"From each according to his ability…" Karl Marx
We go to work each day, we get paid. Performance is good, we get a bonus. If we speed we get fined. The relationship of cause and effect is part of our everyday lives. Another part of the relationship is that in accidents we tend to regard the cause, i.e. the wrongdoing as deserving a more serious penalty where the resulting injury or damage is more serious. So, the same serious breach in a factory which causes a fatality and results in a heavy fine may attract no interest from the authorities for a near miss. Two recent criminal cases looked at appropriate sentencing levels.
"From each according to his ability…" Big Co, Big Fine
In Health and Safety prosecutions the courts have long recognised that any sentence or fine imposed upon a company should take account of the size and the financial circumstances of that company in order to have the desired effect. For this reason, the Court of Appeal recently dismissed appeals by two companies, Sellafield Limited and Network Rail Infrastructure Limited, which claimed excessive fines were imposed upon them for breaches of certain safety and environmental protection legislation. However, the cases were unusual because of the level of detail gone into by the court, which analysed the financial and corporate structure of the companies and considered who ultimately benefits from the profits.
Radioactive waste dumping
Sellafield have a turnover of £1.6 billion and an annual profit of £29 million. They were fined £700,000 for improper disposal of radioactive waste. The court recognised there had been no harm caused but there was an unnecessary risk to the public and those handling the waste off site. The court assessed the financial circumstances of the company and noted it was an ordinary commercial company which made profits for its large multinational company shareholders.
Network Rail have a turnover of £6.2 billion and were fined £500,000 for a failure which resulted in a collision at an unmanned level crossing in which a child suffered serious injuries. The court noted that Network Rail's parent company had no shareholders who received profits and it invested its profits in the rail infrastructure.
In considering whether the fines were excessive, the court took into account various factors including the financial circumstances of the company, the corporate structure of the company, the fact that these companies provided important public services, the recipients of profits within the company, any previous offences, together with the nature of the breaches. Sellafield argued that a fine at that level would only be appropriate where there had been a significant nuclear event or pollution incident whilst Network Rail argued that the level of fine imposed upon them would be appropriate where a major public disaster or loss of life had occurred. However, the court dismissed the appeals taking the view that the awards were at the correct level.
The court analysed the structure of the company and its financial circumstances in considering the level of award necessary to send a message to the company's shareholders and directors that Health & Safety legislation is of the utmost importance and should be at the forefront of their minds at all times. The message to companies is clear - if due regard is not paid to this legislation and safe systems of work are not enforced, they will be the ones who will personally feel the financial consequences.
Small Co, small fine
Of course, the fines imposed on companies are all relative. A fabric manufacturer in Kearsley was recently fined £8,000 for safety failings and ordered to pay over £10,000 in prosecution costs after pleading guilty to a breach of the Health & Safety at Work Act 1974. The breach led to an employee being dragged into a piece of machinery resulting in injuries to his left foot and ankle. Whilst this sum appears comparatively low, it was considered to be in proportion to the means of the company concerned.
In a time when the Health and Safety Executive's resources are limited and fewer proactive inspections are taking place, it is a significant message that the court has given to companies which highlights the importance of compliance, even in circumstances where no accident has taken place.