CORPORATE CRIMINAL

LIABILITY

Matthew Goode

The Common Law: Vicarious Liability and the Development of Primary

Liability

UNLESS THE TERMS OF THE STATUTE INVOLVED SPECIFICALLY PROVIDE TO the

contrary, the criminal responsibility of a company or corporation, as distinct
from its officers or employees, falls to be determined by common law
principles. Under original common law, a company could not be convicted for
any criminal offence. The common criminal law also took the position that, in
general, there could be no vicarious criminal responsibility; that is, a person
could not be deemed to be guilty of a criminal offence committed by another.
But in the nineteenth century, general statutory exceptions to the vicarious
responsibility principle led also to statutory exceptions to the principle against
the criminal responsibility of corporations, and to common law exceptions
where the corporation had failed to carry out a statutory duty creating a
common law nuisance. For a variety of reasons, not least confusion about the
principles governing primary corporate criminal liability, the principles of the
common criminal law have never truly shaken free from these foundations
(Welsh 1946; Yarosky 1964; Leigh 1969; Fisse 1967).
A principal hurdle to the imposition of primary, as opposed to vicarious, corporate
criminal liability at common law was that common law offences insisted on proof of
criminal fault, and the courts could not see a clear way of saying that, for example, a
company, as opposed to any human being associated with the company, "intended"
something, or "knew" something (Kellow [1912] VLR 162). That was not a problem
with vicarious liability, because it did not rest on fault (Great Britain Law Commission
1972). The hurdle was overcome by the opinion of Viscount Haldane in Lennard's
Carrying Co Ltd v. Asiatic Petroleum Co Ltd [1915] AC 705. There he invented a
theory of primary corporate criminal liability for offences requiring fault which has
become known as the "identification theory" or the "alter ego" theory of responsibility.
This is what he said: (at 713)
 Environmental Crime

. . . a corporation is an abstraction. It has no mind of its own any more than it has
a body of its own; its active and directing will must consequently be sought in the
person of somebody who for some purposes may be called an agent, but who is
really the directing mind and will of the corporation; the very ego and centre of the
personality of the corporation.

The essence of what is said here is that a company may be convicted directly of
the commission of a crime requiring proof of fault by attributing to the company the
fault of an officer, agent or employee of the company who stands in such a relation to
that company that he or she may be regarded as being the company for that purpose.
(DPP v. Kent and Sussex Contractors [1944] KB 146; ICR Haulage Ltd [1944] KB
551; Moore v. I. Bresler [1944] 2 All ER 515). A famous statement of this doctrine is
as follows:

A company may in many ways be likened to a human body. It has a brain and
nerve centre which controls what it does. It also has hands which hold the tools
and act in accordance with directions from the centre. Some of the people in the
company are mere servants and agents who are nothing more than hands to do the
work and cannot be said to represent the mind or will. Others are directors and
managers who represent the directing mind and will of the company, and control
what it does. The state of mind of these managers is the state of mind of the
company and is treated by the law as such (HL Bolton (Engineering) Co. Ltd. v.
T.J. Graham & Sons Ltd. [1957] 1QB 159 at 172).

Under the identification theory the person who acts is not acting for the company.
He or she is acting as the company. This development de-emphasised the necessity for
the development of vicarious liability under which the person who acts does act for
the company, but whose acts are attributed to the company. Since criminal
responsibility is attributed to the company in this manner, whether or not the company
was at fault in any way or not, vicarious liability was seen as unjust, and lacking in
defensible penal rationale, and so was allowed to wither a great deal (Hanna 1989). In
general terms, vicarious liability disappeared from the common law and was used only
in the context of statutory liability (Fisse 1967).
Nevertheless, corporate vicarious liability remains alive and well in the modern
statute book. Section 42 of the South Australian Marine Environment Protection Act
1990 provides:

For the purposes of this Act, an act or omission of an employee or agent is to be

taken to be the act or omission of the employer or principal unless it is proved that
the employee or agent was not acting in the course of his or her employment or
agency.

