England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2
		Thursday, 31st January 2002

1. LORD JUSTICE KAY: I will ask Gibbs J to give the judgment of the Court.
2. MR JUSTICE GIBBS: The appellants, Colthrop Board Mills Limited, appeal against sentence with the leave of the single judge. The sentence consisted of fines, imposed by His Honour Judge Spence at Reading Crown Court, totaling £350,000, together with costs somewhat in excess of £5,000. The appellants had pleaded guilty to those two offences on 2nd October 2000 before the West Berkshire Magistrates' Court and they were committed for sentence at the Crown Court. The details of the sentences were as follows. First, for contravening section 2(1) of the Health and Safety at Work Act 1974 there was a fine of £200,000, and for the second offence of contravening regulation 11 of the Provision & Use of Work Equipment Regulations 1998 there was a fine of £150,000. Both of those offences arose out of one serious incident which had taken place on 20th February 2000.
3. The appellants were a company who specialised in the manufacture of carton board. They produced this on an extremely large machine, about 150 metres in length, 30 metres wide and 20 metres high. There were over 200 points in and about the machine known as in-running nips. These constituted joins between various rollers on the machine which were moving or rotating during the production process.
4. On 19th October 1999 the appellants received a visit from a Health and Safety Inspector, who subsequently, as a result of that visit, on 11th November 1999, issued an Improvement Notice requiring the company to carry out a programme of risk assessment by 30th January 2000. The company found themselves in a position of not complying with that deadline and the Health and Safety Inspector, somewhat reluctantly, granted an extension of time to complete the process by 7th March 2000. However, by 12th January 2000 the risk assessment on the nip which was to become at issue in this case was completed.
5. In the schedule to the Improvement Notice to which we have referred, the inspector had said as follows:

"You should ensure that, where situations are discovered where there is a risk of serious personal injury, there is no delay in making improvements to prevent injuries. This may be temporary measures to reduce the risk before permanent measures have been put in place."

6. In an accompanying letter he included this sentence:

"Obviously any areas where there is a significant risk should be remedied immediately."

7. Elsewhere in the letter, under the sub-heading "access while cleaning, et cetera", was the following:

"As discussed, there appear to be particular problems in your industry with employees accessing dangerous areas of machine to carry out cleaning and maintenance work. Safe access must be provided for these activities."

