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What price on safety failures?

19 January 15

New guidelines produced by the Sentencing Council (England & Wales) on penalties in health and safety and food safety cases are likely to impact on Scotland

by Vikki Watt, Laura Irvine

In November 2014, the English Sentencing Council began their consultation on sentencing guidelines for health and safety, food safety and hygiene offences. Although the Council recognised that corporate manslaughter and fatal health and safety offences benefit from existing guidance, the fines imposed in some cases were considered to be on the low side, the parameters for individual penalties were ill-defined and there was a perceived inconsistency in how the courts applied the existing guidance.

The existing guidance for fatal cases produced by the Sentencing Council has been approved by the High Court in Scotland and is applied by the courts here when sentencing for health and safety offences, including non-fatal cases. The consultation and any resulting guidelines may therefore be equally important to duty holders operating north of the border.

The proposed guidelines are intended to cover a wide range of offences from rat infestations to a supermarket’s failure to recall faulty food products. The consultation (click here to view) closes on 18 February 2015.

It was prompted in part by the Court of Appeal cases of R v Sellafield Ltd and Network Rail Infrastructure Ltd (where respective fines of £700,000 and £500,000 were upheld), in which the Court of Appeal looked at what the purpose of a fine imposed on a corporate entity should be:

“A fine of the size imposed, even though only a little more than a week's profit and about 2% of its weekly income, would, in our view, in the circumstances achieve the statutory purposes of sentencing by bringing home to the directors of Sellafield Ltd and its professional shareholders the seriousness of the offences committed, and provide a real incentive to the directors and shareholders to remedy the failures which the judge found existed at the site at Sellafield”.

Taking this lead, the Council’s proposal is that although the court must continue to have regard to the established principles (seriousness of the offence, how far short of the appropriate standard the offender fell and its financial means), it must also have specific regard to the impact the fine should aim to have on the offender’s business and activities in the future.

Equally, for individual offenders or sole traders, the Council recognised that whilst custodial sentences were an option, courts tended in the majority of cases to impose fines. They recognised that further guidance was required in order to set out parameters which would commend when those alternative disposals would be appropriate.

Increase in the pipeline?

The Council suggests that to enable the court to assess the financial means of the offending company, its assessment should initially be based on the annual turnover of the company rather than the traditional bottom line, as this is less susceptible to manipulation than other accounting indicators. The guidelines also propose that the court must take into account the other financial circumstances so that the fine can be properly and fairly assessed.

It is suggested that fines for corporate manslaughter could be as high as £20 million for companies with a £50 million-plus annual turnover. The proposals also suggest that fines for fatal health and safety offences could be as high as £10 million.

Assessing the seriousness of the offence will remain a significant factor, but if the proposals are introduced, large corporate entities will risk significantly larger fines being imposed. In practice, this could result in fewer pleas of guilty and more trials, with duty holders opting to risk the Crown proving their case, rather than risking gamechanging fines.

It also seems inevitable that these guidelines will be followed in Scotland, given the judicial enthusiasm from the High Court for the corporate manslaughter guidelines. Although we may have our own Sentencing Council in Scotland in 2015, health and safety will be one of a number of areas of criminal law requiring careful consideration, so it may not be given priority.

In Scotland, we have already seen significant fines imposed for health and safety offences by the High Court. In 2005, Transco was fined £15 million following a gas explosion which resulted in the death of four members of the same family, and last year saw Svitzer Marine fined £1.7 million for health and safety breaches which led to the death of three individuals when a boat capsized in the Clyde. If the guidelines are implemented here, such fines may become commonplace for duty holders of means. We may also see an increase in the number of custodial sentences imposed on individuals or sole traders north of the border, as there is presently no guidance for courts on when that may be an appropriate disposal.

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