Health and safety crimes and fines in Scotland

Howard Fidderman looks at a landmark judgment from Scotland that increases a fine for an HSW Act death by a factor of eight.

On this page:
Lorry load crushed car
Failures and fine
The appeal
Going south of the border
Turnover guidelines of "some" assistance
Munro's financial position
Trial judge's approach "in error"
Consequences were "catastrophic"
Fine was too low
Box: The Balfour Beatty principles.

In late January, Scotland's equivalent of the Court of Appeal in England and Wales gave its first reported judgment on setting an appropriate fine for an HSW Act offence involving a death. The judgment in the case of Munro & Sons¹ follows the principles laid down in the English courts, emphasising that the ability of an offender to pay a fine is one, but not the principal, factor in setting a fine. The judgment also addresses proposals from the English Sentencing Advisory Panel, which would link the level of a fine to an offender's turnover. One day later, the same Scottish court - albeit with different judges - gave a second judgment on another appeal over what constitutes an appropriate fine for an HSW Act offence involving a death.

Lorry load crushed car

The incident in the first case took place on 5 July 2006 on the A9 Inverness to Scrabster Road near Easter Ross, when a wheeled loader fell off a lorry and crushed a car, killing one of its occupants. Earlier that month, Umax, an international pipeline fabricator, had decided to sell the Michigan L190 wheeled loader. William Munro, a director of Munro & Sons (Highland), a haulage and waste disposal contractor, expressed an interest and, together with his contracts manager, Angus Gillies, had visited Umax to discuss a purchase and test drive the loader. They decided they wanted a further test drive at Kindeace Quarry, where it would be used.

On 5 July 2006, William Munro instructed Walter MacLennan, a jobbing lorry driver who had been employed by the Munro company for 15 years, to transport the Michigan to the quarry. Gillies drove the Michigan onto a low loader trailer, put its gears into neutral, switched off the engine and operated a pull lever in order to activate the handbrake. A serious defect in the parking brake, however, meant that its wheels remained free to turn; the Michigan was thus held in place only by two securing chains, each of which had a breaking strain of 4.5 tonnes. The total weight of the laden unit was 48.35 tonnes - four tonnes above the limit imposed by the Road Vehicles (Construction and Use) Regulations 1986. This overload was approximately equal to the weight of the tyres, which had been filled - in an accepted practice - with water and salt, instead of air, to provide greater stability. Munro and Gillies were both unaware of this.

Most of the journey was on the A9, which is comparatively level. But the road that MacLennan subsequently turned into at the Tomich junction sloped slightly uphill at 5^º, which caused the Michigan to roll backwards on the trailer, imposing a load on the chains that was in excess of their combined breaking strain. About 40 metres from the junction, both chains broke and the Michigan ran down the trailer onto the road where it crushed a Nissan car, killing the passenger, 24-year-old Christina Fraser, and injuring the fingers of the driver, Julia McKay. She has recovered from her physical injuries, but suffers post-traumatic stress disorder.

Failures and fine

The subsequent HSE investigation found Munro & Sons had failed to provide MacLennan with sufficient and adequate load-securing equipment - in particular, chains or lashings and fastenings - to secure the load, and failed to ensure that the brakes of the load were effective, in working order and in operation. At the High Court of Justiciary in Edinburgh on 11 April 2008 the company pleaded guilty to a breach of s.3(1) of the HSW Act, in that it had exposed members of the public to risks from its undertaking. It was fined £3,750, discounted by 25% from £5,000 to reflect its early plea of guilty. The Crown appealed on the ground that the sentence was unduly lenient (but not against the principle of the 25% discount). On 28 January in a judgment given by Lord Nimmo Smith, the High Court of Justiciary's Appeal Court unanimously increased the fine to £30,000.

The appeal

The "agreed narrative" before the appeal court stated that the Department of Transport's Code of practice for safety of loads on vehicles "provides very clear guidance as to how a vehicle of this type should be loaded and secured. It is clear that the chains selected should have been of sufficient strength to restrain 100% of the weight of the vehicle in any forward motion and 50% of the weight of the vehicle in any rearward or sideways motion and should at least have been lashed at each of the four wheel stations." The code further "suggests that no reliance should have been placed on the effectiveness of the parking brake".

