Faltec Europe Ltd v Health and Safety Executive  EWCA Crim 520
Faltec is a car part manufacturer, employing around 550 people, and located in a well-populated urban area. On 3 April 2017 Faltec was sentenced in respect of three offences under ss.2, ss.3 and 33(1)(a) of the Health and Safety at Work Act 1974 to a total fine of £1.6 million.
A Legionnaires’ disease outbreak gave rise to two offences, under ss.2 and ss.3. Between October 2014 and June 2015 there were two legionella outbreaks emanating from a dead leg, or length of capped off pipe, in a cooling tower. Four employees and one local resident contracted Legionnaires’ disease. One victim was admitted to intensive care and put into an induced coma.
The third offence related to an explosion in a flocking machine, which injured an apprentice. The £800,000 fine for this was unchanged on appeal.
Faltec pleaded guilty to all three offences at the Magistrates’ court and was committed to the Crown Court for sentence. The Judge applied the Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences Definitive Guideline, correctly following the approach to the Guideline set out in R v Tata Steel Ltd  EWCA Crim 704.
Sentencing on Counts 1 and 2
Culpability for Counts 1 and 2, the legionella offences, was assessed in the Crown Court as being at the top end of medium. The dangers of legionella were very well known. An HSE Approved Code of Practice was in force and identified the danger from dead legs. Faltec had failed to properly oversee their subcontractors’ work and none of Faltec’s employees had the training necessary to provide effective oversight.
Harm was placed in Category 1. It was not in dispute that the harm risked was Level A. The likelihood of that harm arising was a more controversial issue. The sentencing Judge relied on expert evidence showing the number expected to sustain fatal injuries would be up to 4 in 10,000. He found that in an urban area this constituted a high risk of harm arising.
It was agreed that Faltec was a Medium level company, with annual turnover of £50 million. The range of fine identified was £300,000 – £1.3 million.
Faltec had two previous Health and Safety convictions arising from breaches of s.2(1). In 2006 an employee died and in 2012 an employee was gravely injured. This was an aggravating feature, as was the fact that HSE warned Faltec regarding its pipework in 2012 and 2013. The starting point was £1.2 million.
Considering proportionality, the Judge found he could, exceptionally, have regard to the Holding Company’s resources in applying the proportionality principle. The starting point remained. A discount of 1/3 was afforded for Faltec’s guilty plea. The fine was £800,000 on Counts 1 and 2.
The Court of Appeal (Gross LJ, Sweeny J, Sir Kenneth Parker) considered a “root and branch attack on the judge’s conclusions” by Faltec on appeal. The 27-page judgment systematically examined the propriety of the sentencing exercise. The following conclusions may be of particular interest to practitioners.
Expert scientific analysis is key to assessing risk of harm arising
The Court endorsed the view in R v Squibb Group Ltd  EWCA Crim 227, that assessment of likelihood of a particular level of risk arising should be based on scientific evidence rather than supposition or impression. The Court confirmed that this must be decided to the criminal standard.
In Faltec’s case, the expert evidence was that there was up to a 4 in 10,000 risk of fatality. The more difficult question for the Court to confront was how that statistical data should be characterised.
Finding that “characterisation ought not to be divorced from the statistical reality of the scientific evidence” the Court cited paragraph 45 of Squibb:
“….The expert’s best estimate was that, if 100,000 people were exposed to asbestos to a similar extent to Squibb’s employees, about 90 deaths would result. To put this estimated risk in context, the risk of dying from smoking cigarettes is around 1 in 5 (i.e., 20,000 cases per 100,000) and the risk of dying from working in the construction industry for 40 years or from an accident on the roads is around 500-600 chances per 100,000. On this basis, the likelihood that one of Squibb’s employees will die as a result of their employer’s breach of duty in this case is on any view extremely small.”
The Court then concluded that in comparison with the asbestos, smoking and construction examples in Squibb the risk of Level A harm arising from the legionella incidents was not low (as Faltec suggested) or high (as the sentencing Judge had found). The Court found the risk should have been assessed as medium. The Court was unsurprisingly careful to point out that the analysis in Squibb should not be construed as a rule or guidance.
Imposing an uplift on the harm category
The Guideline obliges a sentencing court to consider an uplift in level of harm, if;
- The offence exposed a number of workers or members of the public to risk of harm, or;
- The offence was a significant cause of actual harm.
However the Guideline goes on to say an uplift should not be considered if “actual harm was caused but to a lesser degree than the harm that was risked…”
The sentencing Judge nonetheless elected to apply an uplift, on the basis that limb (i) was engaged, but the caveat only applied to limb (ii). The Court of Appeal disagreed, finding that the caveat must always apply to both limb (i) and (ii).
The effect of the Court’s overall analysis of harm on the legionella offences was that harm fell into Category 2, with no option for further uplift. Accordingly the range should have been £100,000 – £600,000. The Court placed the fine at the top end of the scale at £570,000. With 1/3 discount, the total fine on Counts 1 and 2 was £380,000. The total fine for all three offences was therefore reduced to £1,180,000.
Separately, the Court found that the Judge should not, in assessing proportionality, have referred to a £1.6 million reserve held by Faltec as contingency against a fine. The Judge had commented that it showed the company would remain solvent. While it was accepted that his observation had not affected the fine in this case, the Court was concerned that such comments might discourage companies from making prudent provision.