England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM BASILDON CROWN COURT
(JUDGE ZOE SMITH)

		Royal Courts of Justice Strand, London, WC2A 2LL
		31 July 2003

Lord Justice Scott Baker:

1. On 27 January 2002 the appellant pleaded guilty to an offence under section 85(3) of the Water Resources Act 1991 of causing sewage effluent to be discharged into the river Crouch. The magistrates committed the case to the Crown Court for sentence on the basis that the maximum penalty they could impose, which was £20,000, was insufficient.
2. On 15 March 2002 before judge Zoe Smith in the Crown Court at Basildon the appellant was fined £200,000.00 and ordered to pay the prosecutor's costs of £9,579.58.
3. This was a private prosecution brought by Mr Hart, a member of the public. The Environment Agency offered to take over the case but this offer was rejected by Mr Hart. This case, and others like it, should be prosecuted by the Environment Agency rather than by an individual member of the public and it is unfortunate that it was not. We have not explored the reason in any detail. Suffice it to say Mr Hart thought the Agency was dragging its feet, whereas the Agency said it was gathering evidence. Mr Hart felt the Agency lacked determination in discharging its responsibilities. In the event, this background is irrelevant to the sentence appeal before us. The question is whether the fine was manifestly excessive. Leave to appeal against sentence was given by the single judge.

The facts

4. About 9.25am on 15 October 2001 Mr Hart, who was looking out of his office window, saw condoms and sewage floating down the river Crouch. He reported this immediately to the Environment Agency. The pollution was caused by a discharge from the Wickford Sewage Treatment Works for which the appellant is responsible.
5. The material working of the works is as follows. Sewage is directed to a middle lagoon where it is aerated for 12 hours before passing to two outside ditches where it is retained by gates. These rise to retain the contents of the ditches. The sewage is than aerated for a further 3½ hours after which the gates lower to allow clear liquid to pass out whilst the sediment remains on the bottom of the ditch.
6. The gates were computer operated, but the computer failed to recognise that a bolt operating one of the gates had de-threaded so that the gate was not rising. Accordingly, as more semi-treated sewage entered the ditch from the middle lagoon it was mixing with the sediment and being discharged into the river.
7. There should have been a safety monitor present which, when the contents of either of the ditches reaches a certain level of contamination, diverts the flow out onto a grass plot and sounds an alarm. The monitor, however, had been away for three weeks for repair at the time of the offence and no replacement had been installed. Mr Pardoe Q.C. who appeared before us for the appellant submitted that the primary purpose of the turbidity monitor was to alert the appellant to long term changes albeit it would, if present, have provided protection. The telemetry has been amended since the incident. The incident occurred because the computer failed to recognise that there was a problem rather than that the designated backup was away for repair. We do not think the distinction is of great importance. Either way the appellant did not have in place a satisfactory backup in the event of an occurrence such as a bolt de-threading.
8. The works were unmanned, although an operator had been to the site to take samples at 7.30am. Also, two people attended the site for training purposes about 10am.
9. The source of the discharge was discovered at 12.30pm on the same day. The appellant thereupon provided the necessary plant and re-oxygenated the river. Samples that were taken indicated that the river had recovered by the following day.
10. There was a Newton hearing because there was a dispute about the quantity of sewage that had been discharged into the river. The judge concluded it was in the region of 200 tonnes.
11. The judge described the discharge as very substantial and said the effect on an area near the source was catastrophic for the fish and wildlife. She said she had heard evidence of the observation of dead fish over a 2 kilometre stretch of the river, and had also seen a photograph of a dead swan. She said her task was to assess the culpability of the appellant and also to take account of public disquiet. She found the appellant was grossly irresponsible in failing to have a safety system in operation on the site and again grossly irresponsible, in the absence of a safety system, in not having the site manned to ensure the gates were rising and closing properly.

The judge took into account in mitigation:

i) the plea of guilty;

ii) co-operation with the Environment Agency;

iii) restoring the river the following day;

iv) achieving improvement;

But she said that the appellant had 65 convictions – 64 for sewage discharge (albeit only one for Wickford). She said that because of the mitigation the fine was smaller than it would otherwise have been.

