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Domestic Abuse: Time for A Specific Offence?

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19 March, 2014
Criminal Law, Lewis Bedford
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USMC-04952

– Lewis Bedford (LLB Law, Newcastle University) l.bedford@newcastle.ac.uk

The highly anticipated private members Bill, purporting to overhaul the law underpinning domestic abuse, is set for second reading early June this year. The Bill intends to create a separate offence running in parallel to the current Offences Against the Persons Act 1861.

Elfyn Llwyd, sponsoring the Bill, hopes the proposals will bring domestic abuse laws up-to-date by codifying the cross-government definition of domestic abuse adopted last year; a definition that the current law does not fully accommodate. If successful, the Bill will criminalize all elements of domestic abuse including what has been coined coercive control (ibid):

[A]n act or a pattern of acts of assault, threats, humiliation and intimidation or other abuse that is used to harm, punish, or frighten their victim

If the Bill is passed, perpetrators will find themselves facing a custodial sentence of up to fourteen years. Moreover, under the judiciary’s discretion, there is a possibility that the accused must attend a domestic violence rehabilitation program whilst in prison.

A number of measures are also being proposed in retaliation to the perceived justice gap and attrition problem inherent in many domestic offences. Concerns have been raised as to why cases often fall through in the prior stages to prosecution.

WomensAid underline how victims, predominantly women, may feel pressured into dropping charges post-incident in order to maintain a family’s reputation.  Additionally, particularly among Minority Ethnic communities, women often feel ostracized within their local areas due to ‘allegations of disloyalty or collusion’. Only making matters worse, the long costly nature of the court process leaves victims at risk of suffering further domestic abuse whilst waiting for cases to be heard. Arguably, because of these hurdles, victims are less inclined to report domestic abuse. Statistically, only 20% of rapes or sexual assaults are reported to the Police. Less serious cases of domestic abuse also share similar statistics.

Llwyd, hoping to address these issues, stated how the Bill intends to tighten up the investigatory process, create duties upon the police force in respect of domestic abuse call-outs, and provide statutory training in relation to such cases. However, with the Bill being what Llwyd calls a ‘working draft’, what these provisions specifically entail is yet to be specified.

Jamie Doward believes the Bill will be similar to its US counterpart, the Violence Against Women Act (VAWA). By strengthening penalties for re-offenders, creating dedicated hotlines, and ensuring police responses, the Act hoped to tackle similar issues that are faced in England and Wales today. In light of the Bureau of Justice’s statistics, the Act was, in the most part, successful. After the Act’s inauguration, intimate partner violence decreased by 64% – a statistic VAWA advocates have been keen to underline.

It’s supposed success was accredited to a combination of factors. Most notably, however, the Act has sectioned funds for training in how to cope with domestic abuse call-outs for over half a million law enforcing personnel every year. With Llwyd pointing towards training himself, it seems England and Wales may make similar provisions.

Lanette Ruff concluded in 2012, that training does matter. Ruff explored the responses of police officers with regards to domestic abuse call-outs in Fredericton, Canada. By drawing upon statistics compiled both before and after training, Ruff concluded that officers were more likely to report crimes once training had been completed. As somewhat of a corollary, guilty verdicts also marginally increased. Ruff found particularly promising how ‘ongoing training allows police officers to reflect on the importance of treating each domestic dispute call like it is their only opportunity to provide intervention’. Indeed, there has been a pressing concern that some forces in the UK are harboring a ‘culture of disbelief’ with regards to the more serious domestic offences. Active participation in training would go some way to correct this injustice (ibid):

[T]raining provides… an opportunity to reflect on their own biases and stereotypes… and how their views can have an unintended impact on their response to accused and victims

On the other hand, Ruff’s analysis also found that post-training, a majority of officers responded in a similar fashion to how they always had. Police still seemed reluctant to contact a temporary shelter or mention third party help centers.

Furthermore, Kate Pickert suggests that the fall in domestic violence in the US is more likely attributable to the general nationwide drop in domestic abuse, irrespective of the Act being implemented. Pickert believes that rather than shortening the justice gap, the VAWA spurred a counterproductive culture change in law enforcement. She believes particular training has the capacity to foster a culture whereby police are more willing to arrest on arrival. As such, women may be discouraged from reporting domestic violence in fear their partners will be arbitrarily detained in custody. Indeed, it is generally held among commentators that victims of domestic abuse are often dependent, particularly financially, on their abusive partners. If such is the case, foresight of an arrest surely works as a disincentive rather than encouraging women to speak up.

