R v Rollco Screw and Rivet Co Ltd
Rose (Bernard)
Rose (Philip)

In the Court of Appeal Criminal Division

Friday 26 March 1999

B e f o r e:

Lord Bingham Of Cornhill
(The Lord Chief Justice of England and Wales)

and

Mr Justice Jowitt

and

Mr Justice Astill

THE LORD CHIEF JUSTICE: There is before the court an appeal by Rollco Screw and Rivet Company Limited and applications for leave to appeal by Mr Bernard Rose and Mr Philip Rose. Mr Bernard Rose was a director of the company until 16 May 1996 and thereafter became the secretary. Mr Philip Rose, his son, became a director of the company with effect from 16 May 1996. Mr Bernard Rose was the founder of the company and its effective manager during its early life. During the period with which we are concerned he was in the process of handing over the management of the company to his son, although continuing himself to play an active and dominating role. 

On 4 September 1998, in the Crown Court at Birmingham, His Honour Judge Harris QC imposed fines on the company and the two directors, all of whom had pleaded guilty on re-arraignment to two offences in each case. One of those offences was in each case against section 2(1) and the other against section 3(1) of the Health and Safety at Work Act 1974. By section 2(1) of that Act a duty is placed on every employer to ensure so far as is reasonably practicable the health, safety and welfare at work of all his employees. By section 3 a similar duty is placed on every employer to conduct his undertaking in such a way as to ensure so far as reasonably practicable that persons not in his employment who may be affected are not thereby exposed to risks to their health and safety. On each of the two offences to which it pleaded guilty the company was fined £20,000. In addition, it was ordered to pay £30,000 towards the costs of the prosecution. The judge ordered that £5,000 of the total payable by the company should be paid within the first twelve months and that the balance should be paid at a rate of £1,000 per month. The total period for payment therefore, in the absence of accelerated payment, was six years and five months. 

On the two counts to which he pleaded guilty, Mr Bernard Rose was fined £3,000, to be paid at £1,000 per month. In addition, he was ordered to pay £2,000 towards the costs of the prosecution. On each of the two counts to which he pleaded guilty, Mr Philip Rose was fined £2,000, with a further order that he pay £2,000 towards the costs of the prosecution. The sums respectively payable by the three parties accordingly were, inclusive of the fine and costs, £70,000 in the case of the company, £8,000 in the case of Mr Bernard Rose and £6,000 in the case of Mr Philip Rose. 
There were also before the court at the time of sentencing other parties. A Mr Martin Joyce, who was a partner in a firm called M & M Joyce was fined £6,000 and ordered to pay £1,000 costs. A Mr McNeill, also a partner in that firm, was ordered to pay a fine of £6,000 and £1,000 costs similarly. Mr Paul Evans, whose role in this matter will be described very shortly, was sentenced to nine months' imprisonment. 

The prosecution arose out of an extremely serious incident of asbestos contamination in the Birmingham area in late September 1997. The company employed some 12 or more employees in the manufacture of screws and rivets. The roof of the factory in which the company's operation was housed was in poor condition and Mr Bernard Rose was anxious that it should be repaired before the company became the responsibility of his son. Both father and son were aware that the roof was asbestos and they had looked into the question of removing it. 

The two co-accused already mentioned, Mr McNeill and Mr Joyce, trading as M & M Joyce, were contacted by the company and in September 1997 contracted to remove brown asbestos from the factory roof. Brown asbestos is the most dangerous of all kinds of asbestos and requires the greatest care in handling. Mr Evans was a specialist asbestos worker. On this occasion he acted as an independent contractor and contracted with Mr McNeill and Mr Joyce to remove the asbestos for the modest sum of £5,000, for which work he was in due course paid £4,000 in cash. Neither Mr McNeill nor Mr Joyce nor Mr Evans possessed an asbestos licence. The evidence showed that at the end of September 1997 a vehicle hired by Mr Evans was seen unloading bags of asbestos at a number of unauthorised sites. It was inquiries prompted by these deposits which eventually led to the company and the two personal defendants. 
When the matter was investigated, it turned out that the stripping of the asbestos at the company's premises had been done with inadequate equipment and with a marked absence of precautions such as air locks, effective masks and protective clothing, with the result that asbestos was disseminated over the factory premises. Both employees and members of the public were exposed to risk. It turned out that some 200 or 300 bags had been fly-tipped on eight sites around Birmingham -- sites to which the public had access. Indeed there was evidence of children taking an interest in these bags. 

The factory had been closed for a week whilst the work was carried out, but it opened on Monday, 29 September when the company employees were directed to clear up the mess which had been left by the contractors. Mr Philip Rose was present on this occasion and organised the clean-up. During the course of the work the factory had been visited regularly by both father and son. Mr McNeill and his brother had worked on the site and Mr Joyce had also visited. It was apparent that the work was not performed well or successfully, a fact which Mr McNeill had drawn to Mr Evans' attention. 

