IN THE COURT OF APPEAL (CRIMINAL DIVISION) ON APPEAL FROM ...

Judgment Approved by the court for handing down. R v Thames Water 8. In her sentencing remarks, the Recorder said this: The Crown and Thames Water agree that the culpability of.

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Neutral Citation Number: [2015] EWCA Crim 960

Case No: 201404543 A8

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM THE CROWN COURT AT READING

MRS RECORDER ARBUTHNOT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 03/06/2015

Before :
THE LORD CHIEF JUSTICE OF ENGLAND AND WALES

THE RIGHT HONOURABLE LORD THOMAS OF CWMGIEDD

and
MR JUSTICE LEWIS

- - - - - - - - - - - - - - - - - - - - -
Between :

REGINA

-

v
-

THAMES WATER UTILITIES LTD

Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ; MR JUSTICE MITTING
This is the judgment of the Court to which we have all contributed.
Facts
Between 29 August 2012 and 4 September 2012 untreated sewage was discharged
from Broadlayings Sewage Pumping Station into the Chase Brook which flows
through a 143 acre nature reserve owned by the National Trust in the North Wessex
Downs Area of Outstanding Natural Beauty. The discharge occurred otherwise than
under and to the extent permitted by an environmental permit. An offence was
therefore committed, contrary to Regulations 38(1)(a) and 39(1) Environmental
Permitting (England and Wales) Regulations 2010. Thames Water Utilities Limited
(the Appellant), as the operator of the pumping station, was culpable.
On 18 July 2014 the Appellant pleaded guilty to that offence at the first opportunity at
Reading Magistrates’ Court. It was committed to the Crown Court for sentence.
On 29 August 2014 at Reading Crown Court, Mrs. Recorder Arbuthnot imposed a
fine of £250,000 plus a victim surcharge of £120 and ordered the Appellant to pay
costs of £6,887.48.
The Appellant appeals, with the permission of the single judge, against the amount of
the fine only.
The function of Broadlayings Sewage Pumping Station was to receive untreated
sewage from the surrounding area and from another upstream pumping station and to
pump it to a downstream pumping station and thence to a sewage treatment works.
Sewage was pumped by two pumps submersed in a “wet well”. The cause of the
discharge was the failure (by tripping) of both pumps. In consequence, sewage was
not pumped to the downstream pumping station but discharged directly into the Chase
ook. The cause of the failure of the pumps was well known: they became clogged
with “rag” inappropriately discarded into the sewage system by domestic and other
users. When this occurred, an alarm was triggered which alerted the Appellant’s staff
to the failure. The Appellant laid down a response time to the failure of one pump of
24 hours and to the failure of both, manifested by the triggering of an alarm which
signified that the liquid level in the wet well was rising, of four hours. In the five
months before the incident, there had been at least 16 instances of failure of one or
both of the pumps. Each incident was recorded in the Appellant’s log.
On 29 August 2012 alarms signifying pump failure were triggered on 12 occasions
between 7.20 am and 8.50 am. The alarms indicated that both pumps had failed and
that the water level in the wet well was high. The Appellant’s staff did not respond to
the alarms on 29 August 2012 or at all. Further alarms were triggered on 4 September
2012 between 1.17 am and 2.57 am. Again, there was no response. The discharge
was first discovered by a member of the public walking in the Chase, who reported it
to the National Trust who, in turn, reported it to the Appellant. Once notified, the
Appellant’s staff attended
and unblocked the pumps.
Soon afterwards the pumps were replaced by newer pumps with a more robust
specification better able to cope with the ingestion of rag.
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;8. In her sentencing remarks, the Recorder said this:
“The Crown and Thames Water agree that the
culpability of
Thames Water can be described as negligence. I agree with
that assessment on the basis that the company had had a
number of warnings that the pumps were breaking down. They
were close to a very special nature site and they should have
rep
laced the pumps before they had to in September after the
sewage had run into the brook.”
A central issue in this appeal is whether or not she was entitled to reach those
conclusions.
Application to admit fresh evidence - principles

