Gaskells (North West) Ltd [2019] EWCA Crim 1380

Gaskells (North West) Ltd v Regina [2019] EWCA Crim 1380 concerned an appeal by a waste recycling company against a fine of £700,000 imposed for two offences of failing to ensure the safety of employees contrary to section 2(1) of the Health and Safety at Work Act 1974. The Court of Appeal (Dame Nicola Davies LJ, Phillips and Julian Knowles JJ) allowed the appeal in part, reducing the fine to £650,000 and adding a victim surcharge of £15.

The appellant pleaded guilty to the first offence on 15 October 2015 and to a second offence on re-arraignment on 16 July 2018, the day of trial. On 26 October 2018 His Honour Judge Trevor Jones sentenced the company to a fine of £700,000 for the first offence with no separate penalty for the second, and ordered costs of £99,806.57. At the same hearing the company’s managing director, Mr Jonathan Gaskell, was sentenced to nine months’ imprisonment for being a director of a body corporate which committed the offences. Two years earlier a manager, Mr Paul Jukes, had been convicted of being a manager of a body corporate which committed the first offence and sentenced to nine months’ imprisonment, and an employee, Mr Michael Cunliffe, had pleaded guilty to failing to take reasonable care contrary to section 7(a) of the 1974 Act and received four months’ imprisonment suspended for two years.

The appellant operated a licensed waste recycling facility in Bootle employing 60 people in 2010, rising to over 100 by 2018. Mr Gaskell was managing director and owned 75 per cent of the company’s shares. The facility used a BOPA 456 baler manufactured in 1990 and installed second-hand in 2005 to compact waste paper and cardboard. The machine was primarily operated by Mr Tony Griffin, who had been trained by installation engineers but was not himself an engineer. He performed only visual checks, noting deficiencies on daily check sheets which were logged and emailed routinely to Mr Gaskell, Mr Jukes (then general manager) and Mr Cunliffe, who worked as a fitter and dealt with deficiencies on an ad hoc basis. Mr Zbigniew Galke assisted Mr Griffin. The machine frequently became blocked, often at least once per shift.

On 23 December 2010 Mr Galke entered the main baling chamber to deal with a blockage. Whilst he was still inside the chamber the machine activated and the hydraulic ram crushed his lower body and amputated his leg. Other employees went to help but none initially knew how to reverse the machine. Mr Galke was extracted but was pronounced dead later that day. A joint investigation by the police and the Health and Safety Executive established that the baler had been allowed to deteriorate over a number of years. There had been no planned system of maintenance or inspection, only an ad hoc system of inexpensive repairs. The safety interlock switch controlling the main chamber access door had been deliberately bypassed. The wire connecting the switch to the control panel had been damaged. Instead of tracing the fault and replacing the wire, Mr Cunliffe installed a new wire on the control panel, short-circuiting two relay channels so that the machine could operate when the door was open. That sub-standard repair was directly causative of the fatal accident. Mr Cunliffe had informed Mr Gaskell and Mr Jukes by email dated 22 October 2010 of his intention to bypass the interlock. A new switch was ordered on 23 December 2010 immediately after the accident. Other safety interlock switches were found to be defective or bypassed, and those faults were longstanding. The door sensor fault had been reported daily on check sheets sent to Mr Gaskell and Mr Jukes from October 2010 until December 2010.

The appellant had also failed to apply risk assessments and safety operating procedures. Documents were available for inspection as required by law, but the procedures were not implemented. In early 2010 Mr Gaskell provided Mr Jukes with risk assessment and safe operating procedures from another company, which were adopted with the company’s name substituted. No employee spoken to had seen the documents and many would have been unable to understand them because they were not translated into Polish for the significant number of Polish nationals employed. There was no risk assessment or safety procedure for dealing with breakdowns or unblocking. Health and safety management supervision was described as non-existent and several employees described dangerous practices as routine. The Health and Safety Executive issued improvement and prohibition notices requiring the appellant to reinstate the baler to a proper condition and ensure written instructions for safe use were given to all employees.