The Bill’s proposed obligations on officers might also prove ineffective. Llwyd, in his ten-minute motion, made little reference to what obligations police forces in England and Wales would be subject to. Catherine Baksi interprets Llwyd as proposing a duty to investigate.

Under such a scenario, officers will most probably be obliged to investigate if they hold a reasonable suspicion that the supposed offence had occurred. In most cases, the accused will unreservedly deny any accusations, leaving any reasonable suspicion grounded solely on the victim’s testimony. Officers will find themselves faced with little option but to side with one or the other; accused or accuser. The bottom line is, those making callouts will be caught in an uncomfortable and cost-ineffective situation. Furthermore, having to deal with a barrage of similar in-conclusive scenarios, officers may become desensitized towards those less serious, non-evidential abuses within the home that the Bill aspired to address. Indeed, this may work as a catalyst for the ‘culture of disbelief’ [quote other article here] some commentators are keen to underline.

Clearly, the proposals may prove ineffective in tackling the issues faced by the law related to domestic abuse. Some have questioned whether reformulating the law is even necessary with the Offences Against the Person Act and subsequent case law already providing adequate legislative underpinning. Instead, focus should be placed more readily upon cutting domestic abuse before it happens, rather than finding justice for victims. Personally, however, I believe reforms should be welcomed with open arms.

Providing a separate offence will not only clarify what domestic abuse entails, but also provide a platform whereby change, both legal and social, can be obtained. The criminal law undoubtedly holds an overwhelming ideological and discursive power among those subject to it. By coherently setting out the offence, Parliament sends a strong moral message about intimate partner abuse. In effect, the law can be used as a tool to further the changing attitudes and ideals in relation to domestic abuse. Indeed this is increasingly important for those offences that don’t ‘leave scars or bruises, but [are] every bit as debilitating’. Such offences are relatively new within the sphere of what constitutes domestic abuse; society must be reminded that coercive control should not, and will not, be tolerated. Nevertheless, it must be borne in mind that change can go two ways. Hopefully, those drafting the particular Bill are appreciative of how particular proposals can prove counterproductive, not just for victims but society as a whole.

What the Dogs in the Street Know: On the Runs and Hanging Peter Hain Out to Dry

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14 March, 2014
Colin Murray, Constitutional Law
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outside-in

– Colin Murray (Senior Lecturer, Newcastle Law School) colin.murray@newcastle.ac.uk

This post was first published on Human Rights in Ireland

“In Northern Ireland”, Peter Hain opined in his autobiography Outside In (pictured left), there is “always a crisis around the corner” (p.323). There is more of a feel of truth than truism to the statement, especially as the on-the-runs scandal dominated recent headlines (before being eclipsed by developments in the Crimea). I’d be surprised if a good few Irish viewers watching the BBC 2 drama miniseries 37 Days, on the slide towards the First World War, haven’t felt there is something queasily apposite in the scenes where the UK Cabinet’s attention is wrenched away from the “muddy by-ways of Fermanagh and Tyrone” and towards a developing European Crisis.

As I’ve previously highlighted on humanrights.ie, Northern Ireland has repeatedly seen victims’ interests cranked up or down depending on the aims of the political parties. As the n-the-runs scandal broke, the DUP leader Peter Robinson quivered with outrage at the injustice of “amnesties”, whilst Gerry Kelly’s television interviews stuck rigidly to the acronym “OTRs”, perhaps hoping people would lose interest in his review of the technicalities of why it was inappropriate to describe the assurances given to on-the-runs as amnesties. But in this case the DUP’s readiness to hang Peter Hain, Northern Ireland Secretary from 2005-2007, out to dry for supposed misleading of Parliament seems particularly vindictive.

Hain’s establishment of a seven-person PSNI team to evaluate whether it was possible to inform individuals linked to historic offences that they were now not wanted by police in the UK (Operation Rapid) has been firmly in the spotlight since news first broke on 25 February of the collapse of the prosecution of John Downey for his alleged role in the IRA’s Hyde Park bombing of 1982. The problem, as Mr Justice Sweeney explained, was that the PSNI investigation had not so much been Operation Rapid, but Operation Hasty (at [173](19)):

At the time of Operation Rapid’s review of the defendant’s case, [the PSNI] was aware that the defendant was wanted by the Metropolitan Police in relation to the Hyde Park bombing, but failed to pass that on to the DPP(NI).

