It has been widely reported in the UK that maximum fines available to magistrates will soon increase fourfold; and that the lower courts will also be able to levy unlimited fines for some offences in England and Wales.
The greatest attention in the popular press has probably been on the impact these powers will have on motorists. For example, the Guardian reported that motoring groups said the new fines were disproportionate and could put people off challenging unfair speeding tickets. Similarly, Channel 4 News focused on the potential for motorway speeding fines to hit £10,000.
However, the impact of these changes is likely to have a much wider effect than on the speeding motorist alone. Corporate organisations may need to consider the effect of the changes on their approach to regulatory compliance, as the new provisions will affect a very wide range of legislation including food, health and safety, licensing and environmental laws. The Publican Morning Advertiser has already reported on the potential effect unlimited fines for the sale of alcohol to under 18s will have on the pub trade.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (the “Act”) allowed for the changes to magistrates’ courts sentencing powers. At that time, sections 85 and 87, which remove the limit on certain fines and provide a power to increase other fines, were not brought into force.
However, the Government has recently announced that it now intends to bring the relevant section into force to remove the current £5,000 upper limit on fines imposed in the magistrates’ courts. It has also published draft secondary legislation to increase the standard scale of fines for summary offences and to make provision for fines expressed as proportions.
The “fourfold” increase reported relates to the proposed changes to sums currently specified as levels 1 to 4 on the standard scale. The old and proposed new fine levels are as follows:
Click here to view the table
However, probably more significant for corporate organisations, is the removal of the cap on fines.
Under section 85(1) of the Act, for any offence punishable on summary conviction (i.e. in the magistrates’ court), a fine currently capped at £5,000 (which may be referred to in the offence as a ‘Level 5’ fine or the ‘Statutory Maximum’) will now be a fine of an unlimited amount.
In addition, higher caps which may be specified in certain legislation (for example certain health and safety, licensing, environmental and food offences, which can currently have fines of £20,000 or £50,000 in the magistrates court), will also be fines of an unlimited amount once the section comes into force.
Effect on Corporate Organisations?
The fact that the changes will cover a wide range of legislation, however, is not the only reason that corporate organisations will need to consider the effect of these changes. The Equality Impact Assessment published by the Ministry of Justice states (page 3):
There are some cases, where the offence is at the serious end of the spectrum dealt with by magistrates and where the offender is relatively wealthy, possibly a corporate body, for which the current maxima….curtail magistrates in the fines that they can impose.
This suggests that corporate organisations may be more likely to receive larger fines from magistrates for serious summary or either way offences when they have the authority to impose unlimited fines. The Impact Assessment goes on to consider the impact on organisations and notes that (page 5):
1% of all fines in the magistrates court and around 60% of all fines of £5,000 or over in the magistrates court, are issued to organisations.
The vast majority of these fines are for indictable offences which the magistrates can currently commit to the Crown Court if they think a fine of over £5000 is appropriate. These cases are therefore unlikely to be affected, but it is possible that magistrates’ don’t currently commit these cases to the Crown Court because it is time consuming and costly and they may issue higher fines if they have the power to do so.
It is the organisations who commit summary offences and currently get fines of £5000 or more who are most likely to be affected and they will be differentially affected relative to individuals.
According to the Impact Assessment, the impact on organisations is justified as in general “organisations are likely to have greater funds at their disposal than individuals and are therefore more likely to be able to pay higher fines set by reference to their financial means” (page 7). Again, this suggests that corporate organisations are more likely to receive larger fines once the change has been brought into force.
In addition to the level of fine, the Impact Assessment acknowledges that decisions about whether a case should be heard in the magistrates’ court or the Crown Court may be affected (currently, one of the factors affecting that decision is whether the magistrates’ court has sufficient sentencing powers). At the moment, it is also possible for a magistrates’ court to send an either way offence to the Crown Court for sentencing because they have insufficient powers. The new powers, however, will allow magistrates to impose larger fines and deal with more cases themselves, without the potential for delays and increased costs of committing a matter to the Crown Court.
Existing sentencing guidelines have not yet been amended to provide magistrates courts with guidance on the fine levels that are appropriate if there are no caps. However, the guidelines currently in place require for health and safety offences that the fine is substantial enough to have a real economic impact on a corporate offender, to bring home to management and shareholders the need to improve regulatory compliance. In addition, magistrates are required to assess ability to pay (to ensure fines on smaller companies are not beyond their capability) and it is recommended that for this purpose magistrates consider turnover, profitability and liquidity. For environmental offences, the guidelines specifically require the court to focus on annual turnover to reach a starting point for a fine.
Therefore, it is already common practice for the depth of a company’s pockets to be considered by magistrates when sentencing. There is nothing to suggest this will change when the level of fine the magistrates can impose is unrestricted.
For all of these reasons, it is foreseeable that a corporate offender, who will often have a fuller purse than an individual, may well be affected by the changes for magistrates court fines in terms of both the level of fine imposed and the choice of venue for trial. It seems then that the changes to magistrates’ courts fines in England and Wales will go well beyond the realm of the speeding motorist.