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August 31, 2010

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Paying with fire

Hilary Ross examines the New Look case – a prosecution under The Regulatory Reform (Fire Safety) Order (RRO) 2005, which caused some disquiet in health and safety circles, not least on account of the size of the penalty imposed.

On 26 April 2007, a fire broke out on the second floor of fashion retailer New Look’s Oxford Street store in London. The fire alarm was activated, the fire brigade called, and the building evacuated. The fire resulted in part of Oxford Street being closed and adjacent stores evacuated.

The London Fire and Emergency Planning Authority (LFEPA) investigated immediately, but the cause of the fire was never determined. The investigation ran for almost two years until the LFEPA commenced a prosecution against the retailer. A total of 35 alleged breaches of the Regulatory Reform (Fire Safety) Order (RRO) was eventually reduced to two offences:

  •     failing to carry out a suitable and sufficient risk assessment; and
  •     failing to have in place adequate training.

Entering a guilty plea to both charges, New Look was sentenced on 25 November 2009 to pay £400,000 in fines (£250,000 for the risk-assessment charge and £150,000 for the training charge), together with £136,000 of costs. This represents the largest fine ever imposed in relation to breaches of the RRO and is very high in relation to health and safety cases characterised by similar facts.

The risk assessment

The prosecution’s case contended that one consequence of the failure of the risk assessment was confusion on the evening of the fire. Instead of being ushered by staff to safe escape routes and, thereby, to designated fire exits, customers made for the main exit by routes that took them under the seat of the fire on the second floor.

Inspection of the building after the fire revealed a number of failings in the physical condition of the escape routes, which should have been identified in the fire-safety risk assessment, and rectified. The basement was used as a shop floor and there were two escape routes via exit doors at the rear. However, building works obscured a sign indicating one of the routes, so, if there had been a fire in the basement near the front of the premises, the lack of effective signage would have risked the escape of customers in the direction of the fire rather than away and into protected escape routes.

Along one such route, the corridor was partially obstructed by plastic crates, some containing stock, stacked to a height of 1.7 metres. These both created a fire hazard and restricted access.

The fire-exit doors from the basement were controlled by a locking mechanism, which required a swipe card to release it and did not appear to be connected to the fire-alarm system so as to unlock the doors in an emergency. On one of the doors, the break glass and emergency-release button were situated on the wrong side, rendering it inaccessible to those seeking an exit from the basement into the fire-escape corridor.

Inspection of the ground floor revealed that there was no natural lighting to illuminate one of the staircases, nor any emergency lighting. On the ground-floor landing, clothing racks and cardboard boxes were causing obstruction. An open fire door had also overcome the self-closing mechanism, thereby exposing the escape route, in the event of fire, to increased danger from smoke inhalation. In addition, a number of combustible items was found stored in the landing area serving a staircase along an emergency exit route.

A particular issue was that New Look had developed its risk assessment in line with government guidance, but it was largely generic in form and effectively a ‘tick-box’ exercise to be completed by the store management at each of the retailer’s premises. At the Oxford Street store, although management had identified the changes in the physical state of the building and problems with the swipe-card system, the risk assessment had not been updated to reflect these issues.

Unsurprisingly, it was the prosecution’s case that these were all serious issues, and that, consequently, the risk assessment was neither suitable nor sufficient. However, it should be noted that the premises would have sustained damage from fire-fighting activities, e.g. water damage or ceiling collapses, and, as such, there was no definitive way of knowing whether some of the things found occurred before, during, or after the fire.

Training

The training system employed by New Look at the time of the fire was not dissimilar to many other companies with multiple sites.

All new employees were trained in health and safety at their induction and required to complete a test to verify understanding. This was then refreshed annually using the same training material. But, when asked, New Look could not produce training records to demonstrate that all of its employees were trained. After the fire, all of the training records were transferred from the store to another premises, from where, after a period of time, they were destroyed, owing to them already having been damaged by water from the sprinklers. 

The prosecution’s position was that training was ineffective, on account of staff failing to evacuate the store properly once the fire had started. However, New Look representatives were not interviewed under caution for more than 18 months after the incident. This caused problems in trying to ascertain what training staff had received, as they found it difficult to recall the details.

Aggravating and mitigating factors
When sentencing, the Crown Court identified three aggravating features:

  • it was not an “odd breach, or merely technical”;
  • the store was in the heart of one of the main shopping centres in the country; and
  • all the matters were simple matters, which could easily have been put right without the need for considerable expenditure.

Mitigating factors taken into account included:

  • no one was killed or injured;
  • the company pleaded guilty at the first reasonable opportunity; and
  • the company showed that it had taken significant and effective steps to remedy the situation.

While the mitigating factors reflected those contained in previous case law, the aggravating factors appeared to be a significant departure.

When determining the correct level of fine to impose the judge made it clear that “each case must be considered on its own facts”. In this case, he remarked that “the defendants are a major and highly successful private company with an annual turnover. . . well over £1bn and pre-tax profits of over £200m”. In light of this, he concluded that “only a disproportionate fine could have any real impact”.

