In September 2016 Merlin Attractions Operations Limited was fined £5,000,000 following an accident on the Smiler rollercoaster at Alton Towers which left a number of people seriously injured. This reflects the continuing trend of very significant fines being imposed on large corporate defendants following the introduction of new sentencing guidelines earlier this year. The judgment provides a helpful insight into the way the courts are applying these guidelines.
On 2 June 2015 a number of people were injured (some of them very seriously) when two trains collided on the Smiler rollercoaster at Alton Towers amusement park (owned and operated by Merlin Attractions Operations Limited ("Merlin")). Merlin was prosecuted for failing to ensure, so far as reasonably practicable, the safety of visitors to the park (in breach of the Health and Safety at Work etc. Act 1974). Having pleaded guilty Merlin was sentenced following a two day hearing in September 2016.
The Smiler rollercoaster was designed so that multiple passenger-carrying trains could travel around the track at once. Its automated operating system blocked trains from moving into a part of the track that was occupied by another train. The Court heard that on the day of the incident the Smiler was halted whilst a fault was repaired. Having completed their repairs, Merlin engineers sent two empty trains around the track to ensure it was operating properly. One of these trains did not complete its circuit and remained halted on the track. The rollercoaster was then re-opened and a passenger-carrying train began to travel around it. The automatic operating system stopped the passenger train as it approached the area where the empty train was halted. This was then overridden by the engineers who believed, mistakenly, that the automatic stop related to the fault they had repaired. The passenger train then collided at high speed with the empty train causing very serious injuries to a number of passengers. The passengers were left suspended for several hours before being rescued by emergency services.
Merlin was severely criticised by the Judge for (i) failing to conduct an adequate risk assessment; (ii) failing to have in place a safe system of work; and (iii) failing to properly train and supervise its staff in relation to health and safety (in particular, failing to train them in procedures to be followed in the event of the ride being stopped automatically). The Judge found that the company fell far short of the standards expected.
The failure to provide the emergency services with proper and timely access to the site was an important aggravating factor. So too was the conviction of Merlin in 2012 for what the Judge described as a similar failure to carry out proper risk assessments which led to a fatal accident at its Warwick Castle site.
The Judge applied the new Sentencing Guidelines (applicable to all corporate manslaughter and health and safety offences) which came into force in February 2016. These guidelines set out a systematic approach to sentencing under which the Judge must:-
- first determine the category of offence by reference to the level of the offender's culpability and the risk of harm created by the relevant breach;
- then identify the appropriate starting point and range of fine (by reference to the category of offence and the financial means of the offender);
- then set a fine within the appropriate range; and
- finally, adjust the fine if necessary (i) to take account of any aggravating or mitigating factors; (ii) to reflect an early guilty plea; and (iii) to ensure that the fine is proportionate.
These guidelines were widely expected to lead to a significant increase in the size of fines imposed (particularly on large companies) and this has proved to be the case.
In Merlin's case, the Company pleaded guilty and there was relatively little dispute in respect of the factors relevant to sentencing. It was agreed that the risk of harm created by the breach was at the most serious level (Level A – risk of death or serious physical impairment). Merlin argued that its level of culpability was "borderline high/medium". It appears to have accepted that some elements of its conduct reflected the factors listed under 'high culpability' in the sentencing guidelines but argued that it should get credit for the fact that some of the factors listed under 'low culpability' were also applicable. The Judge was not persuaded and agreed with the prosecution that the culpability was 'high' (the second highest category, below 'very high' (which effectively means deliberate)).
The next step was to determine which starting point and range applied by reference to the size of the company measured by turnover. The sentencing guidelines classify corporate defendants as "micro" (turnover up to £2 million); "small" (£2 million - £10 million); "medium" (£10 million - £50 million); and "large" (more than £50 million). There is a final category of "very large" companies, namely those whose turnover "very greatly exceeds [£50 million]". If a company is very large, the court has the discretion to move outside the set ranges of fines in the guidelines in order to ensure a fine is sufficiently large to properly reflect the offence and provide a suitable deterrent. There has been much debate as to the size of turnover that would justify classification in this category. This is an important issue for larger companies. Although the Sentencing Guidelines may have led to an increase in the level of fines imposed they are, at least for smaller companies, more predictable than was once the case since they are set by reference to specified ranges. The difficulty for very large companies is that the guidelines do not make clear when the courts will depart from the top point of the set ranges of fines (i.e. £10 million for health and safety offences; £20 million for corporate manslaughter) and by how much.
Merlin's turnover in the years prior to the incident ranged from £367 million to £412 million. The Judge said that it "was certainly arguable" that Merlin was a very large company but ultimately he found that it was not necessary to move outside the sentencing range for a large company.
For a large company guilty of a 'category 1' offence with high culpability, the starting point is a fine of £2.4 million with a range of £1.5 million to £6 million. However, taking into account the aggravating factors described above, the Judge moved into the higher range (£2.6 million to £10 million, usually applicable to category 1 offences with very high culpability). He concluded that the appropriate fine was £7.5 million, reduced by one third to £5 million to take account of Merlin's early guilty plea.
The judgment illustrates a number of the developments we have seen since the sentencing guidelines came into force in February.
The Judge applied the rules in a systematic way and had no hesitation in imposing a fine that was very significantly larger than would have been expected before the guidelines came into force. It is worth noting, in this regard, that Merlin's fine following the fatal accident at Warwick Castle (for which it was sentenced before the guidelines came into force) was just £350,000 (notwithstanding the Judge observing parallels in the failings which led to the two accidents).
It is interesting that, in order to achieve what he viewed as a proportionate fine, the Judge chose to apply the sentencing range for a more serious category of offence rather than by classifying Merlin as a very large company. It is also interesting that the Judge appears to have accepted Merlin's argument that a defendant could, in principle, be found to have a level of culpability on the 'borderline' between two of the bands set by the Sentencing Guidelines (albeit, on the facts, he did not find that culpability was borderline in this case).