Section 85(3) of the Water Resources Act 1991 provides:

"A person contravenes this section if he causes or knowingly permits any trade effluent or sewage effluent to be discharged –

a) into any controlled waters; or

b) from land in England and Wales, through a pipe, into the sea outside the seaward limits of controlled waters."

It is subsection (a) that is relevant in this case.

12. Mr Pardoe accepts that the offence in this case was committed by the appellant setting up a system with the intention of the products of sewage treatment being discharged into controlled waters when in fact polluting material was discharged. This, submits Mr Pardoe, is an offence that does not require mens rea and is to be distinguished from acts of a criminal nature. Sherras v De Rutzen [1895] 1QB 918, 922, Sweet v Parsley [1970] AC 132, 149, 162; Alphacell v Woodward [1972] AC 824, 834 and 5.
13. We would not categorise breaches of section 85(3) of the nature that occurred in this case as being of a non-criminal character, albeit the offence is one of strict liability.
14. The environment in which we live is a precious heritage and it is incumbent on the present generation to preserve it for the future. Rivers and watercourses are an important part of that environment and there is an increasing awareness of the necessity to preserve them from pollution. It is of note that the offence to which the appellant pleaded guilty carries an unlimited fine in the Crown Court and, if committed by an individual, imprisonment of up to 2 years.
15. The very nature of the kind of treatment carried out by the appellant carries a high risk of damage to adjoining waterways. As Lord Salmon pointed out in Alphacell Parliament has imposed on people like the appellant a heavy burden to do everything possible to ensure that they do not cause pollution. We are satisfied that there was and is such a burden on the present appellant both at the Wickford Sewage Treatment Works and elsewhere.
16. The thrust of Mr Pardoe's argument is that the lack of culpability is a very important factor in determining the level of fine. A similar argument was advanced in R v Milford Haven Port Authority [2000] 2Cr App R(S)423. The port authority argued that there was a low level of culpability since the plea of guilty was tendered and accepted on the basis of strict liability without admission of fault. Lord Bingham C.J. said the court saw considerable force in the point. The culpability would have been very much greater had it pleaded guilty or being convicted on any basis other than strict liability. However, he went on at p 432:

"It is, however, important to bear prominently in mind a countervailing consideration. Parliament creates an offence of strict liability because it regards the doing or not doing of a particular thing as it self so undesirable as to merit the imposition of criminal punishment on anyone who does or does not do that thing irrespective of that party's knowledge, state of mind, belief or intention. This involves a departure from the prevailing cannons of the criminal law because of the importance which is attached to achieving the result which Parliament seeks to achieve."

17. The appellant faced a particular difficulty in the present case in the judge's findings of fact that it was grossly irresponsible in its failure to have a safety system in operation.
18. Mr Pardoe's argument was on the following lines. There was no causative culpability. Because the de-threading of the bolt was an unforeseeable event, his client could not be faulted for failing to have taken steps to prevent it occurring. The offence was not a very serious example of a breach of section 85(3). It was of no economic effect on the public; its spatial and temporal effect was limited. The court should not treat every minor infringement of this legislation as if it was a major one. A balance had to be struck and the actual impact of the incident ought to be a fundamental factor in determining the level of fine. Whilst it was true the appellant had 64 previous convictions this was something that had to be seen in context. The company covered some 20% of the land-mass of England and Wales and this was its first conviction in respect of the Wickford Works. The appellant ran a gigantic operation and some accidents were bound to occur. There were only two other of the major water companies that had better records than that of the appellant.
19. It was plain to us that Mr Pardoe, on his client's behalf, was not so much concerned with the level of fine in this case as its effect on the level of fines generally for this type of offence. He pointed to the unusual position of monopoly companies such as the appellant because they are very strictly regulated in what they can charge their customers. High fines will affect the amount they can expend on capital investment and, as its finance director described, its discretionary spend on charitable and environmental programmes.
20. The underlying issue, as it seems to us, is the degree of priority that companies such as the appellant should give to environmental safety. If, through some mechanical failure, an aircraft crashes and all the passengers are killed, no one would accept the explanation that the actual failure that occurred was unforeseen and there was no fail-safe system. Broadly speaking, the more extensive the precautions against pollution, the greater the cost that ultimately falls on the public. The question is where to strike the balance. It seems to us that a prudent water company will conduct ongoing risk assessments looking at, not only the likelihood of events occurring that lead to pollution, but also the extent of the damage or possible damage if they do occur. There is, at the present time, a clear public perception that insufficient priority is still given in some circles to environmental safety. There should have been a fail-safe system in operation in the present case. Where the gate operating the mechanism failed, as it did, it should have failed to safety.
21. The Environment Agency assisted the Court on the sentencing principles relevant to this appeal and pointed out that the absence of any "tariff" or scale of financial penalty makes it very difficult for courts, both Magistrates Courts and the Crown Court, to know at what level to pitch the fine in individual cases. We were shown a circular issued by the Magistrates Association in September 2000 and amended in May 2001 headed "Fining of Companies for Environmental and Health and Safety Offences." It contains helpful advice, which we endorse. One of the points made is that Magistrates should accustom themselves in appropriate cases in these fields to imposing far greater financial penalties than have generally been imposed in the past.