8. These passages plainly applied to or included the running nips to which we have already referred. In their risk assessment completed in January concerning the nip, the appellants found that in the event of an accident occurring at such a point, there was a substantial risk of death or serious injury to an employee. The gravity of such an injury was put as "at its highest". The assessment of the likelihood of an accident was put as being "moderate". That assessment was based on evidence of that over a period of 40 years, the particular nip or type of nip in question must have been cleaned about 126,000 times without accident.
9. However, that finding must, we think, be taken in the context of two previous convictions of the appellants. Those convictions on the face of them clearly refer to comparable points in the defendant's machinery to the nips in question. The details of those previous convictions were that the first was on 12th December 1994 under section 2(1) of the Health and Safety at Work Act 1974. An employee had had a hand drawn into an in-running nip of another machine of the appellants and the appellants were fined £6,500, together with costs. The second conviction was on 1st March 1995 and was under section 14(1) of the Factories Act 1961. This was an accident where another employee had been drawn into the in-running nip of another machine. The fine in that instance was £3,000, together with just over £1,000 by way of costs.
10. That briefly is the background to the offences. It is to be noted that although an assessment had taken place by the time that the offences were committed, no concrete steps had been taken to remedy any deficiency in the safety aspect of the machine to which we have referred. In the evening of 20th February 2000, a Mr George, an experienced charge-hand, went to a part of the machine called the curing roller. He was unable to remember precisely what he had done subsequently. The evidence, however, suggested that he had been leaning through the handrails of a cross-machine platform, extending himself beyond the roller, while either trying to clean a nip roll or prick out some "blowing" that had arisen by air getting between the layers of cardboard. He either slipped or became entangled in the machine, so that his right arm passed or was pulled through the nip. He sustained a serious crush injury to his right hand and arm, several broken bones in the hand, friction burns to the shoulder and back, and a deep cut in the right palm. He was detained in hospital for four weeks and underwent two operations.
11. We consider it is fair to say that whatever he was precisely doing, it appears that he was endeavouring to assist the appellants, his employers, in keeping the machine running. He may have been unwise in the manner that he adopted for doing this; but, on the other hand, there was nothing by way of safeguard to prevent him injuring himself by the ready access afforded to the dangerous parts of the machine.
12. The details of the offences which arose from those facts were these. The first offence charged that the appellants failed to ensure that their systems of work for cleaning the curing dryer nip roller were safe, for example by installing guards or altering systems of work as soon as possible following the risk being highlighted by their risk assessment. The second offence charged them with failing to ensure that effective measures were taken to prevent access to dangerous parts of the machinery, namely the curing dryer nip roller, the precise danger being caused by the in-running nip between the rollers not being effectively guarded so as to prevent their employee being caught in them.
13. In sentencing the appellants the learned judge observed that, as a result of the visits from the Health and Safety Inspector, the company was well aware that action to safeguard dangerous areas such as that involved in this case was essential. That had been agreed on the appellant's behalf. The judge took the view that the company had received a very clear warning of the dangers involved in the cleaning of rollers and that the practices which had been going on for a considerable period of time were in fact dangerous. As against that, it appeared to the learned judge that the solution to the problem was very simple and inexpensive, as had been proved by its introduction promptly after the accident.
14. The judge then went on to list a number of aggravating and certain mitigating features. He found that the company had fallen very short of what was reasonable and practicable after the issue of the Improvement Notice. He observed that, whilst he was dealing with a case of serious injury rather than a fatality, a fatality might well have resulted from the company's default. He then went on to impose the penalties to which we have referred.
15. Seven grounds of appeal are put forward, of which six only are pursued. They amount, upon analysis, to three matters of complaint, as helpfully and concisely developed by Mr Mullen, who has appeared on behalf of the appellants.
16. The first complaint is that the learned judge wrongly concluded that the injured man was cleaning the roller when the accident had happened, and if he had come to the correct conclusion that the employee was actually seeking to do something else, he would not have made the adverse finding on causation which was inherent in his sentencing remarks. We are not impressed by that argument. The fact is that the appellants, by their neglect, were permitting access to dangerous parts of machinery for the purposes of cleaning at least. The contention that the employee in question sought, in order to assist his employer's interest, to gain access to the machinery for some other purpose does, we think, not assist the appellants, as well as being, as my Lord, Kay LJ, pointed out in the course of argument, an unattractive submission.
17. The second complaint is that the learned judge, almost certainly due to no fault of his own, was presented with misleading information about the true financial state of the company; and had he been given the correct information, he would have assessed the company's means as considerably less than those on which he based his judgment at the time.
18. The third complaint is connected in part with the second. It is to the effect that the fines in fact imposed were simply too high. They fell too high within the scale of such financial penalties to be derived from previous decisions of the courts and in particular of this court.
19. Mr Matthews was required by the Court to attend on behalf of the respondents and gave us assistance on two matters. First he gave us assistance on what he submitted may be regarded as the true financial position of the company; and, secondly, on the principles to be applied when judging the appropriate scale within which penalties for these matters fall.
20. We should record that some further information is available to us which was not available to the learned judge. The learned judge was told that not long after these offences, the company decided that it was not worth continuing to trade, and upon discontinuance of trading the company was sold, thereby realising assets of some £17 million; it was on those facts that the learned judge relied. We are now shown profit and loss accounts and balance sheets relating to the company for the two years leading up to the time of the accident. It is submitted that had the learned judge had those available, first of all he ought and would properly have taken into consideration the profit levels or the potential profit levels of the company rather than the assets which the company in fact realised upon its sale; and secondly, even if it was right to take the net assets realised on the sale, the learned judge would, having seen the latest balance sheet, have taken a lower figure.
