Friday, December 8, 2006

Corfu case exposes fatal flaws

This article was the front page article for the Solicitor's Journal on 8 December 2006. You can also listen to a similar version of it as a podcast here.

The tragic deaths of the two children Christianne and Robert Shepherd in their holiday bungalow at the Louis Corcyra Beach Hotel in Corfu has raised much comment on the potential liabilities of the hotel and the tour operator. In particular, it has been said that manslaughter charges are being considered against the hotel by the Greek authorities. Others have pointed to the operation of the Package Holiday Regulations in relation to tour operators. However, there are wider issues which the debate has not yet touched.

The first concerns whether the Corporate Manslaughter Bill currently going through Parliament should ensure that the new offence of corporate manslaughter covers British companies who cause deaths abroad. Although individual British nationals can be prosecuted for manslaughter committed abroad, in its current form the Bill leaves a serious loophole in respect of companies in that it only covers those deaths which occur in this country. This is despite the fact that it is quite possible in the case of companies that many of the actions that lead to a death may take place in this country. For example, whilst there is no suggestion of this in the present case, the question arises as to what would happen if it became clear in such a situation that the management in a British tour operator in fact knew that a particular hotel was having problems with carbon monoxide leaks but turned a blind eye in the interests of maintaining their profits. Or what if there was a repeat of the 1984 Bhopal disaster, in which a Union Carbide plant in central India leaked 40 tons of toxic gas and killed more than 3,000 people, but with a British company responsible and the deaths being its British workers? Add to this the fact that it is perfectly possible for inquests to be held in this country in relation to deaths abroad and further that such a hearing could well reveal serious management failures having been made on domestic soil. It seems unlikely that in circumstances such as these, there would not be many who may then regret that the Bill’s jurisdiction had not been wider. Perhaps this case may at least prompt the government into amending the Bill before it enters the statute books.

The other issue which these tragic deaths highlights is the level of damages which are awarded in many fatal accident cases. Even without commenting on the merits of this specific case, if a tour operator were found liable for the deaths of two small children the most likely award would be for £10,000 “bereavement damages” per child and a few funeral expenses. Compare this to the millions of pounds which are often awarded in personal injury claims where the victim has lived and there are claims for continuing loss of earnings and any cost of care. This highlights the little known anomaly that in English law it is often cheaper in terms of civil liability to kill someone than it is to maim them.

The reason for this is the so-called compensatory principle which only allows claims for actual financial loss and takes no account of the wider circumstances of the case. So, if a young City banker on half a million pounds a year and with no dependants is injured and therefore unable to work for the rest of his life, he could claim for his lifetime’s loss of earnings and potentially the cost of any care he might need. However, he clearly doesn’t have any such losses if he’s dead. In order to remedy this injustice, it might be argued that perhaps there should be some sort of punitive element built into awards for fatal accidents. Such an approach is all he more so in the case of companies. So, too, for infant deaths where dependency claims are unlikely.

There would be many ways of implanting a system of punitive or exemplary damages. For example, there might be a claim by the estate for the present value of an average lifetime’s loss of earnings for the deceased although questions might then be raised as to why a rich man’s death should be worth more. If not, it might be a standard tariff. In effect this is what the bereavement element of the damages is at the moment and the objection is not to the principle but to its current derisory and potentially insulting level. Alternatively, it could be a jury award which is left to the discretion of the judge taking account of the seriousness of the wrong and the wealth of the wrongdoer. Not only would this facilitate more specific justice it would also give the court the ability to hit companies, in particular, where it hurts. However it’s done, it’s time that this anomaly is rectified.

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