The authorities.

22. Milford Haven, to which we have referred above, was a case where an oil tanker went aground and lost 70,000 tonnes of crude oil. The port authority, which was responsible for the pilot, was fined £4m.This was reduced to £750,000 by the Court of Appeal. The defendant in Milford Haven pleaded guilty to an offence under the same section of the Water Resources Act 1991 as the present appellant, albeit section 85(1) rather than 85(3). Lord Bingham C.J., who gave the judgment of the court, referred to five other cases which gave some assistance. They were all cases where the event leading to prosecution was a matter of great gravity. Only one was a pollution case; the other four were Health and Safety cases. Like Milford Haven, however, they are all cases that belong to a very different league to the present case. The Lord Chief Justice said at p.435:

"But we conclude that (the judge) did fall into error in failing to give effect to the agreed basis of the port authority's plea of guilty in failing to give full credit for its plea of guilty, and in failing to consider the possible impact of a £4m fine on the port authority's ability to perform its public functions. We also conclude (although largely on the basis of material which was not before the judge) that he took too rosy a view of the port authority's financial position and prospects."

23. Earlier in his judgment the Lord Chief Justice referred to F Howe and Son (Engineers) Ltd [1999] 2Cr App R(S)37 in which this Court made observations concerning the approach to fines for health and safety offences. He pointed out that health and safety offences are not directly analogous to environmental offences since health and safety offences inevitably present at least a threat of personal injury or death, whereas environmental offences may, but need not, do so. Having emphasised that every case must be dealt with on its own peculiar facts he went on to say:

"Nonetheless the Court drew attention to certain material factors, among them the extent to which the defendant fell short of his duty, the causing of death or serious injury, the skimping of proper precautions to make or save money or gain a competitive advantage, the deliberate breaching of a duty in order maximise profit, the degree of risk and danger created by the offence, the extent of the breach or breaches, evidence of repetition or failure to heed warnings, the financial profit (if any) occurring to the offender as a result of the offence, admission of guilt and plea of guilty at an early opportunity, the taking of prompt and effective measures to rectify any failures, and a good record of compliance with the law. It was pointed out, correctly, that any fine should reflect the gravity of the offence and also the means of the offender, whether the offender was an individual or a corporation. The more culpable, the more offence, the more severe, generally speaking, a penalty should be. If a commercial entity has profited from its offending, that is a very relevant consideration when assessing the level of any penalty."

24. Closer to the circumstances of the present case is R v Yorkshire Water Services Ltd [2001] EWCA Crim 2635. In that case the water company pleaded guilty to 17 offences of supplying water unfit for human consumption. The plea was on the basis that although the water was unfit for human consumption there was no bacteriological risk to health. Fines totalling £119,000 were reduced to £80,000. There were four different incidents leading to the 17 offences. The incidents arose out of a mixture of bad planning, bad organisation, poor quality engineering and, in the case of one of the incidents, disregard of the alarm system for the second time in twelve months.
25. It should be kept in mind that the offences in Yorkshire Water were under sections 70(1) of the Water Industry Act 1991 and not, as here, section 85(3) of the Water Resources Act 1991. The maximum penalty is different and the magistrate's jurisdiction under section 70(1) is a fine of £5,000. Nevertheless, some similar principles apply. Rougier J giving the judgment of the court said at paragraph 17:

