England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		Tuesday, 30th March 2010

1. MR JUSTICE NICOL: On 14th June 2004 the bodies of Stuart Jordan and Richard Clarkson were discovered in a pit surrounding a hot isostatic press that was owned and operated by the appellant.
2. Mr Jordan was the works manager. Mr Clarkson was the site maintenance engineer. They had died from asphyxiation. The pit in which they were found had filled with argon gas which had escaped from the HIP. Argon is an odourless, colourless gas that is heavier than air. Its collection in a confined space can lead to the diminution or exclusion of oxygen, thus causing a lethal danger.
3. In due course the appellant was prosecuted for an offence under section 2(1) of the Health and Safety at Work Act 1974. A general duty is placed on employers to ensure as far as reasonably practicable, the health, safety and welfare at work of their employees. It was the prosecution case that the appellant had failed to fulfil these obligations over a number of years in relation to its employees generally and, on this occasion, to Messrs Jordan and Clarkson in particular.
4. The appellant pleaded guilty. The matter came before Mr Recorder Desmond sitting in the Crown Court at Worcester on 23rd and 24th July 2009. On the latter date the Recorder fined the defendant £533,000. He also required the defendant to pay the prosecution costs in the agreed sum of £200,000. The appellant appeals against sentence with the leave of the single judge.
5. The HIP process removes internal porosity from metal castings where this is necessary for components requiring especially high integrity, such as orthopaedic implants and turbine blades. The appellant is part of a multi-national group which specialises in the HIP process. The group has 260 companies and 11 sites operate the HIP process worldwide. Three of those sites are in the UK. The one in question was in Hereford.
6. The HIP process involves a predetermined cycle of temperature and pressure in the presence of an inert gas such as argon or nitrogen. These processes take place in large vessels. There were four such vessels at the Hereford site and two of them shared the same pit. One of these two used argon, the other used nitrogen. A series of pipes surrounding the vessels and beneath them carried the gases to the vessels and away.
7. What appears to have happened here was that a hose connecting a vessel to one of the pumps was split. Other potential sources of leakage were the vacuum valves and relief valves that were also in the pit. By one or more of these means a very considerable quantity of argon leaked out of the system into the pit. The inference is that one of the men went down into the pit to investigate a malfunction in the system. He was probably overcome by the lack of oxygen. The second man probably went to help him. Tragically he suffered the same fate.
8. In general terms the risk that argon can create in confined spaces is well known. The appellant was not oblivious to that risk but it was the prosecution's case that in very many respects the systems that it adopted to deal with them were woefully inadequate. Their criticisms were explained in detail to the Recorder. With one or two minor exceptions, they were accepted by the appellant. It is sufficient if we give a brief summary so as to convey their flavour.
9. There should have been two separate systems for ventilating the pits: a trickle fan and two large extractor fans. Neither had been in operation. The defence case was that there may have been a power cut some weeks before and that the trickle fan had tripped out. The prosecution responded that it was a sign of a deficient system that the fans did not automatically return to an operational position when the power was restored or that there was no light or other warning that the power was off and the trickle fan disabled. There should have been sensors for detecting the level of oxygen and for giving warnings through lights and a bell if the level fell to dangerous levels. This system was not working. Someone had pressed simultaneously the reset and channel inhibit buttons. That could not have happened by accident. The two large extractor fans which we have mentioned previously were connected to the oxygen detector system. Because that system was disabled these large extractor fans were also off.
10. A different bell, on a different alarm system would also have been considerably muffled because someone had stuffed paper behind the bell. Again, that could not have happened by accident. It looked very much as though these steps had been taken as a result of false alarms that one or more people in the plant had found to be an irritant.
11. In 2002 the oxygen detecting system had been upgraded and included a monitor produced by a company called Crowcon. Crowcon had offered to provide an ongoing service contract to the system. The appellant had declined and chosen to undertake the work itself. However, there was clear evidence that the maintenance work had not been carried out to an acceptable standard.
