Our Environmental team reported last week on the recent decision of R v Thames Water Utilities Limited (“TWU”)  EWCA Crim 960 whereby the Court of Appeal ruled on an appeal by TWU, classed as a “very large company”, against the quantum of a pollution fine. The applicable guidance, Guideline for Specified Environmental Offences, is not clear as to how fines are to be calculated for such a sizeable company. On account of the fact that TWU is a very large organisation, having a turnover close to £2billion, the Crown Court applied a multiplier of 5 creating a starting point of £300,000 and a range of £175,000 to £750,000. Thames Water appealed against the use of such a mechanism.
Although the Court of Appeal did reject the concept of applying a simple multiplier in the case of very large organisations, they expressly endorsed the view that fines in respect of environment offences are currently too lenient. The Court commented in respect of serious offences “This may well result in a fine equal to a substantial percentage, up to 100%, of the company’s pre-tax net profit.”... “Even if this results in fines in excess of £100 million. Fines of such magnitude are imposed in the financial services market for breach of regulations”.
The decision has potentially huge implications for health and safety, in terms of the new sentencing guidelines proposed for corporate manslaughter, health and safety and food safety offences, as reported by us in November 2014. The Sentencing Council propose to create a more consistent approach to sentencing for both fatal health and safety offences and corporate manslaughter, given their close interplay. Similar to the Guideline for Specified Environmental Offences, the Council are looking to ensure “proportionate sentences” by imposing starting points for fines based on the size of the company involved. Should the decision in R v Thames Water Utilities Limited be applied in a similar fashion to health and safety sentencing, companies will face levels of fines in line with those imposed in the finance sector, potentially in excess of £100 million.
The Sentencing Council have recently indicated that the proposed guidelines for health and safety are intended to be launched in November 2015. With no intention to re-consult on the proposals, the guidelines will be eagerly anticipated. Although they will apply exclusively to England and Wales, a similar approach is expected in Scotland.
To view the judgment courtesy of Bailii, please click here.