Court of Appeal significantly reduce health and safety fine following reassessment of likelihood of harm
The Court of Appeal has significantly reduced a fine imposed following reanalysis of expert evidence on “likelihood of harm”.
In April 2017 car parts manufacturer Faltec Europe Limited (Faltec) pleaded guilty to health and safety offences following an outbreak of Legionnaire’s disease at its site on Boldon Buisness Park in South Tyneside.
The legionella bacteria contaminated water in Faltec’s cooling towers. Five people, including four workers and one local resident, were diagnosed with Legionnaire’s disease. Only a proportion of those infected by the legionella virus will go on to develop Legionnaire’s disease which can, if untreated, lead to life threatening illnesses and death. Fortunately in this case none of those infected suffered fatal injuries.
Faltec was sentenced according to the Health and Safety Offences Definitive Sentencing Guideline (the Sentencing Guideline) which requires the sentencing judge to consider the seriousness of the harm risked and the likelihood of that harm occurring. Whilst the parties agreed that there was risk of death (Level A under the Sentencing Guideline), they disagreed on the likelihood of that harm arising.
The evidence of the expert instructed by Faltec was that between 0–0.04% of people exposed to legionella from cooling towers would be expected to suffer fatal injuries. The HSE inspector’s evidence was that Legionnaires disease is fatal in around 10-15% of cases.
Faltec submitted that the likelihood of Level A harm was low, whilst the HSE contended it was high. The sentencing judge concluded that a risk of death of between 0–0.04% could not possibly be described as low, stating that it was more as a result of good fortune that there were no fatalities given the statistical likelihood that between 10–15% of those infected would die.
The sentencing judge determined that there was a ‘high’ likelihood of Level A harm resulting in Harm Category 1. Having decided that the offending was at the top end of ‘medium’ culpability he imposed a fine of £1.2 million. Applying a one third credit (for the guilty plea) the judge ultimately fined Faltec £800,000.
Faltec was also fined £800,000 for a separate offence relating to an explosion, making the total fine payable £1.6 million.
When considering the financial position of the organisation, the sentencing judge identified that a provision of £1.6 million had been made in Faltec’s annual financial accounts in respect of potential fines but the judge said that he paid no regard to this when considering the level of fine.
Faltec appealed the level of fine on the basis that the sentencing judge was wrong in his assessment of both culpability and harm.
On the issue of culpability, the Court of Appeal concurred with the sentencing judge that the offending fell into the category of ‘medium’ culpability. However, in relation to harm it held that the sentencing judge had erred in concluding that there was a ‘high’ likelihood of Level A harm.
The Court of Appeal held that the likelihood of harm can only be assessed having regard to the scientific evidence before the court. The court could not substitute an impressionistic view for the expert evidence.
The Court of Appeal added that whilst the sentencing judge should have regard to the scientific evidence as to the likelihood of harm arising, the question of categorising the likelihood of harm as ‘low’, ‘medium’ or ‘high’ (under the Sentencing Guideline) is a matter for the court. It was not, however, satisfied that the sentencing judge’s categorisation of the likelihood of Level A harm as ‘high’ could be sustained, in light of the statistical evidence.
On reassessment, given that the site was located in an urban area and there was a short period of exposure, the likelihood of Level A harm was assessed as ‘medium’ and the fine was reduced significantly from £800,000 to £380,000.
The judgment places greater emphasis on the provision of scientific evidence and advises against assessing likelihood of harm on an impressionistic view of the evidence, where scientific evidence is available.
In cases where there is a question mark over whether or not expert evidence should be obtained (i.e. concerns about incurring the cost), this case demonstrates the merit of obtaining independent expert evidence.
The initial total of the combined fines of £1.6 million, matched that of the sum Faltec had ring-fenced within its accounts. Whilst the sentencing judge made it clear that the reserve was irrelevant in his consideration of the level of fine, the Court of Appeal warned here that the unintended consequence of taking such an approach would effectively discourage prudent reserving.
This would clearly be counterproductive and therefore it is important that appropriate legal and accountancy advice is sought in relation to making appropriate provision, both in terms of the size of the reserve and its presentation in published accounts.