Health, safety and environmental management is increasingly at the top of the corporate agenda. With many companies putting the environment and safety at the heart of their corporate social responsibility policy, the consequences of falling foul of the law are becoming all the more significant, not just in terms of financial liabilities but, more importantly, in relation to brand reputation. While consistency of approach to sentencing remains a problem for everyone who practices in the field of health and safety, the courts are increasingly imposing penalties for offences in this area. Environmental penalties are also on the increase and a convergence of approach is beginning to develop in the principles of sentencing for health, safety and environmental offences. There are two recent developments that anyone concerned with the management, governance or brand protection of a company should be aware of. This article looks at Sentencing Guidelines Council (SGC) guidelines (the Guidelines) on corporate manslaughter, and health and safety offences causing death, specifically in relation to the Court of Appeal decision in the Environment Agency prosecution, R v Thames Water Utilities Ltd [2010].
SGC guidance
On 9 February 2010 the SGC issued its long-awaited guidelines. The mooted proposal of linking fines to turnover was not adopted. The first point to note is that the Guidelines only apply to the sentencing of organisations and do not cover individuals. The second, more significant, point is that the Guidelines apply retrospectively and will affect organisations sentenced after 15 February 2010, even if the offence for which they are sentenced was committed before the Guidelines took effect.
The Guidelines set out the factors likely to affect seriousness, and what will be considered aggravating and mitigating features of the offence. They recommend that the seriousness of the offence should ordinarily be assessed by asking the following questions.
How foreseeable was serious injury?
The more foreseeable the injury, the more serious the offence will be.
How far short of the applicable standard did the defendant fall?
This looks at the risk gap. The further below the requisite standard, the more serious the offence will be. Prosecuting authorities are increasingly referring to Heath and Safety Executive (HSE) guidance, and industry-specific publications, in demonstrating how far short of the required standard defendants have fallen.
How common is this kind of breach in this organisation?
If it was an isolated incident, the offence would be less serious than if it was indicative of a systemic failing or widespread non-compliance. It is, in effect, an invitation to the sentencing court to look at the health and safety culture of an organisation.
How far up the organisation does the breach go?
Usually, the higher up the organisation that responsibility for the breach goes, the more serious the offence will be. However, it would be wrong for companies to drive down health and safety management to a lower level. Companies should ensure that there are proper governance systems in place so that health and safety is given appropriate priority and resources, and that there is buy-in from those at the highest level of the organisation.
Aggravating features
The following factors will constitute aggravating features and will lead to a more substantial penalty being imposed:
- The occurrence of more than one death or grave personal injury.
- Failure to heed warnings or advice, whether from officials of organisations, such as the HSE, or by employees (especially health and safety representatives) or other persons, or to respond appropriately to near misses arising in similar circumstances.
- Cost cutting at the expense of safety.
- Deliberate failure to obtain or comply with relevant licences that involve some degree of control, assessment or observation by independent authorities with responsibility for health and safety.
- Injury to vulnerable persons.
With the exception of points 4) and 5), the aggravating features listed above reflect those identified in previous cases dealing with principles of sentencing in health and safety offences, primarily R v F Howe & Son (Engineers) Ltd [1998]. Vulnerable persons are defined as those who are susceptible to exploitation, such as young or immigrant workers.
Mitigating features
The mitigating features set out in the Guidelines are:
- A prompt acceptance of responsibility.
- A high level of co-operation with the investigation, which goes beyond that expected by the court.
- Genuine efforts to remedy the defect.
- A good health and safety record.
- A responsible attitude to health and safety, such as the commissioning of expert advice, or the consultation of employees or others affected by the organisation’s activities.
The mitigating and aggravating features set out above are not exhaustive, and other considerations may emerge from the facts of specific cases.
Level of fines
The new guidelines go further than previous guidance in that they suggest appropriate starting points for sentences. For corporate manslaughter, the Guidelines state that:
‘The appropriate fine will seldom be less than £500,000 and may be measured in millions of pounds.’
In health and safety offences, where the offence is shown to have caused death, the Guidelines state that:
‘The appropriate fine will seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more.’
When sentencing, the courts will have to take account of the resources of a corporate defendant and its ability to pay. Credit will also be given for guilty pleas. The Guidelines also provide that defendants ought ordinarily be ordered to pay properly incurred costs of the prosecution, subject to their ability to pay. This includes legal and investigative costs, which in major investigations can amount to hundreds of thousands of pounds, if not more.
Non-Financial Penalties
On conviction for an offence of corporate manslaughter, a court may order the publication of:
- the fact of conviction;
- the specified particulars of the offence;
- the amount of any fine; and
- the terms of any remedial order.
The Guidelines state that a publicity order:
‘Should ordinarily be imposed in a case of corporate manslaughter. The object is deterrence and punishment.’