The Appellant seeks permission to adduce fresh evidence pursuant to s.23 of the
Criminal Appeals Act 1968, for the stated purpose of correcting what are claimed to
be errors of fact. The principal errors are said to be contained in the passage cited; but
the application is not limited to them. The fresh evidence is contained in witness
statements made by Nigel Membury, Christopher Ralph and Helen Newman which,
together with appendices, run to 119 pages. As well as the stated purpose, they seek
to demonstrate that the Appellant is a responsible organisation which conscientiously
discharges its duties to the wider community.
The application raises questions as to the circumstances in which fresh evidence may
be adduced on a sentence appeal. If the evidence is in essence fresh information
about the offender, a court will normally not require the conditions and formalities of
the governing statutory provision, s.23 of the Criminal Appeals Act 1968, to be
complied: see
R v Roberts
[2007] 1 WLR 1109 at [44]. However outside that limited
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;11. In addressing those factors, in particular that identified in s.23(2)(d) in a sentence
appeal, the court will have regard to CrimPD VII B
Determining the Factual Basis
of Sentence. The relevant paragraphs are as follows:
“B.6 A defendant may put forward a plea of guilty without
accepting all of the facts as alleged by the prosecution. The
basis of plea offered may seek to limit the facts or the extent of
the offending for which the defendant is to be sentenced.
Depending on the view taken by the prosecution and content of
the offered basis, the case will fall into one of four categories…
(a) A plea of guilty upon a basis of plea agreed by the
prosecution and defence.
B.7 The prosecution may reach an agreement with the
defendant as to the factual basis on which the defendant will
plead guilty, often known as an “agreed basis of plea”. It is
always subject to the approval of the court, which will consider
whether it adequately and appropriately reflects the evidence as
disclosed on the papers, whether it is fair and whether it is in
the interests of justice.
B.8
R v Underwood
…outlines the principles to be applied
where the defenda
nt admits that he…is guilty, but disputes the
basis of offending alleged by the prosecution;
(a) The prosecution may accept and agree the defendant’s
account of the disputed facts or reject it in its entirety, or in
part; if the prosecution accepts the def
endant’s basis of plea, it
must ensure that the basis of plea is factually accurate and
enables the sentencing judge to impose a sentence appropriate
to reflect the justice of the case;
(b) In resolving any disputed factual matters, the prosecution
must consider its primary duty to the court and must not agree
with or acquiesce in an agreement which contains material
factual disputes;
(c) If the prosecution does accept the basis of plea, it must be
reduced to writing, be signed by advocates for both sides, and
made available to the judge prior to the prosecution’s opening;
(d) An agreed basis of plea that has been reached between the
parties should not contain matters which are in dispute and any
aspects upon which there is not agreement should be clearly
identified.
B.11 Where the defendant pleads guilty, but disputes the basis
of offending alleged by the prosecution and agreement as to
that has not been reached, the following procedure should be
followed;
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;(a) The defendant’s basis of plea must be set out i
n writing,
identifying what is in dispute and must be signed by the
defendant;
(b) The prosecution must respond in writing setting out their
alternative contentions and indicating whether or not they
submit that a Newton hearing is necessary;
(c) The court may invite the parties to make representations
about whether the dispute is material to sentence; and
(d) If the court decides that it is a material dispute, the court
will invite such further representations or evidence as it may
require and resolve the dispute in accordance with the
principles set out in
R v Newton
In environmental pollution cases, it is now routine for the Crown to produce a
Friskies”
schedule of aggravating and mitigating factors (
R v. Friskies Petcare (UK)
Limited
[2000] 2 CAR (S) 401). As from 23 July 2014 this practice is expressly
endorsed by the Practice Direction: [2014] 1 WLR 3001 at 3019. Q.3 deals with a
case in which the offence is of a character or against a prohibition with which the
sentencing court is unlikely to be familiar,
“…Save where the circumstances are very straightforward, it is
likely that justice will best be served by the submission of the
required information in writing: see
R v. Friskies Petcare (UK)
Limited….
Though it is the prosecutor’s responsibilit
y to the
court to prepare any such document, if the defendant pleads
guilty, or indicates a guilty plea, then it is very highly desirable
that such sentencing information should be agreed between the
parties and jointly submitted. If agreement cannot be reached
in all particulars, then the nature and extent of the disagreement
should be indicated. If the court concludes that what is in issue
is material to sentence, then it will give directions for resolution
of the dispute, whether by hearing oral evidence or by other
means…”
Case at first instance

