25th March 2022
“How can you defend someone you know to be guilty?” is the one question almost all lawyers will be asked at one time.
But it is perhaps a question about the wrong lawyers and about the wrong area of law.
The question presupposes criminal lawyers and criminal law.
Yet no criminal lawyer can actively defend as not guilty someone who has admitted their guilt (though the prosecution can still be put to proof).
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There is a far more difficult question for those who advise on civil rather than criminal liability.
(Civil law is, in general, about the legal obligations that we owe each other in contract, or tort, or otherwise – as opposed to obligations we owe to the state.)
The question is: “How can you defend someone you know to have deliberately breached civil obligations?”
For what often happens in civil law is that the client will know that they are (or will be) in breach of a contract, or of a duty of care, or of some other legal obligation.
But they do not care.
They just want to know the consequences of that breach – whether they can avoid or mitigate the consequences.
The lawyer will, in turn, explain the consequences of the breach – the likelihood of actually being sued and the amount of damages and so on.
The client will then assess whether the breach is worth the trouble.
They will – to use a common phrase in legal practice – ‘take a view’.
That the ‘view’ being ‘taken’ is a view on whether they should risk breaching a legal obligation is not said aloud.
The relevant exchange is in the following form:
Client: Can I do [x]?
Lawyer: If you do [x] then there is a risk of [y] legal liability.
Client: Ok, we will take a view.
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Some lawyers would say there is nothing wrong with this.
If there is a breach, and the party adversely affected sues successfully, then the injured party will be compensated and (supposedly) placed in the position they would be in had the legal wrong not happened.
A breach of contract will lead to damages to put the injured party in the position had the promise been fulfilled.
In (most) torts, the injured party will have damages intended to place them in the position had the tort not been committed.
And so on.
In effect – damages and so on are the cost of business.
Like professional fouls in association football.
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And this is how one suspects the bosses at P & O went about breaking the law in respect of sacking their staff.
It was not because they did not realise that there would be legal consequences.
But instead they knew that if they budgeted for the resulting compensation payments, they would head off any legal claims.
They would deliberately break civil obligations knowing that they could manage any civil risk.
They would ‘take a view’.
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Postscripts – from Twitter:
Me too! I remember feeling shocked about it. I soon realised that strategy in civil law often involves “taking a view”. I also realised that is fine to do as law sets out the consequences – damages but my political view is that morally it can result in the wrong decision.
— Danny Smith (@DSSmith_lawyer) March 25, 2022
A delightful legal euphemism that avoids the vulgarity of saying out loud that they opt for whatever is the cheaper option.
— Andrew Howard (@amhoward01) March 25, 2022
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Very true.
I was shocked the first time I heard this from a client (more than twenty years ago). The deal in question would have involved the acquisition of a captive insurance company among the other members of the trading group up for sale. It was (and still is) an offence to transfer “control” in a UK insurance company without the Regulator(s) approval (then the DTI as was, these days the PRA and FCA).
The client decided to comply with the statutory requirements, but only because they realised that their relationship with the Regulator would be a continuing one and they couldn’t afford to antagonise them.
The P&O situation doesn’t involve a Regulator in the same way and as a result their directors were not deterred from ignoring the process. I wonder whether this sort of conduct should be an express ground for disqualification as a director. Would directors then vote with their wallets or fall on their swords for a bigger bonus?
“I wonder whether this sort of conduct should be an express ground for disqualification as a director.”
Your question speaks not only to your honesty, but your decency, too.
I suspect that in a scenario like this, a couple of parallel conversations would be taking place. The first would be between P&O and the relevant authorities, one in which the authorities would indicate the intent to prosecute and to levy a suitable fine.
P&O would then trot out the excuse that whilst their corporate body deeply regretted the actions and while they accepted corporate responsibility, the issue could in fact be placed at the door of one particular executive. The company would offer to sacrifice the executive and pay a notional fine, rather than attempt to bluff out their conduct and risk a more serious penalty (if/when) found guilty.
In these negotiations, P&O would point out to the relevant authorities that any attempt to levy a “proper” fine would force the entire company in to bankruptcy and thus cost the jobs of hundreds or thousands of entirely innocent employees. P&O would ask the authorities whether they thought that prosecutorial zeal that resulted in even more job losses was a “good look” for the government.
The government would nod their collective head sagely and there would be some discussion on making the termination of their sacrificial offering “suitably newsworthy”. There would be a brief negotiation of the suitable amount of the fine to be paid.
The relevant executive would be quietly offered a compensation package that would exceed what they would have earned had they remained until retirement and they would be very publicly terminated.
The CEO would express shock, shock he’ll say, to discover that one of their colleagues could have suffered such a tragic slip in judgement.
P&O will, of course, trumpet that they will be happy to pay the full and correct amount of compensation (they won’t, of course) and will put the whole sordid matter behind them.