12. The appellant had instituted, in circumstances to which we will return, a system for monitoring the entry of workers into confined spaces and the issuing of permits by a senior employee for such work to be carried out. From the appellant's records it seemed that, while the number of entries into confined spaces increased slightly, the number of permits dropped dramatically. In short, the need to obtain a permit seems to have been largely ignored. Although this would have been apparent from the records, no action was taken. The appellant did have available two handheld personal oxygen monitors. If Mr Jordan and Mr Clarkson had taken these with them when they went into the pit, they would have been warned of the dangerously low levels of oxygen. They did not. The prosecution alleged that was symptomatic of the lax attitude towards safety that had become prevalent in the plant. Additionally the prosecution alleged the risk assessment which had been carried out in 2001 was inadequate and it had not properly been updated and training and supervision of health and safety measures were deficient.
13. The serious aggravating feature in this case was that a similar incident had led to the deaths of two employees at a HIP plant operated by another company in the same group. That occurred in May 2001 in Tarzana, California. These two employees had also died from asphyxiation as a result of inhaling argon and nitrogen. That may have prompted the appellant to either adopt or to expedite the introduction of its permit system, but, as the prosecution was able to show, not with the rigour that the dangers demanded and the appellant allowed the other defaults in its safety procedures to continue or to get worse. The plant also had a double lock and bleed system which was also intended to act as a safety device. But this too was not operational at the time of the present offences.
14. The Recorder commented that although the company had health and safety mechanisms in place to prevent deaths, a combination of failures made the company significantly more culpable, particularly given the systemic deficiencies that were revealed. The fact that the failure was not an isolated matter but included systemic faults was one of the aggravating features of the case. Furthermore these failures had continued over a substantial period of time.
15. The other aggravating features of particular note were that there had been two deaths and the appellant had not adequately heeded the warnings from the failures in the Californian plant.
16. The Recorder then took account of all the mitigating features. He accepted that this was not the case of a defendant which had put profit before safety. Nor had it wholly disregarded health and safety issues. Measures had been put in place but an atmosphere of complacency had been allowed to develop. There was some training although it was insufficient and not adequately followed up. Likewise, there had been a risk assessment although that too had been inadequate and not reviewed. An audit system was in place but insufficiently rigorous.
17. The Recorder did accept the appellant could not be held responsible for the alleged design faults in the HIP process itself. It had been designed by world leaders in their field and it was unrealistic to blame the company for any of the failures in that regard. After these tragic events the appellant had settled the civil claims in full. It had taken all steps to remedy the deficiencies and to minimise risks for the future. The appellant had no previous convictions and no history of being subjected to improvement or prohibition notices. Finally, the appellant had entered a timely plea and had fully co-operated with the health and safety investigation.
18. Taking account of all the aggravating and mitigating factors, except for the guilty plea, the Recorder considered that a fine of £800,000 would have been appropriate if the prosecution had been contested. Because of the timely plea he followed the recommendation of the Sentencing Guidelines Council and reduced this by one-third. That was how he arrived at the final figure of £533,000. As we have said, he also ordered the appellant to pay the prosecution's costs in an agreed sum of £200,000.
19. On behalf of the appellant Mr Horlock QC advances three grounds of appeal. He submits that the Recorder took too high a starting point. Secondly, he argues that the Recorder made insufficient reduction for the mitigating features of the case. Thirdly, he says the Recorder erred in failing to have regard to the level of costs when he fixed the amount of the fine.
20. We agree with Mr Harris, who appeared for the Crown, that the first two matters really need to be taken together. Central to Mr Horlock's submissions in this regard is his reliance on what was said by this court in R v TDG (UK) Limited [2008] EWCA Crim 1963. That was an appeal against sentence where a company had been fined £250,000 for an offence under section 2 of the 1974 Act and a further £75,000 for breach of regulation 3(1) of the Management of Health and Safety at Work Regulations 1999. At paragraph 19 Gage LJ said:

