The judgment of the Lord Chief Justice gives a clear indication
that appeals against fines will be difficult to win. In two cases
heard at the same time by the Court of Appeal, Network Rail and
Sellafield Limited were unsuccessful in their appeals against fines
of £500,000 and £700,000 respectively which had been
imposed by the Crown Court for breaches of safety and environmental
protection legislation.
Background - Sellafield
The court heard that between 15 November 2008 and 19 April
2010, Sellafield had breached the stringent standards imposed on
the processing and storage of nuclear waste by failing to ensure
the adequacy of its system for segregating non-radioactive waste
from radioactive waste.
The Judge at first instance concluded that the failings
'indicate basic management failures ... [which] ...
demonstrate a ... custom within the company which was too lax ...
to a degree complacent and senior management must bear its share of
responsibility'.
In considering the evidence the judge identified three
aggravating factors, including the fact that the failure was
systematic; that it potentially exposed the public to unnecessary
risk; and that it was not Sellafield's first offence.
The judge also considered that the breaches were not deliberate or
reckless and that the company had co-operated with authorities and
had pleaded guilty at the earliest opportunity before fining the
company £700,000.
Background – Network Rail
In an attempt to drive over a level crossing providing
access to his farm, a farmer's car was struck by a train which
resulted in the farmer being badly bruised and his 10-year old
grandson suffering life changing and long-term brain damage.
The judge concluded that elementary mistakes had been made and that
'Network Rail's assessment of the risk and its
implementation of control measures fell substantially below the
standard expected'.
After considering a number of factors, including the company's
early guilty plea; its cooperation with the investigation; the fact
that the company's income arose out of public funds and profit
was reinvested in the network; and the company's previous
convictions for health and safety breaches, Network Rail were fined
£500,000.
Appeals
Both companies appealed the levels of the fines and argued
that they had not been given due credit for their early guilty
pleas and level of co-operation with authorities. They also
contended that the level of fines imposed equated with a major
public disaster or loss of life.
Outcome of the appeals
The Court of Appeal concluded that the level of the fines
imposed in both cases was appropriate.
The Lord Chief Justice of England and Wales, delivering the
judgment, said that 'the court [has an] obligation ... to
have regard to the financial circumstances of the offender. There
is no ceiling to the amount of a fine that can be
imposed'.
Lord Chief Justice went on to add that in relation to Sellafield,
the level of the fine imposed (equating to around 2% of the
company's weekly income) would 'achieve the statutory
purposes of sentencing by bringing home to the directors of
Sellafield and its shareholders the seriousness of the offences ...
and provide a real incentive to the[m] to remedy the failures ...
particularly the custom within the company which was too lax and to
a degree complacent'.
As far as Network Rail were concerned, the Lord Chief Justice
contended that the fine represented a very generous discount for
the mitigation advanced and in particular the fact that the
company's profits were invested in rail infrastructure for the
public benefit. He went on to add that, were it not for the
mitigating factors, the fine was 'significantly below that
which should be imposed for an offence committed by a company of
this size and where the harm was relatively serious and the
culpability at local operational management was serious and
persistent'.
Finally, the Lord Chief Justice recommended that a reduction of
directors' bonuses would incentivise the board and
'would demonstrate to the court the company's efforts
at the level of those ultimately responsible to address its
offending behaviour, to reform and rehabilitate itself and to
protect the public'.
What does this mean?
- Near misses and minor breaches cannot be overlooked as their cumulative effect creates an impression of an organisation that is just focused on 'High Risk'.
- Directors must not just say that safety is taken seriously; this must be demonstrated in their day to day behaviours and in their remuneration.
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