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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Tata Steel UK Ltd, R v [2017] EWCA Crim 704 (07 June 2017) URL: https://www.bailii.org/ew/cases/EWCA/Crim/2017/704.html Cite as: [2017] EWCA Crim 704 |
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ON APPEAL FROM THE CROWN COURT AT NORTHAMPTON
His Honour Judge Mayo
S20160075
Strand, London, WC2A 2LL |
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B e f o r e :
MRS JUSTICE JEFFORD DBE
and
HIS HONOUR JUDGE AUBREY QC
(SITTING AS A JUDGE OF THE CACD)
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| REGINA |
Respondent |
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| - and - |
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TATA STEEL UK LTD |
Appellant |
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(Transcript of the Handed Down Judgment.
Copies of this transcript are available from:
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7414 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Keith Morton QC and Dominic Adamson (instructed by Plexus Law) for the Appellant
Hearing date : 27 April, 2017
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Crown Copyright ©
Lord Justice Gross :
INTRODUCTION
Tata")
admitted two offences comprising breaches of s.2(1) of the Health & Safety at Work Act 1974 ..."the 1974 Act"), contrary to s. 33(1)(A) thereof and was committed to the Crown Court for sentence, pursuant to s.3 of the Powers of the Criminal Courts (Sentencing) Act 2000. On the 26th July, 2016, in the Crown Court at Northampton,
Tata
was sentenced by HHJ Mayo as follows: in respect of the first offence ("offence 1"), a fine of £185,000; in respect of the second offence ("offence 2"), a fine of £1,800,000; the sentences were consecutive so that the total sentence was a fine of £1,985,000 in all.
Tata
appeals against sentence by leave of the Single Judge.
THE FACTS
steel
manufacturing site at Weldon Road, Corby, Northamptonshire ("the site").
Tata
itself is a wholly-owned subsidiary within the
Tata
Steel
Europe Limited Group; its ultimate parent is
Tata
Steel
Limited ("TSL") and its activities were managed as an integral part of its parent's operations. The two offences arose from separate incidents, five months apart, occurring in different locations at the site. As the Judge put it in his careful written sentencing observations:
" Both incidents involved amputations of fingers and were entirely avoidable. They both involved operatives placing their hands into parts of machinery which were patently hazardous and likely to cause serious injury. For this reason, the parts had been guarded or fenced to prevent incursion by fingers."
steel,
weighing 50-200 kg entered an enclosed painting area via an inlet table and transfer conveyor. The tubes exited the painting process from the transfer table where they were "kicked off" and then packed. The kicker was contained within a caged part of the line. It was not unusual for blockages to occur on the inlet side of the machine. Tubes became backed up on the transfer conveyor. When that happened, a practice had developed whereby a green tunnel guarding the tube conveyor was removed and the lengths of pipe manipulated by hand. That guard ought not to have been removed without the power line being isolated. Unfortunately, Mr Kitchen was using his hand to move pipes when one of the other workers powered up the line from a control panel out of sight of Mr Kitchen. That caused the pipes suddenly to move trapping and crushing Mr Kitchen's middle and ring fingers of his left hand. He has been left with residual hypersensitivity but was able to return to work for
Tata.
Tata
to check all their production lines at the site, to ensure that all identified preventative and protective devices were in place and effective.
Tata
had taken sufficient steps to comply with the Improvement Notice, the incident giving rise to offence 2 would not have occurred.
steel
mesh gate. In the event, Mr Ferns' glove became caught in the rotating parts of the lathe and his hand was pulled in, resulting in the amputation of two thirds of the little finger of his left hand.
Tata
prescribed safe working practices for the lathe. The machine had worked in over 50,000 roll stands over a period of 150,000 man hours without incident.
THE GUIDELINE
" Very high
Deliberate breach of or flagrant disregard for the law
High
Offender fell far short of the appropriate stand; for example by:
- failing to put in place measures that are recognised standards in the industry
- …..
