England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2A 2LL
		19 March 2009

LORD JUSTICE GOLDRING: I shall ask Mr Justice Keith to give the judgment of the court.

MR JUSTICE KEITH:

1. On 20 May 2008 at Ipswich Crown Court, the applicant pleaded guilty to four counts relating to his failure to comply with various obligations imposed on him by the Fire Precautions Act 1971 ("the Act"). He asked for two further offences to be taken into consideration. On 17 June 2008, he was sentenced by Judge Holt to fines totalling £145,000. He was ordered to pay the fines within 28 days, with a total of 54 months' imprisonment in default of payment. He was also ordered to pay a sum to the Legal Services Commission in respect of his own costs under a recovery of defence costs order. In addition, he was ordered to pay the sum of £49,988 towards the costs of the prosecution also within 28 days. He now renews his application for leave to appeal against the level of the fines and the order for the payment of the costs of the prosecution, leave to appeal having been refused by the single judge.
2. The offences all relate to a hotel which the applicant acquired in the early part of 2003. In July 2003, an application under the Building Regulations was lodged on behalf of the applicant with the Building Control Department of the local planning authority. That application sought approval to convert the function room on the ground floor of the hotel into three bedrooms. There was to be a fire escape corridor. Although the Building Control Department consults with the local fire authority over such an application, there was nevertheless an obligation on the applicant to give notice of the proposal to the local fire authority. He did not do so.
3. That would have been only a technical breach of the Act, as the advice on appeal rightly points out, but a subsequent inspection of the hotel in January 2004 revealed that the function room had been converted otherwise than in accordance with the original proposal. It had been converted into two bedrooms. There was no corridor. There was no means of escape from one of those bedrooms, except through the other bedroom. It was the applicant's failure to notify the fire authority of that proposal which formed the basis of count 1. The advice on appeal does not address that issue. On this count, the applicant was fined £10,000.
4. Following this inspection, the local fire authority wrote to the applicant reminding him of his obligation to notify it before any building works took place in the hotel in the future. However, on a further inspection of the hotel in May 2006, it was observed that part of the landing on the second floor had been converted into a bedroom. The local fire authority had not been notified of the proposal to carry out those works. The inspection revealed that there was no fire detector in the bedroom; that the walls between the bedroom and the adjacent corridor were unlikely to be fire resistant for the 30 minutes required; and that the door to the bedroom was not fire resistant to the required standard either. This new bedroom also affected the means of escape from five bedrooms on the second floor. That was regarded as so potentially dangerous that a prohibition notice was served prohibiting the use of the whole of the second floor. The prohibition notice was withdrawn only after remedial steps had been taken, although the defence say that it was withdrawn as soon as combustible materials had been removed from the bedroom, and that the prosecution have exaggerated the dangers created by the construction of the additional bedroom. It was the applicant's failure to notify the local fire authority of his proposal to carry out these works which formed the basis of count 2. On this count, the applicant was fined £75,000.
5. The two other counts to which the applicant pleaded guilty were counts 4 and 7. Unlike counts 1 and 2, they did not relate to the applicant's failure to notify the local fire authority of his proposal to carry out works. They related to his failure to comply with the requirements imposed by the fire certificate issued by the local fire authority. During the inspection of the hotel in January 2004, it was noted that the rear stairs, which comprised part of the escape route from the first and second floors, did not have any artificial lighting to allow people to leave the building safely in the event of a fire, and that although a light fitting with a bulb had been installed on the ground floor where the unauthorised conversion of the function room had taken place, there was no light switch to operate it.
6. The mitigation here was that the inadequacy of the lighting had not been mentioned before, even though the hotel had frequently been inspected, and that the inadequacies of the lighting system were swiftly rectified. It is also said (although it is difficult to see how this can mitigate the actual breaches of the fire certificate) that the hotel was equipped with an emergency lighting system which was activated in the event of a disruption to the power supply. Those breaches of the fire certificate formed the basis of count 4. On that count, the applicant was fined £10,000.
