Legal brief: Court of appeal goes 'back to basics'

23rd January 2014

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Stephen George

Simon Colvin discusses the court of appeal's rejection of Sellafield Limited's claim that a £700k penalty for environmental offences was "excessive" and what it means for the forthcoming sentencing guideline

On 17 January, the court of appeal rejected Sellafield Limited’s claim that the £700,000 fine imposed by Carlisle crown court for a series of environment offences relating to sending radioactive waste to landfill was “manifestly excessive”.

The timing of the judgement is interesting from an environment practitioner’s perspective, because the publication of the new guideline for sentencing environmental offences is due any day now.

Approach to sentencing

The court of appeal’s approach in this case can best be described as going back to basics. The judges have clearly gone back to the sentencing principles set out in the Criminal Justice Act 2003, which include:

1. the need to take account of the purposes of sentencing, for example to punish offenders, reduce crime, reform/rehabilitate offenders and protect the public;

2. the seriousness of the offence, which requires an examination of the offender’s culpability and the level of harm caused; and

3. the level of the fine, which must take account of the financial circumstances of the offender and the seriousness of the offences.

The court of appeal then deferred to R v Howe & Son case in terms of the objectives in applying these principles: “A fine needs to be large enough to bring the message home to [managers and shareholders]”.

Points of interest

The level of analysis of companies, their finances and structures

The court of appeal suggests it is important to carefully consider a company’s structure, turnover and profitability, as well as the remuneration of directors, in determining the level of fine and the extent of the “message” that needs to be brought home to the directors and shareholders of a company.

Presently, there is very limited analysis of this kind in sentencing. Whether a company produces its accounts is generally up to the company. If the accounts are presented these are disclosed to the prosecution and are then considered by the court. In the absence of such information, the court is entitled to assume a company can pay any level of fine.

Many large companies choose not to disclose such information and it is very rare that either the prosecution or the court use their powers to require the disclosure of this information. The court of appeal is clearly advocating a change of approach when it comes to large companies and the level of analysis required.

The need to collate and review this information was not addressed in the draft sentencing guideline for environment offences consulted on in early 2013. This was an obvious gap identified by a number of those that responded to the consultation. It will be interesting to see if it has been addressed in the final guideline which is to be published shortly.

Would the outcome have been different under the new sentencing guideline?

If we apply the new sentencing guideline to the facts it produces an interesting result.

The guideline first requires an assessment of the nature of the harm. In its judgement the court of appeal confirmed there was no actual harm and although there was a foreseeable risk of some perceptible harm the court of appeal considered “… the risk can be characterised as low”. So, in the absence of any harm and with only a low risk of harm we can assume this would qualify as category 3 or 4 offence on the scale provided in the guideline.

In terms of culpability, the court characterised Sellafield Ltd’s culpability as “medium” or negligent. And we know that Sellafield Ltd would qualify as a large company with a turnover of in excess of £25.9 million.

If we assume the harm would qualify as category 4, the starting point for the level of fine for each of the seven charges would be £13,000. The fine range would be £5,000–£25,000. If we assume that the aggravating and mitigating circumstances would have cancelled each other out, the fine per charge would be £13,000. So, even without accounting for an early guilty plea, the maximum fine would have been £91,000 (Sellafield Ltd pleaded guilty to seven offences).

The guideline does allow for the revision of a fine to take account of other factors, such as the means of the offender, but the document is clear that the fine should not exceed the maximum of the specified range. So, in a worst case scenario the total fine could have been increased to £175,000 (7 x £25,000). A long way short of the £700,000 fine imposed on Sellafield by Carlisle crown court in June 2013.

If we assume the level of harm/risk of harm to have fallen into the next category up, category 3, the starting point for the fine would have been £22,000 per charge with a range of £10,000–£60,000. Again, if we assume a worst case scenario where the aggravating factors justified the imposition of a fine at the top of the range, the total fine for all seven charges, without accounting for an early guilty plea, would have been £420,000. Again, this is still a long way short of the £700,000 which the court of appeal maintains was justified.

It should be noted that not all of the offences with which Sellafield Ltd was charged would fall within the new sentencing guideline as they were drafted for consultation. It may be that the final version of the guidance has been extended to include all environmental offences; we will have to wait and see. In any event, the approach advocated in the guideline would, at the very least, be persuasive in terms of the approach to sentencing for those offences not covered.

I wonder whether we will see Sellafield Ltd seeking permission to appeal to the supreme court? Something has clearly gone wrong if the level of the total fine imposed by the court of appeal is so wide of the mark advocated in the new sentencing guideline. In the absence of a further appeal and a significant reduction in the fine, this case will undermine the forthcoming guideline. The judgement drives a coach and horses through the levels of fine that the guideline proposes even before it comes into effect. This highlights the problem of a tariff-based approach to the sentencing of environmental offences.

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