"We return to the facts which we consider certainly relevant in this case as follows. (1) The degree of culpability involved in the commission of what is in effect an offence of relatively strict though not absolute liability. (2) The damage done. This will include the spatial and temporal ambit of the effect of the offence, together with ill effects both physical and economical. This is of particular importance bearing in mind that the Board is the only supplier of this particular commodity. There are no alternatives. It seems to us that the above two are the most important, but also (3) The defendant's previous record, including any failure to heed specific warnings or recommendation will also be material. This has a relatively small impact in this particular case. (4) A balance may have to be struck between a fitting expression of censure, designed not only to punish but to stimulate improved performance on the one hand, and the counter productive effect of imposing too great a financial penalty on an already underfunded organisation on the other. This aspect does not seem to feature largely in the present case. (5) The defendant's attitude and performance after the events, including their pleas. Here the Board clearly have a fairly good score, if one may put it that way. (6) Finally it must be correct to determine what the penalty for any one incident should be rather than tot up the various manifestations of that incident as reflected in the counts in the indictment. There is an obvious analogy between the principle of concurrent sentences of custody. Having determined the overall penalty, as a matter virtually of formality it is then divided among the separate counts. Although the homes affected is one of the material factors in determining the penalty, the number of complaints named should not be used as a multiplier since that is the result of an arbitrary decision of the prosecution."

The appellant's past record.

26. The appellant's 65 previous convictions stretching over the period from November 1990 to February 2002 have to be seen in context. The appellant runs 1,075 sewage treatment works and covers an area of 27,500 square kilometres serving nearly 5½ million people. As Mr Pardoe acknowledged, eight different incidents at the Stewartby Sewage Works between October 2000 and July 2001 led to a fine of £190,000 imposed by the Luton Crown Court on 19 February 2002. All these offences pre-dated the incident in the present case and should have sounded alarm bells in the appellant's senior management. One might have expected a proper review of risk management to have led to the imposition of a sufficient fail-safe system in the present case. Mr Pardoe submitted that there were aggravating features in the Stewartby case not present here, namely prolonged environmental impact, provision at interview by managers of wrong and misleading information and failure to heed warnings from the Environment Agency. That sentence was not appealed. We see the force of these submissions.
27. We were invited by Mr Mark Harris on behalf of the Environment Agency to suggest a tariff based on the common incident classification system adopted by the Agency for prosecuting pollution offences. We decline to do so. We reiterate that each case has to be considered in the light of its own facts. No two case are likely to be identical. All that can be said is that decisions of this Court are likely to emerge with time that will provide some kind of focal points.

The relevant factors in the present case.

28. This was in our judgment a serious local case of pollution. The effect in time and space was fortunately limited. For this one must thank Mr Hart, who spotted the problem and reported it. Had he not done so the problem would have lasted longer and had more damaging consequences. As it was the river was polluted over two kilometres and serious damage done to the fish and wild life that lived in it. The river had recovered 24 hours later and this was due to the prompt remedial action taken by the appellant. The consequences could have been worse. The discharge was, as the judge said, catastrophic for the fish and wildlife near the source.
29. How far below the required standard did the appellant fall? The judge described the appellant's failure as grossly irresponsible. Mr Pardoe argued that there was no culpability. In our argument his submission underestimates the extent of the obligation the legislation places on undertakings such as the appellant. In any event he has the difficulty of a finding of fact by the judge with which we are not minded to interfere.
30. These, it seems to us, are the most important factors about the offence. The number of previous convictions is not of great significance when seen in the light of the ambit of the appellant's operation. The fact that the present offence occurred after the Stewartby incidents together with the submission that there was no culpability suggests the appellant has been giving rather less priority to its obligation to prevent pollution than it should have done. In mitigation, the appellant acted promptly to limit the damage and made sure measures were taken to prevent a recurrence. The plea of guilty is also important and its affect is not, in our judgment, significantly diminished by the Newton hearing to determine the quantity of untreated sewage that was released. Also, there is no question of the appellant having deliberately cut corners to save cost.
31. Mr Pardoe submitted this case should have been heard in the Magistrates Court albeit the appropriate penalty might have been the maximum £20,000. In our judgment, the magistrates were quite correct to decline jurisdiction and they should always do so if they think an offence under section 85 may warrant a fine in excess of £20,000. On the other hand we think the fine of £200,000 was manifestly excessive for this single offence, particularly when measured against the total fines of £80,000 in the Yorkshire Water case. That said, the fine must be at a level to make some impact on the company and overcome any suggestion that it is cheaper to pay the fines than undertake the work that is necessary to prevent the offence in the first place.
32. In our judgment the appropriate fine is £60,000 and the appeal will be allowed to the extent that the fine of £200,000 will be reduced to £60,000.
- - - - - - - - - - - - -

LORD JUSTICE SCOTT BAKER: For the reasons given in the judgment that has been handed down, this appeal is allowed and a fine of £60,000 will be substituted for the fine of £200,000 imposed in the Crown Court.