The Practice Direction and the “
Friskies
” procedure were followed by the
prosecution. In late June 2014 in advance of the hearing before the Magistrates’
Court, they served a detailed 20 page case summary in which their contentions about
the cause and effect of the sewage discharge and on the Appellant’s culpability were
fully set out. A “
Friskies
” schedule set out two agreed aggravating factors and nine
agreed mitigating factors. One aggravating factor was identified by the prosecution
which was not agreed by the Appellant,
“3. Financial decisions may have been partly responsible for
this incident as work to improve, upgrade or replace the two
pumps at Broadlayings SPS would have had costs associated
with them. In this instance Thames Water deemed it more
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;effective to attend site and resolve each blockage as they
occurred through activities being raised following activation of
alarms.”
Counsel for the prosecution opened the case to the Recorder on the basis of the facts
and contentions set out in the case summary. The Appellant relied on a witness
statement by Richard Aylard, External Affairs and Sustainability Director, which
expanded upon the agreed mitigating factors.
Both sides rightly accepted that the step-
-step approach set out in the Sentencing
Council’s definitive guideline on environmental offences should be followed. The
prosecution case was that the harm caused by the incident fell within category 2,
because it had a significant adverse effect on water quality, amenity value and animal
health; and that culpability fell into the negligent category:
“Failure by the organisation as a whole to take reasonable care
to put in place and enforce proper systems for avoiding
commission of the offence.”
paragraph 16 of the case summary, the prosecution identified failings in the pumps
revealed by the Appellant’s records,
Between 20/04/2012 and 04/09/2012 Thames Water
attended Broadlayings SPS on 16 separate occasions to
unblock both pumps and on a further three occasions to
unblock a single pump.
Between 21/06/2012 and 29/06/2012 Thames Water
attended the Broadlayings SPS for three separate multiple
pump failures and to unblock both pumps.
On 31/07/2012 both pumps were pulling over-amps even
when they had just been unblocked, and that pump number
one was missing a ware ring (component of pump) with
numerous quotes for spares raised over the past six months.
Another job was raised for a new impellor (creates flow
through pump) and ware ring that day.
On the 04/09/2012 as part of the response to the pollution
incident another job was raised for new impellors and ware
rings for the SPS.”
The thrust of Mr. Aylard’s witness statement was that the Appellant took its duties
seriously. It explained the cause of the blockage (rag deposited in the sewage
system), what had been done to put it right and what expense the Appellant had
incurred in consequence. The expense included a sum which the Appellant was under
no legal liability to incur: funding a National Trust community warden for three years
at a cost of £90,000. The statement also contained a balanced and detailed
explanation of the financial and regulatory environment in which it undertook its
activities.
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;17. Significantly, Mr. Aylard’s statement did not dispute the proposition that the pumps
required replacement before September 2012. In paragraph 3 he acknowledged “t
he
severity of the incident and the need to do more to seek to reduce the risks of
incidents such as this from occurring in the future”. In paragraphs 11 and 12 he
explained what had been done about the pumps,
“11. The station pumps were replaced shortly
after the incident
with models less susceptible to blocking by rag.
12. The emergency overflow into the Chase Brook has been
sealed and a bunded area created around the pumping
station….While we are confident that the actions we have taken
will prevent failures of this kind from happening again, the
bunding provides a further level of protection.”
The thrust of the mitigation advanced by Mr. Bunyan, counsel for the Appellant, in
oral submissions was that the harm caused by the offence fell within Category 3, not
Category 2. When the Recorder indicated that she thought that it was a Category 3
case, albeit at the top end of the category, he said that he would not “take it any
further”.
He also expressly accepted on three occasions that culpability was correctly
categorised as negligent, though he laid emphasis on the failure to respond adequately
to the alarms triggered when the pumps failed and disclaimed any failure by the
organisation to put proper systems in place.
During the course of Mr. Bunyan’s s
ubmissions, the Recorder put to him her principal
concern about the cause of the incident and the Appellant’s responsibility for it, to
which she got an unequivocal reply, as the following exchange demonstrates:
“The Recorder: I think the biggest problem i
s the fact that you
had all these warnings that the parts were not operating
properly, and I think that 16 or more
I think it is more than 16
Judgment Approved by the

court for handing down.

