Alton Towers & Network Rail: Did September Represent A Step-Change In Fines For Very Large Organisations?

Author:Ms Susan Dearden
Profession:Gowling WLG

With effect from 1 February 2016, every court sentencing a health and safety conviction, must follow the Sentencing Council's Definitive "Guideline for Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences".

The Guideline requires offences to be categorised according to the degree of culpability and degree of harm risked, and for that categorisation to be applied to one of a number of tables which suggest a range and starting point for the financial penalty to be imposed. Annual turnover of a business will determine whether the table to use is for "micro", "small", "medium" or "large" organisations. The Guideline suggests that where an offending organisation's turnover "very greatly exceeds" the £50 million threshold which defines large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence.

Fine Predictability and Banding Arguments

For businesses with turnover around or below £50 million, the Guideline has afforded a relatively high degree of predictability for fines on conviction with its tables and harm and culpability bands. That is helpful, even if the fines are now routinely higher than they were before the introduction of the Guideline. For the very large organisations ("VLOs"), while the starting point for a fine is the "large" organisation table, how has the Court approached the guideline which suggests moving outside the suggested range to achieve proportionate sentencing?

It has always been the case that it is relatively rare for health and safety prosecutions to be defended (and even more uncommon for a defence to succeed). The offences under the Health and Safety at Work etc Act 1974 ("HSWA") in particular are very widely and subjectively drafted. Section 40 of the Act reverses the burden of proof in relation to many of the duties which the Act imposes and which, in turn, depend on an assessment of what was reasonably practicable in order to manage and minimise risk. That, coupled with the presumption that the required standard has not been met when there is an accident, does mean that these cases are difficult to defend.

With higher fines certain under the Guideline, most defendants of any size, prefer to benefit from the increasingly valuable uncapped early guilty plea discount of up to one third rather than gamble the certain loss of that discount against the uncertain success of a not guilty plea.

Harm and culpability

As a result of the banding, arguments in the health and safety cases prosecuted post Guideline have focused not on what was or wasn't reasonably practicable and whether the defendant has breached HSWA duties, but have received early guilty pleas (to achieve the one third early guilty plea credit) and focused on:

Culpability - how far short of expected standards did the defendant fall, whether the breach was flagrant or minor what had been done to avoid the risk of an accident Harm - whether the accepted breach posed a high, medium or low likelihood of harm, how serious that harm might be, how many people were put at risk by it and whether the risk actually caused harm There is a higher differential for the fines suggested between harm categories than between culpability categories. But when prosecution in fact follows a serious accident, there is perhaps less scope for successful argument regarding the harm category than there may be on the culpability category. The cases so far reflect less movement by the Court from the prosecution's position on harm category than culpability category.

The arguments regarding categories are leading to more "mini trials" of these issues (known as Newton hearings) and although this will increase the costs payable, this may be justified where a shift in category might reduce a fine by £2 million.

To illustrate the importance of the categories, for a large organisation:

Starting point for fine Category range suggested for fine Impact of category change on fine starting point Very High Culpability Harm Category 1 £4,000,000 £2,600,000- £10,000,000 Harm cat. increase = £2 million Harm Category 2 £2,000,000 £1,000,000 - £5,250,000 High Culpability Harm Category 1 £2,400,000 £1,500,000 - £6,000,000 Culpability cat increase = £1.6 million Harm Category 2 £1,100,000 £550,000 - £2,900,000 Harm cat increase = £1.3 million Culpability cat. Increase = £900k Given that the tables only suggest fines and ranges for businesses with turnover (or equivalent for public sector organisations) of up to "£50 million and over", one of the biggest early concerns post Guideline was whether the fine that the large organisation table suggested, would be ramped up to achieve the objective of proportionate sentencing for VLOs.

That is not, however, what has happened in practice.

So far, the approach adopted by the Court to sentencing VLOs has been that the Court will fit the offence into the large organisation table. While the size of the business seems to influence the penalty dropping into the upper end of the suggested fine bracket, mitigation has been given as the reason to justify not pushing the VLOs into a higher bracket or beyond the table altogether for sentencing, and aggravating features (not size of the company's turnover) as the reason in some cases for elevating a fine up a culpability bracket.

In the Sentencing Remarks of Judge Cole sitting in Aylesbury in April this year, on the conviction of a VLO (Travis Perkins), he noted the objective of ensuring that the fine is sufficiently large to bring the appropriate message home to the directors and shareholders and to punish them but said:

"Even though this is a very large organisation, the mitigating factors here mean that I need not go outside the range in the Sentencing Guidelines for large organisation in the medium culpability, harm category 1 division, the range there being £800,000 to £3,250,000. I take the view that, but for the...

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