On the strength of this review, Northern Ireland’s Director of Public Prosecutions certified that Downey was not wanted in the UK. Downey’s subsequent letter from the Northern Ireland Office, informing him that he was not wanted, had seemingly not counted for much when he had been arrested at Gatwick on route to a holiday in Greece in May 2013. But Mr Justice Sweeney effectively found that Downey had a legitimate expectation that he would not be subject to arrest over the Hyde Park bombing if he came to the UK (at [173](8)):

The standard letter did not amount to an amnesty as such. However, its terms (and in particular the references to the PSNI and the Attorney General) were intended to and did make clear that it was issued in the name of the Government and that the assurances within it could be relied upon with confidence as meaning what they said, namely an unequivocal statement that the recipient was not wanted ‐ with the obvious implication from the remainder that thus the recipient would not be arrested or prosecuted unless new evidence came to light or there was a new application for extradition.

Hain’s effort at a quiet “resolution” of the on-the-runs issue, so thorny that it officially remained part of the Haass Talks agenda, was now very much in the public domain. Cold comfort that, as the judge affirmed, he could not talk account of the impact of his decision on the peace process (at [168]).

This is not the first time that the potent mix of judicial authority and conflict resolution in Northern Ireland has landed Hain in political trouble. But unlike the unfortunate passage in Outside In in which he questions Lord Justice Girvan’s impartiality and speculates over whether the judge had reached his decision over Bertha McDougall’s appointment as Victims’ Commissioner in a fit of pique at property tax reforms in Northern Ireland (p.333), at least Hain has yet to question Mr Justice Sweeney’s integrity. He has, however, been insistent that the issue was not hidden from Parliament. These claims drew a caustic response from the Alliance Party’s David Ford:

I’ve heard Peter Hain say “I have stood up in the House of Commons and said that this has to be addressed”, as if this was somehow was saying “this is how we’ve addressed it”, including the letters. So I think he needs to examine his precise background and perhaps that’s something a judge will be doing over the coming months.

Everyone seems to have jumped on the Blame-Hain Game. Even Labour’s shadow Northern Ireland secretary, Ivan Lewis, has called the John Downey letter a “catastrophic error”, for which he offers an “unequivocal apology”. Just as cutting is Lewis’s air brushing of Hain out of the peace process picture in his letter to the Belfast Telegraph, expressing his pride instead in “what people like Tony Blair, Mo Mowlam and Jonathan Powell … did so under the banner of a Labour Government”. Ouch.

Hain has long admitted to a love of the bargaining process, and a reluctance to let an issue sit, even where caution may be wise: “There are ministers who prefer a quiet ride and manage the in-tray without changing anything, and I never saw myself as one of those” (p.332). Perhaps it is this wheeler dealing, so useful on the ground in 2005-2007, which makes it so easy to ensnare Hain today (and why legal processes in particular have left him so uncomfortably on the spot). But this really feels like hanging the (manifest) faults of the peace process on one person’s shoulders. It wasn’t just Peter Hain, who suffered an addiction to crisis talks and back-room deals. Most of Northern Ireland’s political elite stand implicated alongside him.

And whatever temporary bounce the DUP currently see in the polls, the reckoning from this scandal may well be yet to come. Although on-the-runs play no part in Hain’s autobiography, the prominence of issues surrounding former IRA members in the run up to the St Andrews’ Agreement are plain to be seen. Discussing the suspension of Sean Kelly’s licenced release in 2005, Peter Hain claims that “DUP leaders, often uncannily well informed from within the police, knew all about it well before I did” (p.324). The scandal has all the feel of a “dogs on the street” issue in Northern Ireland. The importance of the on-the-runs issue to Sinn Féin before the St Andrews Agreement was no secret. Equally, it was evident that no arrests were being made or extraditions sought after St Andrews. The missing link did not take much effort to fill in, even had those involved had been discrete in the interim. And they haven’t. Back in 2009 Jonathan Powell set out in his account of deal-making in Northern Ireland, Great Hatred, Little Room: Making Peace in Northern Ireland, that the DUP leadership had accepted the deal and made hay from it for their own purposes:

They said they could accept the implementation of the unpopular undertakings we had made under the Joint Declaration on OTRs as long as Tony wrote to Paisley making it clear that these concessions had been agreed during David Trimble’s watch, not theirs.

