The speed and nature of the implementation of these new restrictions indicate that the threat of the pandemic is far from over. In order to maintain a level of business continuity in these ever-changing times, the offsetting of the risk of either infection or business interruption should be a priority for compliance departments. Banks and other financial institutions must remain alive to compliance issues raised by their HNW clients’ activities and should therefore be aware of the range of new exposures to liability presented by the virus.

This is an issue that is not going away, as workplaces and commercial buildings continue to reopen and the risk of criminal liability to which they are vulnerable if they do not allay the threat of people contracting the virus on their premises, is presented in many different forms. A new wave of Corona-centric litigation is on the horizon. A proactive and diligent stance must, therefore, be taken in order to shield from the economic threats created by the global pandemic.

Risky business

The range of legislative provisions that could lead to potential criminal liability is extensive. Take, for example, the Health and Safety at Work etc. Act 1974. The general provisions under section 2(1) stipulate that “it shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees.” In the current climate, this must extend to ‘Covid-proofing’ the environment by building up adequate safeguards such as one-way systems through buildings, the provision of personal protective equipment or PPE, or hand-sanitation protocols. Especially interesting is section 3(1) which extends liability in relation to an employer’s dealings with third parties and individuals not under his/her employ: “It shall be the duty of every employer to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that persons not in his employment who may be affected thereby are not thereby exposed to risks to their health or safety.” Failure to discharge either of these duties is an offence contrary to section 33(1)(a). A similar duty also applies under the Occupiers Liability Act 1957, which provides that occupiers have a duty to ensure the safety of visitors. Pursuant to section 2(2), an occupier must “take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.” This can extend to the relationship between bankers and their HNW clients.

Owners/occupiers should also take heed of the provisions encapsulated in the Corporate Manslaughter and Corporate Homicide Act 2007. Section 1 stipulates that an organisation may be “guilty of an offence if the way in which its activities are managed or organised — (a) causes a person’s death, and (b) amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.” The “relevant duty of care” is defined in section 2(1) as a duty of care “in relation to an organisation, means any of the following duties owed by it under the law of negligence— (a) a duty owed to its employees or to other persons working for the organisation or performing services for it; (b) a duty owed as occupier of premises; (c) a duty owed in connection with— (i) the supply by the organisation of goods or services (whether for consideration or not), (ii) the carrying on by the organisation of any construction or maintenance operations, (iii) the carrying on by the organisation of any other activity on a commercial basis…”.

For the purposes of the Act, a “gross breach” is defined under section 4(b) as occurring when “the conduct alleged to amount to a breach of that duty falls far below what can reasonably be expected of the organisation in the circumstances”. The “circumstances” at present are set against the backdrop of mass infection. Therefore, any arrangements or activities engaged in by an organisation that will heighten the risk of infection are likely to qualify as a breach of duty. What can “reasonably be expected” of an organisation in the proper discharge of this duty and in these specific circumstances is to provide means to regulate excessive human contact and transmission by implementing social distancing measures and more and more hygienic protocols.

Corporates, as well as individuals, should also be wary of incurring liability in contravention of the common law offence of gross negligence manslaughter. This offence is committed where a death results from a grossly negligent act or omission on the part of another.

The test for the composite elements of the offence was established in R v Adomako EWCA Crim 741, where it was reaffirmed that the law “can be summarised as being the breach of an existing duty of care which it is reasonably foreseeable gives rise to a serious and obvious risk of death and does, in fact, cause death in circumstances where, having regard to the risk of death, the conduct of the defendant was so bad in all the circumstances as to amount to a criminal act or omission.” During the current global health crisis, the threat of death posed by Covid-19 is rightly classified as a “serious and obvious” risk that corporates and individuals need to know about. It is vital to note, however, that – much like the aforementioned offence of corporate manslaughter – this offence, too, requires the existence of a duty of care. A negligent act, regardless of how severe it is, will not be classed as gross negligence manslaughter if there is no pre-existing duty of care.

Once more unto the breach…

The execution of any duty of care is based on an objective standard of reasonableness. It will therefore be a breach if no reasonable and competent person, in the same position as the defendant, would, in the same circumstances, have acted in the same manner. Consequently, standards of reasonableness will be influenced by the current outbreak of disease.

Reasonable owners/occupiers should be aware of the risks posed by the pandemic and should thus use them as a starting point to implement measures that will limit infection exposure as part of their duty of care to connected third parties. An absence of reasonable exposure-reducing provisions (for instance through improvements in cleaning protocols or social distancing measures) may be deemed to be a breach of this duty, if this refusal to act were abundantly gross so that no comparable actor of reasonable character would have acted in the same way. As for a breach being “gross”, this may be provable if it could be shown that the defendant was aware of the manifestly unsafe nature of the premises – for example, by ignoring complaints from staff or HNW customers regarding the conditions. These actions/inactions might satisfy the conditions for corporate or gross negligence manslaughter if failure to rectify the situation – by means of screen separators, better cleaning protocols, repair work, one-way systems, a contingency policy for when a connected third-party displays symptoms, and the like – were to lead to death.

