Latest £1 million-plus fines; fines reduced on appeal; product safety guidance for businesses; and more.
Latest £1 million-plus fines…
Just before the previous edition of the Regulatory round-up went to press, a food processing company was fined £1.4 million (with costs of £38,000) after a worker suffered serious crush injuries when he was attempting to clear a blockage on a conveying system. The inspector from the Health and Safety Executive (HSE) said: “The employee’s life-threatening injuries could easily have been prevented had the company identified the guarding deficiencies and put in place simple measures to prevent access to dangerous parts of machinery. This should serve as a lesson to others in the food processing industry about the importance of effectively guarding their machinery to stop others being similarly injured”.
Marathon Oil UK LLC was fined £1.16 million after a high-pressure gas blast on its Brae Alpha offshore platform. Most of the 100 personnel were getting ready for their Boxing Day meal at the time, and were therefore away from the source of the blast. An HSE investigation found that the company had failed to undertake any suitable and sufficient inspection of the pipework that would have allowed it to identify the risk and prevent the hazard from materialising. Personnel were exposed to an unacceptable risk of serious personal injury or death from fire and explosion, and an improvement notice was also served on the company.
…while other fines are reduced on appeal
In Faltec Europe Limited v Health and Safety Executive , the Court of Appeal reduced one of two £800,000 fines which had been issued to car parts manufacturer Faltec in relation to two separate incidents, after five people fell seriously ill with Legionnaires’ Disease and a worker suffered serious burns in an explosion. The fine which was successfully appealed concerned the exposure to legionella bacteria and outbreaks of Legionnaires’ disease in and among the employees and local population around Faltec’s place of business.
At step one of the sentencing guideline, as to culpability, the sentencing judge categorised it “right at the top end of medium”. As to harm, the parties agreed that the level of risk created by the offences fell into level A. The issue was the likelihood of harm arising. In light of the statistical evidence, the judge said that he did not consider that a risk of between zero and 0.04% of death resulting could possibly be described as low, when considering an urban area. He held that the risk of level A harm arising was high and therefore this was a harm category 1 case.
Importantly, the sentencing guideline then provides that the court must consider if the following factors apply: (i) whether the offence exposed a number of workers or members of the public to the risk of harm; and (ii) whether the offence was a significant cause of actual harm. It goes on to say that, if one or both of these factors apply the court must consider either moving up a harm category or substantially moving up within the category range at step two, with the caveat that the court should not move up a harm category if actual harm was caused but to a lesser degree than the harm that was risked. The judge did not need to resolve the issue of whether he was prohibited from moving up a harm category by this caveat in the guideline, but he made clear that he did not think that was the case – had he been wrong in assessing the likelihood of harm as being high when it should only have been medium, he would have raised the harm category from 2 to 1 because of the large numbers of people potentially affected by the outbreak.
At step two, it was agreed that Faltec was a medium level company and the range for the offence was £300,000 to £1.3 million. Balancing various aggravating and mitigating factors, the judge took a starting point towards the top end of the range of £1.2 million. Then, at step three, which contemplates stepping back and considering proportionality, the judge acknowledged that Faltec was trading at a loss. However, this was not the position with Faltec’s holding company. Having regard to the statements in Faltec’s 2015, 2016 and 2017 accounts, with it enjoying the full support of the holding company and its position as a going concern, the judge concluded that “some limited regard” was to be had to the holding company. The judge did not pay regard to the £1.6 million provision in the accounts in relation to these health and safety issues when considering the level of fine, but did treat it as relevant to the financial health of Faltec and the consequences for others of the fine he had in mind. Finally, at steps four to six of the sentencing guideline, having taken into account Faltec’s guilty plea, the judge reduced the provisional fine figure of £1.2 million by one third to £800,000.
On appeal, Faltec launched what the Court of Appeal described as a “wide-ranging attack” on the judge’s sentencing observations. As to culpability, the Court agreed with the judge’s finding. However, in relation to harm, it was unable to agree with the judge’s categorisation of a “high” likelihood, which it did not think could be sustained in light of the statistical evidence. It was satisfied that the correct categorisation for the likelihood of level A harm arising from the legionella outbreaks in a densely populated urban area was “medium”. This resulted in harm category 2. The Court noted that the financial impact when applied to a case of medium culpability is considerable – medium culpability and harm category 1 produce a starting point of £540,000 and a category range between £300,000 and £1.3 million, whereas medium culpability and harm category 2 produce a starting point of £240,000 and a category range of £100,000 to £600,000.
As to moving up a harm category, the judge had taken the view that he would have been entitled to do so and was not precluded from doing so by the caveat in the guideline, which he considered only applied to factor (ii) set out above. The Court of Appeal disagreed. On a natural reading, the caveat applied to both factors (i) and (ii). Among other things, given that level A harm was risked but not caused in this case, the caveat in the guideline was applicable. This meant that the relevant provisional categorisation was medium culpability, harm category 2. The Court shared the judge’s view that the offences called for a fine towards the top end of the relevant category range, which it fixed at a figure of £570,000.
As to the position of Faltec’s holding company, the question was whether, as the guideline expressly provides, this was an exceptional case where “the resources of a linked organisation are available and can properly be taken into account”. The Court noted that, ordinarily, it is only the resources of the offender which are to be taken into account; the fact that companies are members of the same group or have a subsidiary-parent relationship, will not of itself satisfy the test; it is only in exceptional cases that the resources of a linked organisation fall to be considered. This was an exceptional case because Faltec’s dependence on the holding company was such that, for Faltec’s accounts to be produced on a going concern basis, it would be unrealistic and misleading to ignore the holding company’s resources. The Court was unable to agree with the judge that Faltec’s £1.6 million reserve ought to have formed part of the proportionality assessment, but in any event it was not persuaded that Faltec was prejudiced as a result. Taking account of Faltec’s guilty plea, the Court of Appeal reduced the £800,000 fine to a figure of £380,000.
