Weighing up the law Two recent cases
show variations in the implementation of
sentencing guidelines, explains Laura White
T
HE GENERAL guideline of the Sentencing Council for offences that do not have specific guidelines is now applicable for
relevant offences, including those under the Regulatory Reform (Fire Safety) Order 2005, from 1 October 2019. In essence, this directs courts sentencing
for fire safety offences to pay regard to the Sentencing Council’s Definitive Guideline for health and safety offences (the Guideline), and brings some much needed clarity to sentencing such offences, also confirming the significance of the Guideline when dealing with analogous matters.
Parent companies
One such matter is the relevance of a linked or parent company’s financial position when setting the appropriate level of fine for a company found to be in breach of its health and safety obligations, which has been considered with apparently contradictory results in two recent cases.
Underlining the basic principle of company law that a corporation is to be treated as a separate legal person with separate assets from its shareholder(s), the Court of Appeal, by halving the £3m fine handed to BUPA Care Homes Limited, recently determined that a parent company’s turnover will be largely irrelevant in such cases. Only in exceptional circumstances will it be necessary to adjust a fine based on the ‘economic realities’ of a parent. In June however, Swansea Crown Court
had to grapple with an explosion at a refinery which, according to reports, was then owned and operated by Chevron Limited (Chevron)
but later sold to Valero Energy UK Limited (Valero UK). Chevron had turnover in excess of £9.4bn, whilst Valero UK’s turnover was around £27m. In sentencing, the court said that it would
be ‘artificial and inappropriate to approach the sentencing on the basis that the first defendant [Valero UK] should be treated as a medium organisation rather than a very large organisation’.
Reconciling differences
How can these decisions be reconciled? In both cases, the court took the Guideline into account. This provides for a stepped approach to sentencing, based in essence on harm, culpability and the financial position of the defendant, but with regard also to mitigating and aggravating circumstances, and the need to make sure that any fine is proportionate in light of the financial realities of the situation – and also that a fine should have a deterrent effect. In the BUPA case, the appeal court
confirmed that the Guideline has to be applied in a way which does not infringe long established principles of company law. The mere fact that a company is a wholly owned subsidiary of a larger parent does not mean that the resources of the parent can be treated as either available to the subsidiary or as part of the turnover of the subsidiary. To do otherwise required exceptional circumstances. In that case, the Court of Appeal concluded there was no such ‘special factor’. In the Valero case, however, instead of sentencing based on Valero UK’s turnover
22 DECEMBER 2019/JANUARY 2020
www.frmjournal.com
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