In January 2011 an independent engineer, Mr Torenbeek, repaired the baler, replacing defective and bypassed safety switches and other worn or broken parts. The prohibition order was lifted and the baler resumed service. However, many underlying problems caused by lack of maintenance remained. No system of preventative maintenance was put in place and similar problems resurfaced. Between 2011 and 2015 Mr Torenbeek visited nine times, usually to deal with baling issues. He often found that the dromat guard had been disabled and reported the matter to the company on each occasion. In December 2013, at his request, his company emailed the production manager, Mr Gilbertson, to inform him the dromat guarding had been disabled and should be reinstated. On the next visit in March 2014 the guard was still or again disabled. His company again notified Mr Gilbertson and told him it should be rectified urgently.

While proceedings in relation to the fatal accident were underway, Mr Torenbeek informed Health and Safety Executive inspectors that the guards were still being disabled. Three inspectors attended on 16 July 2015 and observed the baler operating while the dromat guard was raised. One inspector asked that the guard be fully lowered and the machine started. It became clear the baler could not run with the guard door closed. An employee, Mr Darak Ratacak, attempted to use a screwdriver to force the actuator near the switch but was told to stop. The inspectors asked how he had been able to run the machine with the guard up. He took magnets from a box spanner and stuck them onto the switch when the guard was raised, allowing him to power the machine. When the magnet was removed the machine stopped. A prohibition notice was issued preventing use of the machine because the appellant had failed to ensure guards and protective devices were not easily bypassed or disabled.

The appellant wrote to the Health and Safety Executive claiming the machine had developed a problem with balers not being tied properly and that on 16 July 2015 Mr Ratacak, a machine operative and member of the maintenance team, had defeated the interlock with a magnet in controlled circumstances in accordance with regulations in order to observe the machine operating a single bale with the guard up. This explanation was not accepted. The only reasonable inference was that senior management had at the very least failed to prevent use of the interlock bypass to avoid loss of productivity. The appellant and Mr Gaskell pleaded guilty to the second offence on 16 July 2018, the day of trial, on the basis that the machine had fallen into a dangerous state on three occasions. During the hearing the judge indicated he would treat the circumstances of the second offence as an aggravating factor of the first.

Mr Galke’s wife provided a victim impact statement speaking of the dreadful loss to the family. At the time she and the children remained in Poland while he worked in the United Kingdom. Mrs Galke has since died.

The judge considered the Definitive Sentencing Guideline for Health and Safety Offences. He regarded culpability for the first offence as high due to ongoing failures over a sustained period, lack of training and supervision, absence of risk assessments and safety operating procedures, repeated comprehensive bypassing of safety devices and failure to act on reported defects. The seriousness of harm was level A because the risk was of death, placing the offence in category 1. A number of workers had been exposed to potential harm and the offence caused significant actual harm, necessitating an uplift within the range. The judge determined that the aggravating factor of the circumstances of the second case should also result in an additional uplift.

At the time of sentence the company had a turnover of £17 million and therefore fell within the medium category covering businesses with turnovers between £10 million and £50 million. The starting point for a category 1 offence was £950,000 with a range between £600,000 and £2.5 million. The judge found the appropriate starting point for the appellant was £750,000, increased to £900,000 to reflect the harm caused and further increased to £1.1 million to reflect the aggravating features of the second case.

The judge considered the mitigation and heard submissions about the company’s financial position based on an accountant’s letter. For the year ending March 2018 a provision for liabilities of £542,000 had been made. A valuable contract had been cancelled and some credit facilities lost. There had been substantial capital investment since 2011 of approximately £7.5 million. The company had supported various charitable ventures. The judge read a statement from Mr Norman Cobley producing figures for expenditure on the baler including maintenance since 2010, and a statement from the current operations manager. At the time of sentence the financial picture showed a turnover of £17 million, gross profit of £2.6 million and pre-tax profit of £339,000.

The judge made a downward adjustment to reflect mitigation, leaving a figure of £950,000, reduced to £712,500 after 25 per cent credit to reflect that the appellant pleaded guilty at the plea and trial preparation hearing, then further reduced to £700,000. The appellant was also ordered to pay costs of £99,806.57.

Mr Andrew Thomas QC advanced a number of grounds of appeal on behalf of the appellant, both in skeleton argument and oral argument, addressing why the fine was said to be manifestly excessive.

