CLAUSE 17.—(Offences by corporations.) (Hansard, 25 October 1939)

§ Mr. Silkin
I beg to move, in page 10, line 42, to leave out "or," and to insert "and."
This Clause provides that where a company has been found guilty of an offence the board of directors shall be deemed to have been guilty of the 1512 offence unless they prove either that the offence was committed without their knowledge or that they exercised all due diligence to prevent the contravention. Merely to prove that the offence was committed without their knowledge would not be a sufficient deterrent. It may well be that directors would make themselves deliberately ignorant of a particular contravention, knowing all the time that certain things were going on. Moreover, the directors are the responsible persons in the management of a company. They are in the position of proprietors of a business, and for a director merely to say, "I was not aware that profiteering was going on in my company," should not be treated as a sufficient answer to a charge of profiteering. Therefore, in order to escape being deemed guilty of an offence under this Bill where his company has already been convicted, a director should not only have to establish that he was not aware of the particular offence, but also that he exercised all due diligence to prevent profiteering going on in his company.
I realise it is possible, if the Amendment is accepted, that certain consequential alterations will have to be made to the rest of the Clause, and, no doubt, if the Government accept the Amendment the other consequential Amendments can be made on the Report stage. This Amendment ought to be accepted, because otherwise the Clause is merely nullified. Any director who desires to commit offences of this sort could easily establish that he was not aware that a particular offence was committed, all the time being aware of the system that was in operation and of the kind of prices being charged.

§ The Attorney-General (Sir Donald Somervell)
This form of words has appeared in other Acts passed by this House, and, while appreciating the point made by the hon. Gentleman, I think that the case which he put would not be likely to arise. If it did arise, the court would probably see through it. Directors are responsible for the general policy and running of a company. On the other hand, directors may fulfil their duties to the fullest extent without being actually in touch with the day-to-day transactions of the business. Under the Clause, as drafted, the officers of the body corporate 1513 are deemed to be guilty if an offence has been committed. The onus is on them of proving one or other of the two things set out in the Clause. I think that a director who really knew what was going on would not be able to satisfy the condition of proving that the offence was committed without his knowledge. In the case of a director who was absent through sickness or some other cause, nobody would desire that he should be convicted; but the director who obviously was in touch with the business, and certainly ought to know what was going on, would, I should think—although, of course, one cannot forecast what a court would do in hypothetical circumstances— have to produce strong proof of his innocence before the court was satisfied under that first head. The second alternative is that the director proves that he exercised all due diligence to prevent the contravention. I agree that the two things are not made cumulative; but I think it would be ridiculous to make them cumulative, and to ask a man who had been absent through sickness for a year to prove that he exercised all due diligence to prevent the contravention.

§ Mr. Silkin
I said that I recognised that there would have to be some alteration in the remaining words if my Amendment was accepted. Whatever happens, a director who wants to escape conviction should have to prove that he exercised all due diligence to prevent the contravention. That should be essential.

§ The Attorney-General
Everybody will agree that you want to let out the man who, because of sickness, war work, or any other cause, could not have had knowledge of what was going on. It would be inappropriate to ask him to prove that he exercised all due diligence to prevent the contravention. Then, one has to deal with the case of a man who has not been absent from the business, and who is required to prove that he has exercised due diligence. I think the Clause will work as both the hon. Gentleman and I want it to work, so that if the man had no means of knowing what was going on he gets out under the first provision, and so that if he had means such as would entitle him, at any 1514 rate, to infer what was going on, he cannot satisfy the court unless he has given evidence of his vigilance as a director in seeing that the Act was not being contravened. I believe that these words meet the two classes of cases as adequately as words can; but I certainly do not mind looking at the words again, to see whether they can be improved in the light of what the hon. Member has said.

§ Mr. Silkin
I think these words go rather beyond what the Attorney-General has said, but if he will look at them again I am prepared to withdraw the Amendment.