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TRANSCRIPT
Another new Era? Sentencing Sentencing Council Definitive and Consultative Guidelines for Environmental, Health and Safety, Corporate Manslaughter and Food Safety offences
Stuart Ponting & Teresa Hitchcock
Boardroom Risks Series
February 2015
Outline
Welcome and Introductions
Part 1 – Stuart Ponting History and the need for change
The New Guidelines – in theory
The New Guidelines – in practice
Part 2 – Teresa Hitchcock Responding to the challenge – options
The importance of compliance reviews, assurance, audit and benchmarking
Other considerations
Part 3 Questions & Answers
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History and drivers for change
Major disasters didn't equal major fines Hatfield Rail disaster (R v Balfour Beatty)
Transco
A 'typical' case…
Significant inconsistency with other regulatory crime fines Competition law
Financial Services Regulation
Perception that big businesses paid proportionally small fines
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Drivers for change (2)
Lack of Guidance for Courts R v F Howe (Engineers) and Sons [1999]
s.164 Criminal Justice Act 2003
Lack of consistency between sentencing courts
Lack of predictability for duty holders
A knock-on effect?
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Scope
Environmental offences
The Definitive Guideline for Environmental Offences was published in February 2014 and came into force on July 2014.
Health and Safety, Corporate Manslaughter and Food Safety offences
The Draft Guideline and Consultation document was published in November 2014 and closed in February 2015. The Definitive Guideline was published in November 2015 and is now in force.
The Guidelines are applicable to offences sentenced on or after the date they come into force.
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The New Definitive Guideline
At its heart, the Guidelines impose fines which are anchored to the turnover of the defendant company.
The new Guidelines are implemented alongside the removal of the restriction on the maximum level of fines Magistrates Courts can impose.
The new Guidelines are, in reality, mandatory for every Court to follow (unless it can be shown it is not in the interests of justice to do so).
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So how do the Guidelines work
A new, straightforward (!) 12 step process for environmental offences (9 steps for health and safety/food offences) for the sentencing of companies.
Individuals are also dealt with under the Guidelines but separately to companies.
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Step ONE - Classification
The first step is arguably the most complex and determinative of the outcome of the sentencing exercise.
STEP ONE identify culpability identify harm (note – it is the RISK of harm that is relevant)
to determine the offence category
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Step ONE (2) - culpability
Culpability "How far below the required standard did the defendant fall?"
Types of Culpability Very High flagrant disregard
High failing to employ industry standard ignoring employee concerns continued breaches evidence of serious systemic breaches
Medium Who knows?
Low Minor, non systemic issues occurring without warning or attempts made provide
inadequate
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Step ONE (3)
Medium culpability Falling short of the standard in a manner that falls below the
descriptions in 'high' and 'low'; Level of systemic failure falls between 'high' and 'low'.
The conclusion?
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Step ONE (4) – harm category
identify (potential) harm
Two stages: Identify the seriousness of harm created by the offence
and
Identify the likelihood of the harm arising
(and then)
consider whether the risk exposed a significant number of people to harm?
and
consider whether the offence was a significant cause of the actual harm
Then, consider moving the starting point within the harm category or moving the offender between the harm categories.
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Step ONE (5)
The Likelihood and Seriousness Table
INSERT
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Step ONE (6)
By the end of Step ONE the Court has identified: a level of culpability (low to very high) and
a harm category (4-1).
By reference to the four tables, the Court is given a sentencing range and a starting point.
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The classification of organisations
Four classifications (based on turnover)
Micro (annual turnover of less than £2 million)
Small (annual turnover of between £2 million and £10 million)
Medium (annual turnover of between £10 million and £50 million)
Large (annual turnover in excess of £50 million)
"In 2009 the Sentencing Guidelines Council chose not to follow the [Sentencing Advisory] Panel’s proposals, which they saw as having potentially unfair consequences and being difficult to apply to public-sector and not-for-profit bodies…"
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The fifth category – very large organisations
"Where a defendant organisation's turnover or equivalent very greatly exceeds the threshold for large organisations it may be necessary to move outside of the suggested range to achieve a proportionate sentence"
From uncertainty, to certainty to uncertainty again… or perhaps not … R v Thames Water (Court of Appeal) (June 2015)
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Step TWO (1) – Starting Point and Range
Identify the correct starting point Provided within each range of fine
The starting point is not the mid point of the range e.g.
Large Organisations VHC Cat 1 – £2,600,000 to £10,000,000 Starting point £4,000,000
LC Cat 1 - £180,000 to £700,000 Starting point £300,000
The correct starting point is determined by reference to the financial information provided by the offender
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Step TWO (2)
Consider moving the proposed fine within the given range by reference to 'Aggravating and Mitigating' features.
Now prescribed by the Guidelines
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Aggravating Features Mitigating Features
Previous convictions No previous or relevant previous convictions
Profit before safety Evidence of steps taken to remedy issue
Poor safety record High level of cooperation beyond that always expected
Deliberate concealment/falsification
Good safety record
Breach of Order or Obstruction Effective safety procedures in place
Step THREE - Proportionality
"Check whether the proposed fine based on turnover is proportionate to the means of the defendant"
NB: If the Court finds reason for doing so, it can move outside of the ranges proposed at Step 2
A sense check?
A realistic approach?
A judicial get-out?
In fact, a restatement of the accepted law
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Step FOUR – Other factors
Consider other factors that may warrant the adjustment of the proposed fine the impact on third parties employees (redundancy/insolvency) service users (nursery/charity) public resources (NHS, Transport Network, Custodial estate)
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Steps FIVE to NINE
Pre-existing Statutory Steps (from the Sentencing Council Guidelines): Step 5 – factors reducing the fine for assistance given to the
prosecution or the investigator
Step 6 – Reduction for guilty pleas (up to 1/3 discount for early plea) Step 7 – Compensation and ancillary orders
Step 8 – Consider totality (very relevant in HSWA cases s.2/s.3) Step 9 – Impose sentence and give reasons
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What about the accounts?
The offender is expected to provide comprehensive accounts for the last three years.
Courts should consider turnover
profit before tax
directors remuneration
loan accounts
pension provision
assets on the balance sheet.
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The practical impact of the Guidelines
Insert large organisation table
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Corporate Manslaugher
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