21. In our judgment, there is no doubt that the learned judge went to some trouble in weighing up the issues. The question is, did he nevertheless arrive at a total fine which was manifestly excessive? Two decisions of this court are of particular assistance in judging the factors which should be taken into consideration when judging the proper scale of penalty. The first which was referred to in written submissions was R v F Howe (Engineers) Limited [1999] 2 All E R 249, and [1999] 2 Cr App Rep (S) 37, a decision of this court on 6th November 1998; and the second R v Friskies Petcare UK Limited [2000] 2 Cr App R (S) 401.
22. The Howe case helpfully sets outs relevant factors to be taken into account in cases such as this. It is pointed out in the judgment of Scott Baker J that there is an infinite variety of such cases and difficulties may face courts who deal with them in having an instinctive feel for the appropriate level of penalty. The factors to be taken into consideration include the following: the gravity of the breach, including how far short a particular defendant fell below the appropriate standard and, in particular, how far short the employer fell in meeting the reasonable practicability test. An aggravating feature would be that death or serious injury was caused. A further aggravating feature would be proof that there had been a deliberate motive on the part of the employer in cost cutting or profiteering at the expense of safety. It was said that the size of an organisation would not be a factor in judging the appropriate level of safety. A failure to heed warnings would be another aggravating factor. Mitigating factors would include the prompt admission of guilt, steps to remedy the deficiencies once drawn to the employer's attention, and a good safety record. Finally, and importantly from the point of view of this appeal, there would have to be a careful examination of the company's financial position. An assessment of means, it was stated (and we agree with this) is important where one is dealing with a corporate appellant or defendant, as well as with others. It is a matter, it was stated, for a defendant to provide timely and accurate information to the court on its ability to pay the fine.
23. In the Friskies case remarks it was said in the course of the judgment that normally financial penalties in excess of £500,000 were reserved for cases of major public disasters. Mr Matthews, counsel for the respondent in this case, has urged that we give some reconsideration or clarification of what is meant by that. We do not find it necessary to do so for the purposes of deciding this appeal. What is important is that companies in the position of this appellant can expect to receive financial penalties on a scale up to at least half a million pounds for serious defaults and proportionately lesser sums if the limitation upon means or some lesser blame justifies it.
24. In the case of Friskies, the court was dealing with a very substantial business. An employee was fatally electrocuted. There was no system in place to alert technicians to the inherent risks. The court decided that the fine originally imposed of £600,000 after a plea of guilty could properly be reduced to £250,000. We do not find it helpful to enter into a minute analysis of the facts of this case in comparison with other cases such as Friskies, but we do remark that there was here not a fatality but a serious injury. We note that the company, though of substantial means and capable of paying a heavy fine, was of lesser size than the company in the Friskies case and indeed certain other companies in other decisions which have been referred to in the course of this hearing.
25. We have to decide, having regard to those matters, whether the total financial penalty of £350,000 was manifestly excessive. As to the second complaint about the learned judge's approach: he approached the matter on the basis that the company had been sold for approximately £17 million. We think that he approached the matter entirely correctly on principle. We reject the submission that he was obliged to deal with the case on the notional basis that the company would continue to trade and on the notional profits which would accrue to the company had it continued to trade. In brief, we think that he was right to deal with the case as it really was and not on some theoretical basis.
26. Now that we are armed with the actual balance sheets for the two years leading up to the offence, we are in a position to assess, as the learned sentencing judge was not, whether the £17 million is a figure that was justified. At first sight it seemed to us, having heard from Mr Mullen, that due to no fault of the judge, he may have taken too high a figure because the value of the equity shareholders' funds, as shown in the balance sheet in the year 2000, was some £8,600,000. However, having heard Mr Matthews and being referred to the profit and loss account, it was clear that that assessment of assets was calculated after payment of dividends to shareholders of some £9,500,000 in the previous year. We are satisfied, therefore, that perhaps fortuitously the learned judge did arrive at approximately the correct figure upon which to place his assessment of needs.
27. However, that still leads to the question posed under the third submission made by Mr Mullen as to whether still £350,000 is out of scale. It appears from the authorities that financial penalties of up to around half a million pounds are appropriate for cases which result in the death even of a single employee, and perhaps of the serious injury of such a single employee. We would not wish the sum of £500,000 to appear to be set in stone or to provide any sort of maximum limit for such cases. On the contrary, we anticipate that as time goes on and awareness of the importance of safety increases, that courts will uphold sums of that amount and even in excess of them in serious cases, whether or not they involve what could be described as major public disasters.
28. Nevertheless, we have regard to the fact that this, in relative terms, was a company of modest size. Despite the aggravating features to which we have referred, the fact is that we are dealing not with a fatality, mercifully, but with a case of serious injury. Whilst the outcome of the matter may be a matter of good fortune so far as the company is concerned, rather than reflecting any merit, distinction should, we think, be made at least to some extent between those two situations.
29. In the result, we have come to the view that the total financial penalty in this case was too great, that total fines should have been imposed of £200,000 rather than £350,000. Accordingly, we vary the fines imposed to £100,000 in relation to each of the offences, making £200,000 in all. We leave the costs order unaltered, and to that extent this appeal is allowed.

MR MULLEN: My Lord, could I apply for the costs of this appeal.

LORD JUSTICE KAY: Certainly, Mr Mullen.

MR MULLEN: And could I say --

LORD JUSTICE KAY: From where or what?

MR MULLEN: Sorry?

LORD JUSTICE KAY: Where from, what from?

MR MULLEN: Well, the costs, since the respondents are the statutory body responsible for prosecuting these cases, should not fall on them, and my application is for costs out of central funds.

LORD JUSTICE KAY: Thank you.

MR MULLEN: Could I just say that if my argument on ground two had succeeded, then perhaps my application for costs would have been less sustainable, because it could have been argued that all this information should have been before the sentencing judge. But since that argument has effectively failed, one is left with a reduction in the sentences on principle, and I would argue we should have our costs.

LORD JUSTICE KAY: Thank you. No, we are not prepared to grant costs. We do not think your clients have done very badly today. We think they can afford to pay for the advantages of you achieving what you have.

MR MATTHEWS: My Lord, I have no application.

LORD JUSTICE KAY: Thank you very much. We are grateful to you both for your help.