Further, s. 43 goes on to provide that, once the company has been found guilty of
the offence, then "each member of the governing body and the manager of the body
corporate are guilty of an offence . . . ".
Another example is to be found in s. 85 of the Commonwealth Proceeds of Crime
Act 1987 which states that for the state of mind of a body corporate:

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 Corporate Criminal Liability

it is sufficient to show that a director, servant or agent of the body corporate . . .

by whom the conduct was engaged in within the scope of his or her actual or
apparent authority, had that state of mind.

The justice, in the sense of traditional criminal law doctrine requiring proof of
criminal fault as a prerequisite for conviction of a serious crime, of these forms of
statutory liability is seriously open to question.

The Scope of Primary Corporate Criminal Liability at Common Law

The identification or "alter ego" theory of corporate criminal liability suffers from two
related and fundamental sins. The first is that the basis or rationale for imposing
corporate criminal liability in this way is far from clear. The second, and perhaps
resulting problem, is that it is far from clear exactly which officers, agents or
employees of the company act as the company. The result is that the common law
basis of attribution of primary criminal responsibility to a company is seriously flawed.
This section is devoted to exploring the nature and scope of these deficiencies.
The leading authority in this area in Anglo-Australian law is the decision of the
House of Lords in Tesco Supermarkets Ltd v. Nattrass [1972] AC 153. Tesco
Supermarkets was a large chain of stores which was charged with an offence against
the Trade Descriptions Act by offering goods for sale to consumers at a price at which
they could not really be bought. The prosecution concerned the advertisement of soap
powder at a reduced price. A shop assistant had mistakenly placed normally priced
soap powder on the shelf. The manager had failed to ensure that the powder was
available at the advertised price. There was a defence of due diligence which could be
pleaded by the company, unless the manager's lack of due diligence could be attributed
to the company. So the question was whether the manager of the store was "identified"
with the company via the common law doctrine.
The House of Lords held that the manager was not a person of sufficiently
important stature within the corporate structure to be identified as the company for this
purpose, and since there had been due diligence at the level of top management, the
company could use the defence. In so holding, however, the House of Lords was less
than unanimous about why that was so and what was the test for identification. Fisse
has summarised the decision as follows:

The Tesco principle limits the responsibility of a company to the conduct and fault
of the board of directors, the managing director, or another person to whom a
function of the board has been fully delegated. The leading judgments in Tesco
suggest that the principle does not extend to managers exercising substantial
managerial functions provided that the board of directors has been sufficiently
astute to have retained a formal right of veto or intervention. If so, the principle
greatly restricts the scope of corporate criminal liability, and opens up obvious
opportunities for corporate evasion. Not surprisingly, the principle has often been
watered down to cover middle managers in the absence of any finding that they
have been delegated an unfettered power by the board. This dilution of the Tesco
principle is readily understandable but no clear criteria have emerged for deciding
whether a representative of the company has the requisite corporate manna. The
reason is not difficult to understand. In a corporate world of diffuse organisational
responsibilities many employees have an input in management and the people at
the top of an organisational hierarchy are often remote from day-to-day sources of

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 Environmental Crime

operational power. This invites the conclusion that there is little future in trying to
define the personal identity of a company (Fisse 1990a, p. 601).

While the High Court has yet to rule definitively on the matter, Australian courts
have shown a marked tendency to apply Tesco or what they believe to be Tesco
where there are no statutory rules to the contrary. It is to a degree otherwise in
Canada. In the leading decision of Canadian Dredge & Dock (1985) 10 CCC (3d)1,
the Supreme Court of Canada did maintain the significance of the identification theory
and vicarious liability as the primary means of attributing corporate criminal liability,
but clearly took the view that Tesco placed the limit too high when restricting the
nature of the employees who may be held to act as the company. A basis for doing so
was that corporate decentralisation of decision making was necessarily more prevalent
in a country the size of Canada.

