The recent decision in R v Southern Water Services Limited (2014) has seen the Court of Appeal take a very firm stance against a utilities provider, upholding a fine of £200,000 following a conviction under regulation 38 of the Environmental Permitting (England and Wales) Regulations 2010 (the ‘2010 Regulations’) for discharging untreated sewage into the sea.
Since then, the UK Sentencing Council has published its definitive sentencing guidelines for environmental offences which will apply from 1 July 2014. The publication follows on from the Council’s consultation on its draft guidelines, which we reported on last May, and a number changes have been made as a result of that consultation. The steps to be followed by courts have been amended and there are now separate steps to be taken by the court depending on whether the defendant is an organisation or an individual.
Where the defendant is an organisation, the steps are as follows:
Step 1 – Compensation – The court begins by considering whether to make a compensation order in respect of any personal injury, loss or damage resulting from the offence.
Step 2 – Confiscation (Crown Court only) – The court must consider whether to make a confiscation order under the Proceeds of Crime Act 2002.
Step 3 – Determine the offence category – The court must assess the degree of culpability of the defendant (i.e. whether they have acted deliberately, recklessly, negligently, or with low or no culpability) and the level of harm caused or risk of harm created (which is divided into 4 categories with Category 1 being the most serious).
Step 4 – Starting point and category range – Having determined the offence category (for example, Category 1 harm and where the defendant has acted deliberately), the court must refer to the tables in the guidance which contain the starting points for fines and the possible ranges. There are four tables: one each for large organisations, medium organisations, small organisations and micro organisations. The size of an organisation is determined by their turnover and the threshold bands have been revised since the consultation. It is anticipated that very large organisations (i.e. organisations whose turnovers greatly exceed those of large companies) will fall outside the scope of the tables and will have to be dealt with on a case-by-case basis. Once the starting point for a fine has been established, the court must consider whether, on the basis of aggravating and mitigating factors, to adjust the proposed fine upwards or downwards within the range. Non-exhaustive lists of aggravating and mitigating factors are provided.
(Steps 5 to 7 are where the court must ‘step back’ to review whether the sentence as a whole fairly meets the objectives of punishment, deterrence and removal of gain derived from the commission of the offence. The court may increase or decrease the fine, moving outside of the range, if necessary.)
Step 5 – Ensure that the combination of financial orders (compensation, confiscation if appropriate, and fine) removes any economic benefit (including avoided costs and operating savings) derived from the offending.
Step 6 – Check whether the proposed fine is proportionate to the means of the defendant – The combination of financial orders must be sufficient to have a real economic impact which will bring home the need to improve environmental regulatory performance on both management and shareholders. Whether or not the organisation is put out of business may be a relevant consideration and, in extreme cases, will be an acceptable outcome.
Step 7 – Consider other factors that may warrant adjustment of the proposed fine – For example, whether the fine affects the ability of the organisation to make restitution to victims and/or its ability to improve conditions within the organisation in order to comply with the law in future, and its impact on employees, customers and the local economy.
Step 8 – Consider any factors which indicate a reduction, such as assistance offered or given to the prosecution.
Step 9 – The court should take account of any potential reduction for a guilty plea.
Step 10 – Consider whether to make ancillary orders – These may include orders for forfeiture of a vehicle, or deprivation of property or remediation.
Step 11 – Totality principle – If sentencing a defendant for more than one offence, or where the defendant is already serving a sentence, the court must consider whether the total sentence is just and proportionate to the offending behaviour.
Step 12 – Reasons – The court must give reasons for and explain the effect of the sentence.
The steps applicable to a defendant who is an individual are similar to those for an organisation, save that:
- the requirement to check whether the proposed fine is proportionate to the means of the defendant is removed;
- the lists of aggravating and mitigating factors to be considered, and ancillary orders which are available, include those applicable to individuals; and
- there is an additional final step which requires the court to give consideration for any time spent on bail.
There is only one table containing starting points for penalties and the possible ranges for individuals as there is no system of classifying them by reference to their means (equivalent to the turnover classification for organisations). Custodial sentences and community orders are an option for courts dealing with individual offenders but, since the consultation, the starting point for some offence categories has been changed from a custodial sentence to a fine.
The steps are limited to the sentencing for offences under section 33 of the Environmental Protection Act 1990 (the ‘1990 Act’) and regulation 38 of the 2010 Regulations. However, when sentencing other relevant and analogous environmental offences (including breaches of the restriction against transporting controlled waste without registering under section 1 of the Control of Pollution (Amendment) Act 1989 or breaches of the duty of care regarding waste under section 34 of the 1990 Act) the court should consider certain of the steps listed in the definitive guideline.
Implications for health and safety offences
Away from environmental offences, in the joined decision in R v Sellafield Limited and R v Network Rail Infrastructure Limited (2014), the Court of Appeal recently upheld the levels of fines imposed on two very large organisations following breaches of health and safety law. The factors considered by the court to be relevant when setting levels of fines were similar to those referred to in the definitive guidelines (including analyses of culpability, harm, mitigating and aggravating factors). In fact, the Sentencing Council is currently developing a draft guideline for sentencing health and safety offences, which will be issued for consultation later in 2014. Given the frequent overlap between the two areas, it is anticipated that the draft guidelines for health and safety offences will feature many similar steps and considerations to those published in the definitive guidelines for environmental offences.