7. Finally, during a period of almost two years between March 2004 and January 2006, the fire alarm system was not tested adequately. It is true that the alarm records showed that from October 2004 at any rate the system was tested quarterly, but to comply with the fire certificate it had to be tested weekly. Again, although fire extinguisher checks were carried out annually, they had to be checked monthly to comply with the fire certificate. The mitigation here was that there was no evidence that the fire alarm system was not working. Those breaches of the fire certificate formed the subject of count 7. On that count, the applicant was fined £50,000.
8. The two offences which the applicant asked to be taken into consideration related to other breaches of the fire certificate. The door to the boiler room was not fire resistant, and the door to the kitchen, which provided a means of escape in the event of a fire, was not kept unlocked.
9. There were a number of aggravating features about this series of offences. First and foremost, people were put at risk. It is no answer to say, as is said on the applicant's behalf, that there never was a fire, nor even an increased risk of fire as a result of these breaches. That, no doubt, is true, but the case against the applicant was never put on the basis that there was an increased risk of fire as a result of these breaches, but that the breaches made it less easy for people to escape safely in the event of a fire. In addition, the offences were not about things which the applicant had overlooked through carelessness. The judge found that these were deliberate failures to comply with the requirements in order to save costs. In particular, the offence which the judge rightly regarded as the most serious in terms of putting the hotel's guests at risk (count 2) was committed despite a recent reminder from the local fire authority of the applicant's obligation to notify it before embarking on any building works. Indeed, it is acknowledged that one of the unattractive features of the applicant's behaviour was his reluctance to co-operate with the local fire authority.
10. The applicant was not without previous convictions. He is now 60 years old. He received a suspended sentence in his thirties for an offence of conspiracy to defraud. He went to prison for two years in his forties for offences of deception. In 2006, he received a suspended sentence for being involved in the management of a company when disqualified from doing so. Nor did the applicant have the mitigation of timely pleas of guilty. He had originally pleaded guilty at the magistrates' court, but had then successfully applied to change his pleas to not guilty and had elected to be tried at the Crown Court. The subsequent pleas of guilty at the Crown Court came very late in the day.
11. There is no question but that these were very substantial fines for offences of this kind. But the applicant is a man of considerable wealth. The net value of assets which he jointly owns with his wife was put at over £13,000,000, and his own assets were estimated to be in excess of £10,000,000. As the single judge said when refusing the applicant leave to appeal, there is no point in imposing fines on the rich unless they are large enough to hurt.
12. However, the mere fact that the applicant had the ability to pay substantial fines did not mean that they had to be calculated by reference to his assets. The authorities, in particular R v ESB Hotels Ltd [2005] 2 Cr App R(S) 56, show that in the case of corporate defendants, it is their pre-tax profits rather than the company's turnover which should be taken into account, and therefore presumably rather than their assets as disclosed on the balance sheet. The pre-tax profits for the applicant's business for the two previous years were £218,557 and £240,000. The judge is criticised for not taking the pre-tax profits of the business into account, but looking at his sentencing remarks, it is apparent that he did just that. It is also said in the supplementary grounds of appeal that the judge failed to reflect in the fines which he imposed the fact that the applicant's wife had a share in the business, and that something less than the whole of the pre-tax profits of the business should have been attributed to the applicant. But it is not said that the judge was told what his share of the business was. In any event, as we shall see, the applicant was prosecuted because he was the occupier of the premises for the purpose of the Act.
13. At the end of the day, as was said in R v F Howe & Son (Engineers) Ltd [1999] 2 Cr App R(S) 37 at p. 43, "the important thing is to assess the gravity of the breach", and in that context "it is often helpful to look at how far short of the appropriate standard the defendant fell". In this case the sentencing judge said:

