[2009]JRC019
ROYAL COURT
(Samedi Division)
9th February 2009
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Before :
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J. A. Clyde-Smith, Esq., Commissioner, and
Jurats Bullen and Clapham.
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The Attorney General
-v-
Deerglen (Jersey)
Limited
Bauunterneghmung E Heitkamp GmbH
(now known as Heitkamp BauHolding GmbH)
Sentencing by the Inferior
Number of the Royal Court
following guilty pleas to the following charges:
Deerglen (Jersey)
Limited
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1 count of:
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Contravention of Article 21(1)(a) of the
Health and Safety at Work (Jersey) Law 1989,
as amended. (Count 1).
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Plea: Guilty.
Details of Offence:
Between December 2005 and June 2007
the defendants entered into a joint venture which involved a major
redevelopment of the Royal Yacht Hotel.
The majority of the work was carried out by a sub-contractor but the
defendants had overall responsibility for health and safety. There was an extensive log of health and
safety malpractices and repeated failures to proactively manage health and
safety. Thirteen formal complaints
were made by members of the public.
Nine instances of unsafe working at height practices were
identified. Two Prohibition Notices
were served for working at an unsafe height and one Prohibition Notice for
unsafe excavation. There were three
recorded instances of scaffolding failing to meet legal requirements including
missing guard rails, incomplete working platforms and inadequate
stability. Pieces of timber and
lumps of concrete were reported, on five separate occasions, to have fallen
outside the boundary of the site and onto public areas, including the Museum
Courtyard and the disabled parking area of the Museum. On another occasion two roof tiles fell
from the premises onto a motor vehicle in Mulcaster Street. Two members of the public reported
injury after slipping on a timber covered walkway, as a result of the walking
surface having been poorly maintained and heavily contaminated with mud and
grit.
Details of Mitigation:
Deerglen’s trading was
flat. The company was overdrawn by
£160,000. Sixteen staff had
been laid off since the previous court appearance in January. A total of 26 staff had been laid off in
the last six months. Projects were
drying up. Nothing on the books
post May 2009. Recently paid
Judgment of £157,000 in England,
in respect of a development at Canary
Wharf. Still £40,000 of outstanding work
to be paid for on that development.
In Jersey terms, a substantial company
but not of the size or magnitude it was two years ago. Suffering as a result of the economic
climate.
Previous Convictions:
None.
Conclusions:
£2,500 costs.
Total: £27,500.
Sentence and Observations of Court:
Initial sentencing
hearing adjourned for further research by the Crown as the Court was “minded to impose a materially higher
penalty than that which had been sought by the Crown”.
Principles in R-v-Howe
have previously been adopted in Jersey –
AG-v-Farley. Each case to turn on
its facts. No relationship between
the fine to be imposed and the profits or turnover of a company.
Defendant’s acts
bordered on the reckless. Problems
were identified on every visit to the site.
Fines to reflect the
gravity of the offences and the means of the defendant. To be large enough to “bring the message home to the
shareholders”. Where
there is a substantial difference in the means of the defendants it is open to
the Court to impose different penalties to reflect those differing means.
Conclusions granted, 3
months to pay.
Heitkamp BauHolding GmbH
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1 count of:
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Contravention of Article 21(1)(a) of the
Health and Safety at Work (Jersey) Law 1989,
as amended. (Count 1).
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Plea: Guilty.
Details of Offence:
See Deerglen above.
Details of Mitigation:
Significant borrowing from banks
in Germany. Plea entered on the basis of negligence
,rather than recklessness. Pride in
health and safety record to date.
Never been before a Court before regarding health and safety. Submitted to jurisdiction and a
representative of the company attended Court voluntarily on three
occasions.
Both companies were owed payment
on a project at the Hotel De France and £200,000 remained outstanding
from the Royal Yacht joint venture.
Previous Convictions:
None.
Conclusions:
£2,500 costs.
Total: £27,500.
Sentence and Observations of Court:
Initial sentencing
hearing adjourned for further research by the Crown as the Court was “minded to impose a materially higher
penalty than that which had been sought by the Crown”.
Principles in R-v-Howe
have previously been adopted in Jersey –
AG-v-Farley. Each case to turn on
its facts. No relationship between
the fine to be imposed and the profits or turnover of a company.
Defendant’s acts
bordered on the reckless. Problems
were identified on every visit to the site.
Fines to reflect the
gravity of the offences and the means of the defendant. To be large enough to “bring the message home to the
shareholders”. Where
there is a substantial difference in the means of the defendants it is open to
the Court to impose different penalties to reflect those differing means.