When the matter came to light Mr Bernard Rose was interviewed. He said that he had from the outset insisted that the job was to be done properly and legally. Mr Evans for his part initially denied any involvement with the company at all, but by degrees made certain admissions. 

In giving his reasons for sentence the trial judge began by observing that asbestos was well known to be a potentially dangerous material. He added (correctly): 

"If its fibres are inhaled they may, after very many years, cause unpleasant and fatal diseases, particularly asbestosis, lung cancer and mesothelioma." 

He went on to say: 

"Clearly, this is not a case of regulations against absurdly remote risks, like beef with bones in it, but it is a very serious matter, giving rise to real risks to many people and the extent to which the seeds of future disease may have been sown cannot be known." 

Turning to the individual defendants, he first addressed Mr Bernard Rose to whom he said: 

"Mr Bernard Rose, you are 75, the founder of the business and still, I think, just, active in its management, at any rate you were at the material time. You have pleaded guilty to two counts. You admit that your neglect was a cause of Rollco's offences under count 1 and you admit that you consented to the state of affairs constituting the company's committing count 5. You, therefore, plead guilty to an offence under section 37 of the Health and Safety at Work Act. 

You were in charge of the contractual arrangements. You knew that asbestos had to be dealt with and you knew that this could be a complex and an expensive exercise because it was a dangerous substance. You either knew, or ought to have known that M & M with whom you contracted, were unlicensed for the work and might, perhaps, I put it no higher, by reason of their charges be going to do the work in a less than thorough and satisfactory way. 

You must have appreciated quite soon after they had begun that all was not as it should have been and you have a substantial responsibility, though you did stipulate that the work was to be done in accordance with proper practice. You must have had considerable doubts whether it would be and must have appreciated, fairly quickly, that it was not being." 

The judge then turned to Mr Philip Rose to whom he said: 

"Philip Rose, you have pleaded guilty to conniving at the company's commission of count 1 and by your neglect bringing about, in part, the state of affairs constituting the commission of count 5. You were acting to some extent of course as your father's lieutenant, but you are taking over the concern and were a director. You, too, took an attitude, and particularly on the Monday, which can only (with kindness) be described as cavalier, when you organised your own workforce, although it is to be observed, including you, to sweep up and clear up in a primitive physical way the asbestos debris that was all over your factory. 

I bear in mind the fact that you were involved and I think it probably does follow from that that you did not fully appreciate the risks of what you were doing." 

The judge then went on to impose the fines to which we have already referred. 

In approaching this matter we have reminded ourselves of the observations made by the court in R v F Howe & Sons (Engineers) Ltd (CA 6.11.98, [1997] Crim LR 238), and in particular the observations to be found in the judgment of the court delivered by Scott Baker J beginning at page 11C of the transcript: 

"Disquiet has been expressed in several quarters that the level of fine for health and safety offences is too low. We think there is force in this and that the figures with which we have been supplied support the concern. There has been increasing recognition in recent years of the seriousness of health and safety offences. The circumstances of individual cases will, of course, vary almost infinitely and very few cases have reached this court. Accordingly it is difficult for judges and magistrates, who only rarely deal with these cases, to have an instinctive feel for the appropriate level of penalty. 

We shall endeavour to outline some of the relevant factors that should be taken into account. In doing so we emphasise that it is impossible to lay down any tariff or to say that the fine should bear any specific relationship to the turnover or net profit of the defendant. Each case must be dealt with according to its own particular circumstances. 

In assessing the gravity of the breach it is often helpful to look at how far short of the appropriate standard the defendant fell in failing to meet the reasonably practicable test. 
Next, it is often a matter of chance whether death or serious injury results from even a serious breach. Generally where death is the consequence of a criminal act it is regarded as an aggravating feature of the offence. The penalty should reflect public disquiet at the unnecessary loss of life. 

Financial profit can often be made at the expense of proper action to protect employees and the public. Cost cutting is a crucial tool in achieving a competitive edge. A deliberate breach of the health and safety legislation with a view to profit seriously aggravates the offence. 

There is some evidence that safety standards in small organisations may generally be lower than in larger ones and that proportionately more accidents occur in companies with less than fifty employees than those with a large staff. We wish to emphasise that the standard of care imposed by the legislation is the same regardless of the size of the company. A man who, for example, works with a circular saw should be no less safe if he works for company A than for company B. The size of a company and its financial strength or weakness cannot affect the degree of care that is required in matters of safety. Otherwise the employee of a small concern would be liable to find himself at greater risk than the employee of a large one. How an individual company discharges its health and safety obligations will depend on the particular circumstances. A large organisation with a health and safety department will approach matters differently from a smaller one with perhaps one safety officer or none at all. Those organisations who do not have their own expertise in house can obtain it, if necessary by seeking assistance from the Health and Safety Executive. 

