R. v. BUPA Care Homes (BNH) Ltd

[2019] EWCA Crim 1691;[2020] 1 Cr. App. R. (S.) Before: Lord Justice Davis Mr Justice William Davis and Mr Justice Julian Knowles

October 2019

Richard Matthews KC led for the appellant in this successful appeal against a sentence imposed upon a subsidiary company where the sentencing Court had increased the fine to reflect that the defendant company was part of a much larger group with a turnover of billions of pounds. The case involved asbestos risk, issues around causation of death and the sentencing of a subsidiary that is part of a group, where the parent company is a Very Large Organisation.

The Court of Appeal gave further guidance regarding the operation of the Sentencing Council’s Health and Safety Offences Definitive Guideline and, in particular, the circumstances in which a parent company’s turnover might be taken into account in Step 3 of the guideline. The appellant company, BC, appealed against a fine of £3 million imposed on them for an offence contrary to s.3(1) of the Health and Safety at Work, etc Act 1974 to which BC had pleaded guilty.

In allowing the appeal the Court of Appeal held that at Step 2 under the guideline, a sentencing judge was not only concerned with turnover and the aggravating and mitigating features set out in the table in the guideline. Although Step 1 required an assessment of culpability in the range very high to low according to the factors listed, that did not mean that, in selecting a starting point within the appropriate range at Step 2, the judge must leave out of account, or not make, a quantitative assessment of the extent of the harm and culpability involved in the offending. An offender whose culpability was high because of the presence of a number of listed factors ought in principle to be punished more severely than an offender whose culpability is high because of the presence of just one factor. The presence of multiple culpability factors could properly be regarded as matter capable of increasing the starting point within the indicated range of fine as set out in the relevant table for the size of the organisation involved. In the present case, those matters justified a substantial increase above the starting point of £1.1 million in the relevant bracket and, given that BC’s turnover was significantly in excess of the starting point of £50 million, the judge’s starting point at Step 2 of £2,250,000 could not be faulted in light of her conclusion that a significant number of people were put at risk ([64]–[70]).

The Court held that the judge had gone wrong at Step 3 when she increased the fine from £2,250,000 to £4,500,000 on the basis of the parent company’s turnover. This course did not properly reflect the economic realities of the situation. The mere fact that one company might be the wholly owned subsidiary of a larger parent did not mean that the resources of the parent could be treated as available to, or as part of, the turnover of the subsidiary company. The guideline phrase “economic realities” could not be extended to mean that the parent’s resources belong to the subsidiary simply in order to justify a large increase in fine at Step 3, any more than they could be taken into account to increase the size of the subsidiary’s turnover for the purposes of the tables in Step 2.

Importantly, the Court held that it is wrong to take into account the parent’s turnover to increase the fine at Step 3 absent some special factor of the type identified in R. v Tata Steel UK Ltd [2017] EWCA Crim 704; [2017] 2 Cr. App. R. (S.) 29 , or R. v NPS London Ltd [2019] EWCA Crim 228; [2019] 2 Cr. App. R. (S.) 18 . There was no such factor here: the offence rose out of BC’s breach of duty that was not delegated to the parent, it was a large and profitable organisation in its own right, and there was no suggestion that it would be unable to pay the fine and require instead the parent to pay it, or that it would not be a going concern absent the financial support of the parent company. That it remitted its profits to its parent was nothing to the point. The fine before discount for plea should therefore have been £2,250,000. Applying a one-third discount for the guilty plea, a fine of £1,500,000 was substituted ([82]–[87]).