R v Thames Water

Fresh evidence - decision

Mr. Honey, who did not appear for the Appellant below, seeks to challenge those
findings apart from the finding about the response to the alarms. On the material
before the Recorder, he argues that the only failure in the pumps was a missing ware
ring and that the admitted negligence was not, as Mr. Bunyan conceded, a “failure by
the organisation as a whole to take reasonable care to put in place and enforce proper
systems for avoiding commission of the offence”. We reject those submissions.
Nobody has suggested at any stage in the proceedings that the missing ware ring had
any causative effect on the failure of the pumps. Its significance was that it
demonstrated sloppiness in maintaining the pumps, an attitude consistent with the
Recorder
’s finding that they should have been replaced sooner. Further, the two
failings identified by the Recorder did demonstrate a failure by the Appellant as a
whole to take reasonable care to put in place and enforce proper systems for avoiding
the commission of the offence.
In an effort to persuade this court to reach a different conclusion from that in effect
conceded by the Appellant at the sentencing hearing, it seeks to rely on the witness
statement of Nigel Membury dated 7 November 2014. The central paragraphs of his
statement are 18
23 and 32.
“18. In order to clear full rag blockages it is always necessary
to attend site and physically unblock pumps.
19. In relation to Broadlayings SPS, this process had worked
well previously, ensuring that blockages were cleared without
any problem. There had been no particular problem with this
SPS prior to this incident, as is shown by the maintenance
records, which show a level of blockages which is not
abnormally high and which are normally cleared without
incident.
20. The is no general problem with C type pumps, as they are
perfectly adequate at dealing with rag and pumping sewage,
and there is no reason to seek to replace these pumps. C type
pumps are widely used in thousands of SPSs across the water
industry. These types of pumps are preferred as they only have
one leading edge where solids can attach themselves….
21. The blockages occurring in the period of April to
September 2012 were entirely normal in terms of frequency
and are not indicative of any particular problem with this SPS.
The blockage rate for this SPS is not unusual. For reasons
unknown, there seems to be a lot of rag, rubble and brick debris
in the network in this area, which all flows into the SPS. The
management regime for this SPS was appropriate for these
circumstances.
22. There was no underlying problem or deficiency with the
pumps at this SPS. The Crown Court findings that: (1) “The
company had had a number of warnings that the pumps were
Judgment Approved by the

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R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;breaking down”; (2) Thames Water “sho
uld have replaced the
pumps” before September 2012 (transcript at 32E) and (3) “had
plenty of warning that the pumps were faulty” (transcript at
33E) are unfounded.
23. On (1) it is wrong to say that the pumps were “breaking
down” as the pumps at this SPS
did not have any operational
problems. It is an inevitable consequence of having to deal
with the content of modern day sewage that pumps will from
time to time become blocked by rag, but this does not mean
that they were “breaking down” –
the normal outc
ome of a
reported blockage is that the blockage is cleared and the pumps
are returned to full working operation quickly and without
incident. On (2) there was no need to replace the pumps as
there was no problem with this SPS prior to this incident. On
(3) the pumps were not faulty, and were brought back to full
operation once the blockages had been cleared on all of the
previous occasions between April and September 2012….
32. Action was taken following the incident to replace the
existing C type pumps with N type pumps which are even less
susceptible to blocking. This was done not because the C
pumps required replacing, but on a precautionary basis, as a
“belt and braces” approach with the aim of reducing the risk of
repeat incidents in the area.”
We indicated at the conclusion of submissions on the admission of new evidence that
we would not receive Mr. Membury’s witness statement under s.23. Our reasons for
doing so can be simply stated. For the reasons which we have explained above, the
case was conducted at the sentencing hearing by both sides on the basis that the
Recorder could properly conclude that the pumps required replacement before
September 2012. If the Appellant wished to demonstrate that that was not so, by
evidence of the type given by Mr. Membury, it could and should have set it out in a
basis of plea as required by B.11(a) of the Practice Direction, so that the prosecution
were alerted to the need to deal with the issue. Further, it could and should have put
in evidence to support its case. Had it done so, it might have been the subject of
detailed inquiry and challenge by the prosecution in the light of the disputed
aggravating feature cited above, not necessarily to the Appellant’s advantage. The
Appellant cannot now invite this court to consider the penalty imposed on it in the
light of a case which it did not advance at the sentencing hearing.
The facts of this case emphasise the importance, both for the parties and the
sentencing court, of complying strictly with the requirements set out in the Practice
Direction. It can only be in the rarest of circumstances, far removed from the facts of
this case, that this court would permit an Appellant in this type of case to advance a
case on appeal which was not fully deployed below.
Various other alleged errors in the Recorder’s sentencing remarks are identified in the
Appellant’s grounds of appeal and referred to in the witness statement of Mr. Ralph.
While not resiling from them, Mr. Honey did not advance any oral submission about
them. We can, accordingly, deal with them shortly. Mr. Ralph challenges the
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R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;prosecution case that the discharge caused the death of a significant number of macro-
invertebrates (spineless creatures visible to the naked eye, such as crayfish). He says
that the cause was lack of water, not pollution. If, which we doubt, this was an issue
of any importance, it should have been raised at the sentencing hearing. He criticises
the Recorder for mis-
identifying the Chase Brook as a “specially protected body of
water” and the site into which the sewage was discharged as a “very special nature
site”. None of this matters at all. Sewage was discharged into the Brook before it
reached the Alder Carr, a patch of marshland which was a sensitive site. He also
draws attention to the fact that, according to a report prepared for the Appellant on 19
October 2012 recovery within the Chase Brook took six weeks, whereas the Recorder
said that the worst of the pollution had been removed within two weeks with a
complete recovery within six months. None of this could possibly have influenced
the level of the fine imposed. If it was material at all, it should have been raised at the
sentencing hearing.
The witness statement of Helen Newman adds nothing material to that of Mr. Aylard.
For the reasons given, we decline to receive the evidence of Mr. Ralph and Ms.
Newman under s.23.
Sentencing