£2,500 costs.
Total: £52,500, 28 days to
pay.
T. J. Le Cocq, Solicitor General.
Advocate P. M. Livingstone for Deerglen (Jersey) Limited.
Advocate B. H. Lacey for Heitkamp BauHolding
GmbH.
JUDGMENT
THE commissioner:
1.
Between
December 2005 and June 2007, the defendants, who we will refer to as
“Deerglen” and “Heitkamp” respectively, undertook, by
way of joint venture, the control and supervision of a major development of the
Royal Yacht Hotel which involved the creation of 76 new hotel bedrooms, new
conference facilities, a pool/leisure area as well as the refurbishment of the
existing hotel.
2.
Although
the defendants had employees on site, the majority of the work was carried out
by sub-contractors appointed by the owner.
Each sub-contractor undertook to the owner to be responsible for the
safety of the site in respect of their own employees, but the defendants had
overall responsibility for construction safety at the site and compliance with
the Health and Safety at Work (Jersey) Law 1989 (“the Health and
Safety Law”).
3.
The
extensive log of contacts between the Health and Safety Inspectorate and the
defendants detail a catalogue of unsafe work practices including:-
(i)
9
instances of dangerous working at height;
(ii) an instance of working an unsafe excavation
(immediately adjacent to the site office);
(iii) 5 instances of material falling on to public
areas;
(iv) 4 instances of unsafe scaffolding;
(v) 2 instances of failing to maintain timber
walkways used by the public.
There were also contacts about poor
housekeeping and poor standards of site lighting.
4.
During the
course of the contract, there were 13 formal complaints from members of the
public who had seen what they perceived to be dangerous working on the site.
5.
Two
prohibition notices were served in relation to dangerous working at height, one
of which was served on the day of a pre-arranged visit by the Health and Safety
Inspectorate to view arrangements for working at height following a visit two
days earlier. A prohibition notice
was also served in relation to the unsafe excavation.
6.
There were
a significant number of sub-contractors on site, the majority of whom spoke no
English and who often appeared to be working unsupervised. Warnings by the Inspectorate led to
short-term improvements but there was a repeated failure to address the
underlying failings of management to proactively manage health and safety on
site.
7.
It is the
case that no injuries resulted but as pointed out by the English Court of
Appeal in R v F Howe & Son (Engineers) Ltd (1999) 2 All ER 249, this
is often a matter of chance.
8.
Both
defendants have admitted being in breach of their duties under Article 51 of
the Health and Safety Law to conduct their undertaking in such a way as to
ensure as far as reasonably practicable that persons not in their employment,
namely sub-contractors working on the construction site and members of the
public who might be affected thereby, are not exposed to risks to their health
and safety.
9.
The
principles set out in Howe have been adopted by the Courts in Jersey (see AG v Farley (2000/70)) and we have had
regard to them. It is clear that
there is no tariff and no specific relationship between the fine and the
turnover or net profit of the defendant.
Each case must be dealt with on its own particular circumstances. In assessing the gravity of the breach,
it is helpful to look at how far short of the appropriate standard the
defendants fell in failing to meet the reasonably practicable test. In our view, these breaches were serious
and fell woefully short of the appropriate standard. In the view of the Inspectorate the
repeatedly identified hazards were easy to resolve.
10. Howe identified
the following matters as relevant to sentence:-
“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.”
In this case the degree of risk and extent
of danger were high. The Crown
submits that the defendants’ attitude to procedures and requirements for
working at height bordered on the reckless. The Inspectorate say that dangerous work
practices exposing persons working on the site to serious and potentially fatal
consequences were identified on almost every visit made to the site. Prohibition notices were not appealed
against and resulted in no lasting improvements in safe working practices. The breaches were extensive and
prolonged and there was a repeated failure to heed warnings. However, the prosecution do not assert
that the defendants deliberately profited financially from a failure to take
the necessary health and safety steps or specifically ran a risk in order to
save money.
11. Howe states
that:-
“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.”
12. In this case, there has been a prompt admission
of responsibility and a timely plea of guilty by both defendants. Furthermore, both defendants have a good
safety record.
13.
Deerglen
has been in existence for 8 years and is a Jersey
company which employed 80 people at the relevant time. It has made extensive disclosure of its
financial position, providing accounts for the 3 years ending the 31st March 2005/6
and 7, and a current balance sheet.
