SANCTIONING AND THE CRIMINAL LAW
READING
Ramsay chap 7.*
Cartwright “Crime, Punishment and Consumer Protection.” [2007] Journal of Consumer Policy 1-20.*
A Ashworth “Is the Criminal Law a Lost Cause?” (2000) 116 LQR 225.
Regulatory Justice: Making Sanctions Effective Final Report (Nov 2006 also known as the Macrory Report). Linked through WebCT.
Regulatory Enforcement and Sanctions Act 2008 Guidance to the Act (BERR July 2008). Linked through WebCT.
HM Government A Better Deal for Consumers: Delivering Real Help Now and Change for the Future (Cm 7669) July 2009. Linked Through WebCT.
FURTHER/ADVANCED READING
There’s a huge range of articles on corporations and the criminal law. I’m happy to give you further reading if you like. One very good article is:
GR Sullivan “The Attribution of Culpability to Limited Companies” (1996) 55 Cambridge Law Journal 515
The following chapters of textbooks are also relevant.
Cartwright chaps 3 and 4.
Ramsay (to be notified).
Howells and Weatherill chap 11.
Cranston chap 8
Ogus chap 5
You might also like to look at some criminal law texts on the role of the criminal law, and the doctrines of strict, corporate and vicarious liability. For example Ashworth Principles of Criminal Law and Clarkson and Keating Criminal Law: Text Cases and Materials are particularly good.
INTRODUCTION
In the previous classes, we examined some of the rationales for protecting the consumer, and at some of the techniques by which consumers can be protected. We noted some of the difficulties that arise when private law is used as a method of protecting consumers. The main technique used by successive UK governments, particularly since the late 1960s, had been criminal sanctions. Leading examples of this included the Trade Descriptions Act 1968, the Consumer Protection Act 1987 (part 3), the Food Safety Act 1990, the Property Misdescriptions Act 1991 and the General Product Safety Regulations 2005. These have largely been replaced by the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) which continue to create criminal offences, but envisage action being more commonly taken by enforcement authorities through civil law enforcement mechanisms. The main purposes of this section are to consider whether the criminal law is an appropriate tool for protecting consumers, and to examine how criminal liability is established against traders, in particular corporations.
WHEN SHOULD CONDUCT BE CRIMINALISED?
An initial question to consider is when conduct should be made criminal. The current government has paid lip-service to the concept of minimalism, where conduct should only be criminalised as a last resort, but appears not to be quite so principled in practice. Is consumer protection an appropriate reason for criminalising business behaviour?
ASHWORTH’S CORE PRINCIPLES
In a major article in 2000. Andrew Ashworth set out his vision for a principled criminal law (A Ashworth “Is the Criminal Law a Lost Cause?” (2000) 116 LQR 225). Ashworth identified the following “core principles”:
· Criminal law should only be used to censure substantial wrongdoing
· Criminal laws should be enforced with respect for equal treatment and proportionality
· Persons charged with substantial wrongdoing should be afforded the protection appropriate to those charged with criminal offences
· Maximum sentences and sentence levels should be proportionate to the seriousness of the wrongdoing.
Do consumer protetcion laws meet these criteria?
THE AIMS OF PUNISHMENT
There is no doubt that regulatory offences are part of the criminal law in the UK, even if they are sometimes referred to as being not truly criminal. If we think of the aims of punishing under the criminal law, we might identify them as:
1. deterrence
2. incapacitation
3. rehabilitation
4. retribution
5. restoration
To what extent are these aims present in regulatory offences?
Deterrence
The most obvious aim of the criminal law, especially in the regulatory sphere is to act as a deterrent. This involves both individual deterrence (making sure the offender does not re-offend), and general deterrence (deterring other members of society from committing offences). According to Gardiner "the belief in the value of deterrence rests on the assumption that we are rational beings who always think before we act, and then base our actions on a careful calculation of the gains and losses involved." He argues, however, that "amongst criminals, foresight and prudent calculation is...conspicuous by its absence." Is this true of those who commit regulatory offences? Deterrence-based theories have come in for criticism in recent years, largely because of doubts as to whether punishment does deter.
Incapacitation
Incapacitation is quoted as another aim of punishment. How often do we incapacitate for the breach of regulatory offences? What if the defendant is a corporation?
Rehabilitation
Should regulatory offences seek to rehabilitate offenders? Rotman describes rehabilitation as creating in the offender “the capacity for social participation and responsibility”. It is often criticised on ideological grounds as being reactionary (JG Murphy) and on pragmatic grounds as being “impossible” (Duff and Garland). Are corporate offenders more or less easily reformed than other groups? Cranston commented that “the business man’s conception of himself does not change following a conviction for a consumer offence, and neither is there any loss of status among his commercial associates”. Is this fatal to any attempt to rehabilitate? Would it be better if we focused on rehabilitation as education?
Retribution
The most basic aim of punishment is perhaps retribution; Stephen said in the 19th Century that "the criminal law proceeds upon the principle that it is morally right to hate criminals". This "vengeance" was, however, described by Cohen as "the breakdown of human intelligence". If its wrong to be vengeful, is it nevertheless right to seek "just desserts?" One main theory of criminal justice is the retributive theory, which has seen something of a resurgence in the literature.
Restoration
Restoration bears some similarity to compensation. In the words of Ashworth “[a] restorative theory might be chiefly concerned to achieve compensation or a reconciliation that restores the status quo ante”. This is usually seen as an aim of the civil rather than the criminal law, but compensation may be ordered by criminal courts under the Powers of Criminal Courts Act 1973.
