14/08/2015
At the beginning of June, the Court of Appeal handed down the judgment of R v Thames Water Utilities Ltd [2015] EWCA Crim 960. This case provides the first analysis of the Definitive Guideline for Environmental Offences by the Sentencing Council which was published in July 2014, and also provided guidance on the admission of adducing fresh evidence pursuant to s.23 of the Criminal Appeals Act 1968.
Sentencing of Companies with Large Turnover
For the purposes of sentencing, the Definitive Guideline for Environmental Offences by the Sentencing Council (the Guideline) divides organisations up into four categories; micro, small, medium and large (defined as having a turnover of £50 million or more).
In the judgment, Mr Justice Mitting observed that the Guidance stated, “Where a defendant company's turnover or equivalent greatly exceeds the threshold for large companies, it may be necessary to move outside the suggested range to achieve a proportionate sentence."
He also stated clearly that the court is bound by, or even required to start at the ranges of fines suggested by the Guidance for organisations ‘large’.
In the case of Category 1 environmental damage caused by deliberate action or inaction:
“….the need to impose a just and proportionate penalty will necessitate a focus on the whole of the financial circumstances of the company. We have already outlined the approach by reference to the guideline – starting with turnover, but having regard to all the financial circumstances, including profitability. In such a case, the objectives of punishment, deterrence and the removal of gain (for example by the decision of the management not to expend sufficient resources in modernisation and improvement) must be achieved by the level of penalty imposed. This may well result in a fine equal to a substantial percentage, up to 100%, of the company's pre-tax net profit for the year in question (or an average if there is more than one year involved), even if this results in fines in excess of £100 million. Fines of such magnitude are imposed in the financial services market for breach of regulations. In a Category 1 harm case, the imposition of such a fine is a necessary and proper consequence of the importance to be attached to environmental protection.”
The Court stated that similar considerations should be applied to Category 1 offences which are caused by recklessness; however, the Court should recognise that recklessness is a lesser evil than deliberate action or inaction.
Admitting Fresh Evidence
Under s.23(1) of the Criminal Appeals Act 1968, the Court may receive evidence not admitted in proceedings from which the appeal lies if the Court thinks it necessary or expedient in the interests of justice. The factors to which it must have regard are those set out in s.23(2),
"The Court of Appeal shall, in considering whether to receive any evidence, have regard in particular to –
(a) whether the evidence appears to the court to be capable of belief;
(b) whether it appears to the court that the evidence may afford any ground for allowing the appeal;
(c) whether the evidence would have been admissible in the proceedings from which the appeal lies on an issue which is the subject of the appeal; and
(d) whether there is a reasonable explanation for the failure to adduce the evidence in those proceedings."
In environmental pollution cases, it is now routine for the Crown to produce a "Friskies" schedule of aggravating and mitigating factors (R v. Friskies Petcare (UK) Limited [2000] 2 CAR (S) 401). This schedule should be served before any plea is entered.
The practice was endorsed by Practice Direction: [2014] 1 WLR 3001.
Mitting J stated, “It can only be in the rarest of circumstances, far removed from the facts of this case, that this court would permit an Appellant in this type of case to advance a case on appeal which was not fully deployed below.”
This, along with the fact the Court was not convinced that any requirements of s.23(2) of the Criminal Appeals Act 1968, meant the admission of fresh evidence request was denied.
What Corporations Need to Take From the Decision
There are two main points that large organisations that cause major environmental damage need to take from this recent Court of Appeal decision:
1. The Court is not bound by any restrictions when it comes to imposing a fine on large corporations who deliberately or recklessly cause damage to the environment. In these types of situations, the courts are interested in not only punishing the particular corporation, but deterring other businesses from damaging the environment in pursuit of profits.
2. In these types of cases, it is very unlikely that the Court of Appeal will accept any new evidence which was not presented in the lower courts. This puts organisations on notice that they need to be diligent in ensuring they read and act on the information contained in the Friskies’ schedule at the beginning of the litigation process as they are unlikely to receive a second chance.
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