This was the first case of its kind to have come before a court since the Sentencing
Council’s definitive guideline came into effect. Th
e Recorder was faced with a
difficult sentencing decision, only partly informed by the contents of the guideline.
The guideline proposes a step-
-step approach to calculation of a fine based upon the
degree of culpability of the offender and the harm caused by the offence and upon the
size of the offending organisation, assessed by reference to its turnover.
Organisations are divided into four categories, micro, small, medium and large. Large
organisations are identified as those with a turnover or equi
valent of “£50 million and
over”. The Council, however, makes it clear that the starting points and range of fines
suggested do not apply to very large organisations. Step 4 of the guidance states,
“Very large organisations
Where a defendant company’s t
urnover or equivalent very
greatly exceeds the threshold for large companies, it may be
necessary to move outside the suggested range to achieve a
proportionate sentence.”
This is consistent with step 6,
“Check whether the proposed fine based on turnover
is
proportionate to the means of the offender.”
Judgment Approved by the

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R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;It will be necessary to examine the financial circumstances of
the organisation in the round. If an organisation has a small
profit margin in relation to its turnover, downward adjustment
may be needed. If it has a large profit margin, upward
adjustment may be needed.”
The Recorder correctly recognised that the Appellant fell into the very large category
of organisation: its turnover was £1.9 billion and profit for the year ending 2014, £346
million. Her solution to the problem was to multiply the starting point for a negligent
Category 3 case - £60,000 for a large company
by five to £300,000 and the range -
£35,000 - £150,000
to £175,000 to £750,000. She did so by extrapolating the
incremental increases between micro, small, medium and large companies set out in
the guidelines. Taking into account the mitigating factors and the Appellant’s plea of
guilty at first opportunity, she arrived at a figure of £250,000. She did not explain the
mathematical exercise, if any, undertaken to reach that outcome, but it is reasonable to
suppose, that but for the mitigating factors and prompt plea of guilty, the fine which
she would have imposed would have been not less than £500,000.
Mr. Honey submits that, by the approach which she adopted, the Recorder has
established a new category of penalties in the case of very large companies which is
not sanctioned by the Sentencing Council or by statute. Mr. Berlin, for the
Environment Agency, does not seek to support a mechanistic approach to the
assessment of fines on very large companies. Since the hearing of the appeal, we
have received written submissions from the parties as to the approach which the court
might adopt. We are grateful for those submissions. Although in our conclusions
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R v Thames Water

The approach to be adopted in the case of very large commercial organisations run for
profit