Why the Common Law requires Reform

The identification theory in general and the Tesco interpretation of it in particular, are
fundamentally flawed and should be replaced by statutory provisions. The literature on
the area is very large indeed and the reasons for this conclusion are complex and do
not readily respond well to attempts to summarise. Nevertheless, there are two central
reasons for that conclusion (containing sub-reasons as well), and they are as follows.
First, the identification theory can, on occasion, pose legal and conceptual
difficulties of Byzantine complexity (Goode 1975).
Second, the theory no longer reflects (if it ever did) the way in which corporate
decision-making occurs. In many, if not most large companies, corporate policy is
diffused throughout the management structure. It is simply not the case that good
corporate management works in the top-down way assumed by the identification
model. This may be particularly the case with the desirable decentralisation of such
important matters as occupational health and safety practices. Worse, Tesco locates
responsibility at an unrealistically high level which conduces to evasion of criminal
responsibility by devolution of policy management in sensitive areas (Fisse 1971; Wells
1989). If Tesco is abandoned, the problem then is whether to set an arbitrary limit as to
who may act as the company, or have no limit at all and either give up all attempts at
corporate criminal responsibility or suffer the injustices of vicarious liability. Neither
choice is acceptable or palatable.
Third, it is now clear from studies of corporate criminality that unacceptable
behaviour (notably criminally negligent behaviour) may result from the failures of the
organisation as an organisation, rather than from the fault of one or more individuals
(at whatever level of the company): "collective responsibility becomes lost in the
crevices between the responsibilities of individuals" (Field & Jorg 1991). The other
side of this coin is that, just because one or more individuals is at fault, does not
necessarily mean that the company is at fault and should be punished. Hence the desire
in reform efforts in this area to require that the company have a defence of due
diligence even though fault can be identified with the company or to limit the
identification theory to cases in which the "controlling" employee acts for the benefit of
the company.
For these reasons, the Gibbs Committee, having surveyed the wide and
inconsistent variety of specific Commonwealth statutory provisions designed to
overcome the short-comings of the common law, concluded:

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 Corporate Criminal Liability

. . . the common law, largely because of the emergence of large corporations in

modern times, does not make appropriate provision for the criminal liability of
corporations. Further, the change required in the law to accommodate this
development is of such dimensions that legislative action, rather than reliance on
evolution of the common law, is required (Gibbs 1990, p. 305).

Homicide and Corporate Criminal Liability

The things that we do ought to reflect as accurately as possible the reasons why we do
them, and corporate criminal liability is no exception. In considering the desirable
scope of reforms to corporate criminal liability, it is necessary, given the immense
variety and wealth of views on the subject, to take a step back and examine why it is
that it might be argued that imposing criminal liability on a company, as distinct from
the individuals which comprise it, is a defensible measure of criminal and social policy.
A specific example of the operation of corporate criminal liability which exposes the
policy questions and the issues in an interesting way, is the question of the possible
liability of a company for unlawful homicide murder or manslaughter.
Although the Tesco principle (and its forebears) would allow homicidal fault to be
attributed to a company, the common law position until very recently was generally
that a company or corporation, as distinct from an individual working within it, could
not be guilty of unlawful homicide. It was held that a company could not be guilty of
murder because, again until very recently, the mandatory penalty for murder was either
death or life imprisonment and neither penalty applied to a company (Murray Wright
Ltd [1970] NZLR 476). But recently, the general trend has been to replace mandatory
life penalties with discretionary life penalties. It was also held that the definition of
manslaughter and murder at common law (and in statutes which repeated or picked up
the common law) referred only to the killing of one human being by another, thus
disqualifying a company. It is, however, common practice for Acts Interpretation Acts
in Australian jurisdictions to state that "person" includes a company and s. 4 of the
South Australian Act so provides.
Despite this, scandalous instances of corporate misbehaviour which have caused
deaths have compelled a common law reassessment of this position (Swigert & Farrell
1981; Cullen, Maaksted & Cavendar 1987; Field & Jorg 1991) and it is now widely
accepted that a company can be found guilty of homicide if an appropriate penalty is
available (Clark 1979; Spurgeon & Fagan 1981; Coment 1984; Stone 1985; Edelman
1987; Wells 1988; Corns 1991). The question remains, however, whether the company
should be liable for conviction for unlawful homicide.
Rethinking the fundamental question whether and why a company should be held
criminally responsible for homicide or indeed, any other crime requires attention to
be paid to the fundamental bases for the imposition of the criminal sanction
deterrence, retribution, rehabilitation and so on and thence to the nature of the
criminal penalties that may be visited on the corporation as well as community attitudes
to the corporate behaviour involved. These are important and complex questions about
which much has been written, and it is not possible to do more than touch the surface
and draw tentative conclusions here.
The debate about the utility of corporate criminal responsibility in general and
corporate liability for homicide in particular has been sharpened recently in the United
Kingdom partly in response to the sinking of the ferry Herald of Free Enterprise. In

