Sentencing remarks by the judge in R v Edeco Petroleum Service Ltd and the introduction of revised guidelines introduced by the Magistrates' Court Sentencing Guidelines have once more brought into sharp focus the need for all companies to take environmental protection and health and safety seriously.
R v Edeco Petroleum Services Ltd
Edeco was fined £200,000 plus prosecution costs of £47,500 after a sub-contractor was fatally crushed by a piece of lifting equipment owned and operated by Edeco. It admitted that no proper risk assessment had been carried out to assess the safety of the machine and that it did not take health and safety as seriously as it should have done. Unusually, the fine imposed represented an estimate of projected profits for the current financial year which the judge intended to serve as a warning.
"What I do have to do is reflect the gravity of this case, which resulted in death…I have to do so in a way that will carry a signal to employers that the casual and lax approach to the safety of their and other employees will cost them money, and since businesses exist to make money, that is the only way the courts can set an example to employers.…the substantial fine that I have imposed does represent what are estimated to be the net profits for this financial year so it can be seen by members of the public that this is a significant financial penalty which will, and is intended to, hurt the management and reputation of this company without causing damage to the job market and its employees in so far as that is possible."
Magistrates' Court Sentencing Guidelines
The Magistrates' Court Sentencing Guidelines covers most of the offences regularly coming before a magistrates' court. There is an obligation on every court to have regard to the guidelines in a relevant case and to give reasons when imposing a sentence outside the range identified.
Environmental and health and safety offences
The main environmental protection and health and safety offences covered by the guidelines are:
- Summary of offence: Depositing, recovering or disposing of waste without a site licence/permit or in breach of its conditions (covers fly-tipping). Legislation: Environmental Protection Act 1990, Section 33. Maximum penalty: On summary conviction: £50,000 fine and/or six months imprisonment. On indictment: unlimited fine and/or five years imprisonment.
- Summary of offence: Polluting or solid waste matter entering controlled waters. Legislation: Water Resources Act 1991, Section 85. Maximum penalty: On summary conviction: £20,000 fine and/or three months imprisonment. On indictment: unlimited fine and/or two years imprisonment.
- Summary of offence: Failure to comply with the waste 'duty of care' (often associated with fly-tipping). Legislation: Environmental Protection Act 1990, Section 34. Maximum penalty: On summary conviction: £5,000 fine. On indictment: unlimited fine.
- Summary of offence: Failure to hold a permit for an activity (e.g. a landfill site) or failure to comply with condition of a permit. Legislation: Pollution Prevention and Control Regulations 2000, regulations 9(1), 32(1)(a) and (b). Environmental Permitting (England and Wales) Regulations 2007, regulations 12, 38(1)(a) and 38(1)(b). Maximum penalty: On summary conviction: £20,000 fine. On indictment: unlimited fine.
- Summary of offence: Failure to comply with requirements associated with producing, transporting and managing hazardous wastes. Legislation: Hazardous Waste Regulations (England and Wales) 2005, regulations 65 and 68. Maximum penalty: Offences under regulation 65 in connection with regulations 21-22, 24-26, 34, 35-44, 46 and schedule 7, 53, 54 and 55: On summary conviction: level five fine. Other offences under regulations 65 or 68: On summary conviction: fine not exceeding statutory maximum. On indictment: unlimited fine and/or two years mprisonment.
- Summary of offence: Failing to comply with an improvement or prohibition notice, or a court remedy order. Legislation: Health and Safety at Work etc Act 1974, Sections 33 (1)(g) and 33(1)(o). Maximum penalty: On summary conviction: £20,000 fine and/or six months imprisonment. On indictment: unlimited fine and/or two years imprisonment.
- Summary of offence: Breaching general duties in Health and Safety at Work etc Act 1974, Sections 2 to 6. Legislation: Health and Safety at Work etc Act 1974, Section 33(1)(a). Maximum penalty: On summary conviction: £20,000 fine. On indictment: unlimited fine.
- Summary of offence: Breaching health and safety regulations or licensing conditions. Legislation: Health and Safety at Work etc Act 1974, Section 33(1)(c). Maximum penalty: On summary conviction: £5,000 fine. On indictment: unlimited fine. Where the offence involves contravention of a licence, maximum penalty on indictment: two years imprisonment.
Factors businesses should be aware of that are likely to impact upon sentencing in all environmental and health and safety offences include (although the list is not exhaustive):
- Deliberate or reckless breach of law rather than result of carelessness
- Action or lack of action prompted by financial motives (profit or cost-saving)
- Regular or continuing breach
- Failure to respond to advice, cautions or warning from regulatory authority
- Ignoring concerns raised by employees or others
- Death or serious injury or ill-health resulted from or risked by offence
- High degree of damage resulting from offence
- Considerable potential for harm to workers or public
- Animal health or flora affected
- Extensive clean-up operation or other remedial steps required
Mitigating factors that may be relevant to sentencing include:
- Offender's prompt reporting of offence and ready co-operation with regulatory authority
- Offender took steps to remedy the problem as soon as possible
- Good previous record
In order to determine the appropriate level of fine, the seriousness of the offence and the financial circumstances of the offender will also be taken into account. For both individual and corporate offenders, the level of fine will reflect the extent to which the offender fell below the required standard and any economic gain from the offence. The following factors will be particularly relevant when sentencing companies:
- The fine must be substantial enough to have a real economic impact which, together with the bad publicity arising from prosecution, will emphasise to both management and shareholders the need to improve regulatory compliance.
- Appropriate fines for large companies might be beyond the summary fines limit.
- Care should be taken to ensure that fines imposed on smaller companies are not beyond their capability to pay, and do not affect its ability to pay for improved procedures or cause the company to go out of business.
- There is no single measure of ability to pay in respect of corporate offenders; turnover, profitability and liquidity should all be considered.
- If a company does not produce its accounts, the court can assume that the company can pay whatever fine the court imposes.
The case and guidance demonstrate the dim view taken by the courts to regulatory offences. Punishing a company through a substantial fine, which may represent an estimate of future profits, will not only affect its balance sheet but also its reputation and that of its management.
The sentencing remarks in Edeco and the guidelines also demonstrate the need to keep environmental protection and health and safety at the top of your 'to do' list. The best form of defence remains preventing accidents from happening (fatal or otherwise).