The starting point of the approach to be adopted for very large commercial
organisations run for profit is the statutory provision for all offenders in ss.142, 143
and 164 of the Criminal Justice Act 2003, as summarised in paragraph 3 of
R v.
Sellafield Limited
[2014] EWCA Crim 49
The general principles
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R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;(4) Subsection (3) applies whether taking into
account the financial circumstances of the
offender has the effect of increasing or reducing
he amount of the fine.”
As in every case, an assessment must be made of the seriousness of the offence. This
is to be done be applying the guidance given in steps 3 and 4 of the Sentencing
Council’s definitive guideline on environmental offences.
The factors taken into account in steps 5
11 should also be followed, save where
irrelevant, for example, the proviso relating to public or charitable bodies in step 7. It
is of particular importance in the case of such very large commercial organisations to
take into account the financial circumstances of the offender as required by s.164 of
the CJA 2003. This should ensure that the penalty imposed is not only proportionate
and just, but will bring home to the management and shareholders the need to protect
the environment.
The Court is not bound by, or even bound to start with, the ranges of fines suggested
by the Sentencing Council in the cases of organisations which are merely “large”.
Mr. Berlin, for the Crown, suggests that an organisation should be treated as being
“very large” if its turnover exceeds £150 million per year on a three–
yearly average.
We do not think there is any advantage to be gained by such a definition. In the case
of most organisations, it will be obvious that it either is or is not very large. Doubtful
cases must be resolved as and when they arise.
The object of the sentence is to bring home the appropriate message to the directors
and shareholders of the company:
Sellafield
paragraph 6 and step 6 of the Guideline.
Sentences imposed hitherto in a large number of cases have not been adequate to
achieve that object. This Court has on two occasions observed that it would not have
interfered with fines “very substantially greater” or “significantly greater” than six
figure fines imposed for environmental offences:
R v. Southern Water Services Limted
[2014] EWCA Crim 120 paragraph 21 and
R v. Day
[2014] EWCA Crim 2683
paragraph 46.
Previous convictions will always be relevant aggravating features and in the case of
some, seriously aggravating features. Relatively limited weight may be given to
offences committed with low or no culpability (in the Sentencing Council’s definition
in step 3); but offences which result from negligence or worse should count as
significantly more serious.
Repeated operational failures
suggestive of a lack of
appropriate management attention to environmental obligations
fall into this
category. For example, to bring the message home to the directors and shareholders
of organisations which have offended negligently once or more than once before, a
substantial increase in the level of fines, sufficient to have a material impact on the
finances of the company as a whole, will ordinarily be appropriate. This may
therefore result in fines measured in millions of pounds.
The court should therefore:
In the worst cases, when great harm exemplified by Category 1 harm has been
caused by deliberate action or inaction, the need to impose a just and
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R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;proportionate penalty will necessitate a focus on the whole of the financial
circumstances of the company. We have already outlined the approach by
reference to the guideline
starting with turnover, but having regard to all the
financial circumstances, including profitability. In such a case, the objectives
of punishment, deterrence and the removal of gain (for example by the
decision of the management not to expend sufficient resources in
modernisation and improvement) must be achieved by the level of penalty
imposed. This may well result in a fine equal to a substantial percentage, up to
100%, of the company’s pre
-tax net profit for the year in question (or an
average if there is more than one year involved), even if this results in fines in
excess of £100 million. Fines of such magnitude are imposed in the financial
services market for breach of regulations. In a Category 1 harm case, the
imposition of such a fine is a necessary and proper consequence of the
importance to be attached to environmental protection.
In the case of a Category 1 case resulting from recklessness, similar
considerations will apply, albeit that the court will need to recognise that
recklessness is a lower level of culpability than deliberate action or inaction.
Where the harm caused falls below Category 1, lesser, but nevertheless
suitably proportionate, penalties which have regard to the financial
circumstances of the organisation should be imposed. In an appropriate case, a
court may well consider, having regard to the financial circumstances of the
organisation, that to achieve the objectives in s.143 of the CJA 2003, the fine
imposed must be measured in millions of pounds, as we have already
indicated.
In the case of such an organisation, there must not be a mechanistic
extrapolation from the levels of fine suggested at step 4 of the guideline for
large companies. This is made clear by (1) the fact that by definition a very
large commercial organisation’s turnover very greatly exceeds the threshold
for a large company, and (2) the requirement at step 6 of the guideline to
examine the financial circumstances of the organisation in the round.
It is axiomatic that all relevant mitigating features must be taken into account. In
environmental pollution cases these will include prompt and effective measures to
rectify the harm caused by the offence and to prevent its recurrence, frankness and co-
operation with the authorities, the prompt payment of full compensation to those
harmed by the offence, and a prompt plea of guilty. In addition, significant expense
voluntarily incurred
called “r
eparation” –
in recognition of the public harm done
d be taken into account in the manner explained in
R v. Thames Water Utilities
Limited
[2010] EWCA Crim 202 at paragraph 53. Clear and accepted evidence from
the Chief Executive or Chairman of the main board that the main board was taking
effective steps to secure substantial overall improvement in the company’s fulfilment
of its environmental duties would be a significant mitigating factor.
In the case of a large statutory undertaker, such as the Appellant, no amount of
management effort can ensure that no unauthorised discharge can ever occur. In the
case of an offence which causes no harm and which occurs without fault on the part of
the undertaker, it would be difficult to justify a significant difference in the level of
fine imposed on two very large organisations, merely because the infrastructure and
Judgment Approved by the

