Taking Responsibility

Personal Liability Under Environmental Law

Stephen Tromans, Gillian Irvine

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9781138459199
• eBook ISBN: 9781134189939
• Topic: Politics & International Relations
• Subtopic: Ecology
• Index: Politics & International Relations

A report written by two environmental lawyers which explains the responsibilities of company directors under UK and European environmental law, and their potential personal liabilities. It sets out what steps to take to avert liabilities and what to do in the event of environmental problems, including chapters on whistle-blowing by employees and liabilities for overseas activities.

CHAPTER 1

PERSONAL LIABILITY: A GROWING RISK

Few people, when they become company directors, will spend a lot of time worrying about whether or not their appointment could result in having to face a criminal charge. We all know of the well publicised cases where directors and other officers have been accused of fraud, false accounting, insider dealing and the like. Less obvious is the risk of personal liability under environmental legislation, but these risks may well affect the honest director as well as the crook.

Consider the following extract from The Times.

‘Pollution Danger for Owner Managers’

‘Owner managers of small businesses will face an increased risk of fines and even prison this year if they breach the growing list of environmental regulations. In 1998 a man was jailed while five others and a company were ordered to pay fines and costs totalling £98,000 for asbestos waste offences. Roger Adams, head of the technical research department of the Association of Chartered Certified Accountants says: ‘These days, company directors can go to prison for a wide range of environmental offences’ (The Times, 19.01.99).

The threat of personal liability is seen increasingly as one of the most effective ways of improving corporate responsibility under legislation for the protection of the environment. This is not a new idea:

‘I think it would be a very good thing, instead of having fines as the punishment for breach of the law, to make it imprisonment, and flogging and pillory; I have no doubt that would keep them to it. (Mr Richard Oastler, addressing a select committee at the House of Commons on early factory safety legislation, 1831).

In its enforcement policy (published in November 1999) the Environment Agency has stated that it will ‘identify individuals, including company directors and managers, if it considers that a conviction is warranted and can be secured’.

Surveys indicate that the majority of the public and business executives favour holding individuals liable for environmental offences. Yet, personal liability remains very much the exception rather than the rule in the UK. The position is very different in some other jurisdictions, particularly the US and Canada, where executives are regularly prosecuted for environmental offences committed by their companies; in some cases, they receive prison sentences. The body of this report sets out the position in England and Wales (not Scotland) although details of an important Canadian case are set out in the Appendix.

What is certain is that the risk of this type of liability for UK company directors is increasing. The regulators and the public are becoming less tolerant of environmental non-compliance, and it is certainly true that incidents that would have been considered acceptable a few years ago are now resulting in prosecutions. This is reflected in the levels of fines imposed for offences. Although the fines have in the past been generally very low, they are now increasing. Although the examples given below relate to companies, the effect of the trend is likely to be felt by individuals who will be prosecuted.

EXAMPLE

In January 1999, the Port Authority responsible for the spill of oil from the Sea Empress was fined £4 million. This followed the spillage of 70,000 tonnes of oil in 1996 and a clean-up operation costing £100 million. The court said that the fine would have been much larger if a wealthier organisation had been found liable.

EXAMPLE

In 1990, Shell was fined £1 million for a major spillage of crude oil into the Mersey Estuary at Stanlow.

EXAMPLE

In March 1998, ICI was fined £300,000 for a major chloroform spill at its Runcorn works in Cheshire. Ed Gallagher, the Environment Agency’s chief executive, commented that: ‘In the past, fines for pollution have represented little more than loose change to big companies. I hope the scale of today’s fine is an indication that the courts are beginning to understand the impact of what industry does when it pollutes the environment.’

Both the Government and the Environment Agency have for some time been encouraging the courts to impose larger fines for damage to the environment. The courts have themselves accepted that the level of fines are too low and Magistrates’ courts are increasingly referring to the Crown Court for sentencing cases that they consider sufficiently serious to merit a higher punishment than they can give. The Court of Appeal has given guidelines to ensure that fines in health and safety cases reflect the gravity of the offence.

All directors (and other company officers) should therefore be aware of the law on personal liability for environmental offences, and how they can take steps to minimise the risks to themselves or their fellow directors of finding themselves before the criminal courts.

The following chapters explain the law governing personal liability, highlight areas of risk, and suggest some simple steps to reduce those risks.