Nevertheless, with both manslaughter offences, causation is likely to be a key issue of which compliance officers connected to potential litigation in the arena should be mindful, considering the nebulous nature of the virus. For the offences to be made out, death must be directly ascribed to a relevant breach of duty, as was recognised in R v HM Coroner for Inner London, ex parte Douglas-Williams 1 All ER 344: “In relation to both types of manslaughter (i.e. unlawful act and gross negligence) it is an essential ingredient that the unlawful or negligent act must have caused the death at least in the manner described.”

Taking the Coronavirus as a backdrop, will it ever be possible to prove categorically how or where an individual contracted the infection that led to his death? This might be the casethe victim only had outside contact on one set of premises and then spent the rest of his time isolated at home – as did his household. However, due to the generally more relaxed approach to lockdown that most of the UK has experienced over the past few months prior to the provisions of 14th September, it might be problematic to prove that a person conclusively contracted the virus at one specific venue if he had also visited a plethora of different locations. In light of the fact that all elements for manslaughter offences must be proved to the criminal standard (beyond reasonable doubt,will it ever realistically be possible to prove causation to this level in a society that is increasing in interconnectivity?

Money, money, money

Another key consideration is the ability for such conduct to fall within the ambit of legislation that deals with the proceeds of crime. Part 7 Proceeds of Crime Act 2002 contains a range of money-laundering offences. For example, if an owner/occupier becomes aware or suspects that it has generated income from its business as the result of a breach of its health and safety obligations as outlined above, this could render that income “criminal property” as per section 340(3): “property is criminal property if — (a) it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and (b) the alleged offender knows or suspects that it constitutes or represents such a benefit.” With this as a starting point, other offences under the Act would have been committed. For example, section 329 stipulates that it is an offence if a person “(a) acquires criminal property; (b) uses criminal property; (c) has possession of criminal property”. If a bank is too lackadaisical in its approach to the safety of its employees or other individuals who enter the premises in order to obtain an economic advantage, any income generated from the running of this unsafe operation could be deemed to be the proceeds of crime.

An important point to note is that in the event of prosecution for a money laundering offence on the basis of Corona-centric liability, a bank (or other connected financial institution) that has had dealings with the defendant should be apprised of the risk that he poses. As a result, the bank would be well advised to conduct “enhanced due diligence” (EDD) with reference to the defendant’s accounts and transaction history to ensure that nobody has used his facility as a vehicle to either harbour the proceeds of crime or to launder money on his behalf.

Continuing to look at the economic impact of Corona-centric liability, on conviction of any of the above offences it might be possible for the prosecution to seek a confiscation order under Part 2 Proceeds of Crime Act 2002 to confiscate such income as the owner/occupier’s “benefit” from the specified offence. When discerning what is meant by “benefit” from a criminal offence, section 7(1) explains that “the recoverable amount…is an amount equal to the defendant’s benefit from the conduct concerned.” The “benefit” is the property derived from the conduct that resulted in the defendant being convicted of a criminal offence, e.g. the financial gain obtained by operating a business in a way that breaches a duty of care.

Part 5 POCA also affords other avenues of attack through the civil recovery of assets generated by the operation of a business in an unsafe manner. If the property or assets in question can be proved to have been “obtained through unlawful conduct”, then that property is deemed recoverable by certain accredited governmental bodies. While useful to the authorities, however, the victims of statutory breaches cannot use this mechanism to recover financial compensation, as there is no provision for private civil recovery.

As a raft of new restrictions are introduced and eased with an almost yo-yo-like effect, what the future holds is anyone’s guess. Compliance officers will be especially interested to see the international response to this emerging platform for risk and liability exposure. Will our litigation-happy friends across the Pond see a similar triggering of their own domestic liability legislation? Will other countries have comparable legislative instruments that contemplate the economic or white-collar-criminal threat presented by the pandemic? The global impact of the virus is on a scale not seen since 1920, so it is therefore likely that the international legal response will be similarly impressive.

However, closer to home, it is prudent for now for compliance officers to be aware of the risks to which their banks and other financial institutions are exposed. As talk of a second wave becomes ever more pronounced, one way to guard against continued interference with business operations is to make every financial institution's premises ‘Covid-secure’ across the board. The risk of infection has become a financial and compliance risk as well.

* Peter Fitzgerald can be reached on +44 (0)20 7822 7785 or at law@petersandpeters.com