Given the potential damage to brand reputation of the publicity surrounding a conviction, the impact of a publicity order should not be underestimated. Conversely, remedial orders that are available both for corporate manslaughter and offences under health and safety legislation are unlikely to be frequently used. Section 42 of the Health and Safety at Work etc Act 1974 requires remedial measures to be undertaken but it is a remedy that is rarely used. The reality is that appropriate remedial measures are likely to have been taken by the time an organisation comes to be sentenced and the failure to do so will have a significant adverse impact on efforts to mitigate the damage to a company.
R v Thames Water Utilities Ltd [2010]
Thames Water was a decision of the Court of Appeal on an appeal against sentence by Thames Water Utilities Ltd (TWUL). Judgment was handed down on 19 February 2010.
Background
Briefly, the facts were that sodium hypochlorite, commonly known as bleach, was being used to clean effluent tanks. Due to a failure to close the valve, 1600 litres of sodium hypochlorite was flushed out into the River Wandle and one of its tributaries. TWUL pleaded guilty to an offence of causing polluting matters to enter controlled waters contrary to s85(1) of the Water Resources Act 1991. TWUL was fined £125,000 and ordered to pay £21,335.19 towards prosecution costs in the Crown Court at Croydon. TWUL appealed the sentence before the Court of Appeal.
One of the striking features of Thames Water was the remedial measures taken by TWUL. The pollution had had a catastrophic affect on the aquatic life in the waters. However, in the aftermath of the incident TWUL pledged £500,000 in compensation to restore the river, covering local education projects, compensation for local angling clubs, the costs of restocking and an ongoing survey to assess damage to the river’s ecology. TWUL also provided core funding for the Wandle Trust, which included support for the cost of an employee responsible for raising additional project funding to deliver access and habitat improvements along the length of the river, and a restoration fund to support local projects to improve the river environment.
Court of Appeal Decision
The Court of Appeal was plainly swayed by the remedial measures undertaken by TWUL, but recognised that there could be no question of a wealthy defendant buying off an appropriate penalty. The Court went on to consider the principles that should be applied in sentencing for environmental offences. It recognised that there was ‘clearly an overlap with the sentencing principles applicable to health and safety cases’. This statement is helpful for those who have responsibility, as is increasingly the case, for both environmental and health and safety management. Significantly, the Court also recognised that:
‘Punishment, deterrence (thereby protecting the environment and the public in the future) and reparation are all particularly important purposes of sentence in this type of case.’
Many potentially aggravating features were identified, including:
- Pollutants that are noxious, widespread or likely to have long-lasting affects.
- Human health, animal health or flora being adversely affected, especially where protected species or a site designated for nature is affected.
- The requirement of an extensive clean-up, site restoration or animal rehabilitation operation.
- Other lawful activities being prevented or significantly interfered with.
- The extent to which the defendant falls short of its duty and, as such, its degree of culpability.
- The deliberate breach of a duty to maximise profit.
- The omission of proper precautions to make or save money, or to gain a competitive advantage.
- Evidence of repetition, or failure to heed advice, caution, concerns or warnings from the regulatory authorities, employees or others.
- A poor attitude and/or response after the event.
- Previous convictions.
Mitigating features were identified as :
- A good record of compliance with the law.
- A good attitude and/or response after the event, including prompt reporting of the offence, co-operation with the enforcement authorities, the taking of prompt and effective measures to rectify any failures, and the payment of compensation.
- A timely admission of guilt and a plea of guilty at an early stage.
The Court of Appeal gave very significant weight to the reparation made and pledged by TWUL, and reduced the fine from £125,000 to £50,000. It is apparent from the judgment that the reparation was a very significant factor indeed. There was a recognition that it is often difficult for courts to make compensation orders and that the reparation exceeded any punishment that the Court could reasonably have imposed. Accordingly, the need for the deterrent element of the penalty was eliminated.
What should companies do to protect themselves?
All companies should have in place adequate and dynamic systems for the management of health, safety and environmental issues based on risk assessment and review. The way in which these issues are managed should reflect best governance and practice. A critical incident policy that allows a company to respond to an incident efficiently and reduce potential consequences is essential. In environmental incidents, very careful consideration should be given to putting in place appropriate restorative or remedial measures at an early stage. It should be noted that TWUL had numerous previous convictions. Where an organisation has a good record and no previous convictions, prompt and wide-ranging remedial measures might be sufficient to persuade the regulatory authorities that prosecution is not in the public interest and should be avoided. Such action is also persuasive mitigation.
Comment
Companies that have appropriate systems in place, and pro-actively manage health, safety and environmental issues, will be best placed to avoid prosecution or mitigate its consequences. Organisations that do not give sufficient priority to the management of these issues risk the substantial consequences of prosecution, in terms of penalties imposed by the court, the significant management time and disruption involved in a formal investigation, and, above all, irrevocable damage to reputation.