Environment: £20 million fine and costs

United Kingdom

On 2 February 2017 Thames Water Utilities Limited (“Thames Water”) was warned by a Crown Court Judge, when considering sentencing for water related environment offences that “The fine is going to be very substantial and the shareholders have got to get the message…”.

Today His Honour Judge Francis Sheridan imposed a fine and costs order of £20,361,260.06 in respect of 14 offences with several other offences taken into consideration. This is the largest penalty following an environment prosecution since the introduction in England and Wales of sentencing guidelines, known as the Definitive Guideline for Environmental Offences (the “Guideline”), in July 2014. Details of the offences and the fine are outlined below.

The offences

The prosecutions relate to the discharge into the River Thames of untreated sewage from four sewage treatment works (STWs), at Aylesbury, Didcot, Henley and Little Marlow and a large sewage pumping station at Littlemore. There was also one charge of pollution to land (with respect to the Little Marlow STW). On 17 March 2017 a further charge was added regarding a discharge from an unmanned sewage treatment plant at Arborfield with several other offences identified to be taken into consideration by the Judge in sentencing. The offences, in respect of which guilty pleas were entered, took place between January 2013 and June 2014. It has been reported in the media that the incidents caused the death of hundreds of birds and fish, impacted livestock and commercially affected businesses.

The sentence

The Guideline sets out the approach which the Courts must follow when sentencing for certain environmental offences based on a matrix including the size of organisation (determined by turnover), the level of harm caused and the level of culpability involved. Our earlier Law-Now explains the approach to “very large organisations” which Thames Water has been classified as previously. Where a very large organisation is involved the Court can go outside the sentencing ranges where it is necessary to achieve a proportionate sentence.

The amount payable of £20,361,260.06 comprises:-

Fines for:-

  1. Failing to comply with/contravening the requirements of an environmental permit on 16.05.2013 - fine £1m;
  2. Failing to comply / contravening the requirements of an environmental permit condition on 7.7.2013 – fine £9m;
  3. Causing a water discharge activity on 18.4.2013 – fine £800,000;
  4. Failing to comply with / contravening the requirements of an environmental permit condition between 8 – 11.4.2013 – £800,000;
  5. Contravening the requirement of an environment permit between 15.11.2012 – 31.12.2013 and failing to comply with / contravening the requirements of an environmental permit condition on between 1.1.2013 – 1.11.2013 – £8m;
  6. Causing a water discharge activity on 29.12.2013 – fine £150,000; and
  7. Prosecution costs of £611,140.06 and a victim surcharge (required by legislation) of £120.

Comments

The sentencing remarks should be of interest to all senior management and investors in organisations. At earlier hearings the Judge was at pains to make clear that the message of sentencing was to ensure that shareholders take environment obligations seriously (and via management of organisations ensure their implementation) and the costs of any fine should not be passed onto consumers. Of course the fines per se will not be insured. Today’s resulting financial penalty of over £20m is well placed to secure shareholder attention of not only Thames Water but also of other companies. Senior management of Thames Water undoubtedly will have been expecting a large fine and because this case was well trailed in the press no doubt the senior management of many other organisations will have been expecting it also. Thames Water has stated that since the incidents it has expended significant resource in infrastructure which will have been considered and reflected in the sentencing process (and perhaps without which the fine would be expected to be higher).

*Sentencing remarks reported in various sources including The Wandsworth Guardian and BBC News