5
 Environmental Crime

Australia, the debate has surfaced, less dramatically, in relation to the enforcement of
occupational health and safety laws. It is an undeniable fact that too many workers die
each year in the workplace as a result of unsafe work practices and conditions. It is
also undeniable that, although it is now legally possible to prosecute corporate
employers for manslaughter, that course is not taken.
There are arguments made that it is inappropriate to use manslaughter in the
appropriate case because workplace safety is governed by specific schemes of
legislation and offences (Wells 1989; Corns 1991; VLRC 1991). It has also been
argued that to invoke the general criminal law of manslaughter via corporate criminal
responsibility will marginalise less serious occupational health and safety laws:

By prising out a few cases for treatment under separate criminal auspices, the
criminal status of what is left is rendered even more ambiguous than it is already
becoming under the impact of the continuing historical and structural processes
which we have outlined. The objective, which we share, is better achieved by
recognising occupational health and safety offences as much more unequivocally
criminal, and by creating occupational health and safety offences specific to the
enormity of the criminality involved when employer negligence leads to death at
the workplace (Carson & Johnstone 1990).

The Victorian Law Reform Commission has rejected this argument, arguing that
the current law of manslaughter is clearly applicable, and that "[t]o create a special
new offence to cover workplace deaths implies that these sorts of deaths are somehow
different from other cases of negligent manslaughter" (VLRC 1991, p. 21). But the
debate remains a real one, and equally applicable to other classes of offence, including
environmental offences. It raises real questions about the aims and efficacy of
corporate criminal responsibility, about what is and what is not a "real crime", and
why. Rethinking those questions without the shackles of the common law
accommodation of principle might lead to a better idea.

Rethinking Corporate Criminal Responsibility

A great deal has been written about the aims and efficacy of corporate criminal
responsibility. There is a continuing debate between those who believe that corporate
criminal responsibility is necessary and desirable in addition to the criminal
responsibility of the individual actors in terms of the aims and objectives of the criminal
law, on the one hand, and those who believe that individual criminal responsibility is all
that is required on the other (collected in Fisse & Braithwaite 1988). A middle course
is taken by those who argue that corporate criminal responsibility should be available
only where individual criminal responsibility is ineffective or where no individual can
be said fairly to be responsible for the crime (Mitchell 1977; Lim 1990).
Analysis of the traditional aims of the criminal law: deterrence, prevention,
incapacitation, retribution, rehabilitation and restitution show that all have a role to
play in corporate, as opposed to individual, criminal responsibility, especially when the
organisational aspects of corporate crime are teased out and explored (examples are
Fisse 1978; Braithwaite & Geis 1982; Note 1987). Fisse and Braithwaite concluded:

. . . Individualism persistently fails to capture the corporate significance of

corporate operations over which the law seeks to exercise control. . . . The logic
and practical imperatives of deterrence do not preclude corporate criminal

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 Corporate Criminal Liability

responsibility, but, on the contrary, impel it. Given the difficulties and expense of
convicting individuals for crimes within complex organisations, a policy of
individualism almost certainly would reduce the number of convictions for
corporate crime and thereby worsen the inequality between crime in the streets and
crime in the suites. And retributive theories of punishment are more compatible
with corporate criminal liability than the Individualist's intuitions about retribution
would have one believe (Fisse & Braithwaite 1988, p. 510).