This makes the DUP’s ratcheting of the tension on this issue harder to understand, whatever the short-term gains of being seen, as David Cameron put it, to be willing “to unpick or call into question all the difficult decisions that were made” in negotiating a settlement to the Troubles. Mr Justice Sweeney may have vindicated “the public interest in holding officials of the state to promises they have made in full understanding of what is involved in the bargain” (at [175]), but an inquiry will illuminate not only official actions but the approach of Northern Ireland’s politicians towards them. For if the judicial inquiry into the on-the-run letters does reveal widespread knowledge of the scheme in the higher echelons of the DUP, and gives Powell’s claims the imprimatur of judicial legitimacy, the issue will very quickly rebound upon them.

Pursuing a Career at the Criminal Bar – A Fool’s Choice?

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6 March, 2014
Criminal Law, Law & Practice, North East Law Review Blog Competition, Sophie Allinson
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Image Source: http://www.gazettelive.co.uk/news/teesside-news/legal-aid-cuts-protesting-barristers-6472513

– Sophie Allinson (LLB Law, Newcastle University) s.allinson@ncl.ac.uk

“Today our worst fears have been confirmed, another round of cuts, after three years of cuts, cuts and more cuts“.

Nicholas Lavender QC

 Uncertainty is a theme increasing in prominence throughout all practices at the Bar, but none more so than the Criminal Bar. Cuts to the criminal legal aid budget were confirmed yesterday, reducing the funding available by £220 million. Widespread opposition and strong condemnation has been voiced, with Nicola Hill, president of the London Criminal Courts Solicitors Association, damning the confirmation of the cuts as, “a shameful day in legal and criminal justice”. Such a measure of austerity will mean fewer people than ever before will qualify for legal representation, and worryingly, many will find themselves unable to afford access to justice. The closure of several high-profile chambers is indicative of the crisis facing the criminal bar. Barristers of the highest quality are struggling to fill their diaries. Many junior criminal barristers have made it plain that they cannot survive on their wages. Such a crisis begs the question, who could possibly still want to pursue a career as a criminal barrister?

It is true that cases will not vanish, there will always be crime. The law will not cease to operate simply because funding has been withdrawn. Representation, however, is in great danger of disappearing, as barristers seek to make ends meet in other fields of law. This raises extremely alarming questions about the possibility of miscarriages of justice and the upholding of democracy, as quality barristers are forced out. The legal profession has voiced their fury by holding a half-day demonstration. This is the first time barristers have completely withdrawn their labour in support of a cause, with a further strike planned. Those already trained within the profession are struggling to see a viable future for their career. Ministry of Justice figures show that criminal barristers have an average income of £56,000. However, Nigel Lithman QC, chairman of the Criminal Bar Association explains this is before all other costs have been deducted. Lithman argues the number of bankruptcies in the junior bar is increasing at an unheard of rate, with the majority struggling to meet the cost of living.

Junior barristers currently undertaking pupillages at criminal sets have reported annual incomes of no more than £24,000. To put this in perspective, this is equivalent to a basic cleaner’s salary and lower than entry level jobs in nursing, local government or the police. The amount of debt accrued in the years of university and graduate training outweigh the financial reward substantially. It is true that many are doing rewarding work which they are passionate about, yet the truth remains that these students will have financial obligations to meet. The old mantra of sticking with it to reap the eventual reward appears to have been wiped out. Hearings in the magistrates’ court are usually in the range of £50 – £80 and Crown Court work is increasingly scarce. The majority of those at the junior end are still saddled with student debt, combined with rising living costs, particularly on the South Eastern Circuit. The profession appears to no longer be economically viable.

It is true that in times of austerity, every publicly funded area must bear the brunt of cuts. Nevertheless, the cuts announced this week have been criticised as unprecedentedly harsh. The Ministry of Justice made few concessions, despite a sustained campaign emphasising the cut’s irreconcilability with the public interest. Consequently it is expected that skilled and experienced advocates will be pushed away from publicly-funded criminal work. Indeed some chambers have found themselves unable to continue operating. Tooks Chambers, having worked on landmark cases such as Hillsborough (although not as a criminal set), began dissolution in 2013, directly blaming legal aid cuts for their inability to continue.

What do these cuts mean for students? For those seeking a profession as a solely criminal practitioner, the outlook is decidedly bleak. Chamber sets specialising in criminal law rely overwhelmingly on cases funded by legal aid. The steady reduction in this source of income has left a large number of chambers economically vulnerable, and unable or unwilling to provide financial support to their pupils. For several sets, funding for pupils has been entirely withdrawn. The majority of those wishing to undertake the BPTC must now fund the absolute minimum £12,000 tuition fee entirely on their own, with no guarantee of a job upon completion of their training. If only a privileged minority can fund their course independently, surely the criminal bar is inaccessible to the majority of students who cannot justify this financial risk, especially without the guarantee of an income at the end.