CHAPTER 2

GENERAL PRINCIPLES

While the following chapters are mainly concerned with the personal liability of directors and other corporate officers, this chapter outlines the underlying principles of corporate and individual liability that it is important to be aware of.

Criminal and Civil Liability

There is a fundamental distinction between criminal and civil liability and as shown in Table 2.1 there are many important distinctions between them.

Crimes are generally acts that have a harmful effect on the public or the environment and do more than interfere with the private rights of individuals: punishment is a matter of public rather than private interest.

Civil liability results from the breach of some duty owed by one person to another. The duty may arise from a contract or from a duty in tort (for example, to take reasonable care or to avoid acts that unreasonably interfere with the enjoyment of land).

Environmental Crimes

Many breaches of environmental law are treated as crimes. The aim is to make clear to polluters society’s moral condemnation of environmentally harmful activities. The main environmental crimes are listed in Table 2.2.

Civil Liability

Civil liability in the environmental context may arise in the following circumstances:

• death or personal injury caused by an explosion at an industrial site;

• disease caused by exposure to a hazardous substance such as asbestos;

• physical damage to property, for example, by an explosion caused by an accumulation of landfill gas;

• physical damage to crops caused by atmospheric pollution; and

• interference with the normal reasonable enjoyment of land caused by smells, dust, noise or vibrations.

Table 2.1 Main Features of Legal Liability

	Criminal	Civil
Procedure	Criminal Court: Magistrates or Crown Court	Civil Court: High Court or County Court
Proof	Onus on prosecution to prove crime to standard of ‘beyond reasonable doubt’, (no room for doubt).	Onus on plaintiff to establish liability on ‘balance of probabilities’ (more likely than not).
Prosecutor/Plaintiff	In general, any individual can bring a prosecution, although in practice most are brought by the UK’s Crown Prosecution Service or regulatory bodies such as the Environment Agency or the Health and Safety Executive.	Only the person injured by the civil wrong can bring a civil action.
Sanction	Personal sanctions; the punishment is not related directly to the damage caused by the offence or to any need for compensation.	Damages are directly related to the consequences of the wrong. Punishment is not the objective.

Table 2.2 Main Environmental Crimes

Integrated pollution control (IPC)	• operating certain processes without an authorisation (permit)
	• breaching the conditions of an authorisation (permit)
Integrated pollution prevention and control (IPPC)	• failing to comply with an enforcement or prohibition notice
Waste	• treating, keeping, disposing of or depositing waste without a waste management licence
	• breaching the conditions of a waste management licence
	• failing to comply with the requirements of the duty of care
Water	• causing or knowingly permitting any poisonous, noxious or polluting matter to enter controlled waters
	• contravening the conditions of a discharge consent
Contaminated land (forthcoming)	• failing to comply with the requirements to clean up land specified in a remediation notice
Nuisance	• failing to comply with the requirements to abate nuisance caused by noise, dust, odour, smoke and animals, etc

Corporate Personality

A business may be conducted in one of three ways:

1 As a sole trader

2 As a partnership

3 As a company

A sole trader will be personally responsible for his own acts, both in criminal and in civil law.

EXAMPLE

Mr Swine runs a small butchers shop as a sole proprietor. As a result of appalling food hygiene conditions, a number of his customers contract food poisoning. He may be prosecuted and may also be liable to the customers.

Similarly, the members of a partnership will also be personally liable for those acts within the ordinary course of the partnership business.

EXAMPLE

Belt, Braces & Co is a firm of West End solicitors. The air conditioning plant at their offices is not properly maintained and causes an outbreak of legionnaires’ disease. Personal, criminal and civil liability for each of the partners may follow.

These examples contrast with a business run through the medium of a company, whether a private limited company, public limited company, or company limited by guarantee.

From the date of its incorporation, a company is a separate legal body, distinct from its officers or shareholders. This is so even if ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Tables and Figures
• About the Authors
• Preface
• Acronyms and Abbreviations
• 1 Personal Liability: A Growing Risk
• 2 General Principles
• 3 The Criminal Liability of Directors: General Principles
• 4 Consent, Connivance and Neglect
• 5 Non-executive Directors, Shareholders and Others
• 6 An Inspector Calls
• 7 Will They Prosecute?
• 8 The Consequences of Conviction
• 9 Civil Liability
• 10 Whistleblowing
• 11 Insurance and Indemnity
• 12 Some Practical Advice
• 13 Managing a Crisis
• Appendix I – Canadian Case Study: The BATA Industries Case