On Friday 17 January 2014, a significant judgment was delivered relating to the sentencing of companies who have breached safety and environmental protection legislation. The two appeal cases of R v Sellafield Limited and R v Network Rail Infrastructure Limited , which were heard together, highlight the important role that a company’s finances has in determining the level of fine imposed when sentencing offending companies.
Two recent cases which involved appeals against the level of fines imposed are:
- Sellafield Ltd (Sellafield), who were fined £700,000 on 7 February 2013 for offences arising out of the disposal of radioactive waste; and
- Network Rail (NR) who were fined £500,000 on 27 June 2013, for an offence arising out of a collision at an unmanned level crossing, which caused very serious injuries to a child., both made appeals against the level of fines imposed.
Sellafield argued that the offence that they were guilty of caused no actual harm to anybody and the foreseeable risk of the offence causing any harm was low. Furthermore, Sellafield made the point that the level of fine imposed should only be used where an offence has led to a major public disaster, loss of life, a significant nuclear event or an unmitigated environment pollution incident.
Similarly NR argued that the level of fine was too severe and that fines with a starting point of £750,000 would only be appropriate for cases where there was more than one fatality, where the offence caused a public disaster or where the defendant had been convicted of corporate manslaughter. Although the actual harm caused by NR’s offence was serious, there was no evidence to show that the offence was caused by specific failures of the senior management.
In reaching its decision, the court took into consideration the financial circumstances of the company and its corporate structure. Sellafield have a turnover of £1.6 billion and an annual profit of £29 million and NR have a turnover of £6.2 billion and an annual profit of £750 million. Taking this into account, the Court dismissed both of the appeals. By taking into account the company’s financial circumstances, the Court was able to impose a level of fine which would help to drive home the message that health and safety legislation should be strictly adhered to by large companies as well as small companies.
Both the Sellafield and NR cases highlight the seriousness that the courts attach to health and safety legislation. It also sends out the message that companies should not overlook the importance of reviewing their financial position well in advance of a sentencing hearing, as even in the case of prosecutions for non-fatal regulatory breaches, the financial standing of the Company will play a significant role in the level of fine imposed. These cases serve as a valuable reminder that ultimately, the ability of a corporate defendant to pay a fine, and whether the fine is large enough to be sufficiently felt, are key sentencing factors taken into account by the Courts.
If you have any questions or would like more information please contact Paul Cantwell, Trainee Solicitor, for more information.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.