- failing to make appropriate changes following prior incident(s) exposing risks to health and safety
Medium
Offender fell short of the appropriate standard in a manner that falls between descriptions in 'high' and 'low' culpability categories….. "
" Normally, only information relating to the organisation before the court will be relevant, unless exceptionally it is demonstrated to the court that the resources of a linked organisation are available and can properly be taken into account."
" Very large organisation
Where an offending organisation's turnover or equivalent very greatly exceeds the threshold for large organisations, it may be necessary to move outside the suggested range to achieve a proportionate sentence. "
A "large organisation" is referred to as one with a turnover or equivalent of £50 million and over. For large organisations, in respect of High culpability, Harm category 1 has a starting point of £2.4 million. Harm category 2 has a starting point of £1.1 million with a Category range of £550,000 - £2,900,000. Harm category 3 has a starting point of £540,000 with a Category range of £250,000 - £1.45 million.
" The court should finalise the appropriate level of fine in accordance with section 164 of the Criminal Justice Act 2003, which requires that the fine must reflect the seriousness of the offence and that the court must take into account the financial circumstances of the offender.
The level of fine should reflect the extent to which the offender fell below the required standard. The fine should meet, in a fair and proportionate way, the objectives of punishment, deterrence and removal of gain derived through the commission of the offence; it should not be cheaper to offend that to take the appropriate precautions.
The fine must be sufficiently substantial to have a real economic impact which will bring home to both management and shareholders the need to comply with health and safety legislation."
" The profitability of an organisation will be relevant. If an organisation has a small profit margin relative to its turnover, downward adjustment may be needed……
Whether the fine will have the effect of putting the offender out of business will be relevant; in some bad cases this may be an acceptable consequence."
i) First, the Guideline begins by considering the level of culpability. It then looks at the seriousness of the harm risked, followed by the likelihood of that harm materialising. In combination, the seriousness of the harm risked together with the likelihood of it materialising, yield various harm categories.ii) Secondly, the level of culpability, considered together with the relevant harm category are then applied to tables, depending on and reflecting the size of the organisation's turnover. This exercise produces a starting point for the fine. It can be adjusted upwards or downwards for aggravating and mitigating factors.
iii) Thirdly and likewise, the starting point may warrant adjustment to reflect the true size of the organisation. In particular, an upwards adjustment may be called for in the case of a very large organisation so as to produce a proportionate fine, bringing home the message to management and shareholders of the need to comply with health and safety legislation. In this manner, the Guideline reflects the objective, clearly set out by Mitting J, giving the judgment of the Court in Thames Water (supra), at [38]:
" The object of the sentence is to bring home the appropriate message to the directors and shareholders of the company…. Sentences imposed hitherto in a large number of cases have not been adequate to achieve that object. "iv) Fourthly and in accordance with s.164 of the Criminal Justice Act 2003, the financial circumstances of the offender must be taken into account. A downwards adjustment may be called for where an organisation has a small profit margin relative to its turnover; by implication, a downwards adjustment may equally be appropriate where the business is loss-making. So too, any wider impact of the fine on those who are not shareholders or directors, should be considered and may warrant adjustment.
v) Fifthly and as with any other sentencing exercise, there is a discount for an early guilty plea and totality must be taken into account.
SENTENCING OBSERVATIONS
Tata.
We echo those observations.
Tata
taken sufficient steps to comply with the Improvement Notice, the incident giving rise to offence 2 would not have occurred.
Tata
had previous convictions but the Judge would avoid double-counting, having regard to the fact that Culpability was High because of
Tata's
failure to respond to previous incidents – i.e., the incident in 2000 and the Improvement Notice".
Tata
was a "very large organisation", with a turnover of some £4 billion, compared with the Guideline reference of £50 million for a "large organisation". At Step Two of the Guideline, the Judge considered it right to move outside the suggested range to achieve a proportionate sentence. Accordingly, instead of taking a starting point of £1.1 million, with a range of £550,000 - £2.9 million, the Judge took a starting point of £2.4 million, achieved by moving up to Harm Category 1 because of the extent of
Tata's
turnover.