The first ground was that the judge’s approach to the second offence was unlawful or breached a legitimate expectation, in that the judge had indicated he would impose no separate penalty for the second offence but would treat it as an aggravating feature of the first, yet in the event effectively imposed a substantial additional fine. The court rejected this ground. The judge was fully entitled to reflect the whole of the appellant’s offending in the sentence for the first offence. The resulting sentence was in no way unlawful and was well within the range provided in the guideline. Far from breaching the appellant’s legitimate expectations, the judge did exactly what he said he would do, namely reflecting the second offence by regarding it as an aggravating factor and increasing the sentence for the first offence accordingly.

The second ground was that the increase of £200,000 was in any event excessive. The court disagreed. The appellant’s culpability in respect of the further offending was particularly high given that the appellant had overridden a safety mechanism over a number of years where similar offending had already caused a fatal accident. There was undoubtedly a continuing failure to maintain the machine and, although the basis of plea was that there were only three occasions on which that gave rise to a risk of injury, that was three occasions too many. Such further conduct was a seriously aggravating factor and fully justified an increase in the region of 25 per cent within the applicable range prior to adjustments. As the judge held, it was a cynical overriding of safety features for the purpose of maximising profit.

The third ground was that the judge did not take into account the significant delay between the first offence and sentence, said to be particularly prejudicial because increased revenues exposed the appellant to increased fines. However, the court noted that the delay between the appellant’s pleas to the first offence in 2015 and sentence was largely due to its further offending and then its delay in pleading guilty until the day of trial. In any event, the purpose of the sentencing guidelines is to assess the financial penalty appropriate at the date of sentencing. Furthermore, part of the appellant’s argument was that regard should be had to its present low profitability in assessing the appropriate fine.

The fourth ground was that the judge did not give any or sufficient credit for the double impact of the sentence, Mr Thomas submitting that Mr Gaskell was punished twice as an individual and also as a 75 per cent shareholder in the company. Whilst that may have been an argument open to Mr Gaskell and may have factored into his sentence, the court did not consider that the appellant could complain of double punishment.

The fifth ground was that the judge failed to have sufficient regard at stage 3 of the sentencing process in the guidelines to the economic effect on the appellant, taking into account the fact that its net assets and profitability were low in comparison to its turnover and that it had been exposed to significant losses and liabilities due to these offences. It was said that at this stage the judge should have taken into account the fact that a director and shareholder was being imprisoned and therefore the need to bring home to management and shareholders the need to comply with health and safety legislation had been amply fulfilled by such a sentence. However, the court held that the nature of the offending, both the original offence giving rise to a wholly avoidable and tragic death and the subsequent cynical continuing failure to put the machine into a safe condition, demanded a fine of the size imposed by the judge. Close examination of the company’s accounts showed that its profits before and after tax were somewhat higher than Mr Thomas had set out in his grounds of appeal, although the court accepted that was an accidental omission no doubt because dividends had been taken off the figures before he stated them. In 2014/15 and 2015/16 net profits were in excess of £400,000 and in 2016/17 were almost £400,000. During the last four years the shareholders had been paid in the region of £700,000 in dividends. In those circumstances, standing back as required at stage 3, the court did not consider the judge was wrong to decline to make a greater deduction than the £200,000 he had made. The court considered it was not arguable that the total financial penalty of £800,000 was disproportionate to the company’s assets or profitability.

The sixth ground was that the judge, in giving credit of 25 per cent, failed to apply the 2007 Guidelines on Reduction for Guilty Pleas in force when the company pleaded guilty to the first offence in 2015 at the plea and trial preparation hearing. The court accepted there was force in that submission and that the appellant should have had credit in the region of 30 per cent. For that reason the court quashed the fine of £700,000 and replaced it with one of £650,000 to reflect the proper degree of credit. To that extent the appeal was allowed. As the first offence was on an indictment committed to the Crown Court in December 2010 there should have been a surcharge of £15. As the court had otherwise reduced the sentence it was appropriate to order that surcharge be applied.

In short, the appeal was allowed only to the limited extent of reducing the fine from £700,000 to £650,000 to reflect the proper credit for the guilty plea to the first offence and adding a victim surcharge of £15, but was otherwise dismissed.