Since 12 March 2015, Magistrates' Courts have been able to impose an unlimited fine for offences committed after that date which would have previously attracted a Level 5 fine capped at £5,000. Understandably the potential for unlimited fines is a worrying prospect, especially for companies where turnover can be a relevant consideration in the calculation of the level of fine. The worst case fines can be equivalent to 5% of a company's turnover.
In accordance with the Criminal Justice Act 2003, the amount of a fine should reflect how serious the offence itself was. The Court will take into account the offender's financial circumstances to determine if the fine should increase or reduce and it is important that an offender provides information as to their financial circumstances. If they fail to do so then the Court may make any order it sees fit. In any event, the Court may order the disclosure of the financial information of an individual or corporate Defendant.
Reference should also be had to the Criminal Practice Directions VII Sentencing Part Q where it is made clear that it is the Defendant’s responsibility to disclose to the court such information relevant to their financial position as will enable the Court to assess what they reasonably can afford to pay. As above, failure to do so can have consequences, as the Court may make a judgment as they see fit, or adjourn, at the Defendant's cost, to consider financial information served late.
Where an offence is committed by an organisation, guidance on the range of fine that may be imposed can be found in the Environmental Offences guideline produced by the Sentencing Council.
The guidance applies primarily to environmental offences, and other "relevant and analogous offences". However, it appears that this is the only clear guide as to how unlimited Level 5 fines apply to a Company in the Magistrates' Court.
In short, the Court should consider whether any compensation offers have been made by the Company, and how culpable the Company is for the offence, and how harmful the offence was. The Court should amend the starting point and ranges included at pages 18 to 21 of the Guidance to reflect the statutory maximum punishment available for the relevant offence. That said, the ranges at pages 18 to 21 demonstrate that companies face a wide range of fines, and depending on the harm of their actions and their culpability, companies can face fines equivalent to 5% of their turnover in the worst cases.
After reviewing those ranges and the starting point for the fine, the Magistrates will consider whether the fine removes any economic benefit of the offending, other factors impacting the proposed fine, consider reductions for assistance to the prosecution and for a guilty plea, and any ancillary orders they may wish to make.
All of the above may seem worrying to companies concerned about the risk of committing offences to their company. This is understandable, especially as fine levels will generally scale with turnover. However, the recent case of R (on the application of the Royal Borough of Kensington and Chelsea) v CC Construction Limited (unreported) may prove a useful example as to the effect mitigation in the Magistrates' Court can have.
In this case, Ashfords' Senior Associate Jeremy Asher represented the Defendant. District Judge Zani was persuaded to depart from the guidelines relating to fines on companies committing criminal offences, due to the company's supportive references, unblemished record and steps it took to limit noise pollution. Instead, he imposed fine of just £3,000. For further details on this case, please click here.
Companies should not assume that they can simply deal with such cases by way of correspondence direct with the Court. The financial risks involved are now far too great and specialist legal assistance is therefore advised.