" practices had developed amongst the workforce to save time and effort and with plant and equipment where cutting or heavy lifting operations are involved, members of the workforce should be prevented by physical intervention from putting themselves in danger."
The Judge therefore moved up from his starting point of £2.4 million to £2.75 million.
Tata's
financial position, its 2015 Report and Accounts stated that the directors had a reasonable expectation that
Tata
had adequate resources "…(including the support of ….[TSL]…) to continue in operational existence for the foreseeable future." However, despite a very sizeable turnover of £4.17 billion in the year ended March 2015 (£4.49 billion for 2014),
Tata
recorded a loss after taxation of £851 million. During that accounting year, restructuring and impairment costs were £314 million. In the event, the Judge declined to make any downwards adjustment to reflect the losses borne by TSL (
Tata's
parent company). The Judge had regard to counsel's acceptance that a fine of £1 million would not cause
Tata
to stop trading, though it was "not going to help the business survive".
Tata's
guilty plea to offence 2 had been entered at the earliest possible opportunity, the Judge reduced the fine by one third; the fine accordingly imposed was £1.8 million.
Tata
was very large organisation, the Court moved up the harm category, giving a starting point of £600,000 and a range of £300,000 - £1.5 million. The likelihood of harm was described by the Judge as "obvious" and a dangerous practice had been allowed to exist with operatives accessing a part of the Paint Line where heavy pipes were being manoeuvred, the machine was active and the substantial guard had been removed. The initial fine was therefore £700,000, reduced by £235,000 to reflect an early guilty plea. The resultant fine was £465,000. Taking totality into account, that figure was reduced by 65%, producing a final figure of £185,000.
THE RIVAL CASES
Tata
and Mr Mills, for the quality of their assistance.
Tata
was a very large organisation. As to offence 2, Mr Morton accepted high culpability and that the level of harm risked was Level B. However and with reference to Step One, he submitted, on the facts, that the Judge's categorisation of the offence as carrying a high likelihood of the harm arising was unsustainable. Moreover, it was disproportionate to categorise offence 2 as "high likelihood" when offence 1 had been categorised, correctly, as "medium likelihood". Next, the Judge had erred at Step Two in moving up a category range, so equating offence 2 with a Level A risk of harm. The Judge was further wrong and engaged in double counting in adjusting the starting point upwards from £2.4 to £2.75 million. At Step Three, the Judge had failed to take mitigating factors into account; in particular, he had failed to make a necessary downwards adjustment in the light of the losses sustained by
Tata's
business. This was not a case for penalising TSL for enabling
Tata
to continue trading. If not before, then the Judge should have made a downwards adjustment at Step Four.
Tata
was a very large organisation and the fine had to be at a level which brought the message home; a turnover of £50 million was very different from a turnover of £4 billion. As to offence 2, Mr Mills underlined the chronology and submitted that the Judge was entitled to take the view he did, that this was a high likelihood case. That decision was within the ambit of permissible outcomes and this Court should not interfere. There had been no double counting; the Judge had to go outside the range to pass a proportionate sentence, given
Tata's
size. The Judge was further entitled to rely on the finding that senior management was inadequately focused on day to day safety. Still further, the Judge was entitled to take the support provided by TSL into account –
Tata
was only a going concern because of that support; indeed it would be inaccurate if TSL's resources had been left out of account. This was not a case where the fine risked putting
Tata
out of business; the fine amounted to no more than 0.6% of annual losses. The Judge had taken the mitigating factors into account. As to offence 1, Mr Mills effectively repeated the same submissions, mutatis mutandis.
