Thames Water fined £250,000 after Court of Appeal approves Sentencing Guidelines for environmental offences

In R v Thames Water Utilities Ltd [2015] EWCA Crim 960 the Sentencing Guidelines for Environmental Offences were applied and approved and the fine of £250,000 ordered by the Crown Court upheld. Thames Water had pleaded guilty to an offence of causing or knowingly permitting a water discharge contrary to Regulations 38(1) and 39(1) Environmental Permitting (England and Wales) Regulations 2010. Untreated sewage had escaped from unmanned pumping stations into a watercourse due to the pumps becoming clogged with debris. Thames Water had failed to respond to alarms indicating a problem with the pumps, an attitude which the Recorder found to be negligent (within the matrix of the Sentencing Guidelines).

In calculating the level of fine the Recorder applied the matrix contained with the Sentencing Guidelines which required the size of the organisation to be determined, these range from mirco-organisations to large organisations. A large organisation is one which has a turnover or equivalent of £50 million and over. Thames Water had a turnover for year ending 2014 of £1.9 billion (profit of £346 million) and therefore greatly exceeded the threshold for the largest of organisations catered for within the Sentencing Guidelines. The Sentencing Guidelines made provision for this stating that ‘Where a defendant company’s turnover or equivalent very greatly exceeds the threshold for large companies, it may be necessary to move outside the suggested range to achieve a proportionate sentence’. The Recorder applied a multiple of five for a Category 3 harm case which had been committed negligently. The Guidelines state that the level of fine should reflect the culpability and should ‘meet, in a fair and proportionate way, the objectives of punishment, deterrence and the removal of gain derived through the commission of the offence; it should not be cheaper to offend than to take the appropriate precautions’. In upholding the level of fine the Court of Appeal (but noting disproval of the arithmetical approach of the Recorder of simply applying a multiple to the existing scales) indicated that it would have no hesitation of endorsing fines on ‘very large organisations’ of a much higher quantum than those listed in the Sentencing Guidelines where the largest fine envisaged was £3,000,000. Thereby leaving scope and flexibility for the sentencing Courts but uncertainty, and a potential for lack of sentencing consistency, for organisations who fall outside the scale catered for within the Guidelines. Whether these Sentencing Guidelines will retain their currency as time progresses or whether additional categories of companies and their corresponding scales of fines will be required is an issue which will no doubt be subject to further legal scrutiny.

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