Other matters that may be relevant to sentence are the degree of risk and extent of the danger created by the offence; the extent of the breach or breaches, for example whether it was an isolated incident or continued over a period and, importantly, the defendant's resources and the effect of the fine on its business. 

Particular aggravating features will include (1) a failure to heed warnings and (2) where the defendant has deliberately profited financially from a failure to take necessary health and safety steps or specifically run a risk to save money. 

Particular mitigating features will include (1) prompt admission of responsibility and a timely plea of guilty, (2) steps to remedy deficiencies after they are drawn to the defendant's attention and (3) a good safety record. 

Any fine should reflect not only the gravity of the offence but also the means of the offender, and this applies just as much to corporate defendants as to any other. See section 18(3) Criminal Justice Act 1991. Difficulty is sometimes found in obtaining timely and accurate information about a corporate defendant's means. The starting point is its annual accounts. If a defendant company wishes to make any submission to the court about its ability to pay a fine it should supply copies of its accounts and any other financial information on which it intends to rely in good time before the hearing both to the court and to the prosecution. This will give the prosecution the opportunity to assist the court should the court wish it. Usually accounts need to be considered with some care to avoid reaching a superficial and perhaps erroneous conclusion. Where accounts or other financial information are deliberately not supplied the court will be entitled to conclude that the company is in a position to pay any financial penalty it is minded to impose. Where the relevant information is provided late it may be desirable for sentence to be adjourned, if necessary at the defendant's expense, so as to avoid the risk of the court taking what it is told at face value and imposing an inadequate penalty. 

The objective of prosecutions for health and safety offences in the work place is to achieve a safe environment for those who work there and for other members of the public who may be affected. A fine needs to be large enough to bring that message home where the defendant is a company not only to those who manage it but also to its shareholders." 

Those observations amount in our judgment to a very clear and correct statement of the principles which should guide the court in cases of this kind, and we give them our unqualified support. 

We have also given consideration to the question, squarely raised by this appeal, of the period over which a fine may properly be ordered to be payable. In that connection we have reminded ourselves of the decision of this court in R v Olliver and Olliver (1989) 11 Cr App R(S) 10, and in particular of the passage at page 15 of the judgment where Lord Lane CJ said: 

"Thus it seems to us that on a true reading of the authorities there is nothing wrong in principle in the period of payment being longer, indeed much longer than one year, providing it is not an undue burden and so too severe a punishment having regard to the nature of the offence and the nature of the offender. Certainly it seems to us that a two-year period will seldom be too long, and in an appropriate case three years will be unassailable, again of course depending on the nature of the offender and the nature of the offence. 

As indicated in the course of argument, this is particularly important in the present climate, where every effort is required in the face of the growing crime figures, to find alternatives to custodial sentences. Again, as indicated in argument, it may very well be that fines, where fines are possible, are the most effective and the most desirable alternatives to custody. If the fine or, as the case may be, the compensation order is within the capacity of the offender to pay over a period of two or three years in such a way that a default and the consequent penalty is very unlikely, then in the appropriate case there is no reason why that course should not be taken. Any find must of course be balanced against the length of any suspended sentence passed at the same time. That is an equation which the judge once again must try to solve." 

In advancing his submission on behalf of the company Mr Hegarty, for whose submissions we are grateful, has contended that a period for payment of a fine of the length contemplated in this case is well beyond anything which the court should sanction and that there is for this purpose no distinction to be drawn between a personal defendant on whom a fine is imposed and a company. 

We return to consider later the period in this particular case, but address at once the question of principle. It is plain from the passage that we have quoted that the court was at pains to avoid stipulating any period which should not be exceeded in a proper case. We would nonetheless be inclined to accept that with a personal defendant, with a fine hanging over him, there are arguments for keeping the period of that continuing punishment within bounds. It appears to us that those arguments are much weaker (if indeed they apply at all) when one is considering a corporate defendant. There is not the same sense of anxiety as is liable to afflict an individual, and it appears to us to be acceptable on proper facts and in appropriate circumstances for a fine to be payable by a company over a substantially longer period than might be appropriate in the case of an individual. We would, however, accept a further submission made by Mr Hegarty to the effect that one must avoid a risk of overlap. In a small company the directors are likely to be the shareholders and therefore the main losers if a severe sanction is imposed on the company. We accept that the court must be alert to make sure that it is not in effect imposing double punishment. On the other hand, it seems to us important in many cases that fines should be imposed which make quite clear that there is a personal responsibility on directors and that they cannot simply shuffle off their responsibilities to the corporation of which they are directors. The proper approach to a case of this kind in principle seems to us to be to pose two questions. First: what financial penalty does the offence merit? Second: what financial penalty can a defendant (whether corporate or personal) reasonably be ordered to meet? That second question inevitably raises the question of time. 