THE PRINCIPAL ISSUES
Offence 2:
i) Did the Judge err in categorising offence 2 as involving a high likelihood of harm? ("Issue I: High likelihood")ii) Was the Judge entitled to move outside the range? ("Issue II: Moving outside the range")
iii) Should the Judge have made a downwards adjustment, given the losses sustained by
Tata
in its business? How should the Judge have approached the support provided to
Tata
by its parent TSL? ("Issue III: A loss-making business and parent company support")
iv) What amount should
Tata
have been fined? ("Issue IV: Conclusions on Offence 2")
Offence 1:
v) Was the Judge's approach to offence 1 in error? ("Issue V: Offence 1")
OFFENCE 2
ISSUE I: HIGH LIKELIHOOD
ISSUE II: MOVING OUTSIDE THE RANGE
Tata's
turnover meant it was a very large (rather than large) organisation. Harm category 1 is generally applicable to offences with a high likelihood of harm and a Level A seriousness of harm risked (explained above). The Judge further increased the starting point from £2.4 million to £2.75 million, so that it would have a real impact on management and shareholders and in the light of his criticism that senior management was inadequately focused on day to day safety.
Tata,
judged by turnover, was a very large rather than a large organisation and so to impose a proportionate fine. Indeed, at Step Two, the box of text at the top of p.7 of the Guideline (set out above) expressly so provides. Subject to the need to factor in the consequences of our decision on Issue I, no proper criticism can therefore be made of the Judge taking an initial starting point of £2.4 million.
ISSUE III: A LOSS-MAKING BUSINESS AND PARENT COMPANY SUPPORT
Tata,
to be dealt with principally under Steps Three and Four of the Guideline.
Tata's
loss-making business. The Judge should not have taken the support provided by TSL into account; it was "irrational" to penalise TSL for managing its own affairs so as to enable a "large loss making business of national importance to continue trading and maintain the employment of many people". This was not a case where the offending warranted putting
Tata
out of business and the fine imposed was manifestly excessive and disproportionate.
Tata
and TSL in our approach to the matter.
Tata's
Report & Accounts 2015 includes, in the section headed "Strategic Report" the following paragraph:
" Going concern
After making enquiries, the directors have a reasonable expectation that the Company has adequate resources (including the support of its ultimate parent,Tata
![]()
Steel
Limited (TSL)) to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the financial statements. "
On that footing, it seems to us that this is one of those exceptional cases within Step Two, where the resources of TSL, as well as those of
Tata,
can properly be taken into account. Indeed, as the support of TSL is plainly of the first importance in ensuring that
Tata
could continue to prepare its accounts on a "going concern" basis, it would seem to me wrong not to take the position of TSL into account – the removal of TSL's resources would produce a misleading and unrealistic picture of
Tata's
financial circumstances. This is not a matter, as Mr Morton submitted, of "penalising" TSL for keeping
Tata
in business to the benefit of employees and the community at large. It is instead, quite simply, recognising the economic reality of the situation. Be all that as it may, on any view, the Judge was amply entitled to take TSL's resources into account when considering whether or not to make a downwards adjustment in the light of
Tata's
financial circumstances.
Tata's
financial circumstances. The losses in the
steel
industry are of course public knowledge and the Judge clearly had them in mind. He took into account, as we have held he was (at the least) entitled to do, the fact that
Tata's
losses were borne by TSL. Plainly, this was not a case where a fine at the level imposed risked putting
Tata
out of business; there was certainly no evidence that it would.
Tata's
financial circumstances, was one he was entitled to reach. We dismiss the ground/s of appeal advanced under Issue III.
ISSUE IV: CONCLUSIONS ON OFFENCE 2
Tata's
early guilty plea. The resultant figure, with a little leeway allowed to
Tata, is £1,315,000. We quash the fine of £1,800,000 imposed in respect of offence 2 and substitute a fine of £1,315,000. To such extent, the appeal on offence 2 is allowed.
ISSUE V: OFFENCE 1
OVERALL OUTCOME
i) We allow the appeal on offence 2 and substitute a fine of £1.315 million;ii) We dismiss the appeal on offence 1, so that the fine imposed of £185,000 stands;
iii) The sentences remain consecutive but the total fine is therefore reduced from £1,985,000 to £1,500,000.