MR PARDOE: I am obliged. My Lord, I sent over yesterday a couple of very minor amendments.

LORD JUSTICE SCOTT BAKER: They have been attended to, I think.

MR PARDOE: I am obliged.

LORD JUSTICE SCOTT BAKER: I dealt with some from the Environment Agency as well.

MR PARDOE: My Lord, I do have an application. It is an application for a defendant's costs order in this appeal. The power, as you know, arises under section 11(3) of the Criminal Appeal Act.

LORD JUSTICE SCOTT BAKER: Yes.

MR PARDOE: I have handed up a set of documentary material.

LORD JUSTICE SCOTT BAKER: Yes.

MR PARDOE: Which includes excerpts from the Act and a decision, the unreported version of the decision, because it contains a paragraph which is material in Milford Haven. My case is that, just as in Milford Haven, where the fine was reduced by 75 per cent, from 4 million to three-quarters of a million, here the fine has been reduced by 70 per cent from a couple of hundred thousand to £60,000. That is not just a matter of arithmetic, there is a decision of principle embodied in the court's decisions in both cases. This was, when all is said and done, a major appeal in which the Environment Agency made very considerable submissions which have been dealt with. There can be no distinction in principle between the two cases for this reason. They were both cases of strict liability where there had been human error of a culpable kind. In Milford Haven the defendant there, the port authority, was charged with providing safe pilotage, but in fact the pilot provided was a negligent pilot, with truly disastrous results in that case. Here Anglian Water was under a strict liability not to prevent sewage effluent to enter controlled waters. Owing to the absence on the day, as your Lordships have found, of a fail safe mechanism, that liability was incurred. The cases that I have set out are distinctions in principle, and in Milford Haven the then Lord Chief Justice, Lord Bingham, regarded it as indeed obvious, and your Lordships will see that in paragraph 55 of the unreported decision.

LORD JUSTICE SCOTT BAKER: What are the court's powers with regard to costs out of central funds?

MR PARDOE: I have put in an excerpt from Archbold, the second page of the document, paragraph 6.10. If you look at paragraph 6.5, section 16(4)(c) of the Prosecution of Offences Act 1985. You will see "on an appeal under that part", that is of the Criminal Appeals Act, "against sentence, exercises its powers under section 11(3)", which is what your Lordships have done in this case, "(powers where the court considers that the appellant should be sentenced differently for an offence for which he was dealt with by the court below --

LORD JUSTICE SCOTT BAKER: Your point really is that you have come here on the appeal, you have succeeded on the appeal, the fine has been substantially reduced and your client has incurred considerable costs in doing so.

MR PARDOE: Absolutely, my Lord. I can repeat verbatim the observations of Lord Bingham in Milford Haven: "On that appeal the Port Authority achieved a considerable measure of success such as would have led to the making of a defendant's costs order had leading counsel asked for such an order" -- well, here I am asking for such an order.

LORD JUSTICE SCOTT BAKER: Very well, we will just consider the position.

(The bench conferred)

LORD JUSTICE SCOTT BAKER: You can have your defendant's costs order.

MR PARDOE: My Lord, I am very much obliged.

LORD JUSTICE SCOTT BAKER: Mr Hart, you are here.

MR HART: Sir.

LORD JUSTICE SCOTT BAKER: You have no further applications to make, have you?

MR HART: None whatsoever. I would like to ask, will I be liable for any of the costs?

LORD JUSTICE SCOTT BAKER: You are not liable for any of the costs here, and I think you have not really incurred any at this stage.

MR HART: Thank you very much.

LORD JUSTICE SCOTT BAKER: Mr Pardoe, thank you for your attendance and helpful submissions.

MR PARDOE: My Lord, I am obliged.