In better economic times, perhaps, the government might be persuaded to take a tougher stance. But given current circumstances, the DWP will want this to go away as quickly and as quietly as possible.
Given, what appears to be, the highly cynical nature of these actions I wonder if management ‘took a view’ calculating too narrowly what the legal risks and likely financial repercussions of their actions may be. Whilst totally ignoring/ underestimating the reputational damage and potential public outrage such actions could cause. Certainly, in the age of social media aiding the quick circulation of video and emails that the company sent out seems that such unethical practices are bound to be quickly exposed.
Or maybe they did and are even more cynically calculating that given the current geo-political situation this will be forgotten before too long and their harsh treatment of staff will have paid off?
Unfortunately can’t remember where so can’t get the details, but I read an interesting comment about the reputational damage and its impact on their business. From what I can remember it said that in the short term the impact would be negligible for the simple reason that there just isn’t the capacity to replace them. In the longer term it could have a negative impact should they try to expand into other routes, but then it would only matter if (which is a big if) people remember. A risk they might have taken into account and decided to be low when they took a view?
Thank you. I enjoyed reading that. Often individuals, not just corporate entities, take a similar view of the law. The example I think of is a Tree Preservation Order (TPO) on a large and elderly tree in a prestigious location. If the protected tree is preventing an extension being built and/or blocks a magnificent sea view (Sandbanks, Poole, Dorset for example), the max £20k fine, is little deterrent to cutting down the protected tree when it would add hundreds of thousands to the value of that property to do so.
I don’t intend this to sound pedantic – the calculation is similar, but I think the legalities involved are different because to fell (or carry out works to) a protected tree without permission is an offence (with potential punishment as you have detailed).
Thank you David for the post – can I suggest a development of this topic which I think many of us would find helpful please? The difference between unlawful and illegal. It is not uncommon for the announcement of a court decision finding the government has acted unlawfully, to be followed by opining about them having acted illegally. A handy go-to-guide to aid the confused would be very useful.
Under sustained examination on Wednesday by Richard Millett QC, Counsel for the Grenfell Tower Inquiry, Brian Martin testified that the then Department for Communities and Local Government “took a view” (that phrase peppers the transcript) to ignore a warning in 2014 that flammable had been installed on hundreds of buildings in breach of their regulations.
It’s very similar with International law where, at present, Russia doesn’t care as they they don’t want NATO on their doorstep and have “taken a view” that there is not much the rest of us can do about it! Similarly the US has behaved in the same way in the past when it suited them. The strong always ride roughshod over the weak when it suits them!
When privatisation of the UK electricity supply industry was taking place, I (a Scots QC) was instructed along with an English silk to prepare a joint opinion for a major Scottish electricity supplier. We were required to advise (in the context of privatisation due diligence) on the order in which “must-take” fuel contracts with oil, gas, coal and nuclear suppliers should be breached if the electricity company found itself unable to use all of the fuel that its various suppliers were requiring it to take in a particular generation period, with a view to minimising the resultant damages claims by the supplier(s) whose fuel was refused. It came as something of a surprise to the English QC to learn that, unlike the situation in English law, the primary remedy under Scots law in a situation of contract breach is specific implement (anglicé performance) — though there are, of course situations in which a court must, and others in which it has a discretion to, refuse an order of implement. This made the ranking operation in our opinion much more interesting (and challenging).
In another online forum and in various news reports about the P&O case much confusion has reigned over who has jurisdiction. At first sight we, the public, assumed it was English law, the breaching of which had rendered the company liable to an unlimited fine. Then it was pointed out that a Jersey-based “P&O” company (owned by DP World) had hired the services of an English-based “P&O” company (owned by DP world) in the capacity of an agency, and therefore the employer was a Jersey company subject to Jersey law. Then it turned out that the company’s action was also a breach of Jersey law, though I have failed to ascertain whether unlimited fines are applicable under that.
The latest variation on this theme is the theory that, because the vessels are registered under a Cypriot flag, Cypriot law should prevail, which requires a company (among other things) to notify the Cypriot government of intention to declare massive redundancies.
Cyprus has a reputation for being as relaxed as Peter Mandelson about — if I may paraphrase –the self-serving antics of rich bastards. It begins to look as if the best (i.e. only) recourse for the sacked crews is to take the money and walk away.
Part of the P&O argument was that they were going to change their business model to be more like some of their competitors who presumably don’t have to worry about living wages and redundancy procedures. The race to the bottom.
A retired representative of one of the business organisations in the UK argued that the customer will desert P&O. Is that ever the case. Are people still loyally shopping at Waitrose when Lidl or Aldi are opening just down the road?
Do you think that the remedy being that “the injured party will have damages intended to place them in the position had the tort not been committed.” in part encourages this behaviour?
If the worst case is you owe what you would have anyway, plus say the same again in legal fees then if you think you have a 51% chance of getting away with it. This is especially true when dealing with lots of individual potential claims where many won’t know their rights.
