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APPEAL COURT, HIGH COURT OF JUSTICIARY
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Lord
Nimmo Smith
Lord
Clarke
Lord
Philip
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[2009] HCJAC 10
Appeal No:
XC326/08
OPINION OF THE COURT
delivered by LORD NIMMO
SMITH
in
CROWN APPEAL AGAINST
SENTENCE
by
HER MAJESTY'S ADVOCATE
Appellant;
against
MUNRO & SONS (HIGHLAND) LTD
Respondent:
_______
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Appellant:
Bain, Q.C. A.D.,:Crown Agent
Respondents: J. G. Thomson; Anderson Partnership, Glasgow
28 January 2009
Introduction
[1] The
Health and Safety at Work etc Act 1974 ("the 1974 Act") provides by section
3(1):
"It shall be the duty of
every employer to conduct his undertaking in such a way as to ensure, so far as
is reasonably practicable, that persons not in his employment who may be
affected thereby are not thereby exposed to risks to their health or safety."
Section 33(1) provides that it is an offence for
a person (a) to fail to discharge a duty to which he is subject by virtue of
section 3(1), among other provisions.
[2] The
respondents, Munro & Sons (Highland) Ltd ("Munro"), pled
guilty at a continued preliminary hearing in the High Court of Justiciary
sitting at Edinburgh on 11
April 2008 to charge 2 in an indictment, which as amended was in the
following terms:
"(2) On 5 July 2006 at the A9 Inverness to
Scrabster Road at Tomich Junction, Invergordon, Easter Ross and at premises
occupied by you at the Deephaven Industrial Estate, Evanton, Easter Ross, you
MUNRO & SONS (HIGHLAND) LIMITED being an employer within the meaning of the
aftermentioned Act, did fail to conduct your undertaking in such a way as to
ensure, so far as was reasonably practicable, that persons not in your
employment, namely Julia MacKay, c/o Northern Constabulary, Dingwall, Christina
Fraser, formerly residing at Garstein, Arabella, by Tain, and members of the
public using said road at the time, who may have been affected thereby were not
exposed to risk to their health and safety and in particular;
(a) you did cause and
permit WALTER MACLENNAN, an employee of said company, to transport a load,
namely a Michigan L190 wheeled loader by means of a mechanically propelled
vehicle, namely an Articulated Unit and a Low Loader Trailer Combination,
registered number T373 KMS and did fail to provide said WALTER MACLENNAN
with sufficient and adequate load securing equipment, in particular sufficient
and adequate chains or lashings and fastenings, fail to ensure that the said
load was sufficiently secure and fail to ensure that the brakes of said load
were effective, in working order, and in operation;
(b) you did cause and
permit said WALTER MACLENNAN to load said mechanically propelled vehicle with a
load of 30130 kilograms, causing the gross weight of said mechanically propelled
vehicle and load to be 48350 kilograms, being a load in excess of its maximum
permissible gross weight of 44000 kilograms shown on the plate fitted in
accordance with provisions of the Road Vehicles (Construction and Use)
Regulations 1986;
whereby the said chains
broke and said load broke away from said mechanically propelled vehicle and
rolled into the path of motor vehicle registered number P678 JAS then being
driven by said Julia MacKay, whereby said Julia MacKay was severely injured and
said Christina Fraser, a passenger in said motor vehicle being driven by said
Julia MacKay, was so severely injured that she died: CONTRARY to the Health and
Safety at Work etc Act 1974, section 3(1) and section 33(1)(a)".
The Crown accepted pleas of not guilty by Munro and by
their employee Walter MacLennan to the remaining charges on the
indictment.
[3] After hearing counsel, the sentencing
judge imposed a fine of £3,750 on Munro, discounted by 25% from £5,000 to
reflect the plea of guilty and the stage at which it was tendered. The Crown have now appealed against this
sentence on the ground that it was unduly lenient. No exception is taken to the 25% discount, so
there is no need for us to set out the factors, principally the stage at which
an unequivocal intention to plead guilty in the terms finally accepted was
intimated to the Crown, which the sentencing judge took into account when
selecting it. The issue for us is
therefore whether in the whole circumstances the starting point of £5,000 can
be regarded as unduly lenient.
