UK: Court Of Appeal Ruling Marks New Era Of Hefty Fines For Large Businesses For Regulatory Offences

Large corporations subject to prosecution for health and safety and environmental offences are likely to find themselves subject to fines amounting to hundreds of thousands of pounds, even if there has not been a major disaster or fatality, following an important new judgment.

The decision will have serious ramifications for sizable businesses which find themselves before the Courts and is likely to mark the start of a trend in significant fines for regulatory offences for big organisations.

What Did The Case Involve?

Network Rail Infrastructure Ltd and Sellafield Ltd had pleaded guilty in the Magistrates' Court for breaches of health and safety, following a collision at an unmanned level crossing, and environmental protection legislation, following the disposal of radioactive waste, respectively. The cases had been committed to the Crown Court for sentence.

Both companies had an annual turnover in excess of GBP 1 billion. Sellafield was fined GBP 700,000 and Network Rail was fined GBP 500,000 and both sought to appeal those fines on the basis that they were manifestly excessive. Neither case involved a fatality.

On 17 January, the Court of Appeal delivered its judgment and laid down principles for sentencing Courts.

What is an appropriate fine?

The ruling stressed that, in determining the appropriate level of fine, the Court must consider not only the seriousness of the offence but also the financial means of the offender, which will serve to increase or reduce the level of any fine. This applies whether the case involves a small local business or a multi-million pound corporation.

The Court had called for the provision of company accounts and stated that accounts or financial information must be made available in good time. Where a corporate defendant has a turnover in excess of GBP 1 billion, the Court must carefully scrutinise the structure, turnover and profitability of the company and the remuneration of the directors.

Most importantly, and perhaps controversially, the Court robustly rejected submissions that, on early guilty pleas in environmental and health and safety cases, fines in excess of GBP 500,000 are only appropriate where there has been a disaster or fatality. In fact, the Court stated there was no ceiling on the amount of a fine which could be imposed, although of course each case will turn upon its own facts and the financial means of the defendant. This is in line with the other health and safety and environmental matters where there is no sentencing tariff.

How did this apply to Sellafield and Network Rail?

In the case of Sellafield, the Court highlighted that a fine of GBP 700,000 represented little more than a week's profit for the company when there had been a systemic failure over the period of four months and what was described in Court as a "lax and complacent" custom within the company.

The Court therefore was of the view that a fine at this level would bring home to the directors and shareholders the seriousness of the offence and provide them with an incentive to remedy the failures.

Similar comments were made in respect of Network Rail, although the Court noted that the fine would inflict no direct punishment on anyone because its profits were reinvested in rail infrastructure. However, such a fine would serve its purpose if it reduced offences of this kind committed by Network Rail, rehabilitated the company and protected the public.

What about director remuneration?

Interestingly, there was evidence before the Court that the bonuses of the directors of Network Rail had been reduced in light of the incident.

The Court held that those bonuses should have been reduced very significantly. Indeed, in future such information would be highly relevant to the sentencing Court's assessment. The Court commented that if the purpose of a bonus is to incentivise a director to perform better, then the prospect of a significant reduction of that bonus should encourage that director to pay the highest attention to protecting the lives of those at real risk from the company's activities.

What are the ramifications?

All large businesses will be affected by this judgment, which is likely to have crucial implications for sentencing in health and safety and environmental offences.

The financial information submitted to the Court will be key. Businesses should be warned that the Court will not just look to turnover and profit but also further to director remuneration, particularly whether the business is encouraging future safety compliance at the highest level. Any business will need to show that it has learnt real lessons from the incident.

It is clear the Courts will not be restricted in terms of the level of fine by whether the accident in question involves a fatality or major disaster. This ruling is likely to result in materially greater fines, even if the harm caused is minor and the mitigation significant, where the business has the ability to pay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions