charged with an offence requiring proof
of mens rea, the traditional approach of courts has been to require the
prosecution to prove those who can be regarded as the directing minds of the
company i.e the Company Directors
It’s stated that the knowledge of someone who had the
directing mind or centre of a personality of the company could be attributed to
the company. This matter was illustrated in;
Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1 or [1972] AC 1
Tesco was offering a discount on washing powder which was
advertised on posters displayed in stores. Once the powder ran out of the lower-priced product, the stores began to replace it with the regularly priced stock.
The manager failed to take the signs down and a customer was charged at a
higher price. Tesco was charged under the Trade Descriptions Act 1968 for
falsely advertising the price of washing powder.
In its defense, Tesco argued that the company had taken all
reasonable precautions and all due diligence and that the conduct of the
manager could not attach liability to the corporation.
House of Lords accepted the defense and found that the
manager was not a part of the "directing mind" of the corporation and
therefore his conduct was not attributable to the corporation. The corporation
had done all it could to enforce the rules regarding advertising.
Lord Reid held that, in
order for liability to attach to the actions of a person, it must be the case
that:
"The person who acts is not speaking or
acting for the company. He is acting as the company and his mind which directs
his acts is the mind of the company. If it is a guilty mind then that guilt is
the guilt of the company."
In the House of Lords Tesco were successful with their defense
showing two things;
- A store manager was classified
as ‘another person, and,
- A system of delegating
responsibility to that person was the performance of due diligence, not
avoidance of it.
The store manager was not the directing mind and will of the
company. The company had done all it could to avoid committing an offence and
the offence was the fault of another person (an employee).