The facts
[4] The
sentencing judge was presented with an agreed narrative, on which his report to
this Court is based. Some additional
information was provided in the course of discussion before us. This allows us to give the following account.
[5] Munro
are a wholly owned subsidiary of William Munro Construction (Highland) Ltd
("Construction"). The directors of both
companies are members of the Munro family, principally William Munro and his
brother David, who are respectively managing director and transport director. The principal activity of Munro is that of
haulage and waste disposal contracting.
They operate from various premises on the Cromarty Firth, including
premises at Deephaven Industrial Estate, Evanton, and Kindeace Quarry.
[6] Umax
Limited ("Umax") are international pipeline fabricators. They also have a base at Deephaven Industrial
Estate and, as we understand it, are part of an international group of
companies.
[7] In
June 2006 Umax decided to sell a Michigan L190 wheeled loader ("the Michigan") and indicated through
the trade locally that the machine was available. The Michigan had a bucket at the
front, a cab in the centre and an engine at the rear, and stood on four wheels
fitted with large pneumatic tyres. At
the time the tyres were filled, not with air, but with a solution of water and
salt, adding a weight of about four tonnes in total; this is a recognised
method of giving additional stability to the machine. In that condition, the Michigan weighed 30.13 tonnes.
[8] William
Munro, the managing director of Munro, expressed an interest in the purchase of
the Michigan.
On 3 July 2006 he and
Angus Gillies, Munro's contracts manager, visited the Umax premises and
test drove it. The Umax site manager,
Gavin Sutherland, participated. The
agreed narrative states that both Gavin Sutherland and Andrew Gillies
"claim that they were not aware of and did not discover any braking defect on
the machine during this process". There
was in fact a serious defect in the parking brake, the nature of which we
discuss in more detail below. Following
the initial test drive the Michigan was moved about 200 yards
to Munro's premises, where its use was further demonstrated. Angus Gillies and William Munro
decided that, before a sale was concluded, further testing was required at
Kindeace Quarry, where it would be used. They both understood that the Michigan weighed about 27 tonnes,
and were unaware that the water in the tyres added about four tonnes.
[9] Accordingly,
on 5 July 2006, the lorry driver Walter
MacLennan was instructed by William Munro to transport the Michigan from Munro's base at
Evanton to the quarry.
Walter MacLennan had been employed as a jobbing lorry driver by
Munro for more than 15 years. He
collected a low loader trailer from other premises belonging to Munro and drove
it to their premises at Evanton where the Michigan had last been
tested. The low loader trailer had
two loading ramps at the rear, which were raised and lowered by hydraulic
arms. They were not designed to be
capable of restraining the load when raised.
The load required to be separately secured once placed on the
trailer. Two securing chains were
supplied with the trailer. At Munro's
premises, Angus Gillies drove the Michigan up the lowered ramps onto
the low loader trailer, put its gears into neutral, switched off the engine and
operated a pull lever in order to activate the handbrake. According to the agreed statement, he
"apparently remarked to the driver Walter MacLennan that 'it had good
brakes'". The Michigan was butted up against the
front of the trailer and its bucket was lowered onto the swan neck where the
trailer deck rose over its front wheels.
Walter MacLennan was then left to secure the load. He applied the two securing chains by passing
the front chain through the eyes and over the arms behind the bucket of the
machine and weaving the rear chain behind the tow pin at the rear of the
loader. Both chains were then tightened
with a ratchet. He did not use wheel chocks.
Apparently, it is not now normal
practice to use them, as the size and elasticity of the tyres would necessitate
very large chocks, the use of which would give rise to manual handling
problems.
[10] In this
situation, the following features may be noted.
(1) As a result of the serious
defect in the parking brake, discussed below, the Michigan's wheels were free to
turn. (2) The Michigan was thus only held in
place by the two securing chains, each of which, on subsequent testing,
was found to have a breaking strain of 4.5 tonnes. (3)
The total train weight of the articulated tractor and trailer unit was
44 tonnes. The unladen weight of
the unit was 18.22 tonnes. Accordingly,
when the 30.13 tonnes weight of the Michigan was added, the total
weight of the laden unit was 48.35 tonnes.