Its net profit before tax for 2005 was £346,224, for 2006
£420,499 and for 2007 £1,220,007. There are no accounts for the year
ending March 2008, and the company, like most companies in this sector, is
currently experiencing difficult trading conditions.
14.
Heitkamp
was founded in 1892, and is the 20th largest construction company in
Germany,
employing 1,000 staff with an annual turnover of some €300M. It is engaged in a number of large
projects internationally. Notwithstanding
Mrs Lacey’s best efforts, Heitkamp has not provided the Court with
financial information other than the above, which was gleaned from the
Internet, and a single piece of paper indicating that its capital position is
under strain and that it is not currently trading profitably. We accept that this lack of information
is not deliberate, but we have to conclude that the company is not sufficiently
concerned as to the level of fine that might be imposed to ensure that its
legal representative is properly instructed.
15. The overall cost of the works at the site were
some £15M. The joint venture
between the two defendants made a profit of €1,868,019.72 which was
allocated as to 75% to Heitkamp and 25% to Deerglen. Deerglen’s share of this was
€490,325.97. In sterling
terms this equates to £336,713.76, from which certain expenses and
overheads were deducted, giving Deerglen a net profit of
£249,792.98. These figures
relate exclusively to the joint venture and do not include sub-contract work
separately carried out by the defendants.
Whilst the remainder of the profit figure would relate to Heitkamp, we
have no information as to the net profit it earned from its share.
16. The contract clearly started well in that all
personnel engaged on the site received safety training in their own language
and were issued with a certificate to that effect, again in their own
language. Some 4 to 6 permanent
members of staff were on site, including 3 dedicated senior managers.
17.
Both
defendants accept that it was in the area of supervision that they fell
down. They had real difficulty in
controlling the sub-contractors.
Orders were not followed.
Height operators who arrived without the harnesses which were supplied,
were sent home. More often than
not, however, the defendants were ignored.
The roof area was cleared once because orders were not being followed,
but it is accepted that the defendants had not exerted the control and
discipline in relation to health and safety that they were engaged to do.
18.
Both
defendants were very apologetic.
Mrs Lacey pointed out that Heitkamp had no presence in Jersey,
but agreed to accept service of the proceedings voluntarily and has attended
and submitted itself to this jurisdiction.
19.
Howe says this in relation to fines:-
“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 s 18(3) of
the 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 prosecution for
health and safety offences in the workplace 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.
Mr Dixey argued in the present case
that the fine should not be so large as to imperil the earnings of employees or
create a risk of bankruptcy. Whilst
in general we accept that submission, as Rose LJ observed in argument there may
be cases where the offences are so serious that the defendant ought not to be
in business.”
20. Howe was decided
some 10 years ago. Quoting from the
judgment, it was “a bad case involving
a fatality” but the defendant was a small company with limited
resources (see page 252 letter f).
21. In this case the junior partner in the joint
venture, Deerglen, can fairly be described as a substantial company in local
terms, and Heitkamp, the senior partner, as a substantial company in
international terms. Both companies
are now trading in difficult circumstances compared to those in 2005 to 2007,
following the credit crunch which is affecting most economies.
22. As is clear from Howe, there is no
tariff and each case has to be decided on its own particular
circumstances. In our view, the
fine imposed in Farley is therefore of limited assistance. The key requirement in terms of
sentencing is that the fine needs to be large enough to bring the message
home. It is clear from Howe
that the fine should reflect the means of the offender. In this case there is a substantial
difference between the means of the defendants and they did not share equally
in the remuneration paid for the control and supervision of the site. Whilst we accept that the defendants are
equally liable or equally culpable in law for the contravention and it is not
possible to apportion blame for the individual breaches as between them, it is
open to us on the authority of Howe and would be fair and just to impose
different penalties to reflect their respective means and the mitigation
available to them. To do otherwise
would require us to reduce the penalty we would otherwise impose to the level
of the defendant the least able to pay.
23. In terms of disparity, the Solicitor General
drew our attention to the following passage from the judgment of Lord Phillips
in the case of R v Balfour Beatty Rail Infrastructure Services Limited [2006]
EWCA Crim 1586, at paragraphs 47 and 48 as follows:-
“What effect if any should
the size of the fine imposed on Railtrack have on Balfours Beatty’s
appeal? Disparity between the
sentences of two defendants is not an automatic reason for reducing the
sentence. Lawton LJ, giving the
judgment of this Court in R v Fawcett (1983) 5 Cr App R (S) 158, 161, approved
the following test:
“would right thinking members
of the public with full knowledge of all the relevant facts and circumstances,
learning of this sentence, consider that something had gone wrong with the
administration of justice?”
