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Health and Safety – May/June 2017

fork lift truck driver discussing checklist with foreman in warehouse Print publication

27/06/2017

Sentencing and case update, including a £2 million fine and considering a parent company’s resources.

Sentencing and case update

A reminder that the new definitive guideline on reduction in sentence for a guilty plea came into force on 1 June 2017. The stated aim of the guideline – which is more restrictive than before – is to encourage those defendants who are going to plead guilty to do so as early in the court process as possible. See our March 2017 edition for further details.

We reported in the last edition of the round-up that April 2017 saw three fines of £1 million or more imposed for health and safety offences. Since going to press, Bakkavor Foods Limited was given a £2 million fine after a worker who was cleaning a storage yard died when a number of plastic bales weighing 703 kg fell on top of him.

The Court of Appeal reduced the total amount of a fine imposed on Tata Steel UK Limited (Tata) for health and safety offences in which two employees suffered serious and lasting hand injuries [1]. After the first incident, the Health and Safety Executive (HSE) served an improvement notice on Tata, requiring it to check all of its production lines at the site. The individual fines were £185,000 and £1,800,000 respectively.

The appeal largely concerned the amount of the fine in respect of the second offence. The sentencing judge categorised the offence as involving a high likelihood of harm.  At step two of the sentencing guideline, the court is required to focus on the organisation’s annual turnover or equivalent to reach a starting point for a fine.  This can be adjusted upwards or downwards for aggravating and mitigating factors.  The guideline provides, in respect of very large organisations, that where an offending organisation’s turnover or equivalent very greatly exceeds the threshold for large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence.

In this case, Tata was a “very large organisation” with a turnover of over £4 billion (compared with the guideline reference of £50 million for a “large organisation”) and the judge considered it right to move outside the suggested range to achieve a proportionate sentence. Instead of a starting point of £1.1 million, he took a starting point of £2.4 million, by moving up to harm category 1 because of the extent of Tata’s turnover.

At step three of the guideline, the court checks whether the proposed fine based on turnover is proportionate to the overall means of the offender. The guideline states some general principles to follow, including that the fine must be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation.  The fine may be adjusted upwards or downwards. The financial circumstances of the offender are to be examined “in the round to assess the economic realities of the organisation”.  A downwards adjustment may be called for where an organisation has a small profit margin relative to its turnover.

The judge increased the starting point to £2.75 million, so that it would have a real impact on management and shareholders, and in light of his conclusion that senior management was inadequately focused on day to day safety. In respect of Tata’s financial position, its 2015 Report and Accounts stated that the directors had a reasonable expectation that Tata had adequate resources (including the support of its ultimate parent, Tata Steel Limited (TSL)) to continue in operational existence for the foreseeable future.  Accordingly, they continued to adopt the “going concern” basis in preparing the financial statements.  Despite having a very sizeable turnover, Tata recorded a loss after taxation of £851 million.  The judge decided not to make any downwards adjustment to reflect the losses borne by TSL.  The fine was reduced by one third due to Tata’s early guilty plea.

It is interesting to note the judge’s commentary that the resultant fine was out of proportion to penalties imposed in the past but that the guideline had “marked a new dawn”; and that the calculation of the fine was heavily dependent upon turnover and organisations potentially affected by the guideline “had better wake up to this fact”.

Tata argued, among other things, that the judge’s categorisation of the offence as involving a high likelihood of harm was unsustainable, that the judge had been wrong to move up a category range, and that he had failed to make a necessary downwards adjustment in light of Tata’s losses.

