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July 20, 2012

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Biggest fine yet in third corporate manslaughter conviction

A Manchester storage-products manufacturer has been sentenced today (20 July) after becoming the third company in the UK to be convicted under the Corporate Manslaughter and Corporate Homicide Act 2007.

Lion Steel Equipment Ltd, based in Hyde, Greater Manchester was ordered to pay a fine of £480,000 in relation to the death of worker Steven Berry in 2008. Mr Berry fell through a fragile rooflight at the company’s Hyde premises after he had gone to check the source of a leak.

Judge Gilbart QC, sentencing at Manchester Crown Court, ordered the company to pay the fine in four instalments: £100,000 by the end of September this year; a further £150,000 by end-September 2013; the same amount again by end-September 2014; and the final £80,000 by end of September 2015.

It was also ordered to pay a contribution of £84,000 towards the Crown Prosecution Service’s costs.

The company had pleaded guilty earlier this month to corporate manslaughter following the death of 45-year-old employee Mr Berry on 29 May 2008.

Originally, the CPS had also brought charges under sections 2 and 33 of the HSWA 1974 against the company, as well as charges of gross-negligence manslaughter and breaches of section 37 HSWA 1974 against three of the firm’s directors: Kevin Palliser – works manager at the Hyde site; Richard Williams – works manager at Lion Steel’s Chester site; and Graham Coupe – the company’s financial director.

However, following a ‘half-time’ submission of no case to answer, Richard Williams was acquitted of both charges he faced and Graham Coupe was acquitted of the manslaughter charge but remained charged under section 37 HSWA 1974. Following these rulings, negotiations were entered into with the prosecution, with the result that the company pleaded guilty to corporate manslaughter and the remaining charges against Graham Coupe and Kevin Palliser were dropped.

Manchester Crown Court heard that the day before the incident Mr Berry, who was a general ‘odd-job’ employee at the company, was carrying out renovations and internal decoration work in the kitchen at Lion Steel’s Hyde premises. He noticed that water was dripping from the roof but did not go up on to the roof to investigate the source until the following day.

As he was heading back along the roof to the door through which he had accessed it, it is thought he took a short cut over the roof’s apex and fell through a skylight, landing 13 metres on the floor below and suffering fatal injuries.

The prosecution argued that Lion Steel had not put in place any suitable arrangements for working on the roof, nor had it trained Mr Berry in roof work, nor provided him with any protective equipment for such work.

It also sought to establish a duty of care for Palliser, Williams and Coupe through the managerial offices they held and relied on information from various surveys carried out by the company’s insurers to establish that the three managers had knowledge that safety procedures and precautions were not as they should be.

According to Richard Ollier, senior associate at solicitors Clyde and Co, which represented Richard Williams, the judge said his client had no responsibility for the Hyde site and thus did not owe a duty of care to Mr Berry. Mr Ollier explained that the judge found a similar lack of duty of care on behalf of Graham Coupe but, in relation to Kevin Palliser, Judge Gilbart said he did have knowledge of the actions of the deceased.

Steffan Groch, regulatory partner at DWF, which defended the company, said: “DWF has been involved with this case from the outset and we’ve been amazed at how long it has taken to come to a conclusion. We welcome the judge’s comments that this was unacceptable on the part of the prosecution authorities. It has been a long process for those involved, not least for Steven’s family, and our thoughts are very much with them at this time.”

Steffan added: “Lion Steel has operated successfully from the premises where Steve’s accident occurred for around 50 years and there has never been an accident involving work on the roof, nor has the company ever been the subject of a prosecution for health and safety matters. Indeed, during the course of the trial, the prosecution accepted the significant improvements in health and safety that had been made by the company.”

In setting the fine, the judge took the company’s guilty plea into account and duly reduced the amount by 20 per cent – suggesting that the fine would otherwise have been in excess of £600,000. He said he was also mindful of the fact that the company employed 142 people and did not wish for jobs to be lost as a consequence of their colleague Mr Berry’s death.

Added Steffan Groch: “In setting a fine 20 per cent lower than that recommended by the Sentencing Guidelines, we note that the judge has accepted the company had a good safety record and reflected upon the potential effect of a large fine. It is also noted that the judge reduced the prosecution costs by almost 50 per cent.”

The judge criticised the length of time it took to bring the prosecution (four years). He also said the CPS should have given more consideration to the test to be passed in order to prove corporate manslaughter – particularly in relation to the cases against Richard Williams and Graham Coupe.

Richard Ollier commented: “The sentences against the first two companies convicted of corporate manslaughter (Cotswold Geotechnical Holdings in 2011 and JMW Farms Ltd in May this year) were not representative of what companies can typically expect to be fined. This is the first real example of the size of fine courts are likely to impose on companies with a reasonable turnover and profits.”

The 32-page judgement in the case has been published in full on the judiciary website – to view it, click here.
 

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Andrew
Andrew
11 years ago

It’s still the Company paying the fine. I had understood part of the reasoning behind the introduction of the CMA to be that Directors and SMT would face the very real prospect of gaol: something that tends to focus the mind somewhat.

Andrew
Andrew
11 years ago

The same ‘corporate veil’ that provides very little insulation when it comes to renumeration packages…

Either they are excersing control and should be duly rewarded/punished or they’re not.

Until Sir Bufton Tufton CBE, CEO of Dangerous Widgets Ltd, spends some time aquiring a stripey suntan, directors will continue to skirt their responsibilities.

Peter
Peter
11 years ago

good story

Ray
Ray
11 years ago

I have to agree that 4 years to come to trial is an indecent length of time. The CPS appears to be immune from any criticism, especially given that two senior managers were acquitted by the Judge.

Ray
Ray
11 years ago

There is guidance for judges, I can’t remember excatly but I think it was a fine of not less than £500k for a conviction for Corporate Manslaughter. There is some discretion as the financial circumstances of the organisation (or individual) must be taken into account.

Ray
Ray
11 years ago

The original white paper on corporate manslaughter did include individual liability, however the CPS in their ‘wisdom’ decided not to include individual liability in the Corporate Manslaughter Act.

Individuals can face gross negligent manslaughter, but it would be very difficult, if not impossible, to prosecute directors of large organisations where they are insulated by the ‘corporate veil’.

Ray
Ray
11 years ago

Steve, why was it an important case?

It was a fait accompli. The company (Lion Steel) pleaded guilty to CM in order that individual directors did not face charges. Little has been achieved in my book.

Shp
Shp
11 years ago

You sometimes get the feeling that the way fines are calculated is an arbitary figure plucked out of the air, I am sure it is not, and that there is a formula, and wait to be corrected.
Would it not be better to calculate them on the total costs of the investigation into the accident, and then add ten per cent, that could be used in promoting the case as a warning to others, and as a form of education to all.
Self financing with a long term benefit for all.

Steve
Steve
11 years ago

This was an important Corporate Manslaugher case. Have we shared this with the PiC community?