04/01/2018
R v Whirlpool (UK) Appliances
A company which was fined £700,000 after pleading guilty to an offence contrary to section 3(1) of the Health and Safety at Work Act 1974 has had the fine reduced to £300,000 by the Court of Appeal.
The company appealed the decision of the judge at first instance on the grounds that the judges starting point when applying the Definitive Guideline on Corporate Manslaughter, Health and Safety and Food and Safety Hygiene Offences was too high when compared to the starting points and category ranges of other large organisations. The Appellant’s also argued the judge had failed to consider the company’s financial circumstances when deciding whether the fine issued was proportionate to its overall means.
The facts of the case
A self-employed contractor with 30 years’ experienced was employed as a sub-contractor at the appellant's Indesit factory in Yate near Bristol. In March 2015, he was working at height, fixing the fire and heat detector systems. He was standing on a mobile overhead platform which he had moved into position between hanging baskets on the overhead conveyor system.
Another employee set the mobile conveyor system in motion which caused one of the baskets to topple. This resulted in the working platform toppling and the contractor falling. He suffered serious injuries and died ten days later.
Section 3(1) of the Health and Safety at Work Act 1974 imposes a duty on an employer to conduct its work in such a way as to ensure, so far as reasonably practicable, that persons not in its employment are not thereby exposed to risks to their health and safety.
Investigators found the Appellant had not required the contractor to prepare a job-related risk-assessment nor a method statement for the work he was to perform.
The issues for the Court of Appeal to decide
The Court of Appeal was asked to decide on three main issues:
1. What impact did the victim’s death have on the judge’s approach to the guidelines?
2. Did the judge correctly identify and treat the Appellant as a ‘very large organisation’ for the purposes of the guidelines?
3. Did the judge correctly take into account the relative poor profitability of the Appellant in relation to its substantial turnover?
The Court of Appeals decision
The court considered the case of R v Thames Water Utilities Limited [2015] EWCA Crim 960, which reviewed the level of fine given to a very large company found to have breached environmental law. The court, in this case, adopted the general principles set out in R v Sellafield Limited [2014] EWCA Crim 49 which stated:
"It is important at the outset to recall the provisions which Parliament has enacted in the Criminal Justice Act 2003 (CJA 2003) in relation to the duty of the courts in sentencing, as these principles are applicable to all offenders, including companies:
i) The courts must have regard in dealing with offenders to the purposes of sentencing which Parliament specified as (a) the punishment of offenders (b) the reduction of crime (including its reduction by deterrence), (c) the reform and rehabilitation of offenders, (d) the protection of the public, and (e) the making of reparation by offenders to persons affected by their offences (s.142 of the CJA 2003).
ii) In considering the seriousness of the offence, the court must have regard to the culpability of the offender and the harm caused or which might foreseeably be caused (s.143 of the CJA 2003).
iii) If a court decides on a fine it must approach the fixing of fines having regard not only to the purposes of sentencing and the seriousness of the offence but must also take into account the criteria set out in s.164 of the CJA 2003:
(1) Before fixing the amount of any fine to be imposed on an offender who is an individual, a court must inquire into his financial circumstances.
(2) The amount of any fine fixed by a court must be such as, in the opinion of the court, reflects the seriousness of the offence.
(3) In fixing the amount of any fine to be imposed on an offender (whether an individual or other person), a court must take into account the circumstances of the case including, among other things, the financial circumstances of the offender so far as they are known, or appear, to the court.
(4) Subsection (3) applies whether taking into account the financial circumstances of the offender has the effect of increasing or reducing the amount of the fine."
The Court of Appeal stated that this approach was applicable when passing sentence under the Definitive Guidelines.
It was noted that a consistent feature in recent sentencing policy had been to regard the death of a person as a factor which substantially increased a sentence, as required by the second stage assessment of harm under the Guidelines. The fact that the contractor died was therefore enough to push the starting point for the culpability category up to £250,000.
Given the Appellant company had a turnover of around £700 million, it could be considered a ‘very large organisation’. Therefore, the court concluded:
- “We have reached the stage in the Guideline of having to take into account the following factors. First culpability; secondly risk of harm; thirdly actual harm – in this case death; and fourthly turnover. The judge's conclusion that there was low culpability and a low likelihood of harm underpins this part of the exercise. Were the culpability or harm category greater, then a substantially higher starting point would be appropriate. In our view, the last of these four points, namely turnover, should result in the starting point moving to £500,000 before aggravating and mitigating factors are taken into account.”
£50,000 was deducted for mitigating factors.
The Appellant’s financial health was then considered. The Court of Appeal stated that the judge at first instance did not take this into adequate consideration and that there was a big difference between a company operating on tiny margins and one that enjoyed healthy profitability.
Taking the financial health of the company into account, the court held:
“The fluctuations in the profitability did not affect the directors' remuneration. As required by the Guideline we have stepped back and reviewed the proposed level of fine. Having regard to the underlying culpability, risk of harm, actual harm and turnover, in our view a starting point of £450,000 at Step Three is sufficient to have a real economic impact which will bring home to the management and shareholders the need to comply with health and safety legislation but it is also proportionate to the appellant's overall means. As the judge noted, this is an organisation with an impeccable safety record which has done everything possible to make good the deficiencies exposed by these events.” – emphasis added.
Finally, the court considered the impact of the early guilty plea, which the Guidelines dictate should reduce the fine by a third. This was seen as appropriate. Therefore, the fine of £700,000 was quashed and substituted for £300,000.
The impact of the judgment
The two main points of the Court of Appeals judgment on the Guidelines are as follows:
1. The conduct of the company accused of breaching health and safety laws plays a significant part in the fine received. In this case, the judge at first instance noted that the organisation and its directors co-operated fully with the investigation. He went on to say: "so far as the Guideline is concerned … not only are there no aggravating features, every single mitigating feature arises … It has an excellent health and safety record … The company had also taken steps to ensure that [Mr Dalley] [the deceased] was aware of his duty to act under a code of practice which highlighted the risk of working at height, and the company was aware that he was qualified to undertake the work he was doing. It is accepted that there was no formal process to inform workers of contractors working on site. Mr Dalley had been asked to notify the workforce when he would be working at the site of the accident but did not do so."
2. The sentencing judge should consider current profitability when dealing with an organisation which falls into the ‘very large organisation’ due to its large turnover.
It seems the courts consider the Guidelines are designed to be a deterrent and severely impact a company, but they are also sensitive the fact that it would make no commercial sense to ‘break’ the organisation, costing the livelihood of workers and destroying the service the business provides to the public.
Fisher Scoggins Waters is a London based law firm who are experts in construction, manufacturing, and engineering law. If you have any questions about health and safety matters or require an emergency response to an incident, please phone us on 0207 993 6960.