Laying down the law - June 2019
20 May 2019
Warren Spencer warns that company officers are increasingly being held accountable under the Fire Safety Order (FSO).
DUE TO the way in which the Fire Safety Order (the FSO) is drafted, companies are more likely to be prosecuted than individuals. This is because the “responsible person” as defined by article 3 is usually the employer, where the premises constitute a workplace. As most employers are companies, those people who run the companies, usually the directors, are able to hide behind the “corporate veil”, and escape liability on the basis that they are not ‘the employer’ - the company is.
However, as with the Health and Safety at Work Act, the FSO includes a provision in Article 32(8) for offices of a company to be culpable where they have allowed their company to commit an offence under the FSO where that offence has been committed with their consent, connivance or neglect.
Although the government statistics outline the relevant articles (8-22) which have been breached in prosecutions which have taken place, they do not indicate the basis on which the prosecution was brought against the defendant under articles 3, 5 or 32 (8). However, my own experience, and a number of recently reported cases, suggest that directors and managers of companies are being held increasingly accountable for fire safety breaches.
In particular, these prosecutions occur where an officer of the company has been served with either an enforcement or prohibition notice at some time prior to offences being committed. Once a company official has been served with a copy of the notice, which may be in the name of the company, he or she is ‘on notice’ that the FSO has been breached and that the company is required to rectify those breaches by whichever means are appropriate.
If a later audit reveals further breaches, the fire service is entitled to question why those running the company have allowed further offences to be committed, and to explain what they have done to ensure that further breaches did not occur.
Unsurprisingly, it is not uncommon, following an audit by the Fire Service (where breaches may have been found) for a company to go into liquidation. The more cynical of us may suggest that many companies enter into liquidation to avoid any potential enforcement action by the Fire Service. The less cynical would argue that companies with financial difficulties are less likely to comply with fire safety responsibilities.
Where a corporate employer, who may have been the Responsible Person under Article 3 has gone into liquidation, a prosecution brought under article 32 (8) can be a very effective tactic for holding the Company Officers to account and which may prevent them from starting up fresh companies and continuing with the same attitude towards fire safety.
In such cases the culpability is clear. The person who had control of the company is held to account where the company no longer exists for failing to take the appropriate decisions to keep premises safe. I would argue that in such cases the Sole Director/Shareholder could still be prosecuted as a person with control of the premises under Article 5(3). Clearly, as the Director/Shareholder has control of the company, he has control over the decision making in respect of fire safety measures for the premises. Article 5(3) states that he can be liable to the extent of his control and I have conducted a number of prosecutions on that basis.
It becomes more difficult with insolvent companies with two or more Directors or Shareholders. Part 2 of the Guidance Documents states that a company Board should appoint a Director to be responsible for fire safety. If certain members of the Board state that fire risk management was not their responsibility and can point to the appropriate Director whose responsibility it was, then this may be a strong defence to any prosecution under Article 32(8).
But prosecuting under Article 32(8) is not without its difficulties. First of all the Prosecution would have to prove that offences had been committed by the Body Corporate. Effectively this would involve a two-pronged prosecution where the onus is to prove that the Body Corporate committed the offences and, in addition, that those offences were committed with either:- a) the consent, b) the connivance, or c) the neglect on the part of a Company Officer.
It is helpful that Article 32(10) states that the Officer of the Body Corporate can still be prosecuted whether or not proceedings are taken against the company itself. However, it is still necessary to prove that the company committed the offence and that it was done with either the consent, connivance or neglect of the Officer of the Company.
In my experience, it is usually the Company Directors who have been prosecuted under Article 32(8), and these prosecutions have usually taken place where there is a sole Director/Shareholder, but the Article is not confined to Directors and Shareholders. It refers to ‘managers, secretary or other similar Officers of the Body Corporate’. This could cause evidential difficulties where a Director/Shareholder states that a person was employed specifically to take care of fire risk management responsibilities and failed to carry out those tasks in accordance with the Order. The prosecution against the Director or Shareholder in those circumstances would leave itself open to the question as to why the appropriate “Officer” was not prosecuted under Article 32(8).
I have been involved in a case where I defended a manager of a hotel who was not a company director, on the basis that he had previously been served with an enforcement notice, and that enforcement notice had not been complied with. In that case, we were able to persuade the prosecution that the hotel manager did not have sufficient financial control of the company to ensure that the enforcement notice was complied with, and the case was eventually dropped. But it is clear, merely by opening unsafe premises up to the public a manager may exercise sufficient control over premises to be liable under the order.
The strict liability aspect of Article 32(11), (which states that the employer in any criminal proceedings does not have a defence for any breach of the Order by an employee of his), would not apply as the Director/Shareholder would not be the employer for those purposes. The employer would still be the insolvent company.
Over the last few years I have been involved in a number of prosecutions where a company which is not insolvent, has been prosecuted together with a Director/Shareholder under Article 32(8). This very often leads to defence solicitors offering guilty pleas on behalf of their client company, on the basis that the proceedings against the company officer are withdrawn. What has to be remembered here, is that individual, company officers could receive a prison sentence, whereas the corporate body can only be fined.
What is clear, is that it is becoming increasingly difficult for those running companies to hide behind the ‘corporate veil’, in relation to fire safety regulations, and failure to ensure a company’s compliance could result in a personal prison sentence of up to 2 years.
Warren Spencer is managing director of Blackhurst Budd Solicitors. You can see more articles from Warren at www.firesafetylaw.co.uk