Do you agree with Ashworth that the use of criminal law should be restricted in the ways he suggests? Is so, why, and if not, why not? Think about the implications of the Macrory Report here (Regulatory Justice: Making Sanctions Effective (Nov 2006))
CHARACTERISTICS OF REGULATORY OFFENCES
Regulatory offences are part of the criminal law, but are sometimes seen as distinct from mainstream offences or "sins with legal definitions" (Borrie). They are perhaps:
"not criminal in any real sense, but are acts which in the public interest are prohibited under a penalty."
Because there is no formally separate class of regulatory offences in the UK, we are left to try to say what distinguishes them from so-called real offences. Ramsay sees the following characteristics:
1. Strict liability tempered by statutory defences.
2. Fines as the primary sanction.
3. The existence of a specialised bureaucracy who will exercise discretion ("compliance strategies").
4. The use of magistrates courts with higher courts playing a role in the development of the statute in question.
(Ramsay Text and Materials p.183).
Recent offences created include a number under the CPRs. For example, Regulation 10 states:
· A trader is guilty of an offence if he engages in a commercial practice which is a misleading omission under regulation 6.
Regulation 11 states:
· A trader is guilty of an offence if he engages in a commercial practice which is aggressive under regulation 7.
Regulatory offences will not, however, always be of strict liability. The CPRs require mens rea for prosecuting where the general prohibition is breached):
“ “8.—(1)A trader is guilty of an offence if—
he knowingly or recklessly engages in a commercial practice which contravenes the requirements of professional diligence under regulation 3(3)(a); and
the practice materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product under regulation 3(3)(b).”
”Are there difficulties with the characteristics set out by Ramsay? See Scott's chapter in Loveland (ed) Frontiers of the Criminal Law. Do you think that these crimes are "truly criminal"?
THE USE OF THE CRIMINAL LAW
STRICT, CORPORATE AND VICARIOUS LIABILITY
Where strict criminal liability is imposed (in other words, liability without the need to prove mens rea), the act may be done by one person, but the prosecution may wish to prosecute another. For example, adulterated food may have been sold by an employee of a large corporation, and the prosecution may want to take action against the corporation. They can do this under principles of vicarious liability. The main type of vicarious liability is "extensive construction". This is where we say that the act of one person (eg an employee) is also the act of another (usually the employer). This is particularly appropriate when we are dealing with selling, supplying or making a statement. It is not appropriate if the offence involves something like driving (see eg Thornton v Mitchell [1940] 1 All ER 339). There are, however, two main restrictions upon this approach:
1. The use of statutory defences
2. The requirement of proving mens rea.
All criminal law consumer protection statutes include statutory defences. These allow a defendant to escape liability if he can show that he took all reasonable precautions/steps and exercised all due diligence to avoid committing the offence, although statutes differ in their precise wording. According to Tesco v Nattrass [1972] AC 153, where the defendant is a corporation, it can pass the blame onto an employee, provided that the employee is not part of the corporation's "directing mind and will". This has been a cause for concern. According to Lord Widgery:
"Unless some little care is taken in regard to these matters, we may find the administration of this Act [the Trade Descriptions Act] sliding down to the sort of slipshod level at which all a defendant has to do is say in general terms that the default must have been due to something in the shop, one of the girls or some expression like that, and thereby satisfy the onus cast upon him." (McGuire v Sittingbourne Cooperative Society (1976) 140 JP 306.
The second limitation on the use of extensive construction is that it does not apply to offences requiring proof of mens rea. An example is s.14(1) of the Trade Descriptions Act which required that the defendant made a statement which he knew to be false, or recklessly made a statement which is false, about services, accommodation or facilities. Where the prosecution tries to prove such offences against corporations, they must prove mens rea on the part of someone who is the "directing mind and will" of the corporation. Examples would be a managing director or company secretary. This means that the prosecution's task may be difficult. They could prosecute a junior employee who committed the offence with mens rea, but will probably not want to unless that employee is morally to blame. The law may be changing here. We have a couple of cases which suggest that the courts will be willing to attribute mens rea to a corporation where the mens rea is of a relatively junior employee. The cases are:
· Tesco Stores v Brent [1993] 1 WLR 1037 and
· Meridian Global Funds v Management Asia Ltd [1995] 2 AC 500.
In Tesco v Brent the court was faced with a charge of selling a video to an under age customer. The Video Recordings Act 1984 s.11(2)(b) made it a defence that “the accused neither knew, nor had reasonable grounds to believe that the person charged had not reached the required age”. What implications would you expect Tesco v Nattrass to have here? The court said of the employee:
“it is her knowledge or reasonable grounds that are relevant. Were it otherwise, the statute would be wholly ineffective against a large company.” (p 1042).
Do you agree?
In Meridian, the question was whether a company “knew” that it had become a substantial security holder in a target company. The company’s fund manager knew. Did the company? What do you think of the statement by Lord Hoffman that:
“the court must always fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation…Whose act (or knowledge or state of mind) was for this purpose intended to count as the act, etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (it it is a statute) and its content and policy”. (p 419)
For discussion of the implications of these cases for consumer law see Cartwright chap 4. For a more detailed examination of approaches that might be taken to corporate liability see GR Sullivan “The Attribution of Culpability to Limited Companies” (1996) 55 Cambridge Law Journal 515.
There are two other characteristics of regulatory consumer protection offences which need mentioning: Offences committed by bodies of persons and offences due to the default of another person.