While there’s little to admire about the US legal system, exemplary damages are there to act as a deterrent to wrongdoing in the same way sentencing in criminal matters is supposed to have multiple objectives.
You take us in a very interesting direction.
According to Google, the average UK salary in 2021 was £25,971, so if the 800 sacked P&O sailors collective earned the average UK salary, then P&O would be paying them £20,776,800 a year – and of course additional National Insurance and perhaps pension and other costs.
Imagine this same scenario if P&O had decided to terminate a contractor to whom they were paying ~ £21MM annually, without notice, potentially in breach of the contract between operator and contractor. Can you see such a company sitting still and allowing P&O to “get away with it”? Somehow, I don’t think so. This is a classic example of the vulnerability of our legal system: where P&O felt that their sheer size would be enough to intimidate most if not all of the 800 workers into accepting this treatment without fighting back.
Much has been made of the fact that P&O are now going to replace these “expensive” British workers with cheaper foreign nationals, who, because of P&O’s flag of convenience, can be paid less than the UK minimum wage.
Yet I came across this rather intriguing reference on the UK’s Parliament web site:-
https://api.parliament.uk/historic-hansard/commons/1988/mar/30/licensing-of-ferry-services
which rather suggests that the Secretary of State has the authority to require ferry operators who offer services to/from UK ports to be licensed “in accordance with such terms and conditions as he may from time to time lay down”.
Now, if you’ll overlook the obvious sexist form of expression adopted, and if you’ll grant me the concession that the context of this quoted reference is part of a debate, not enacted law, it is clearly indicative that the government has previously considered issues such as this.
A UK Secretary of State, for example, might elect to make the grant of a Ferry Operator’s License conditional upon the Operator agreeing to
1. Be bound by UK employment law
2. Hire at least 50% of all personnel for any route to/from the UK, from the UK
3. Offer equal opportunities, terms and conditions for all UK employees within the organisation – i.e. agree to an operating model where UK employees aren’t hired for the lowest-paid jobs and are given equal opportunity for promotion.
And while we consider what P&O are doing, it might be worth mentioning the “Herald of Free Enterprise” a roll-on, roll-off (RORO) ferry, which capsized shortly after leaving the Belgian port of Zebrugge in 1987, killing 193 passengers and crew. Behind the immediate cause of the capsizing (the ship left port with her bow door open), broader blame was determined to be based on lack of experience and supervision and general communication and safety principles at the operator, Townsend Thoresen. This is relevant in the context of what P&O have done – because by bringing in lower-paid workers from different nationalities, they immediate create a communications problem (for example between officers and hands) where none previously existed.
Pure race-to-the-bottom stuff. Which the UK government could easily address, simply by mandating minimum standards on any ferry operating through any UK controlled port. Which of course would incur additional costs for operators. Hands up all those who expect the UK government to bring in such controls?
Thought so.
Thanks David.
From a tax perspective, there is a lot of dancing on the head of pins as to whether an unhelpful tax rule can be ignored.
Some of the notions put forward can be laughably flimsy (“Yes, I know that the employment law QC says that it’s very likely that my 100+ self-employed sales team are actually employees but, as they have to pay for their own paper-clips,
it’s all good and we don’t have to worry about that massive PAYE and NIC liability”).
In the case of a company, in my experience the keenness to take a view changes when there is also the potential knock-on tax liability for an individual shareholder. So, for example, by doing “x” a company might, if you squint in just the right way, save £25m of tax. But the company might be reluctant to do it if one individual shareholders might end up with a £100,000 inheritance tax bill if HMRC successfully challenged the position taken.
The government has made it harder to take a view in recent years by:
– increasing penalties (e.g. under the general anti-abuse rule, the serial tax avoidance regime),
– making directors personally liable (e.g. personal liability notices),
– early reporting (e.g. disclosure of tax avoidance schemes),
– focusing on reputations (e.g. code of practice on taxation for banks), and
– focusing on the advisers (e.g. promoters of tax avoidance schemes, code of conduct in relation to taxation).
So if the government was keen on doing something, there are plenty of ideas out there.
I was very surprised that Hebblethwaite didn’t respond to the 70mph speed limit question by explaining that he would ignore the limit in an emergency, if he were taking someone to hospital, for instance
But the most obvious reply to the assertion that they felt they were above the law would be to explain that they had taken their lead from the government’s behaviour over the last six years
Most recently when Brandon Lewis declared that the government would be breaching international law in a very specific and limited way
What was striking about the P&O announcement and the subsequent revelation that those unaffected seafarers on the two Dublin – Liverpool routes were employed under Dutch legislation, was that P&O knew precisely what they were doing and, like the Sandbanks tree fellers mentioned above, were prepared to take the hit.
What has been particularly galling has been the outpouring of crocodile tears and craw thumping among government ministers for whom such abominable behaviour is the “hire & fire” brexit commercial environment of their wildest dreams.