Health & Safety: More Court of Appeal Guidelines on Levels of Fines

United Kingdom
A recent court of Appeal decision will have a major impact on the level of fines imposed for breaches of Health and Safety legislation.

Lord Justice Gibbs, giving judgment in the case of R -v- Colthrop Board Mill Ltd on 31 January (as yet unreported), said that although the remarks in a previous case that financial penalties in excess of £500,000 were reserved for cases of major public disasters, "what is important is that companies in the position of the appellant can expect to receive financial penalties on a scale of up to at least half a million pounds for serious defaults and proportionately lesser sums if the limitation upon means or some lesser blame justifies it ".

In this case there was no fatality: an employee suffered serious crushing injuries when he became entangled in a machine about which a Health and Safety Inspector had previously raised concerns. The Crown Court judge had imposed a total fine of £350,000, comprising a fine of £200,000 for contravention of section 2(1) of the Health and Safety at Work Act 1974 and a further fine of £150,000 for contravention of the Provision & Use of Work Equipment Regulations 1998.

On appeal, the company argued that the fines imposed were too high and were inconsistent with the scale of penalties to be derived from previous decisions of the courts and in particular the Court of Appeal. It also argued that an incorrect approach had been taken to assessing its financial means for the purpose of sentencing after its business had ceased. When considering whether the Crown Court judge had arrived at a fine which was manifestly excessive, Lord Justice Gibbs referring to the authorities in particular R -v- Friskies Petcare UK Ltd stated, " we would not wish the sum of £500,000 to appear to be set in stone or to provide any sort of maximum limit for such cases. On the contrary, we anticipate that as time goes on and awareness of the importance of safety increases, that courts will uphold sums of that amount and even in excess of them in serious cases, whether or not they involve what could be described as major public disasters".

After the date of the accident the company had decided to cease trading: the sale of its assets realised £17 million. The Court of Appeal indicated that for a company that had ceased trading the asset value on the sale was the correct measure to use when assessing its means for sentencing purposes, and not its levels of profits while it had still traded (which would have resulted in a lower assessment of means).

In arriving at its decision to reduce the total fine in this case to £200,000 (£100,000 for each offence) the Court of Appeal took the view that despite the aggravating features, the company was of modest size compared to others upon whom larger fines had been imposed in the past. The case did not involve a fatality. The overall effect of the decision however will be more cases being referred to the Crown Courts for sentence and higher fines for corporate defendants.

For further information contact Mark Tyler, mark.tyler@cms-cmck.com, +44 (0)20 7367 2568 or Kajal Sharma, kajal.Sharma@cms-cmck.com, +44 (0) 20 7367 2751.