The Law Reform Commission of Canada noted:

In a society moving increasingly toward group action it may become impractical,

in terms of allocation of resources, to deal with systems through their components.
In many cases it would appear more sensible to transfer to the corporation the
responsibility of policing itself, forcing it to take steps to ensure that the harm does
not materialize through the conduct of people within the organization. Rather than
having the state monitor the activities of each person within the corporation, which
is costly and raises practical enforcement difficulties, it may be more efficient to
force the corporation to do this, especially if sanctions imposed on the corporation
can be translated into effective action at the individual level (LRC 1976, p. 31).

It is therefore not surprising that the South Australian Criminal Law and Penal
Methods Reform Committee, the Law Commission's Draft Code for England and
Wales, the Law Reform Commission of Canada's Draft Code for Canada, the
American Law Institute Model Penal Code and the Draft Statute of the Review of
Commonwealth Criminal Law all provide for corporate criminal responsibility. There
are two central but interlocking themes at work in this: the first is movement in the
social idea of what is a "true crime"; the second is the central notion describing that
with which corporate criminal crime is really concerned. Each theme will be explored
in a little more detail.
In arguing that, far from leading to the marginalisation of occupational health and
safety offences, prosecution of companies for manslaughter by criminal negligence in
the appropriate case will enhance the criminality of health and safety breaches, Corns
identifies some of the factors which have led to the idea that these are not "real"
crimes:

. . . virtually all prosecutions are conducted in the Magistrates Courts. Cases are
presented by non-police, civil inspectors rather than crime victims are the principal
witnesses, limited sentences are imposed (fines and bonds) and very few cases are
appealed against. As a consequence, the higher courts have had limited
opportunity to develop case law relating to corporate liability for indictable
offences and in particular, principles for sentencing corporations (Corns 1991).

But public perceptions can and do change. The key factor appears in an American
study of corporate homicide:

Traditionally, the illegal activities of corporations and those of conventional

criminals have been defined as involving very different consequences. Corporate
misbehaviour has been viewed as entailing a diffuse, impersonal cost to society.
The harms produced by price-fixing, false advertising, or mislabelling, for
example, have been perceived as increased financial burdens on the consumer.

This differs dramatically from the imagery of personal threat or injury suffered at
the hands of the robber, rapist or murderer. These social definitions of harm

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 Environmental Crime

provide important distinctions between air and water pollution, on the one hand,
and assault and battery, on the other; or false advertising and theft, or unsafe
product liability and homicide. Before the activities of corporations can be
recognised as instances of conventional crime, the social harms produced by these
activities must be recognized as conventional harms (Swigert & Farrell 1980, pp.
179-80).

There is evidence of this shift in attitudes. Some, as has been remarked, is taking
place in the area of occupational health and safety. Another significant area is in
relation to environmental offences. A series of disasters, costing human life,
attributable to some degree to corporate criminal negligence has precipitated change in
social definitions of deviance in the United Kingdom (Wells 1988). As always, scandal
drives change and environmental vandalism, particularly on a large scale, is becoming
more and more seen as a gross social harm worthy of being treated as a "real" criminal
offence and not just when, as in Chernobyl and Bhopal, large numbers of people are
killed or injured.
French elaborated on the concept of corporate "collective" responsibility (as
opposed to "aggregate" [of individuals] responsibility) as follows:

Conglomerate collectivities can be justifiably held blameworthy and hence differ

significantly from aggregated collectivities. This accounts for the fact that excuses
are often put forth for such collectivities . . . while when aggregates are blamed the
excuses are put forth in the name of individuals. Hence when we say that a
conglomerate collectivity is blameworthy we are saying that other courses of
collective action were within the province of the collectivity and that had the
collectivity acted in those ways the untoward event would not likely have occurred
and that no exculpatory excuse is supportable as regards the collectivity. This is
not to say that an individual member or even all individual members of the
collectivity cannot support excuses. In fact, that is never really at issue (French
1975, p. 166).