The Court of Appeal agreed with Tata in respect of the judge’s categorisation of the offence and concluded that it should be categorised instead as “medium likelihood”. 15 years had passed since a prior incident and the machinery had been operated for 150,000 man hours without incident.   That was a powerfully persuasive pointer against the offence being one of high likelihood.  The Court of Appeal did not find for Tata on its other arguments, and made the following key points:

  • It is common ground that the guideline is not to be applied mechanistically or construed as a statute. It didn’t matter if conclusions reached by the judge fell under the wrong headings of the guideline, unless it led to double counting or an otherwise flawed overall approach.
  • The judge was entitled to move up a harm category to reflect that Tata, judged by turnover, was a very large rather than a large organisation and so to impose a proportionate fine.
  • At step three of the guideline, the judge is specifically urged to pass a fine, sufficiently substantial, so as to bring home to management and shareholders the need to comply with health and safety legislation. The judge had not been wrong to further increase the starting point to £2.75 million, having regard to his conclusion that senior management had been inadequately focused on day to day safety.
  • As to mitigation, the judge plainly had regard to factors such as the “concerted effort” to respond to the improvement notice and the many steps taken to improve safety provisions, but they had been “patently insufficient” to prevent the incident giving rise to the second offence.
  • Although some judges might have adjusted the starting point downwards to allow for these mitigating factors, the Court was not minded to interfere; it was acutely aware in sentencing appeals of the dangers of “tinkering” and the need to have regard to the sentence as a whole.
  • This was one of those exceptional cases where the resources of TSL, as well as those of Tata, could properly be taken into account when considering whether or not to make a downwards adjustment in light of Tata’s financial circumstances. As TSL’s support was plainly of the first importance in ensuring that Tata could continue to prepare its accounts on a “going concern” basis, it would seem wrong not to take TSL’s position into account. This would produce a misleading and unrealistic picture.

Due to the recategorisation of the offence, the correct starting point for the fine was £2 million. Taking into account the early guilty plea, the fine was reduced to £1,315,000.

The Court of Appeal in Northern Ireland has ruled that a suspended sentence of 15 months’ imprisonment for gross negligence manslaughter was unduly lenient [2]. A construction worker employed by the defendant died after falling a distance of almost five metres while nailing down metal sheeting to the roof of a farm shed without protection and in the rain. The Court referred to a number of English authorities in its judgment, including a gross negligence manslaughter case in which the Court of Appeal quashed a suspended sentence and imposed a sentence of 12 months’ imprisonment. The Lord Chief Justice said “...we think that in this case we can take the course of imposing an immediate custodial sentence of 12 months imprisonment. That will have the effect of ensuring that it is brought home to the offender and others that actions of this kind will almost invariably require immediate custodial sentences.” The Court determined that a sentence of twenty four months’ imprisonment was appropriate in this case, twelve months to be served in custody and twelve on licence.

A company director and foreman were found guilty of gross negligence manslaughter after a workman died in Brighton in 2014 having fallen through a gap in the first floor of a building he was working on.

A construction firm was convicted of corporate manslaughter over the deaths of two workmen who fell from a balcony in Central London in 2014.

Two companies convicted of corporate manslaughter were fined a total of £800,000, and their directors imprisoned, after a workman died following a fall through the roof of a warehouse in Harlow in 2015.

In the past two months, sentences have been imposed for numerous offences involving working at height. This includes a £250,000 fine given to a solar panel firm in Bristol after one of its workers fell more than three and a half metres through a roof void.

The on-site project manager of a construction site in Mayfair who was convicted of gross negligence manslaughter after three unsecured window frames left leaning against a building overnight fell on a passing pedestrian who died from her injuries, has been sentenced to 12 months’ imprisonment.

A construction company was fined £750,000 after repeated asbestos failings which put many workers at risk.

Two companies were fined a total of £700,000 and a director received a suspended prison sentence after multiple deaths on an excavation site in Norfolk. HSE’s Construction Division Head of Operations said: “This was a long term, large scale and complex civil engineering project which needed to be planned, designed, managed and monitored effectively. The tragedy here is that, in the months leading up to the accident, any one of these parties could and should have asked basic questions about building the structure safely. Such an intervention could have avoided the tragic outcome of this entirely preventable accident.”

DHL and JCB were fined a total of £641,000 after a worker was seriously injured when he was struck from behind by falling machinery being towed by an electric tug. The HSE inspector involved said: “The dangers of failing to provide effective segregation between pedestrians and vehicles are well known. Both of these companies were well versed in transport risk management and both fell well below the required standard in ensuring that such risks were effectively managed in this area.

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[1] R v Tata Steel UK Ltd [2017] EWCA Crim 704
[2] R v McKenzie [2017] NICA 29

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