"There are other decisions where the fines are much lower. The courts have, in reducing fines, taken into account the size and financial stability of the appellant. Mr Thorogood, who represents the respondent, submits that in the recent case of Chalcroft Construction Limited [2008] EWCA 770, the court appears to accept that £600,000 now represents the sort of figure for a fatality with the added ingredient of safety being sacrificed for profit. The court in Chalcroft did not expressly state that it had accepted that proposition. However, we have been referred by Mr Thorogood, to sentencing remarks made by the Recorder in that case. Based on those sentencing remarks and the court's dismissal of the appeal in that case, it would appear to us that there is some force in those submissions made by Mr Thorogood."

However, those remarks need to be seen in the context of what the court had said earlier in the same judgment. At paragraph 16 it said:

"It is now generally recognised that in cases of this sort there can be no set tariff. However, as this court said in R v (UK) Limited AGC Automotive [2007] EWCA Crim 3396, fines should not be wholly arbitrary and it is possible, looking at decided cases, to get a broad feel of a level of the fine."

In the next paragraph the court adopted what had been said in R v Balfour Beatty Rail Infrastructure Services Limited [2006] EWCA Crim 1586 (paragraph 22), where Lord Phillips CJ had summarised the principles. In this guideline judgment he said inter alia that in that paragraph:

"(10) Above all, the objective of the fine imposed should be to achieve a safe environment for the public and bring that message home, not only to those who manage a corporate defendant, but also to those who own it as shareholders. Later decisions have all drawn on and confirmed the usefulness of Howe as an authority and they have added the following further points of possible application to this case.

(11) The stated objective in Howe means that consistency of fines between one case and another and proportionality between the fine and the gravity of the offence may be difficult to achieve. Consistency may not, therefore, be a primary aim of sentencing in this area of law. R v Jarvis [2005] EWCA Crim 1409 paragraph 7."

21. Since there is no tariff, since consistency is not a primary aim in this area of sentencing, the references to earlier cases has the much more limited function of providing only a "broad feel" of the level of fine to ensure that the penalty in the instant case is not arbitrarily fixed.
22. In our judgment it would be contrary to these principles to take £600,000 as some of sort of benchmark above or below which variations have to be justified. That would be to introduce a tariff by another name and to reintroduce consistency as a primary aim by the back door.
23. In his careful judgment, the Recorder analysed the aggravating and mitigating factors, apart from plea in this case. It is, of course, a general principle that the court must have regard to any information put before it as to a defendant's means before it imposes a financial penalty. In this case the appellant said nothing about its means. The Recorder was entitled to infer from this stance, no doubt taken on advice, that it would be able to pay any penalty which the court chose to impose and that it did not wish to put forward lack of resources as a limiting factor.
24. We have said that we will take Mr Horlock's first two grounds of appeal together. That accords with the approach recommended by the Sentencing Guidelines Council in its Definitive Guideline on reduction for a guilty plea. The Sentencing Guidelines Council proposes the reduction of sentence because of a timely plea should come at the very end of the sentencing exercise. Before then the court should weigh up all the aggravating and mitigating features to decide what the appropriate sentence would have been, if the matter had been contested. Thus, for instance, we think that the Recorder was right to weigh in the balance the fact that the appellant had settled the civil claims and that it had taken full and proper remedial measures in reaching the figure that would have an appropriate penalty if the appellant had taken the case to trial. Mr Horlock has no criticism of this approach.
25. We reject the argument that that figure can be properly criticised on appeal even though this was not a case where the appellant had put profit before safety. The investigation had shown a dismal attitude towards the health and safety of its employees. There had been multiple systemic failures. The procedures and processes which the appellant had introduced to guard against the known risks of argon gas were all characterised by laxity and inadequacy. They were forms which were hollow of any useful substance. While the incident in California had initially stimulated new procedures such as the permit system, its impact had been short lived. Strikingly two employees had died in California. Two died in Hereford. In reaching his figure as to appropriate fine, if there had been a trial, the Recorder took proper account of the mitigating features, including the appellant's lack of convictions or regulatory measure, its co-operation with the regulators after the event, its settlement of the civil claims and the revisions which it made to its safety procedures. For the reasons which we have given the level of fines in other cases can only be of limited assistance. We do not accept that the "broad feel" which they provide demonstrates that the Recorder's figure for a fine after trial and in the present case was manifestly excessive. Having reached the figure which he would have imposed if there had been a trial the Recorder properly reduced that by one-third to reflect the appellant's timely plea of guilty.
26. We add as a postscript that the Sentencing Guidelines Council has issued a Definitive Guideline for health and safety offences causing death. It applies only to sentencing on or after 15th February 2010. It was not therefore applicable to the exercise which the Recorder undertook. At paragraph 25 the Sentencing Guidelines Council says:

"... where the offence is shown to have caused death, the appropriate fine will seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more."

Had the Sentencing Guidelines Council guideline applied, we consider that the result of this appeal would have been no different.

27. Accordingly we reject the first two grounds of appeal.
28. We turn to Mr Horlock's third ground of appeal concerning the impact of the order to pay the costs of the prosecution. He argues that the Recorder should have considered the whole amount which the appellant would be required to pay. The thrust of the argument is that the sum of the fine of £533,000 and costs of £200,000 added up to a total of £733,000 which was excessive. Where a person is convicted of an offence before the Crown Court the court may make such order as to costs to be paid by the accused to the prosecutor as it considers just and reasonable (see Prosecution of Offences Act 1985, section 18(1)). Mr Horlock draws attention to three authorities. In our judgment, on the facts of the present case, they do not have the consequence for which he contends. The first is R v Northallerton Magistrates' Court ex parte Dove [1999] EWHC 499 (Admin). There Lord Bingham CJ succinctly summarises the relevant principles. He said:

"(1) An order to pay costs to the prosecutor should never exceed the sum which, having regard to the defendant's means and any other financial order imposed upon him, the defendant is able to pay and which it is reasonable to order the defendant to pay.

(2) Such an order should never exceed the sum which the prosecutor has actually and reasonably incurred.

(3) The purpose of such an order is to compensate the prosecutor and not to punish the defendant. Where the defendant has by his conduct put the prosecutor to avoidable expense he may, subject to his means, be ordered to pay some or all of that sum to the prosecutor...

(4) While there is no requirement that any sum ordered by justices to be paid to a prosecutor by way of costs should stand in any arithmetical relationship to any fine imposed, the costs ordered to be paid should not in the ordinary way be grossly disproportionate to the fine. Justices should ordinarily begin by deciding on the appropriate fine to reflect the criminality of the defendant's offence, always bearing in mind his means and his ability to pay, and then consider what, if any, costs he should be ordered to pay to the prosecutor. If, when the costs sought by the prosecutor are added to the proposed fine, the total exceeds the sum which in the light of the defendant's means and all other relevant circumstances the defendant can reasonably be ordered to pay, it is preferable to achieve an acceptable total by reducing the sum of costs which the defendant is ordered to pay rather than by reducing the fine.

(5) It is for the defendant facing a financial penalty by way of fine or an order to pay costs to a prosecutor to disclose to magistrates such data relevant to his financial position as will enable justices to assess what he can reasonably afford to pay."

29. As we have already said, the appellant provided no information as to its resources. The appellant's ability to pay was not therefore a limiting factor which the Recorder had to consider. The quantification of cost was agreed at £200,000. It was not therefore necessary for the Recorder to investigate whether costs in that sum had been actually or reasonably incurred. An order to pay costs should not be grossly disproportionate to the fine. We do not think that can be said to be the case in the present matter. Nor is it open to the appellant to argue that the total of fine and costs exceeds the sum which the appellant can reasonably be ordered to pay in the light of its mains. If the fine was not manifestly excessive and the order to pay costs was reasonable, we cannot see any other circumstances in the present case which would make it unreasonable to require the appellant to pay the total. There is nothing inconsistent with what Lord Bingham had to say in Mr Horlock's second case, R v Howe & Son Engineers Limited [1999] 2 Cr App R(S) 37. Scott Baker J said at 44:

"Where a defendant is in a position to pay the whole of the prosecution costs in addition to the fine there is no reason in principle for the court not to make an order accordingly. The decisions remains, of course, in the court's discretion in terms of the statute. The court must look at the whole sum (fine and costs) that it is minded to order the defendant to pay and consider the impact upon him."