"In my judgment, your failing to meet what you should have done was woeful over a period of more than two years, and the potential for risk of serious injury to your guests whilst they slept in your hotel was considerable."

14. We have looked at comparable cases to see whether these fines were so out of kilter with what a man with the resources of the applicant, running a business with the sort of pre-tax profits which his business had, might expect to pay by way of fines for breaches which fell so far short of the appropriate standard. There is, of course, a real danger in comparing the facts of one case with the facts of another, especially as the overwhelming majority of the reported cases relate to companies and not individuals. In any event, the cases in which an appellate court has reduced the fines imposed by the lower court have tended to be where the lower court was thought to have taken something immaterial into account, or not to have taken something material into account, or to have got the facts wrong. That cannot be said of this case. In the end, we have concluded that the fines here, though very heavy, were not manifestly excessive.
15. We turn to the order for costs. That was challenged on a variety of grounds in the original grounds of appeal and in the supplementary grounds, but we need only address one because it is the only one that was advanced today. It is said that the costs claimed by the prosecution represented its entire costs, despite the fact that the applicant's wife and daughter had originally been charged as well, only for the prosecution ultimately to offer no evidence against them.
16. The prosecution's explanation for not continuing to proceed against the applicant's wife and daughter is that the person said to be liable for failing to comply with the obligations imposed by the Act is the occupier of the premises to which the requirements of the Act related. Since the hotel had been run "by different vehicles at different times", the officers responsible for this prosecution were uncertain who the occupier was for the purposes of the Act. That uncertainty could have been removed if the applicant had volunteered that which he was later to admit, namely that he was the occupier of the premises for the purposes of the Act. However, he did not attend the interview at which questions designed to elicit who the occupier was were asked. Indeed, when his daughter was interviewed, she did not say that he alone was the occupier. She said that he and his wife were. Accordingly, it had been necessary for the applicant's wife and daughter, as well as the applicant, to have been charged initially. The case was withdrawn against the applicant's wife and daughter when the applicant pleaded guilty at the magistrates' court. But when he successfully applied to change his pleas and elected trial at the Crown Court, the proceedings had to be recommenced against the applicant's wife and daughter because it was not then known whether or not the applicant would in due course acknowledge that he alone was the occupier of the premises. In the circumstances, we see no basis for saying that the judge was wrong to conclude that the applicant should have to pay the whole of the prosecution's costs.
17. For these reasons, therefore, this renewed application for leave to appeal against sentence and the order for costs must be refused.

MR ROWLAND: My Lord, I hesitate to ask, but may I mention the question of costs in relation to this application?

LORD JUSTICE GOLDRING: Yes.

MR ROWLAND: There are costs and they amount to quite a lot of money.

LORD JUSTICE GOLDRING: Would you first of all like to tell us what our powers are, please, and where it is set out?

MR JUSTICE KEITH: It is section 18(2)(a) of the Prosecution of Offences Act 1985.

MR ROWLAND: I am grateful.

MR JUSTICE NICOL: It does require you to specify a figure -- or rather if we are to accede, it requires us to specify a figure.

MR ROWLAND: My Lord, yes. On a time basis alone, bearing in mind the preparation work -- which has not been doubled up -- on a time basis alone and with the costs of the officers involved as well, it comes to £5,477.

LORD JUSTICE GOLDRING: Do you have a document setting that out?

MR ROWLAND: My Lord, I have.

LORD JUSTICE GOLDRING: It does not set out your hours at all, does it?

MR ROWLAND: My Lord, no, it does not.

MR JUSTICE NICOL: Why are fire officers' costs appropriate as part of the appeal to this court?

MR ROWLAND: My Lord, the position as far as the fire officers involved is concerned is that there was an advice on appeal submitted and grounds submitted.

MR JUSTICE KEITH: I am sorry, I did not catch that.

MR ROWLAND: There was an advice on appeal submitted and grounds submitted. Instructions had to be taken in relation to those to allow preparation of the documents that you have seen. They also liaised with the court office here, and it is in respect of those matters that they have shown the time.

MR JUSTICE KEITH: What were the grounds of appeal on which the instructions of individual fire officers needed to be taken?

