knowledge 29 June 2020 |

Job Titles Aren’t Everything When It Comes to Wrong-Doing

What Makes a Manager?

On 28 May 2020 in DPP v TN [2020] IESC 26 the Supreme Court was asked to consider the degree of responsibility required for an individual to be considered a “manager” capable of being found guilty of committing environmental offences under the Waste Management Act 1996 (as amended) (the “1996 Act”).  The 1996 Act states that where an offence has been committed by a body corporate, a person can be found similarly liable where two conditions are fulfilled. First, that person must be a “director, manager, secretary or other similar officer of the body corporate” and second, it must be proved that the offence was committed with their consent or connivance or as a result of their neglect. Similar provisions govern offences relating to theft and fraud;¹ investment;² health safety and welfare at work;³ company law;⁴ and tax.⁵

In coming to its decision, the Supreme Court affirmed and expanded upon the preceding judgment of the Court of Appeal (discussed in our briefing here). To be found to be a “manager” capable of being found guilty of offences under the 1996 Act, a person did not have to be shown to have control over every aspect of the affairs of the company. Rather, that person had to have real authority and responsibility for the area or activity in controversy. In establishing this test, the Supreme Court elaborated on the preceding decision of the Court of Appeal which had required the person to have “direct responsibility” over the activity or area in which the offence was committed.

DPP v TN

The background to the decision is as follows. Jenzsoph Limited (“Jenzsoph”) owned lands where dumping and waste activity took place in Kerdiffstown, County Kildare. The dumping and waste activity was carried out by Neiphin Trading Limited (“Neiphin”) which occupied the facility on foot of a licence from Jenzsoph. The Environmental Protection Agency (“the EPA”) also issued a waste licence to Neiphin to govern the operation of the facility. This licence required the facility to be under the control of a suitably qualified facility manager whose identity and qualifications were to be communicated to them. Neiphin identified Mr TN as this person, and provided information about his professional experience and employment history. In each of the annual reports which were submitted to the EPA, Mr TN was listed as the facility manager and positioned at the top of the management chart. Further, the Mr TN himself corresponded regularly with the EPA about the Kerdiffstown facility. In this correspondence his title varied from Director to Managing Director to Environmental Consultant. Documents from the Companies Registration Office identified him as having been the director of Neiphin’s parent company between 2008 and mid-2009, during which environmental pollution occurred in breach of Neiphin’s waste licence.

Both Neiphin and Mr TN were charged with offences under various provisions of the 1996 Act. The DPP’s case against Neiphin was that there had been breaches of the EPA licence it held. It had failed to operate within the terms of the licence and had caused environmental pollution. The DPP’s case against Mr TN fell under s 9(1) of the Waste Management Act. This allowed the DPP to prosecute him and for him to be found guilty of offences under the 1996 Act where it could demonstrate that:

• an offence had been committed by Neiphin with the consent or connivance of Mr TN or due to his neglect; and
• Mr TN was a “director, manager, secretary or other similar officer of the body corporate, or a person who was purporting to act in any such capacity”.   

At first instance, the Circuit Criminal Court acquitted Mr TN on the basis that he could not be said to be a “ director”, “manager”, “secretary” or “other similar officer” in the sense required by the 1996 Act. This acquittal was appealed to the Court of Appeal which found the trial judge had erred in law in directing a verdict of not guilty.

Court of Appeal: A “Manager” Must Have Responsibility at a Corporate Level and Direct Responsibility for the Area in Controversy

In coming to its decision the Court of Appeal found that section 9 (1) of the 1996 Act had to be seen in a modern context. The phrase “director, manager, secretary or other similar officer of a body corporate or a person who is purporting to act in any such capacity” requires individuals to hold responsibility at a corporate level. If an individual’s role is a significant one then the fact that there might be areas of company activity in which that individual is not involved does not mean that that person is not a manager of the corporation. The phrase “other officer” as distinct from “director” or “secretary” of the company must refer to individuals having a similar stature and exercising similar responsibility to what might be expected of a company director or company secretary. The Court of Appeal identified the question as whether Mr TN was functioning as a Senior Manager, having functional responsibility for a significant part of the company’s activities and having direct responsibility for the area in controversy. This decision was subsequently appealed to the Supreme Court.

Supreme Court: The Person’s Real-World Function and Role is Decisive, not their Nominal Job Title

The Supreme Court affirmed much of what was said by the Court of Appeal, but refined certain aspects of the test. The Supreme Court stressed that the term “other similar officers” should be considered separately and focused on the specific meaning of the term “manager”. In addition, the Supreme Court clarified that the requirement for direct responsibility for the area in question should not exonerate someone from liability who was in a senior position (such as a Chief Executive) who was aware of breaches of the law/procedures (e.g. relating to health and safety) but had no direct responsibility for their implementation.

To determine if someone was a “manager” the Supreme Court found:

• The person’s real-world function and role would be decisive, not their nominal job title.
• It was not necessary for a person to be in charge of running “the whole affairs of the company” to be a “manager” within the meaning of section 9 of the 1996 Act.
• The person must, however, have real authority and responsibility over the area in question. Express delegation of responsibility would be highly relevant, though such delegation did not need to be express if it was clear that in practice the person possessed responsibility for the area in controversy.
• Responsibility could be assessed by reference to a person’s authority to make relevant decisions.
• Regard should be had to whether the person in question was responsible for putting relevant procedures and policies in place, or similarly whether that task was performed by staff under his/her direction and control, and in respect of which he had the final word.
• The person’s role in the hierarchical chain could be important: the more senior, the more likely he would be to come within the meaning of the term “manager” as used in section 9 of the 1996 Act. However, if he had no true authority for that aspect of company’s affairs, and did no more than report to a more senior member on his activities of overseeing staff in implementing the policies devised higher up the chain, that would tend to suggest that he did not have the level of responsibility required.

Should you have any queries on managerial risks and responsibilities or the potential implications of DPP v TN [2020] IESC 26 (here) for your business please contact Brendan Slattery; Seán Barton; Valerie Lawlor; Eva Barrett; or Heather Mahon.