Newsletters Criminal Regulatory 5th Oct 2022

Case Note: R v Modus Workspace Ltd [2021] EWCA Crim 1728 and Future Financial Performance of Organisations

The Facts

The Appellant, Modus Workspace Ltd (MW), appealed against a fine of £1,100,000 imposed following a conviction for an offence under section 3 of the Health and Safety at Work Etc. Act 1974. MW were a design and construction company appointed to refurbish commercial premises at a warehouse. The injured party (IP) was employed by a sub-contractor used for installing fire products. The IP was asked to examine a leak in the water sprinkler system. The lighting on the roof where he was asked to work was poor and as a consequence he used the torch on his mobile phone. He leaned a ladder against an exterior wall but it gave way when he stepped onto it and fell through a gap suffering serious injuries. MW had noted the risk that could arise but had not mitigated the risk. Whilst there had been daily toolbox talks on the site MW accepted that it was not able to produce risk assessment documentation for the gap in relation to the area the IP was working.


At sentencing, annual accounts were submitted showing a turnover of over £50 million over the previous three years. The guideline starting point therefore taken by the judge was £1,100,000 within a range of £550,000-£2,900,000. A letter from auditors regarding the impact of the pandemic on trading and sales provided “a most optimistic forecast” of £40 million of turnover for the year 2020. Taking into account the company had no previous convictions, it generally had a good health and safety record and though the company had not immediately accepted responsibility but following the accident steps were taken to make the area safe and the company had cooperated with the investigation. The sentencing judge made no adjustment to the guideline starting point of £1,100,000.


On appeal against sentence, the main ground of appeal lay in MW’s submission that the sentencing judge had erred in her application of Steps 2 and 3 of the sentencing guideline. In particular, that at Step 2 a decrease from the starting point was required to take account of the substantial reduction in turnover which was likely in 2020 as a result of the Covid-19 pandemic and; that at Step 3 the judge did not reduce the penalty to take account of the fact that the company was likely to be loss making in 2020 also as a result of the pandemic. In oral submissions on behalf of the Appellant it was conceded that although the outcome of the pandemic was still uncertain it could not be said that the downturn of the company’s fortunes as predicted by the auditor, even if it turned out to be accurate, was an indication of a long-term deterioration in its business. It was still too early to tell.

The Court of Appeal dismissed this ground of appeal (and indeed all grounds of appeal) holding that the judge had to sentence for the business in front of her and it was incorrect to say that she had done so without regard to the economic realities of the appellant’s situation. The Court observed that the realities were that this company was not loss-making over the course of its business and it was not projected to reduce its turnover by a very substantial degree. The judge took into account the projection of a downturn in business and could do no more. The Court accepted the observation made on behalf of the respondent that in essence the arguments put forward by the Appellant were essentially arguments to do with the ability to pay.

Key Takeaway

For future performance to have an impact on the level of fine, any asserted downturn in turnover must be capable of demonstration rather than a matter of mere speculation.


Alexandra Tampakopoulos



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