The Two-Limbed Defence
Because the prosecution does not have to prove intent, the burden of proof shifts to the defendant when they wish to use the due diligence defence. To succeed, the defendant must prove two specific requirements on the balance of probabilities:
- That they took all reasonable precautions.
- That they exercised all due diligence to avoid the commission of the offence by themselves or by a person under their control.
The "balance of probabilities" is a civil standard of proof. It means the defendant must show that it is "more likely than not" that they met these requirements—effectively, a greater than 50% chance that their proposition is true.
Principles of a Robust Due Diligence System
Case law has established that a successful defence is not just about a single lucky moment; it requires a comprehensive, documented system. A due diligence system should be both pro-active (preventing faults before they happen) and reactive (correcting faults when they occur).
Key components of an effective system include:
- Written Documentation: Instructions, staff training, and records of checks must be kept.
- Management Oversight: The system must be under the directing will of the company, though responsibility can be delegated to competent employees.
- Continuous Improvement: The system must be modified or adjusted as new risks or information emerge.
- Consumer Feedback: Analyzing consumer complaints is essential to detect trends that suggest a systemic failure.
Lessons from Case Law
The courts have been strict in defining what constitutes "reasonable" precautions. A common pitfall for businesses is over-reliance on third parties.
The Limits of Reliance
In Sherratt v Geralds the American Jewellers (1970), a shopkeeper failed to prove a defence because they relied on a wholesaler's reputation regarding a watch's waterproofness without actually testing it. Similarly, in Taylor v Lawrence Fraser (Bristol) Ltd (1977), an importer could not rely on a manufacturer's written undertaking alone; they should have had the products tested themselves.
A blanket assurance from a supplier is rarely enough. In Riley v Webb (1987), the court held that defendants must take "positive acts" rather than just relying on a general condition in a contract.
The Importance of Sampling and Testing
A system is only as good as its testing regime. In Rotherham Metropolitan Borough Council v Raysun (UK) Ltd (1988), testing a single packet from a batch of over 10,000 was deemed insufficient. Likewise, in P&M Supplies Ltd v Devon CC (1991), sampling only 0.49% of imported toys was found to be inadequate.
The "Controlling Mind" and Delegation
One of the most significant legal principles involves how a company is held responsible for its employees. In the landmark case Tesco Supermarkets Ltd v Nattrass [1972], the House of Lords ruled that a company is responsible for the actions of its "controlling mind" (the Board of Directors).
If a company sets up a proper system and delegates responsibility to a manager, and that manager subsequently fails, the company may be relieved of liability for that manager's specific default, provided the system itself was sound. This decision has been criticized for allowing large companies to avoid liability for local management errors, but it remains a foundational principle.
Summary Table: Success vs. Failure
| Feature | Likely to Succeed (Due Diligence) | Likely to Fail (No Defence) |
|---|
| Reliance | Independent testing/sampling | Blanket supplier warranties |
| Records | Detailed, written logs of checks | No check or record system |
| Training | Documented staff training/passports | Inadequate or infrequent training |
| Reporting | Verbal/Written reporting systems | Lack of communication/supervision |
Summary Note: To satisfy the court, a defendant must prove that their system was not just a "paper exercise" but a functioning, monitored, and actively managed process that was capable of catching errors.