However, attempts to support those who still seek a career at the Bar cannot be overlooked. The Inns of Court have pledged significant financial contributions in an effort to encourage chambers to continue offering pupillages in the short-term. The “pupillage matched funding scheme” will provide 50% of the fees offered to trainees by chambers. James Wakefield, director of the Council of the Inns of Court insists that the decreasing availability of opportunities for hopeful barristers will be tackled by the funding scheme. Of course, the introduction of this funding will prevent the profession from dominance by the financially privileged. On the face of it, those who cannot afford the onerous costs of the BPTC should not be deterred, as there will still be financial assistance available during training.

However, whilst the scheme may keep the opportunities for training open, what follows after that? Ultimately, with less paid work on offer for junior barristers, what good will a pupillage be? This has been acknowledged by the Inns, who have announced a review of the scheme in 2015.  Furthermore it has been stated funding may be withdrawn entirely if the scheme proves unworkable. Critics of the proposal, including Nicola Hill, have already pointed out that the result will be an abundance of qualified junior barristers, fighting for the few remaining cases available. Whilst such a scheme may be successful in ensuring students are not deterred from undertaking training, it will be unsuccessful in finding these students work when they need it.

Nevertheless, during such times of uncertainty, it can only be a good thing that the doors to the profession are being propped open for as long as possible, denying them the chance to slam shut infinitely. The economy is recovering, albeit is slowly and incrementally. Whilst it is unlikely that the Government will restore the legal aid budget in its entirety, alternative courses of action will develop over time. Chambers specialising in criminal law will adapt to survive. It is expected that many sets will branch out into other areas, pursuing cases in fraud, bribery and regulatory law to bring in stable fees. This will certainly reassure those who plan on becoming a criminal barrister, however it must be noted that the type of casework is likely to be less socially rewarding than it has been over previous years, as the focus is changed. Those who were once drawn to the criminal bar to pursue ideals such as ‘innocent until proven guilty’ will find themselves working towards substantially different mantras.

Ultimately though, it is argued that it would be naïve to ignore the fact that the Criminal Bar appears to be a sinking ship. With those already in the profession being compelled to make the choice between abandoning, or being forced to walk the plank, students who are yet to finalise their career choices would be well advised to stay away from the profession.  To those already at the criminal bar, the choice is clear-cut, leave voluntarily or wait to be forced out. Huge financial risk is unlikely to be outweighed, as the potential for reward is being increasingly reduced, with very little indication of an imminent return. There will always be crime, thus there will always be cases. But the availability of these cases, and the money gained from undertaking the enormous level of work demanded appears to render a choice to pursue a career as a criminal barrister as nonsensical. It is a saddening truth to realise that the criminal bar is no longer a realistic option for students with aspirations to become a barrister. With this said, it can only be hoped that as the economy commences its recovery, the legal sector may slowly begin its revival.

R V Brown: Where are we now?

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6 March, 2014
Criminal Law, North East Law Review Blog Competition, Timothy Wilson
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Fifty-Shades-of-Grey-1200x500

 Image Source: http://thestudentlawyer.com/2013/03/21/r-v-brown-20-years-on/

– Timothy Wilson (LLB Law, Newcastle University) t.wilson3@ncl.ac.uk

Most law students are familiar with the infamous case of R V Brown, in which several homosexual men filmed themselves consenting in sadomasochistic activities. For the faint of heart, I will exclude details of the acts but they were very extreme. When this tape accidentally found its way into the hands of the police, they were all arrested and charged with Grievous Bodily Harm (GBH). Under s.20 the Offences Against the Persons Act 1861. The House of Lords eventually held that it was not in the public interest for the court to allow members of the public to wound each other “for no good reason”.

The attitude of the majority is best summed up, I feel, by Lord Templeman: “Society is entitled and bound to protect itself against a cult of violence. Pleasure derived from the infliction of pain is an evil thing. Cruelty is uncivilised.”, though it must be mentioned that a huge amount of the judgment focused on the fact that the activities were homosexual. It being considered a “comfort” that one of the “victims” had “settled into a normal heterosexual relationship”. Lord Lowry also continually stressed that he would not allow an exception for “sado-masochistic homosexual activity” throughout his judgment.

A running theme was comparisons made to prize fighting and ordinary sports and boxing. Prize fighting was illegalised because it was not seen to be safe or within the public interest, yet other sports were allowed. This was because they were seen as more noble pursuits but mainly because it was not against the public interest, a main consideration for the court. That the latter has a referee to prevent matters from getting out of hand was also a justification.

