Alton Towers fine sends message to UK corporates

The fine was the largest to date under new sentencing guidelines introduced earlier this year in a bid to increase penalties for breaches of health and safety laws, as well as more consistent sentencing for companies and their directors. Merlin Attractions Operations Ltd was fined for breaches of health and safety regulations following a rollercoaster ride crash in June last year at the company's Alton Towers theme park. The incident left 16 people injured, including two young women who had to have legs amputated. The fine was calculated under the Definitive Sentencing Guidelines that came into force on February 1 2016. The guidelines, which are used to set fines and prison sentences in health and safety and corporate manslaughter cases, are intended to make companies and their directors more accountable for serious or fatal accidents.hideThe guidelines provide a sliding scale of penalties based on turnover and a complex matrix of considerations, including the seriousness of the breach, the offender's culpability and the risk of serious harm, as well as other mitigating and aggravating factors. The guidelines are expected to lead to higher fines for large companies and longer custodial sentences for directors across England and Wales. According to Gavin Reese, partner at law firm RPC, the £5m fine is the highest to date under the new guidelines. However, higher fines have been imposed in a very small number of cases in the past, he added. "The point of the guidelines was to bring home to shareholders and directors that health and safety must be taken seriously. Fines like this would certainly do that," Mr Reese told CRE. The judge arrived at Merlin's fine by using a guideline table for large companies with a turnover of £50m and above. This suggested a fine range between £1.6m and £6m, explained Mr Reese. "As the guidelines require, the judge reviewed the starting point after considering the aggravating and mitigating features. He decided that the case merited a starting point of £7.5m, which is outside the range but was brought within the range by the reduction of a third for a plea of guilty," he said. However, the fine could have been larger. The judge noted that, with a turnover of £400m, Merlin was arguably a "very large organisation", which would allow him to go outside the range, said Mr Reece. According to Kevin Bridges of Pinsent Masons, the guidelines allow the courts to move outside the suggested sentencing ranges for very large companies in order to achieve a proportionate sentence. Comments by sentencing judges in related cases suggest that fines could be up to 100% of pre-tax profits, even if this exceeded £100m, he said. Although Merlin's £400m turnover would justify moving outside the suggested offence range, the judge said that he was able to achieve a "proportionate sentence" within the range provided for by the sentencing guideline, explained Mr Bridges. "The next issue we await the courts to determine is when the 'very large' company categorisation will be applied, and the court be at liberty to move outside of the ranges in order to achieve a proportionate sentence," he said. Since the implementation of the guidelines, fines have increased significantly for a number of large organisations, according to Sally Roff, partner and head of DAC Beachcroft's Safety, Health & Environment team. Several organisations have been fined in excess of £1m, she noted. For example, the £5m fine for Merlin came just one month after Network Rail was fined £4m after an elderly woman was killed on a level crossing. G4S was fined £1.8m for failing to reduce the risk of Legionnaires' disease. "The emphasis on sentencing is now on the risk of injury created by offending behaviour as opposed to the consequences. Therefore the penalty is for the conduct, and not the consequences of the offending behaviour," Ms Roff said. Fines once regarded as exceptional and reserved for the most significant disasters involving multiple fatalities, such as train derailments, now look likely to become the "norm" for the largest organisations, according to Mr Bridges. There will be a similar escalation of fines for smaller companies, he added. Nick Barnard, associate at law firm Corker Binning, also predicts that larger fines are likely in the future. "A fine of £5m will come as a surprise to some, who had expected that the court would use this as an opportunity to set the bar for future high-level sentences," he said in a statement. "Although £5m would have been an extremely significant fine prior to the new guidelines...we have still yet to see a case which really tests the upper limits of sentencing for very large organisations," he added. According to the Health & Safety Executive (HSE) investigation, the "root cause" of the crash at Alton Towers was a lack of detailed, robust arrangements for making safety critical decisions. Judge Michael Chambers QC said Merlin was guilty of a "catastrophic failure to assess risk" and that the accident "could have been avoided if a proper plan was in place”, it concluded. Merlin also came under criticism for claiming the accident was down to human error. The judge said that human error was not to blame and that the company's engineers "were doing their best in a flawed system". Companies need to make sure that they have robust health and safety systems and are able to react quickly to an accident, advised Mr Reece. "The failure to provide access to the site of the collision for the emergency services and the delay that resulted to the rescue was an aggravating feature here," he said. Ms Roff advises organisations to ensure that the risk of conviction for health and safety offences is on their corporate risk register with appropriate control measures in place. "It is clear that breach of health and safety offences can have a significant impact on an organisation's financial sustainability and reputation," she said. Interestingly, Ms Roff believes that higher fines for large companies may mean fewer corporate manslaughter prosecutions, which remain a difficult offence for prosecutors to prove, particularly for larger organisations. "The levels of fine provided for by the guidelines may well mean that prosecutors consider that a fine at the level provided within the guidelines is a sufficient deterrent not to require them to push for corporate manslaughter," she said.

Alton Towers fine sends message to UK corporates

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