It was clear, Lord Nimmo Smith accepted, that the chains used by Munro & Sons fell far short of the code, although it was not suggested that the chains would have held if there had not been four tonnes of water in the tyres. Notwithstanding this, Munro & Sons argued that the main purpose of the chains was to stop the Michigan from bouncing on the low loader trailer, and that the failure of the chains should not be regarded as a major factor in its criminal responsibility for the accident. Lord Nimmo Smith, however, said the appeal court was "unable to accept this approach, having regard to the terms of the agreed narrative and the code of practice, and above all to the terms of the charge to which Munro pleaded guilty. The argument, he added, required "an even more critical look at the defect in the parking brake", which revealed that in May 2005, Umax's service records showed that a new handbrake disc had been required, but was never fitted. Subsequent entries in the records indicated that the Michigan was not holding in reverse and that it had rolled backwards. "The fact was," said Lord Nimmo Smith, "that information was available to Umax which was not communicated to Munro."

Going south of the border

Lord Nimmo Smith noted that although there have been "rare" occasions when the Scottish courts have considered the appropriate level of a fine for an HSW Act offence causing death - most notably the £15 million fine imposed on Transco in August 2005 - no case has led to a reported judgment of the appeal court in which the relevant considerations have been discussed. Munro offered that chance and the consideration, he said, must look to the English authorities, starting with the Howe² case, in which the Court of Appeal set out policy and aggravating and mitigating factors, and Friskies Petcare³, which gave rise to the "Friskies schedules" whereby the prosecution and defence set out their respective aggravating and mitigating circumstances, in addition to what they see as the facts of the case .

The Court of Appeal's judgment in Balfour Beatty⁴ set out the principles derived by the sentencing judge in that case from the judgments in Howe, Friskies Petcare and more recent cases, which the Court of Appeal described as "a helpful summary of the guidance afforded by the decided cases, which guidance we would endorse" (see box). Lord Nimmo Smith agreed and then quoted two "highly persuasive" passages from Balfour Beatty that he believed Scottish courts should follow:

• "Knowledge that breach of this [s.3] duty can result in a fine of sufficient size to impact on shareholders will provide a powerful incentive for management to comply with this duty. This is not to say that the fine must always be large enough to affect dividends or share price. But the fine must reflect both the degree of fault and the consequences so as to raise appropriate concern on the part of shareholders at what has occurred. Such an approach will satisfy the requirement that the sentence should act as a deterrent. It will also satisfy the requirement, which will rightly be reflected by public opinion, that a company should be punished for culpable failure to pay due regard [to] safety, and [to] the consequences of that failure."
• "A breach of the duty imposed by s.3 of the 1974 Act may result from a systemic failure, which is attributable to the fault of management. It may, however, be the result of negligence or inadvertence on the part of an individual, which reflects no fault on the part of the management or the system that they have put in place, or the training that they have provided. In such circumstances a deterrent sentence on the company is neither appropriate nor possible. Where the consequences of an individual's shortcoming have been serious, the fine should reflect this, but it should be smaller by an order of magnitude than the fine for a breach of duty that consists of a systemic failure."

Turnover guidelines of "some" assistance

Lord Nimmo Smith also referred to the Magistrates' court sentencing guidelines, issued by the Sentencing Guidelines Council in May 2008, but said that their limited nature meant they were "of no assistance for present purposes, beyond their recognition of the Howe and Balfour Beatty principles". More important was the Sentencing Advisory Panel's Consultation paper on sentencing for corporate manslaughter , issued at the panel's request in November 2007. This recommended "starting points" and ranges for fines for the new offence of corporate manslaughter and for HSW Act offences that involve a fatality. The panel concluded that annual turnover was the most appropriate measure of an organisation's ability to pay a fine, and suggested a starting point for HSW Act deaths of 2.5% of turnover, with mitigating and aggravating factors establishing a range of 1% to 7.5%. Lord Nimmo Smith noted that final guidelines had not yet appeared, so the panel's paper "must be regarded as of some, but limited, assistance for present purposes".

Munro's financial position

Lord Nimmo Smith said that the information provided to the High Court sentencing judge and on appeal was "less than might have been hoped for": the sentencing judge saw only the directors' report and financial statements for Munro & Sons, for the years ended 30 September 2005 and 30 September 2006, and paid particular attention to the latter, which showed a turnover of £2,306,782, an operating loss of £14,281 and a net profit following adjustments of £18,854. (The previous year had seen a turnover of £2,072,418, gross profit of £426,484 and net profit of £157,984.)

The appeal court additionally saw the abbreviated accounts for the year ended 30 September 2007 for Munro & Sons. These put the net assets of the company at between £328,000 and £347,000 between 2005 and 2007. Creditors included the company's two directors - William and his brother David Munro - who were owed £128,000 in 2006 and £116,000 in 2007.

This company is, however, a wholly owned subsidiary of William Munro Construction (Highland) Ltd - the directors are the same two brothers - and so the appeal court also examined the abbreviated accounts for the years ended 30 September 2006 and 30 September 2007 for the parent company (which did not contain profit and loss accounts). These showed a balance due to the directors of £442,000 in each of 2005 and 2006.