The appeal against the previous convictions was passed by a bare majority and so it is useful to see what the dissenting judges had to say on the matter. As Lord Mustill points out early in his judgment, that the men in question would have already have convicted for sexual offences under the Sexual Offences Act 1967 (they were spared because of a statutory time limit) is easily overlooked, however since the Equality Act 2010 came into force, this is no longer an issue to write about, just something that we can sadly shake our heads at in hindsight. Lord Mustill focuses heavily on the 1861 Act itself and wonders whether it can account for activity which did not involve any aggression, brutality etc. against the person but was instead more for the benefit of the person. He also wonders whether the makers of the Act even imagined it could cover such bizarre circumstances.

In considering various cases, Lord Mustill comes to the conclusion that there are so many exceptions to the general rule that it is hard to decide where the case fell. Lord Mustill looks at the case in very narrow spectrums. The topic to focus on is “Fighting” which eventually comes to the conclusion that the courts have veered from earlier decisions in some cases and made a public fight legal because of consent but illegal because it wasn’t in the public interest for people to fight in the street in the case of Attorney-General’s Reference No. 6. Lord Mustill believes that “circumstances must alter cases” far too much for the act to simply be illegal until something else says otherwise.

Lord Mustill didn’t think that the consensual infliction of harm should be illegal under the 1861 Act simply because it is just another violent act. He also distinguishes this case with prize fighting, on the grounds that prize fighting was illegalised because of its inherently disruptive nature and the policy at the time of wanting to prevent this.

Finally the issue of public interest was raised. Lord Mustill made it very clear that this should not be decided on the basis of what was morally right, a view that, from their general demeanour, it could be said that the majority did not share. It is not that he found the actions moral in the slightest; he just didn’t find them a question for the criminal court to decide. He then went on to say that the question was not (paraphrased) “should sexual acts be given special protection” but instead, “should they be actively given condemnation”. Lord Mustill also recognised that given the ritualistic nature of the acts, the risks of serious injury were severely lessened, though if such injury did arise then it would be treated as any other.

There are numerous cases where the decision has been distinguished from “Brown” for seemingly arbitrary reasons, specifically R V Wilson (pages 270, 271 and 273). In this case, the defendant heated a knife and branded her with his initials with her consent. However it was placed in the same category as getting a tattoo and so the defence of consent applied. The courts also made the point that it was not the duty of the courts to interfere in the matrimonial home. The sheer hypocrisy of this decision, in the same year as Brown, should be painfully obvious.

There are other considerations I would like to focus on, especially with reference to sports. Simply, sports are dangerous. People die in sports, bones are broken and some sports exist for the sole purpose of allowing a man to fight another man, yet all is excused by consent and lack of aggression. For example, in the case of Condon V Basi (pages 867 and 868), a foul tackle resulting in serious leg injuries in a football games was only found to be unacceptable because the defendant wasn’t being careful enough. From personal experience, whilst practicing martial arts, my sparring partners and I suffered injuries ranging from broken noses, cuts, unconsciousness and even a broken wrist. However it would appear that because we all took reasonable care not to do those things and because we all consented to the risk, there can be no hope of prosecuting any of us, despite serious injuries.

It is also worth pointing out that the distinction made by the courts involving the lack of a referee is somewhat ludicrous for similar reasons. There was a “very experienced Class 1 referee” in Condon, there were instructors watching over my group and yet injuries still occurred. I would argue that the use of a “safe word” is a far better indicator of when the activity should cease than an outside observer. Pain thresholds differ with people after all.

Here is the crux of the argument though. Though the last legislation passed on this issue was only in the Criminal justice and Immigration Act 2008 in s.63 and s.66, only criminalising vaguely “extreme pornography” and legalised the defence of consent, so long as it was possible to consent to such a degree. Since this time, a number of significant events have occurred. Love it or hate it, the shockingly successful book series “Fifty Shades” dragged the issue into the public eye and it is safe to say that the idea of such actions were somewhat normalised as a result of this success. Shortly after this, the conditions of sadism and masochism were cleared from being an indication of mental instability in the Diagnostic and Statistical Manual of Mental Disorders (DRM5), a prominent publication on the subject. Perhaps most significant of all, in early 2013 Stephen Lock was acquitted by a jury after engaging in sadomasochistic activity. Whilst it was only within the Crown Court, this is a strong indicator of changing attitudes and the defendant drew the comparison to a bad tackle within a game of football as well. These evens show just how far the courts and society have come when a judge is happy to allow a jury to acquit on such reasoning.

