Notwithstanding the broader implications of a conviction for a work-related death under either the corporate manslaughter or health and safety legislation or both, companies may be able to breathe a little easier that they will not be faced with swingeing fines following on from the Sentencing Guidelines Council's ("SGC") rejection of the Sentencing Advisory Panel's ("SAP") recommendation that fines should generally be based on a percentage - potentially as high as 10% - of a company's average annual turnover.
In its paper published in May 2007, the SAP noted that the largest fine to date had been that of £15million in the Scottish case of Transco for breaches of regulations which led to a gas explosion causing the death of four family members. Yet this fine represented less than 1% of the company's annual turnover.
The SGC's Consultation Guideline (the "guidelines"), published this week, explains that it is inviting views "more widely than usual" given the "differences in approach" from those espoused by the SAP. The consultation period runs until 5 January 2010. Following consideration of those responses, the Council will then issue definitive guidelines.
The proposed guidelines suggest, in cases of convictions for corporate manslaughter, that the appropriate fine "will seldom be less than £500,000 and may be measured in millions of pounds." So far as health and safety offences are concerned, fines "should seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more."
The list of factors to assess the seriousness of the offence and the aggravating and mitigating factors should all be familiar territory. The factors in the leading case of Howe [1999] 2 Cr. App. R. 37 have been closely followed and should be little more than a responsible company would expect. In determining the seriousness of the offence, the guidelines reflect Howe by considering how foreseeable the injury was and how far short of the applicable standard the company fell. Aggravating factors, again reflected in Howe, include failure to heed warnings, cost-cutting at the expense of safety and more than one death, whilst factors that may afford mitigation include a prompt acceptance of responsibility, genuine efforts to remedy the defect and a good safety record.
The guidelines do not suggest that the resources of the company are irrelevant and recommends that a court consider both turnover and profit of a company in gauging its resources to determine an appropriate level of fine (such that it inflicts punishment but which the defendant is capable of paying), but emphasise that "a fixed correlation between the fine and either turnover or profit is not appropriate".
The guidelines also suggest a list of potential financial consequences of a fine which should ordinarily be relevant or irrelevant. They suggest that the effect on the employment of the innocent, the provision of services to the public and whether the fine will have the effect of putting the defendant out of business should normally be relevant factors for the court to take into account. On the other hand, any effect on shareholders, directors, the effect on the price of any underlying products or services which might in consequence be increased, the cost of complying with a remedial order or liability to pay civil compensation, will not ordinarily be relevant considerations.
The guidelines recommend that a publicity order "should ordinarily be imposed in a case of corporate manslaughter." The provision, giving a court power to order that a conviction be publicised as well as power over the content of such publicity, is not yet in force, the Government having specifically delayed implementation of this provision until the Council guideline is in force. However, the view as between the SAP and proposed SGC guideline is consistent – publicity orders should be regarded as the norm in cases of conviction for offences of corporate manslaughter (they do not affect health and safety offences).
With only one company, Cotswold Geotechnical Holdings, (and its director) having been charged under the Corporate Manslaughter Act 2007 and the trial not expected until February 2010, it will be some time before the guidelines will be needed certainly so far as corporate manslaughter prosecutions are concerned. The guidelines are intended to apply to those health and safety cases where it is proved that the offence caused death. Because the link between death and breach is not required in order to secure a conviction under the Health and Safety at Work Act – where it is only necessary to prove a failure to ensure safety, rather than how or why an accident happened – it is likely that proving causation will be reserved for those cases which are regarded as particularly egregious and "it is to be expected that some cases will be prosecuted in the alternative". Indeed, Cotswold Geotechnical Holdings has also been charged with a health and safety offence with the company director also facing separate individual gross negligence manslaughter and health and safety charges, as envisaged by many when the Act came into force – see our client briefing "A further toughening of the law for health and safety breaches." (http://www.cliffordchance.com/expertise/publications/details.aspx?FilterName=@URL&LangID=UK&contentitemid=14741)
Although nowhere close to some of the big fines for companies in other areas such as competition law and corruption, levels of fines in the health and safety arena have been on the increase since Howe with fines of over £100,000 much more frequent in recent years. Whilst higher tariffs under the new guidelines are likely, arguably the trend was moving in that direction in any case. Notwithstanding that trend, the rejection of the turnover test in the guidelines gives industry cause for a collective sigh of relief.
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