The appeal

Given that the judge gave the defendant full credit for pleading guilty at the first opportunity, it appeared as if he had applied a higher presumed standard of seriousness to breaches of fire-safety duties. Leave was sought to appeal the sentence on the basis that it was manifestly excessive.

It was submitted, on behalf of New Look, that the sentencing judge had failed to give sufficient weight to the fact that the breaches of the RRO – neither individually nor cumulatively –were causative of the fire, and nor had they caused death or injury.

While it was recognised that the existence of risk is an important factor in any case, this needed to be balanced against the recognition that the existence of injury or death must be met by more condign punishment. This is a well-established principle going back to the case of Howe, where the Court of Appeal held that “…it is often a matter of chance whether death or serious injury results from even a serious breach. Generally, where death is a consequence of a criminal act, it is regarded as an aggravating feature of the offence. The penalty should reflect public disquiet at the unnecessary loss of life.”

Given the fact that there was no case law in relation to the RRO, it was submitted that the Court should consider fines imposed under the previous fire safety legislation, and under health and safety law in general. The Court’s attention was drawn, in particular, to the case of ESB Hotels. In that case, the owners of the Bolton Moathouse Hotel pleaded guilty to two contraventions of the Fire Precautions Act. The breaches related to the permission of mattresses to be stored in two corridors, which created a combustible environment. A fire occurred and two elderly residents died, with the resulting investigation showing that staff had an incomplete understanding of fire safety.

Although in this case the fire had been started deliberately, the Court, at the first instance, held that the breach of duty by the hotel had contributed towards the fatalities and a fine of £400,000 was imposed. This was subsequently reduced on appeal to £250,000.

It was argued that the level of sentence in this case reflected the principle in Howe that incidents resulting in death or injury (in the case of ESB, a double fatality) are a different order of seriousness and, therefore, should attract a higher penalty. It was emphasised that in the ESB case the Court of Appeal had made a distinction between offences that are causative of death and those that are not. As a result, the second offence of ESB Hotels, which had been discovered as a result of the investigation, had received a lesser penalty.

The Court of Appeal’s attention was also drawn to the fact that the Sentencing Guidelines indicated that a fine in health and safety cases involving death should seldom be less than £100,000 and that, in relation to corporate manslaughter, the starting point should be £500,000. This gave rise to the question of what fine New Look would have faced if someone had been fatally, or badly injured at its Oxford Street store.

It was also submitted that fines of more than £500,000, while not the sole reserve of multiple fatalities or major disasters, were unusual in relation to cases where the risk had not eventuated.

Severe but not excessive

The Court of Appeal did not accept that the sentencing judge was purporting to set a new standard for sentencing for breaches of fire safety legislation. He had clearly, in the Court of Appeal’s opinion, applied the principles set out in Howe and subsequent cases.

While the Court of Appeal held that the RRO was the “mirror image of” health and safety legislation, it advised that three points need to be borne in mind when passing sentence: the seriousness of the breach; the capacity of the organisation to meet the fine; and the need for the fine to impact upon the shareholders and managers. These factors give far greater prominence to a company’s financial resources than previous cases.

The Court of Appeal also held that the Sentencing Guidelines must not be assumed to set a tariff in the case of any organisation, nor indeed a ceiling, but rather a “general indication of current levels of fines”. It underlined that fines in excess of £500,000 being appropriate for major disasters “can no longer be taken to reflect judicial attitudes” towards such incidents, indicating that such cases will, in future, attract far higher fines.

The Court also didn’t agree that ESB provided any benchmark for fines in the present case, as it had involved a painstaking examination of culpability, causation, means and mitigation. The case of ESB therefore merely served to demonstrate that sentencing is a “case-sensitive” exercise.

The Court also commented that “fire can be indiscriminate in its effect and, in the case of an organisation which, in the centre of a large city, undertakes responsibility for large numbers of visitors to its premises, a breach will usually be a very serious matter”, and concluded that the judge had “made no error”. Therefore, although the fine was “severe”, it was not, in the Court’s view, “manifestly excessive”.

Conclusion

Initially, despite remarks by the Court of Appeal, it was thought the New Look case heralded a new stricter sentencing regime for breaches of fire safety. With time to reflect, this is not the case, as subsequent remarks by the Court of Appeal, in the case of R v Marble City – a case involving a fatality prosecuted under sections 2 and 3 of the HSWA – made it clear that the level of fines, generally, are likely to be increased. The Court remarked that the new Sentencing Guidelines meant the old system of “modest fines” was now obsolete.

Nevertheless, the New Look case makes it clear that, for operators that have premises that are open to the public and located in highly-populated areas, a major fire incident is likely to culminate in severe penalties. That may be right and proper but it does not overcome, nor take into account the difficulties that companies are facing in relation to the application of the RRO. Arguably, the greatest fire-safety challenge facing orgainsations at present concerns the inconsistent approach taken by fire authorities in relation to what conditions constitute risk, the level of risk, and how these risks should be addressed. 

Hilary Ross is a partner at law firm Bond Pearce specialising in health and safety, including fire safety.

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Mark
Mark
13 years ago

What is the competency level of a fire risk assessor?