This is by no means a complete account of the case for and against such activities, nor is it even a complete summary of Brown but I feel that the points surrounding changing attitudes and irregularities have been covered.

In conclusion, it can be safely said that the reasoning used with Brown is now quite outdated, despite only being 20 years ago. Since then society has become less concerned about differences in sexuality and such acts are no longer scientifically condemned. I do not advocate the domestic abuse portrayed within the book series “Fifty Shades” but nor can I say that two (or more) consenting adults should be at risk of prosecution for private acts no more dangerous than a football game. Given the evidence, it almost seems inappropriate for the courts to have the final say in this matter, given how inconsistent they have been so far. If any solution should be found, I agree with Lord Mustill’s judgment that would be Parliament the best body to decide, after very careful consideration of evidence and attitudes that may be so far unknown to them.

Shareholder Value or Stakeholder Value, which one shall be in favour of? The best beneficial approach is to harmonise them!

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6 March, 2014
Corporate Law, North East Law Review Blog Competition, Phuong D. Nguyen
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Wall_Street_Sign

Image Attribution: (By RMajouji at en.wikipedia [CC-BY-2.5 (http://creativecommons.org/licenses/by/2.5)], from Wikimedia Commons)

– Phuong D. Nguyen (LLM International Business Law, Newcastle University) p.d.nguyen@newcastle.ac.uk

I. Introduction

Within the context of corporations, the crux of the matter at issue lies in the concern of what the optimal objective of companies is, “for whose benefit are the managers of a company to run the company” (Andrew Keay, The Enlightened Shareholder Value Principle and Corporate Governance (1st edition, Routledge, 2013), 15). This relates to the two noteworthy theories related to shareholder value and stakeholder in corporate governance, whether either of them should prevail. According to the spirit of the latest UK Corporate Governance Code, with the aim of reaching the target of good corporate governance, the managers of companies shall act in favour of its owners (shareholders), concomitantly give consideration to all stakeholders in terms of their interests (Justine Simpson and John Taylor, Corporate Governance, Ethics and CSR (1 edition, Kogan Page Limited, 2013), 105). Hence, apparently, under each theory, profits of all of members of companies are worthily considered. In a general view, the most favourable objective of companies is to serve the interests of both shareholders and stakeholders (Simpson J and Taylor J, at [121]). This paper work will lay down some major points regarding the two cornerstone values in corporate governance in order to sharpen the perception why both should be taken into account and harmonized with each other to fortify the general development of corporations.

II. Shareholder value – Why shareholder value should be taken into account in the light of shareholder theory?

In the case of Dodge v Ford Motor Corp (1919), shareholder value was highlighted by the Court as “business corporation is organized and carried on primarily for the profit of stockholders.” With the primary emphasis on the stockholders’ interest, the managers were censured for not meeting the requirement of operating the company as a business corporation according to the charter. The concept of shareholder value theory, also known as “shareholder primacy theory” or “shareholder wealth maximization” has been pervasive and determined as the aim of large public corporations, certainly as prominence since 1970s. (at [370]) The theory of shareholder value was emboldened as “the orthodox assumption” by Adolf Berle and Gardiner Means as the exercise of powers conferred to management was based on “the benefit of all of the shareholders as their interest appeared”. (at [373])

The shareholder value has been created to protect the remuneration of shareholders who are considered as the real owners of companies. As “the shareholders receive residual earnings in the form of dividends by virtue of their contract” which may be reinvested in companies, nonetheless, the share might come back to the central agent not by its origin, hence, “in no case, either legally, contractually or statutorily, does profit belong exclusively to the shareholders.” (Michel Aglietta, Antoine Reberioux, Corporate Governance Adrift: A Critique of Shareholder Value (Edward Elgar Publishing Limited, 2005), 33).

­On the other hand, this also links to the agency theory which is radically discerned that “the managers or directors are agents for the investors or shareholders as beneficiaries or principals” since they are conferred with the principals’ money and powers to generate profits, increase the value of investment for their investors. (Simpson J and Taylor J, at [25]).  Nevertheless, in practice, it hardly implies that the objective of the company is to manage in the exclusive interest of its shareholders. (Aglietta M, Reberioux A, at [34]). Since the objectives and targets of the shareholders and the benefits of the managers may be in conflict, thereby, naturally the managers may make decisions that benefit them the most which may not be the most profitable choice for their investors. (Simpson J and Taylor J, at [25]).