court for handing down.

R v Thames Water

�� &#x/MCI; 0 ;&#x/MCI; 0 ;turnover of one was twice as large as that of the other. Size becomes much more
important when some harm is caused by negligence or greater fault. Even in the case
of a large organisation with a hitherto impeccable record, the fine must be large
enough to bring the appropriate message home to the directors and shareholders and
to punish them. In the case of repeat offenders, the fine should be far higher and
should rise to the level necessary to ensure that the directors and shareholders of the
organisation take effective measures properly to reform themselves and ensure that
they fulfil their environmental obligations.
Application of those principles to the facts of this case

The essential facts of this case have been described above. It was a case in which
negligence caused localised harm.
The record of the offender was highly relevant. Since 1991, the Appellant has been
convicted on 106 occasions of 162 environmental offences. For the purpose of
determining an appropriate sentence for this offence, it would be desirable to
distinguish between those past offences which resulted in little or no harm and
occurred without fault on the part of the Appellant and those in which negligence
caused harm. It is unfortunately not possible to state with certainty into which
category of the Sentencing Council’s guideline each offence would have been put if
the guideline had applied at the time. A reasonable proxy for more serious offences
those in which at least some harm was caused by negligence
is the number of
occasions on which fines greater than the maximum which could have been imposed
by a Magistrates’ Court for a single environmental offence
until 6 April 2010
(£20,000) were imposed. From 1999 until 29 August 2014 there were 16 such
occasions
just over one per year. In the four years before 29 August 2014, there
were four. This record does not suggest routine disregard of environmental
ligations by the Appellant, but it does leave room for substantial improvement.
But for the explanation given by Mr. Aylard to the Court in his witness statement of
27 August 2014, a combination of the facts of the offence and what can be extracted
from
the Appellant’s record would, in our view, have required the Court to take a
starting point for a fine significantly into seven figures. Mr. Aylard’s explanation of
what the main board has done to address the risk of environmental pollution from the
Appel
lant’s activities did show that they took it seriously and were spending
substantial sums to modernise and improve their infrastructure. That went some way
to justifying a starting point as low as that impliedly selected by the Recorder. Recent
offences suggest that the steps taken by the Appellant may not have been sufficient
and may, in the immediate future, require substantially higher fines to be imposed for
similar offences. In 2014 alone, fines of £75,000, £250,000 and £100,000 have been
imposed for environmental pollution offences. If, as is likely, the first and last (like
the second) represent incidents in which some harm has been caused by negligence,
the Appellant’s recent record suggests that the appropriate message has not fully
struck home.
In his written submissions Mr. Berlin suggested that the fine actually imposed by the
Recorder was lenient. While we have every sympathy for the difficulty facing the
Recorder, we agree that it was, even taking into account the significant mitigation
afforded by Mr. Aylard’s evidence. We would have had no hesitation in upholding a
very substantially higher fine. This appeal is dismissed.
Judgment Approved by the

court for handing down.

R v Thames Water

Concluding observation

Sentencing very large organisations involves complex issues as is clear from this
judgment. It is for that reason that special provision is made for such cases in Crim
PD XIII, listing and classification. Such cases are categorised as class 2 C cases and
must therefore be tried either by a High Court Judge or by another judge only where
either the Presiding Judge has released the case or the Resident judge has allocated the
case to that judge. It is essential that the terms of this Practice Direction are strictly
observed.

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