Addressing the first of those questions with particular reference to the instant case, we note that the total penalty imposed on the company and the directors together amounted to £50,000. We have to ask ourselves whether that sum represented an appropriate penalty to be imposed for this offending. In considering that question we have to bear in mind the glaring public need for effective sanctions in a field such as this where the health and the safety of the public are so very obviously at risk. The situation is the more important when, as here, the ill-effects of exposure to brown asbestos may take very many years to appear. In the interim of course no individual can know whether he will ultimately suffer or not. 

We consider that the division of £40,000 attributed to the company and £10,000 to the directors was an appropriate split. We also consider that the total sum divided between the two was appropriate recognition of the gravity of this offending. We accordingly do not grant leave to the directors to appeal against the orders made against them. 

In seeking leave to pursue such an appeal Mr Hegarty relies in particular on two arguments. The first is disparity. He complains that the fines imposed on Mr Bernard Rose and Mr Philip Rose are excessive when compared with those imposed on the contractors. That, however, seems to us to be an unpersuasive argument since the judge made it quite plain that the business of the contractors had plummeted and that the fines imposed on those two men would have been very much greater had that not been so. Secondly, Mr Hegarty pleads in particular on behalf of Mr Philip Rose that he is a relatively young man with commitments and a young child, and has difficulty in making ends meet. We have considered that submission in the light of the total sum of £6,000 which he has been ordered to pay and we are by no means satisfied that that is a sum which he cannot, or should not be ordered to, pay. 

We turn therefore to the second question relating to ability to pay and the linked question of the time within which payment should be made. Mr Hegarty on behalf of the company submits that the company's means are such that the sum which it has been ordered to pay of £70,000 in total is grossly excessive and a sum which it simply cannot meet in current circumstances. He has supplied us with a quantity of accounting material, some of which (but not all) was before the judge. That material shows that the company has throughout had a very substantial turnover, rising from £350,000 in the year ending 31 March 1995 to a peak of £718,000 in the year ending 31 March 1998, before (in all probability) declining in the current year. The company's profits declined from £51,000 in the year ending 31 March 1995 to £24,000 in the year ending 31 March 1996, and then rose to £33,000 in the year ending 31 March 1997. Then, however -- and this is a matter on which Mr Hegarty naturally places great reliance -- the accounts show an adverse result for the year ending 31 March 1998. The accounts show a loss for the year of £122,000. It is plain on examination of the accounts that that loss is very largely attributable to a number of exceptional items. One of those exceptional items is the high cost of the repairs which were done to the roof of the factory premises and the associated works, amounting to over £68,000. A second exceptional item contributing to the loss is an item of £70,000, being the fines and costs which the company was ordered to pay by the court. A third contributory source of loss is legal fees of over £28,000 which the company incurred in meeting this prosecution. There is a further loss of £57,000 shown on the disposal of the company's freehold premises, in circumstances which raise a number of questions which have not been, and in our judgment need not be, fully answered. However, the accounts at the end of 1998 show, despite these exceptional items which naturally gave an adverse result for that year, and which the judge recognised by requiring the payment of only £5,000 within the first year of his order, a substantial sum of profit carried forward, even after taking account of that loss. It does appear that the company has remained profitable. Mr Hegarty, in reliance on an affidavit sworn by Mr Philip Rose, has painted a gloomy picture of the future, with doubts about the survival of various customers and pessimistic predictions on the state of business in the months to come. Despite all that, however, it does appear that a modest profit is expected in the current year. 

The figures as they have been deployed in the material before us have caused us to consider again the question of the period over which payment is to be made. Under the judge's order it is, as we have pointed out, a total period of six years and five months. As already indicated, we feel that a longer period for payment is acceptable in the case of a company than would often be acceptable in the case of an individual. It also seems to us that it is not necessarily a more severe course to order a larger sum over a longer period than a smaller sum over a shorter period, since the former course may well give the company a greater opportunity to control its cash- flow and survive difficult trading conditions. If, despite a long period, the company has the means or chooses to pay sooner than it need, then that is a course open to it. 

In the result we have considered whether the total period for payment in this case is excessive. With some hesitation we have concluded that there should be some reduction in the period. We propose to achieve that end not by reducing the fine imposed on the company, which we consider to have been fully justified, but by reducing to some extent the sum of costs which the company has been ordered to pay. By reducing that sum from £30,000 to £20,000 we shorten the overall period of payment from six years and five months to five years and seven months, and that seems to us to be a difference which reduces the overall length of payment to one appropriate in the present case. 

We shall therefore allow this appeal to the limited extent of reducing by £10,000 the sum of costs payable by the company, but otherwise the sentence will stand.