Following the decision in R v Squibb Group Ltd , which we reported on in the February 2019 edition of the Regulatory round-up, this judgment again highlights the importance of expert evidence when assessing the likelihood of harm. Among other things, it is also interesting to note the sentencing judge’s observations regarding the engagement by Faltec of an apparently reputable sub-contractor (which persuaded the judge to categorise culpability as medium): “…the lessons of this case are that simply subcontracting out HSE obligations cannot provide an answer to failures to properly monitor and overview that contractor’s work. The failings in that regard were significant and substantial…”
In another recent decision (R v Mick George Ltd ), the Court of Appeal reduced a fine of £566,670 issued to a construction company after a tipper vehicle driven by an employee touched, or came close to touching, overhead power lines. The driver was not hurt in the incident. The sentencing judge concluded that culpability and likelihood of harm were both “medium”. Overall harm fell into category 2. As the company was a “large” organisation under the guideline, the starting point for a fine was £600,000 with a range of £300,000 to £1.5 million. There were no aggravating factors and, in mitigation, the company had a good safety record. It was not clear on what basis the judge then reassessed the starting point, but he concluded that it should go up to a fine of £850,000. Despite the suggestion that the company was at the bottom of the “large” organisation range, had recently made substantial investments and therefore was not cash rich, the judge concluded that it was a very healthy and well run business and, stepping back as required under the guideline, the notional fine should be the same as the starting point, i.e. £850,000. This came to £566,670 after reduction for a guilty plea.
On appeal, the Court of Appeal concluded that the company’s recent turnover did not justify a substantial increase from the starting point of £600,000. Instead, there should have been, in the course of the balancing exercise, some reduction from the starting point to reflect the fact that culpability was in the lower part of the “medium” range and a further reduction to reflect the fact that there were no aggravating features and a number of mitigating features. The appropriate total reduction from the starting point should have been one of £150,000, resulting in a notional fine of £450,000. The judge’s conclusion that the company was very healthy financially should have resulted in an increase to £500,000. This was reduced to an ultimate fine of £334,000 taking into account reduction for a guilty plea.
Other recent enforcement action
A waste management company was fined £500,000 (with costs of over £14,000) after an employee was fatally struck by a reversing JCB loading shovel in the main waste processing shed at the company’s Morpeth waste recycling facility. The HSE inspector said: “The HSE investigation found an inadequate assessment of the risks of vehicle movements in the waste shed and a lack of segregation of vehicles and pedestrians. There are more than 5,000 accidents involving transport in the workplace every year, and, like in this case, sadly, some are fatal. A properly implemented transport risk assessment should have identified sufficient measures to segregate people and vehicles and provide safe facilities”.
A principal contractor and cladding company were fined a total of £310,000 after a worker suffered life-changing injuries when he fell 9.7 metres through a roof light into an active factory area below. The HSE inspector said: “Work at height, such as roof work, is a high-risk activity that accounts for a high proportion of workplace serious injuries and fatalities each year. This was a wholly avoidable incident, caused by the failure of the principal contractor to manage and monitor the works to ensure the correct work equipment was being used. This risk was further amplified by the cladding company’s failure to ensure suitable measures were in place to prevent persons falling a distance liable to cause personal injury”.
A healthcare provider was fined £300,000 following the death of a patient with complex mental health care needs; and a care home operator was fined £270,000 after a resident suffering symptoms of Alzheimer’s Disease swallowed chlorine tablets and died from complications. The tablets had been left in an unsealed box with other cleaning products unattended in a corridor.
Greater London Authority’s land and property arm was fined £250,000 (with costs of over £14,000) after a wall and advertising hoarding collapsed onto a passer-by during a storm, causing facial and skull injuries.
Sentencing Council publishes sentencing guideline impact assessment
The Sentencing Council has published an impact assessment of the sentencing guideline which came into force in February 2016 for health and safety offences, corporate manslaughter and food safety and hygiene offences. There is nothing particularly surprising to come out of the assessment. Among other things, there has been a considerable increase in fine amounts for larger organisations since the guideline came into force.
Government publishes product safety guidance
The Office for Product Safety and Standards has published a webpage of resources for businesses on a range of business regulation topics, including product safety advice and a product safety A to Z of industry guidance.
In related news, consumer organisation Which? is urgently calling for a product safety shake-up to tackle what it describes as a “flood of dangerous products”. Among other things, it says that UK authorities could face crucial delays in receiving surveillance information about unsafe products after Brexit, unless an agreement is in place with the EU. A recently released 2018 annual report on the European Safety Gate rapid warning system shows that toys and motor vehicles were the most notified product categories. See the press release.
FAQs on combustible cladding ban
The government has published a list of FAQs on the Building (Amendment) Regulations 2018 which came into force on 21 December 2018 and give effect to the ban on the use of combustible materials on the external walls of high-rise residential buildings, as well as new hospitals, residential care premises, dormitories in boarding schools and student accommodation over 18 metres. The ban was introduced in the wake of the Grenfell Tower disaster.
  EWCA Crim 520
  EWCA Crim 227
  EWCA Crim 519