Models for Reform

In this complex and rapidly changing area of criminal law and policy, proposals that
have been developed most recently are of primary importance. In Australia, the task
was recently attempted in the Third Interim Report of the Gibbs Committee (Gibbs
1990). It is those proposals which have formed the focus of recent Australian
discussions on reform of corporate criminal responsibility and from those proposals
that discussion must proceed. These proposals took the concrete form of a section of a
draft codification of the Commonwealth criminal law.
The detailed proposals contain a number of technicalities which will not be
discussed here. It is to be hoped that a certain amount of generalisation can be
forgiven. The core of the Gibbs recommendations is as follows. The proposed code
would begin with the usual and unexceptionable method of attributing conduct (or
actus reus) of an offence to a company vicariously where the employee acted within
the scope of his or her employment. As ever, the problematic area of the proposals lies
in the area of fault.
The Gibbs Committee decided to recommend two alternative forms of corporate
criminal responsibility. One is contained in proposed s. 4BA(3). The other is contained
in proposed s. 4BA(4). In the absence of a legislative direction to the contrary, the one

8
 Corporate Criminal Liability

in subsection (3) is to prevail. The default provision itself has two distinct alternatives.
The first is an extension of the Tesco principle. The second is a modified form of
vicarious liability, leavened by a requirement of organisational fault. Tesco is extended
by substantially widening the definition of the corporate officers that may attract the
primary liability of the company. The key is the definition of "controlling officer". That
is defined as follows:

"controlling officer", in relation to a body corporate, means a person who has

authority to determine, or actual control over:

(a) the general conduct, of the affairs or activities of the body corporate; or

(b) the conduct of the part of the business of the body corporate in which a
particular act is done.

The second alternative route to liability imposes vicarious liability in relation to the
conduct and state of mind of any employee if it can be proven that the company did not
take "measures that, in the circumstances, were appropriate to prevent, or reduce, the
likelihood of, the commission of the offence". It is the failure to take those measures
which mean that responsibility attaches to a kind of organisational fault.
Section 4BA(4) contains the alternative basis of liability which may be explicitly
invoked by the legislature. It is exactly the same as the vicarious liability arm of the
previous subsection except that subsection (5) places the onus on the accused company
to prove that it had taken the appropriate measures.
These proposals were highly original in that they tried hard to introduce the idea
of corporate, as opposed to individual or human, fault, into the liability question. But
this was the subject of sustained criticism by Professor Fisse (Fisse 1990b, 1991a,
1991b). Fisse took the view generally that, insofar as the proposals relied upon the
Tesco basis of liability in any form, rather than upon organisational blameworthiness,
they were unduly ill-defined, conservative and subject to the criticisms that may be
made of that basis of responsibility and that insofar as the proposals employed a
concept of organisational blameworthiness, they were insufficiently well thought
through. Fisse suggested that a more appropriate model would be based on s. 65(2) of
the Commonwealth Ozone Protection Act 1989, which would attribute the conduct of
any employee at whatever level of the company to the company, and which would
attribute fault to the company in any one of the following ways:

(a) by having a policy that expressly or impliedly authorises or permits the

commission of the offence or an offence of the same type;

(b) by failing to take reasonable precautions or to exercise due diligence to

prevent the Commission of the offence or an offence of the same type;

(c) by having a policy of failing to comply with a reactive duty to take preventive
measures in response to having committed the external elements of the
offence; or

(d) by failing to take reasonable precautions or to exercise due diligence to

comply with a reactive duty to take preventive measures in response to having
committed the external elements of the offence (Fisse 1991a, pp. 173-4).

