On January 17, 2014, the Court of Appeal dismissed appeals by both Sellafield Limited (Sellafield) and Network Rail Infrastructure Limited (Network Rail) against fines that had been imposed on them for breach of health and safety and environmental legislation. The appeals were heard together as they raised issues of principle in relation to the level of fines to be imposed for breaches of safety and environmental protection legislation on very large companies. Sellafield had been fined £700,000 on February 7, 2013 for offences arising out of the disposal of radioactive waste. Network Rail had been fined £500,000 on June 27, 2013 for an offence arising out of a collision at an unmanned level crossing, causing very serious injuries to a child. Both companies had argued that the fines were manifestly excessive.
In its judgment, the Court of Appeal sets out the public policy considerations to be taken into account when sentencing offenders, including companies, and states that when assessing fines for large companies, it will be necessary to examine the corporate structure, turnover and profitability, as well as the remuneration of its directors. It states that, in relation to sentencing, courts need to consider the punishment of offenders, the reduction of crime, the reform and rehabilitation of offenders, the protection of the public and the reparation by offenders to persons affected by their offences. Other principles to be taken into account include the culpability of the offender and the harm caused or which might foreseeably be caused, the seriousness of the offence and the circumstances of the case, including, among other things, the financial circumstances of the offender.
In the case of Sellafield, the company argued that no credit had been given for its guilty pleas and its degree of cooperation with the Environment Agency and the Health and Safety Executive. It argued that the level of fine imposed equated with a major public disaster or loss of life, a significant nuclear event or an unmitigated environmental pollution incident. The Court of Appeal agreed that in Sellafield’s case that there was, in effect, no actual harm. It found that there was a foreseeable risk of some perceptible harm if the failure had not been detected for a number of years but that this risk could be properly characterised as very low. As a result, the Court of Appeal took into account the fact that there was no actual harm but there was a very small risk of some harm. However, the Court of Appeal agreed with the finding of the Crown Court that there had been a custom in Sellafield which was too lax and complacent and that senior management should bear a share of the responsibility. The failure had been easily avoidable and could and should have been detected very quickly. The fact that it had not been was evidence of the clearest negligence. The Court of Appeal concluded that, for an incident of this kind, the culpability was medium.
So far as harm and culpability was concerned in the case of Network Rail, the Court of Appeal concluded that the actual harm caused was serious and much greater harm was foreseeable. So far as the level of culpability of Network Rail was concerned, there was no evidence of specific senior management failures. The failures, although serious and persistent, were at lower operational levels.
The Court of Appeal called for the accounts of both companies prior to the hearing of the appeal in order to consider their financial circumstances. It states in its judgment that it is important, well in advance of the sentencing hearing, for the court to have access to the accounts of the offending companies and any other information (including information about the corporate structure) necessary to enable the court to assess the financial circumstances of the company and the most efficacious way of giving effect to the purposes of sentencing.
The Court of Appeal disagreed with Sellafield’s view that a fine of £1 million was only apposite to a major disaster and stated that there is no ceiling on the amount of a fine that could be imposed. Therefore, the fine imposed was justified. The Court of Appeal stated that the fine of £500,000 imposed on a company of the size of Network Rail could only be viewed as representing a very generous discount for the mitigation advanced, adding that if the judge had imposed a materially greater fine, there would have been no basis for criticism of that fine.