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Tuesday, 20 August

A Price Worth Paying? An Environmental Fines UPDATE

Following the Court of Appeal’s ruling in the case of Sellafield Limited and Network Rail Infrastructure, who were recently fined £700,000 and £500,000 respectively, I believe this is the start of a trend in significant fines for regulatory offences for large organisations.

Another case which went to Appeal also reinforces this opinion.

The cases reinforces that where the turnover of a corporate approaches a £billion, companies can expect fines that send a real message throughout the business world. However, a further significant development is the fact this latest case specifically makes it incumbent on the CEO and Board to explain their behaviour and the steps they are taking to prevent reoccurrence.

 

What was the Appeal about?

The case involved a large water utility company which appealed against a fine of £200,000 following a discharge of raw sewage over a six-month period when it failed to

repair its sewage pumping station at Margate. Whilst the Lord Chief Justice accepted there had been no actual harm caused by the discharge, he noted it was important to consider the potential harm and particularly in

environmental cases, the impact on the local economy. He found that any loss of confidence in the use of the coastal waters of Kent could have a serious effect. Significantly, he also noted the absence of an explanation by the company of steps taken to prevent the risk of harm and observed there would have been no basis for interfering with the fine even if the lower Court had imposed a 'very substantially greater one'. The appeal was therefore dismissed.

 

What are the ramifications?

This is a very clear signal to the lower Courts to be more robust with the largest companies which have the ability to pay big fines in health and safety and environmental cases, even where there has not been a fatality or any significant harm caused.

 

Rod Hunt

Partner

T: +44 (0)161 240 1610

E: rod.hunt@clydeco.com

Clyde & Co

Chancery Place

50 Brown Street

Manchester M2 2JT

T: +44 (0)161 829 6400

F: +44 (0)161 829 6401

Further advice should be taken before relying on the contents of this summary. 

Article written by Rod Hunt

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