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 Environmental Crime

The Review Committee recommendations and Fisse's proposals have been

considered in detail by the Criminal Law Officer's Committee, a committee consisting
of officers of the Commonwealth and all State and Territory Governments, with a brief
to develop a Draft Criminal Code for Australia. It produced a Discussion Paper in
1992, and a Final Report in late 1992, early 1993 (CLOC 1992a; CLOC 1992b). The
status of these proposals is that they are a report to the Standing Committee of
Attorneys-General, who will consider their reaction to them later this year. The
Committee has made proposals for a concept of corporate criminal responsibility
which, while more radical than that of the Gibbs Committee, do not, perhaps, move so
far as Fisse would have liked.
The Code provisions begin with the deceptively simple proposition that the Code
that is, the proposed Criminal Code will apply with necessary modifications, to
bodies corporate in the same way that it does to individuals. All that follows is really
explication or commentary on that proposition. As before, the Code takes the position
that the physical conduct of a crime can be attributed to a company vicariously through
that of its agents and so on acting within the scope of their actual or apparent
authority. The tricky thing is, as always, criminal fault.
The Code is based on the proposition that, for individuals, there are four kinds of
subjective fault only: intention, recklessness, knowledge and criminal (as opposed to
civil) negligence. The fault element that prevails unless the legislature says otherwise,
is recklessness. The legislature can also create offences which contain elements of strict
or absolute responsibility. But what holds good for individuals may not hold good for
companies. The standards are and should be different. After experimenting with a
separate idea of corporate recklessness (CLOC 1992a), the Committee decided that
this was at once too hard and too subtle. The distinction that mattered was the one
between advertent fault (intention, recklessness and knowledge) and inadvertent fault
(negligence).
The Committee determined that the corporate equivalent to subjective fault in an
individual was the idea that the company "expressly, tacitly or impliedly authorised or
permitted the commission of the offence". It then determined that that could be shown
in a number of ways. These are not exclusive ways. One obvious way is that the board
of directors did it. Another way is that a high manager of the company had the fault,
but the company can escape if it proves due diligence. The most controversial way,
though, is the full "corporatisation" of the idea of corporate fault via the notion of
"corporate culture" (see also Bucy 1991). The Code says that the company will be
taken to have authorised or permitted the commission of the offence if it had a
corporate culture which "directed, encouraged, tolerated or led to" the commission of
the offence or "failed to maintain a corporate culture that required compliance with the
relevant provision". It goes on to say that this can be shown in a number of ways
including by, in effect, previous authorisation, or by the employee holding a reasonable
expectation that the company would have authorised the commission of the offence.
There has been a similar attempt to "corporatise" the idea of negligence. The
committee accepted and the draft reflects the idea that a company can be criminally
negligent even though none of the individuals which compose it is criminally negligent.
This was found to be the case, for example, with respect to Air New Zealand about the
Mt Erebus disaster. The Code goes on to make it clear that a company can be found to
have been at fault in this sense by inadequate corporate systems of management or
control, or by failure to provide adequate systems for the conveying of relevant
information to the people within the structure that should have that information.

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 Corporate Criminal Liability

It is interesting to note that the idea of a truly corporate idea of fault and the
Committee's approach in particular, has attracted the favourable attention of the NSW
Independent Commission Against Corruption (ICAC 1992).

Conclusion

The New South Wales Environmental Offences and Penalties Act 1989 was an
attempt by Governmnent to put in place a code of environmental criminal and quasi
criminal regulation. It was the subject of major amendments one year after it had been
enacted. Analysts in the literature were very critical of it (Farrier 1990; Franklin 1990;
Chappell & Norberry 1990; Lipman 1991). These criticisms ranged from the general to
the very specific. For example, a specific criticism was that the legislation produced
unjust results:

The Hunt case seems a particularly good example. No lasting harm was done to
the environment, and the defendant was supporting a wife and child on a modest
weekly salary of $430. The Land and Environment Court imposed a fine of $10
000, but the defendant also had to pay the costs of the SPCC which amounted to
$11 648.62, quite apart from his own costs. This seems to exalt political and
community expectations over social justice (Lipman 1991, p. 334).

More general criticisms were that the legislation failed to deal with the vexed issue
of a principled approach to corporate criminal liability, because it relied on Tesco (too
narrow) and strict vicarious liability (too broad); that the issue of criminal fault in
relation to the range of criminal offences was poorly dealt with; that the legislation, in
relying exclusively on a fine as a sanction, ignored the evidence about the need for a
range of sanctions to achieve the goals of deterrence and prevention; and that over-
reliance on the criminal sanction obscured the real problems of effective enforcement
and sanction nullification.
Whatever the extent to which this chorus of criticism is justified, we should learn
from the New South Wales experience. This paper suggests the codification of
environmental offences is an important goal of good criminal and social policy, but that
the issue of corporate criminal liability needs to be addressed in an innovative way that
does criminal justice to the corporate form and that, if we are to have serious criminal
offences protecting environmental values, then they should require proof of equally
serious corporate criminal fault.

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