Lord Nimmo Smith concluded that the financial viability of both companies "is in part dependent on loans from William Munro and David Munro, but we were not told when and in what circumstances these loans were made". He noted, too, that Munro & Sons feared that the downturn in construction was likely to reduce its business by 30%-40% and that it would "cause the company great difficulty to find, say, £50,000".

Trial judge's approach "in error"

In his report to the appeal court, the High Court sentencing judge said that Munro & Sons' offence was serious, although the failures of Umax to mention the extra weight in the tyres and the state of the brake "had some mitigatory value". He told the appeal court that his "principal consideration" in setting the fine was the ability of Munro & Sons "to meet a financial penalty... The accounts showed a company which made an operating loss, only turned into a profit by virtue of tax adjustments. On this basis it seemed to me that the company had a relatively limited ability to meet a financial penalty. It seemed to me that any penalty I imposed should be at a level which, whilst reflecting the serious nature of the crime, would not result in the insolvency of the company or render the company in danger of insolvency." In assessing the ability of the company to pay, he used the net profit for the year ended 30 September 2006.

Such an approach, however, was in error, according to Lord Nimmo Smith, who said it was apparent that the judge had not been "invited" to consider the decisions of the Court of Appeal in Howe and Balfour Beatty. "He should," said Lord Nimmo Smith, "have taken into account the gravity of the offence, and any aggravating or mitigating features, along with the ability of Munro to pay a fine. He should, above all, have borne in mind [in line with Balfour Beatty] the policy underlying s.3 of the 1974 Act and the public interest in the requirement that Munro should be punished for its culpable failure to pay due regard [to] safety, and [to] the consequences of that failure."

Consequences were "catastrophic"

Munro was under a clear statutory duty to protect the safety of the public; it was entirely foreseeable that if the Michigan rolled off the low loader trailer, members of the public using the road would be exposed to grave risk of death or serious injury. Munro's duty was to conduct its undertaking "in such a way as to ensure, so far as was reasonably practicable, that such a thing did not happen".

Munro failed to comply with its statutory duty because the chains were inadequate and the handbrake of the Michigan did not work. "No doubt Umax should have told them that problems with the handbrake had been reported. No doubt the test drive, for the reasons explained above, did not disclose that the handbrake was defective. But if the intention was to rely on the handbrake, and that alone, to prevent the Michigan from rolling off the low loader trailer, more was clearly required: most obviously, the Michigan should have been properly inspected by a person sufficiently qualified and experienced to detect the defect. This had, after all, already manifested itself to the extent that it had been recorded in the service records kept by Umax."

The driver, MacLennan, was not to blame: "So far as individuals are concerned, the fault lay higher up in the company. William Munro and Andrew Gillies were in a position to take the appropriate decision at a managerial level. In the context of the operations of a small family company, we regard this as a systemic failure. The consequences of Munro's corporate error of judgment were catastrophic, and need to be brought home to Munro's directors, [the parent company] Construction as their shareholders, and the Munro family members who ultimately own them."

Fine was too low

Lord Nimmo Smith accepted that Munro had no previous convictions and that the incident was an isolated occurrence. There was a prompt admission of responsibility and a timely plea of guilty, and Munro had taken the whole matter very seriously, as was evident from the attendance of William Munro at every stage of the court proceedings.

"Net profit," continued Lord Nimmo Smith, "is not the only relevant factor in assessing the level of fine which will serve the purposes of retribution and deterrence, and thus serve as punishment without bringing a company to its knees. We accept that, although their turnover is substantial, they are not a particularly profitable company and are very much exposed to such factors as increases in fuel prices as well as fluctuations in the economy."

Nevertheless, he said, the sentence was "far too low and took inadequate account of the nature of the offence itself and the need for appropriate punishment in the public interest". An appropriate starting point would have been £40,000, which would be discounted by 25%, to reflect the plea of guilty and its timing, resulting in a fine of £30,000.

Had the court in fact adhered to the Sentencing Advisory Panel's recommendations, the starting point would have been £54,740 (2.5% of the average turnover, before a discount for an early guilty plea).           

¹ HM Advocate v Munro & Sons (Highland) Ltd [2009] (external website) HCJAC 10.

² R v F Howe & Son (Engineers) Ltd [1999] 2 Cr. App. R. (S.) 37.

³ R v Friskies Petcare (UK) Ltd [2000] 2 Cr. App. R. (S.) 401.

⁴ R v Balfour Beatty Rail Infrastructure Limited [2007] 1 Cr. App. R. (S.) 65.