That test has been applied to this
day, see Archbold Criminal Pleading, Evidence and Practice (2006) para 5-106. The disparity in the two fines is so
great in this case that we consider that the test is satisfied.
To restore the appropriate
proportionality between the two fines would require Balfour Beatty’s fine
to be reduced to a level at which it failed to give proper effect to the
principles that we have discussed above.
We do not consider that this would be right. Those principles do, however, provide
more assistance in identifying the lower limit of an appropriate range of a
fine than the upper limit. They
leave a sentencing judge a wide discretion as to the level at which to pitch
the fine. The fine of £10M on
Balfour Beatty was severe. We
consider that there is scope for a reduction in the interests of
proportionality which will still do justice to the applicable principles and,
in particular, to the victims of the Hatfield disaster. We have decided that Balfour Beatty’s
fine should be reduced to £7.5M, thereby reducing the disparity between
its sentence and that of Railtrack.”
24. This was a major contract involving a
significant number of people. The
defendants were engaged by the owner specifically to control and supervise the
site and to be responsible for safety. They failed to exert that control and
supervision over an extended period. We accept that some of the sub
contractors were difficult to control but the defendants had the power to
control them and the responsibility to do so — a responsibility they
failed to discharge. In our view it
is necessary to impose a substantial fine to bring home the message that such
failure will not be tolerated.
25. The prosecution have produced a table of fines
imposed by the Jersey Court
over the last 5-6 years. We accept
that such an exercise, albeit at our request, is of limited assistance because
of the very different factual backgrounds of each case. There is no case involving contractors
taking specific responsibility for the health and safety of a large contract of
this kind. The only recent case
which met with a significant fine was the case of AG v SGB (CI) Limited [2005] JRC
146, which involved the death of an employee, but following a limited operation
involving the movement of a lift.
26. Some assistance can be gleaned from the Health
and Safety Executive summaries provided by the prosecution, although caution
has to be exercised as these are not Law Reports, but comprise brief summaries
with attendant commentary. The most
relevant of those three cases is the case of Re Bau GmbH. In that case the company and its UK subsidiary,
Reconstruction UK Limited, were fined a total of £150,000 for putting
workers and the public at risk during the construction of a supermarket in Sheffield.
The Health and Safety Executive investigated the site in response to a
number of complaints from the public about the standard of scaffolding and not
because there had been any accidents or injuries. It was found that the site was not
effectively managed and a catalogue of unsafe practices were identified
including work at height, excavations and vehicle movements, despite
prohibition notices having been served.
Sentencing took place in Nottingham Crown Court on the 23rd March, 2007. Each party admitted the equivalent of
charges under Article 5 of the Health and Safety Law, namely a failure to
protect persons other than direct employees, and were each fined
£50,000. Bau Gmbh also
admitted exposing its direct employees to risk and was fined an additional
£50,000.
27. Finally the Solicitor General drew our
attention to the English case of R v Rollco Screw and Rivet Company Limited
1999 2 Cr App R, where the Court of Appeal referred to the observations made by
Justice Scott Baker in R v Howe, as set out above, and went on to state
at page 441 of its judgment, the following:-
“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? Secondly: what financial
penalty can a defendant (whether corporate or personal) reasonably be ordered
to meet?”
28. Adopting the approach set out in Rowe
and Rollco, we conclude that the appropriate fine for each defendant,
taking into account their respective means, the mitigation put forward and the
need to ensure that the message gets home to both managers and to shareholders,
is £25,000 in the case of Deerglen and £50,000 in the case of
Heitkamp.
29. We therefore impose a fine of £25,000 on
Deerglen and order it to pay costs of £2,500, with 3 months to pay.
30. We impose a fine of £50,000 on Heitkamp
and order it to pay costs of £2,500, with 28 days to pay.
Authorities
Health and Safety at Work (Jersey) Law 1989.
R v F Howe & Son (Engineers) Ltd
(1999) 2 All ER 249.
AG
v Farley [2000] JRC 70.
R v Balfour Beatty Rail
Infrastructure Services Ltd [2006] EWCA Crim 1586.
AG
v SGB (CI) Limited [2005] JRC
146.
Re Bau GmbH.
R v Rollco Screw and Rivet Company
Limited (1999) 2 Cr App R (S) 436.
AG
v Stansell QVC Ltd [1999] JRC
176.