The need to reflect on the ability of a defendant to pay the combined total of fine and costs was re-emphasised by Lord Phillips in the Balfour Beatty case at paragraph 22 subparagraph (8). Of course the combined total of fine and costs in this case was substantial. But absent any information as to the appellant's means, there was no evidence on which the Recorder could conclude that the impact of an order to pay that total amount on the appellant was such that the presumptive position should not apply. The Recorder's sentence was not wrong in principle because he did not spell this out in terms. In our judgment, he was entitled to require the appellant to pay both the fine and the costs in the amounts that he did.

30. Again, the Sentencing Guideline Council's recent guideline would have produced the same result if it had been applicable. It simply says:

"The defendant ought ordinarily (subject to means) to be ordered to pay the properly incurred costs of the prosecution."

Overall therefore this appeal is dismissed.

31. MR HARRIS: I am in a position to put before the court an application for costs if the court feels it appropriate.
32. LADY JUSTICE HALLETT: I think you were given leave, Mr Horlock, were you not?
(The Bench Conferred)
33. LADY JUSTICE HALLETT: Let us have the figure please Mr Harris?
34. MR HARRIS: £12,805.95.
35. LADY JUSTICE HALLETT: Mr Horlock, the principle whether you should pay the costs or not. Then we will get to the sum.
36. MR HORLOCK: I oppose it on two bases. One, we were given permission and two, the attendance of the prosecution is requested by the Registrar rather than necessitated by our appeal. My learned friend's assistance has been, with all due respect to him, not a great deal more than I would have given the court I suspect by directing the court legitimately to the authorities that I would have done.
37. MR JUSTICE WALKER: It is very difficult in a case of this kind to see the thing from the Health and Safety Executive perspective without having the advance reading we had so helpfully provided to us.
38. MR HORLOCK: The advanced reading would, with all due respect, have been the same in my submission. It would have been the sentencing remarks, the case summary, basis of plea etcetera. My understanding was that in terms of making way through the facts the assistance was provided by me.
39. MR JUSTICE WALKER: Speaking for myself, Mr Horlock, I have derived a great deal of assistance from the written material that I had from the Health and Safety Executive.
40. MR HORLOCK: I understand that. My submission is the material is there largely and would have been supplemented by any questions the court addressed to me. Nothing that I have provided in terms of factual basis on which this sentence was passed or the role played by the company has been challenged or supplemented to any degree.
41. LADY JUSTICE HALLETT: The amount, if we are against you on the principle?
42. MR HORLOCK: I have not seen a schedule of costs.
43. LADY JUSTICE HALLETT: Just under £13,000 (Same Handed). We will discuss the principle while you look at the amount.
(The Bench Conferred)
44. LADY JUSTICE HALLETT: Is there anything on the amount?
45. MR HORLOCK: I cannot work out what the hourly rates are. I have just been handed this. I am not in a position to deal with it.
46. LADY JUSTICE HALLETT: Was it served at the right time?
47. MR HORLOCK: I was not aware of it until mentioned.
48. LADY JUSTICE HALLETT: If not it can go off to detailed assessment unless agreed.
49. MR HORLOCK: I would be obliged for that.
50. LADY JUSTICE HALLETT: I am afraid we are against you on the principle, Mr Horlock, therefore Mr Harris will have his costs in the sum stated by Mr Harris if agreed. If not, the sum will have to be subject to detailed assessment.
51. MR HARRIS: I am much obliged.