In addition, compared to stakeholders like employees whose benefits are assured from the approach of taking stock and salary payment, notwithstanding, “the shareholders do not get anything because they only receive any repayment of capital if the corporation is solvent” (at [400]) or merely have dividends whilst the company is prosperous. As being the risk-bearers having residual claims in the company, they are highly likely to be at risk, thereby, the risk-bearers should take precedence and optimum in the distribution of power and profit. Hence, the allocation of interests in favour of shareholders might be in accordance with the basic principle of externality management. (Aglietta M, Reberioux A at [34]).

In the other camp, under the theory of shareholder primacy, in respect of the mentioned theory, managers are employed by the principals to operate the business. Hence, the shareholders are the best suited to guide and discipline managers in the conduct of their powers and duties (at [380]). Moreover, inevitably, the operation of corporations would be well-run as “both the managers and the non-executives are fully accountable to shareholders for what they do in running the corporation’s business.” (at [381]). The shareholders absolutely have the rights to intervene the business operation as well as other lawful rights which are not bestowed on stakeholders (at [448]), for instance, if the managers or directors breach their duties, accordingly, a shareholder can bring derivative actions against the managers, directors.

III. Stakeholder value – Why stakeholder value should be taken into consideration under the stakeholder theory?

It is ostensibly apparent that if a company merely concentrates on delivering high shareholder value today, it may tend to be on the brink of collapse tomorrow (at [449]). In other words, firms of which the sole concentration is to maximize profits to shareholders may diminish the wealth currently created by the company. Moreover, as the shareholders are also listed as a special genre of stakeholders (at [448]), thereby, taking other values into consideration is a wise approach that the company establishes and sustains its wealth capacity for the future. It is unexaggerated that corporate success is contributed by shareholders, however, it is also significantly dedicated by stakeholders who are significantly affected by the actions of companies (Keay A, at [42]). Thereby, the stakeholder theory holds that the cardinal responsibility of a corporation should not solely maximize shareholder wealth as with the contribution towards companies, the stakeholders deserve protection, their interests should be taken into account by managers (Keay A, at [42]). Comprehensively, “the company is an agent that serves all stakeholders and not just the shareholders.”(Florent Noel, “Downsizing, Financial Performance and Corporate Social Responsibility” in J. Allouche, Corporate Social Responsibility (Palgrave Macmillan, 2006), 69)

Additionally, stakeholders, in the essence of short-term advantage, are much more susceptible than shareholders “who have more of an opportunity” to get rid of corporations. (at [379]) As “they can “do the Wall Street Walk” and sell their shares on a stock exchange, whilst other stakeholders are not able to exit so easily. (at [379]) Furthermore, it is ostensibly reasonable that shareholders, based on the target of profits, may somehow sabotage and deteriorate the generally progressive growth of companies by merely concentrating on gaining short-term profitability. Hence, the assurance of long-term success and profitable growth of companies by balancing the interests of all members including both shareholders and stakeholders are necessarily required (Simpson J and Taylor J, at [120]). Accordingly, pursuant to the UK Company Act 2006, directors are obliged to promote the process of the company by acting in good faith to create benefits for the corporation’s members and also in the respect to the interests of employees, a good rapport with suppliers, customers and others, the impact of the company’s operations towards the community and the environment, the maintenance of reputation for high standards of business conduct and the fairness of acting between members of the company. (Article 172(1)).

III. Whether there should a dominant value in corporate governance?

It is plain that companies are considered as “profit-making” corporations (Keay A, (at [3])), in addition, concurrently as the most critical institutions “for social wealth creation in capitalist economies” [at 195]. It has been for several years since the early years of twentieth century, shareholder value theory and stakeholder value theory have been underlined to answer the query based on what purpose that directors should manage their companies [at 448]. Blatantly, it might be a mistake to separate the shareholder theory and the stakeholder theory as rivalling in the day-to-day management of companies since the maximisation of profits is emanated from well-managed companies and how companies are well-managed is based on the idea of stakeholder theory. Correspondently, they should be appropriately emerged to be taken advantage of positive and beneficial advantages – generally, a so-called proper constellation of shareholder primacy and stakeholder theory.

IV. Conclusion

In general, there is a predicament which is that “directors can’t serve two masters” (at [74]). However, the advent of a further elaboration of shareholder value – “enlightened shareholder theory” – radically grounded on the conventional stewardship theory – differently underlines the contentment of stakeholders’ benefits to consolidate the long-term survival and prosperity of corporations (at [74]). This is also what the UK Company Act inclines to pursue to reinforce stable and long-term corporate governance.