MR ROWLAND: My Lord, in relation to the nature of the risk that had been identified and specific matters which are set out in the skeleton argument relating to the specifics of the allegations.

MR JUSTICE KEITH: All of that would have had to have been done for the hearing before the judge.

MR ROWLAND: My Lord, not quite because, with respect, the way in which the grounds were put needed specifically to be answered because those were matters which had not been raised before the judge.

MR JUSTICE NICOL: But if they are not raised before the judge and there is not an application to adduce fresh evidence, is the fact that they were not raised before the judge and there is not an application to adduce fresh evidence not the end of the matter?

MR ROWLAND: My Lord, it is not a question of fresh evidence. It is more a question of the interpretation of the way in which the matter was being put by the applicant at that time.

LORD JUSTICE GOLDRING: How many hours of legal work does this involve? What is the hourly rate that this involved?

MR ROWLAND: The hourly rate is £150 an hour.

LORD JUSTICE GOLDRING: And the number of hours?

MR ROWLAND: I am afraid I did not prepare the schedule myself.

LORD JUSTICE GOLDRING: No doubt there are some disbursements in this as well.

MR ROWLAND: No, there are not.

LORD JUSTICE GOLDRING: There are not? It is all time?

MR ROWLAND: Yes.

LORD JUSTICE GOLDRING: The number of hours?

MR ROWLAND: It would be seventeen hours approximately -- something like that.

LORD JUSTICE GOLDRING: Including, no doubt, the taking of instructions and the drafting of the skeleton in relation to factual matters to which you have just referred?

MR ROWLAND: My Lord, yes. There was the preparation of the case summary for the appeal, which I think was heavily relied on.

MR JUSTICE KEITH: There were two documents that you produced. One was in response to the original grounds of appeal. The other was in response to the supplementary grounds of appeal. Are there any other documents which have been produced which you could show us?

MR ROWLAND: My Lord, yes. There was a detailed case summary which was sent both to the defence and to the Court of Appeal.

MR JUSTICE KEITH: The Registrar sought a document from you for the purposes of preparing a case summary for us?

MR ROWLAND: My Lord, I cannot say that he sought it from me. I sent it to him.

MR JUSTICE KEITH: You volunteered it?

MR ROWLAND: I did, because of the technical nature of the allegations.

MR JUSTICE KEITH: Yes, I understand that, though in fact the case summary prepared by the court really comes from the transcript of your opening. Everything that I saw in the case summary prepared by the Registrar came from the opening. I have not seen anything in the summary which came from another document, which I now know was the document you provided.

MR ROWLAND: I do not know, my Lord. That may be the case.

LORD JUSTICE GOLDRING: Thank you very much. Let us see what Mr Heraghty has to say about it?

MR HERAGHTY: My Lords have made a number of the points I would have made. As far as I am aware, the Criminal Appeal Office did not require the involvement of the respondent in the proceedings thus far. Thus far it has solely been an application for leave to appeal, and of course the court had everything it needed to decide the issues. Whilst there are technical aspects to this, the fact is that there was a sentencing hearing and a transcript of it and nobody can go behind that. My Lord, it is helpful to have the respondent here, of course, but, as I understand it, it was not absolutely necessary.

LORD JUSTICE GOLDRING: It is often extremely helpful, though, to the court.

MR HERAGHTY: Yes, of course.

MR JUSTICE NICOL: And the statutory power does expressly extend to an application for leave.

MR HERAGHTY: The statutory power to order prosecution costs?

MR JUSTICE NICOL: To order prosecution costs.

MR HERAGHTY: Of course it does.

LORD JUSTICE GOLDRING: Thank you very much.

(The court conferred)

LORD JUSTICE GOLDRING: As it seems to us, taking into account today's hearing, the fact that some of what was done was unnecessary and that some of what was done was fire officers' costs which are not appropriate, the overall figure of £2,000 seems to us to be an appropriate figure and a figure that we consider to be just.

MR ROWLAND: My Lord, thank you.

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