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Shifting tides – an update on environmental and health and safety fines

Recent decisions in R v Sellafield Limited; R v Network Rail Infrastructure Limited and R v Southern Water Services Limitedcouldrepresent a significant shift in the approach to sentencing for breaches of health and safety and environmental legislation as well as prosecution practice. With increasing fines being imposed it is more important than ever that companies are aware of the changing landscape and the Court's views.

Recent case law

R v Southern Water Services Limited

Southern Water Services Limited were fined £200,000 for environmental offences involving untreated sewerage being released into the sea off the Kent coast. One of the aggravating features of the case was the allegation that the Company had a record of similar, albeit minor breaches. The Company appealed the level of the fine. On appeal the fine was upheld, with the Court saying that they would not have interfered with a much more substantial fine.

The Court were highly critical of the failure of the Chief Executive and the board to explain the cause of the offending, current offence and the proposals for protecting the public from further offending. The Lord Chief Justice stressed that it was the responsibility of the Chief Executive and the main board to explain their re-offending.

Within the judgment, the Court put the spotlight on utility companies accusing them of not taking this type of criminality seriously enough. The case sends a stark warning, certainly for Chief Executives and boards of directors that the Courts may well require them to explain why previously identified breaches of legislation have not been addressed.

R v Sellafield Limited and R v Network Rail Infrastructure Limited

Sellafield Limited and Network Rail Infrastructure Limited received fines of £700,000 and £500,000 respectively for breaches of environmental and health and safety legislation (as discussed in more detail in our Insights article last month). Both fines were upheld following an appeal.

The financial means of both Companies were important factors in the decision about the level of fine that would be appropriate. In relation to Network Rail consideration was given to the fact that as the profits of the Company are spent on the rail infrastructure, if there were to be a shortfall in this amount, the funds would likely come from public money or a reduction in investment.

Sentencing guidelines

These decisions coincide with the announcement that from 1 July 2014 the new Environment Offences Definitive Guideline will apply. The Guideline proposes fines of up to £3 million per environmental offence for large businesses, which are defined as those with a turnover of £50 million or over. If an organisation’s turnover far exceeds this figure, the Court is advised to look beyond this threshold to achieve a proportionate (and potentially larger) fine.

The Sentencing Council have produced the Guideline to address the issue that fines for environmental crime have not historically been large enough to reflect the seriousness of the crime committed.

Summary

Whilst fines for serious breaches of health and safety have rapidly increased in recent years, it seems that for breaches of environmental legislation, we will soon start to see fines of a similar level. It may also be the case in the not too distant future that for companies with a history of breaches of health, safety or environmental regulations, the Chief Executive or other senior members of the board are called before the Court to explain what steps have been taken to prevent future repeats.

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.