Legal Briefing

Fines for health and safety breaches: what about the Scots?

The In-House Lawyer Logo

Scotland | 04 May 2011

It is three years since the Corporate Manslaughter and Corporate Homicide Act 2007 (the 2007 Act) came into force on 6 April 2008. After a flurry of interest in the 2007 Act and its ramifications by industry and the public sector alike, and the fear that large fines would be imposed, the reality is that the 2007 Act has not been invoked as often as anticipated. Of course, that is not necessarily a bad thing.

If the 2007 Act was supposed to be a deterrent and encourage greater compliance with health and safety legislation to drive down the number of serious incidents, arguably it has worked. There has been a fall in the number of serious injuries and fatalities recorded by the Health and Safety Executive (HSE) since the 2007 Act came into force.

However, the 2007 Act has finally been tested. Although it was almost a three-year wait for the first conviction under the 2007 Act, in February 2011 Cotswold Geotechnical Holdings was found guilty of corporate manslaughter following the death of employee Alex Wright. The company was fined £385,000 and given ten years to pay. The annual turnover of the company was £330,000.

UK-WIDE LEGISLATION, BUT DIFFERENT LEGAL JURISDICTIONS

As many readers will know, the 2007 Act is UK-wide. Similarly, the Health and Safety at Work etc Act 1974 (the 1974 Act) (which still forms the backbone of our health and safety legislation today) is also UK-wide. Health and safety legislation is reserved to Westminster and, of course, it is sensible to have consistency across the UK, especially since so many businesses are cross-border in nature. However, although health and safety legislation tends to be UK-wide, its implementation in the differing jurisdictions could give rise to inconsistency. An incident in Scotland will be prosecuted in the Scottish courts and, at the moment, the Scottish judiciary does not have the same sentencing guidance as enjoyed by its English and Welsh counterparts.

SENTENCING GUIDELINES

The Cotswold Geotechnical prosecution took place in an English court because the fatality happened in England. In England, judges have access to guidelines issued by the Sentencing Council for England and Wales to help them fix an appropriate penalty. Unfortunately, there is no Scottish equivalent.

The Council issued its ‘Corporate Manslaughter and Health and Safety Offences Causing Death, Definitive Guidelines’ on 15 February 2010. As expected, the idea behind the guidelines was to ensure consistency in approach to sentencing, and they give suggestions regarding the level of fines. The Council confirmed that an appropriate fine for a corporate manslaughter conviction will seldom be less than £500,000 and may be measured in millions of pounds. The Council suggested that a fine for a breach of the 1974 Act resulting in death will seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more.

In Scotland, there is no such guidance – so where does that leave the Scottish judiciary and are there likely to be inconsistencies in approach?

CONSISTENCY OF APPROACH THROUGHOUT THE UK?

The Criminal Justice and Licensing (Scotland) Act 2010 was passed last year. It provides for the establishment of a Scottish Sentencing Council, which will have the power to issue sentencing guidelines just like the English and Welsh equivalent. However, to date, there has been no announcement on when the Council will be established – so at the moment in Scotland, sentencing for serious health and safety offences, and for corporate homicide, is very much a matter for the Scottish judiciary. Clearly, the situation is less than satisfactory. Clear guidance is available in England and Wales but uncertainty will continue in Scotland for the foreseeable future.

Despite the absence of Scottish guidance there has been a recent trend by Scottish judges to increase the level of fines for serious health and safety offences and to fall into line with sentences in England and Wales.

An organisation’s turnover and profit are factors that will be taken into account in Scotland when sentencing an organisation for causing a fatality or serious injury. However, they are not the only factors that will be considered. The seriousness of the offence and size of the fine has to be balanced not only against the organisation’s ability to pay, but also against the fact that any fine might affect innocents (including employees, suppliers and other local companies) should it put that organisation out of business.

In Her Majesty’s Advocate v Munro And Sons (Highland) Ltd [2009], the three-judge Scottish Appeal Court increased the fine handed down to Munro from £3,750 to £30,000. Munro had failed to secure a 44-tonne low loader to a lorry. The loader came loose and crushed a car on the A9 near Invergordon, killing one female occupant and seriously injuring the other.

The initial fine of £3,750 was appealed by the Crown and the appeal judge noted that there was no case authority in Scotland that set out the relevant considerations that had to be taken into account when sentencing an organisation. Accordingly, the judges considered English authorities and, in particular, R v Balfour Beatty Rail Infrastructure Services Ltd [2006], which set out principals that ought to be considered. The Scottish appeal judges followed the English court despite the fact that they are not bound to do so. In the leading opinion given by Lord Nimmo Smith, he said that the Scottish appeal judges found the approach in Balfour Beatty to be highly persuasive. He said:

‘In our opinion, especially given that the 1974 Act is a UK statute, and uniformity of sentencing, other things being equal, between the various jurisdictions is desirable, they should be followed by sentencers in Scotland and we follow them.’

The appeal judges were referred to previous guidance issued by the English and Welsh Council but they found it of limited use. Instead, the appeal judges looked at the turnover and net profit of the company, which had fluctuated between £2m and £2.3m, and approximately £19,000 and £160,000, respectively. On the company’s behalf, it was submitted that a fine of £50,000 would cause the company great difficulty. The judges concluded that a starting point of £40,000 was appropriate but reduced the fine by 25% to £30,000 for mitigating factors, including the fact that the company had pled guilty.

That fine represented a little over 1% of the company’s turnover.

The Munro fine was handed down before the publication of the new English and Welsh sentencing guidelines. Perhaps if those guidelines had been available, the fine in Munro would have been higher, with perhaps a time to pay similar to that of Cotswold Geotechnical. Since the publication of the English and Welsh sentencing guidelines, the indications are that the Scottish judiciary is handing down higher fines.

In an unreported case in February 2011 Sheriff Williamson at Kirkcaldy Sheriff Court fined Tullis Russell Group Ltd £260,000 after a contractor fell to their death through Tullis Russell’s fragile roof. Tullis Russell pled guilty to a breach of s3 of the 1974 Act and, while the Sheriff would liked to have imposed a heavier fine, he felt it would bring the company ‘to its knees’. He did not offer a time to pay. The Sheriff had suggested a starting point of £450,000 for the fine but was told that would have serious implications for the continuing operation of the company. The Sheriff also took into account the work the company had done in the local community and its charitable donations. A fine at a level higher than that given may have resulted in redundancies.

In another recent unreported case in March 2011 the Piperdam Golf and Leisure Resort was fined £120,000 by a Scottish court after a guest at the resort died from Legionnaires’ disease. Piperdam failed to control legionella bacteria at the resort that led to the death of visitor Edward Warnes.

So, although there are currently no Scottish sentencing guidelines, there does seem to be recognition by the Scottish judiciary that there has to be consistency of approach throughout the UK. That consistency is likely to bring with it a higher levels of fines.

FUTURE FINES FOR HEALTH AND SAFETY BREACHES IN SCOTLAND

It is clear that the levels of fines are on the increase. Despite the absence of definitive guidelines in Scotland, it is likely that the English and Welsh guidelines will be referred to by Scottish prosecutors until such time as the Scottish Council is established and issues its own guidelines. Fines are likely to be in the hundreds of thousands of pounds, rather than the tens of thousands, although the courts will be mindful of the damage and the effect that hefty fines will have on business continuity.

Giving Cotswold Geotechnical ten years to pay a fine, which by itself was greater than its annual turnover, is an example of how the judiciary might get around the thorny issue of imposing a large enough fine to reflect the seriousness of the breach while maintaining the economic viability of an organisation.