The amount of the overloading was approximately equal to the weight of
the water in the tyres of the Michigan.
[11] Walter MacLennan
then set off to drive the laden unit to the quarry. For most of his journey he travelled along
the A9 road, which is comparatively level, and then turned left onto an
unclassified public road leading from the A9 junction at Tomich to
Newmore. This road sloped slightly
uphill, at an angle of about five degrees.
[12] Meanwhile,
Christina Fraser and Julia McKay were travelling in
Julia McKay's Nissan Almera motor car along the A9. They both worked as beauty consultants,
latterly at Debenhams store in Inverness, and shared travel
arrangements. They left work at about 5.30pm, and at about 6.30pm they approached the
Tomich junction. Julia McKay was
driving and Christina Fraser was in the front passenger seat.
[13] By this
time, the unit driven by Walter MacLennan was about 40 metres from the
junction. Because of the incline on the
road, the Michigan began to roll backwards on the low
loader trailer, thereby imposing a load on the chains which was in excess of
their combined breaking strain. Both
chains broke, the Michigan then ran backwards down
the trailer, struck the hydraulic ramps, knocked them down onto the road, and
rolled backwards down the slope and onto the northbound carriageway of the
A9. There it struck the Nissan Almera,
and crushed it almost flat. Christina
Fraser was killed outright and Julia McKay,
remarkably, survived with injuries.
[14] The
agreed narrative included a victim impact statement. The emergency services attended soon after
the accident. Christina Fraser was
pronounced dead at the scene, having died of multiple injuries. She was 24 years
old at the time of her death. For nine
years before her death she was in a relationship with Garry Ross and since
January 2005 they had lived together at Garstein, Arabella, by Tain. They had been engaged for three years. Her fiancé chanced upon the scene of the
accident on his way to pick her up and realised that the car involved was the
one in which she had been travelling. He
was sent to wait for news at the hospital in Inverness but discovered
that only the driver - Julia Mackay - arrived there. Both Garry Ross and Christine Fraser's
parents have been devastated by the loss of his fiancée, their daughter. The
family enjoyed particularly close and happy bonds and Mr and Mrs Fraser
and Mr Ross feel a sense of complete and utter desolation at her untimely and
tragic death.
[15] Julia
McKay was cut free from the wreckage and taken to hospital, where she was found
to have suffered bruising and cuts and required surgery to repair
two fingers on her left hand. She
was in hospital for four days. Although she has recovered
from her physical injuries, she has been left with a weakness in her left hand
and scarring and has experienced psychological difficulties as a result of the
accident, with post traumatic stress, a psychological inability to drive and
extreme difficulty in travelling as a passenger. She is obtaining professional psychiatric
advice.
The offence
[16] It is
now necessary to consider in more detail the failures on the part of Munro
which caused the accident and thus constituted the offence. Obviously, steps should have been taken to
ensure that the Michigan was not able to roll off
the low loader trailer as it did. It is
not suggested, for reasons given above, that chocks should have been used or
that they would have been capable of immobilising it. This leaves for consideration the use of
chains and the Michigan's parking brake.
[17] According
to the agreed narrative:
"Expert opinion has been
sought on the manner of securing the load.
Remarkably there does not appear to be any compulsory training for lorry
drivers in this connection nor is a lorry driver expected to be familiar with
what appears to be the 'best practice' standard, ie. the Department of
Transport Code of Practice for Safety of Loads on Vehicles. Some general questions are asked apparently
as part of the HGV licence test and thereafter it seems to be a matter of
accumulated experience. ... The Code of Practice provides very clear
guidance as to how a vehicle of this type should be loaded and secured. It is clear that the chains selected should
have been of sufficient strength to restrain 100% of the weight of the vehicle
in any forward motion and 50% of the weight of the vehicle in any rearward or
sideways motion and should at least have been lashed at each of the four wheel
stations. The Code of Practice suggests
that no reliance should have been placed on the effectiveness of the parking
brake."
Angus Gillies, who attended the scene of the
accident, apparently remarked, "The chains broke when the lorry driver went up
the hill and the machine came off. These
old fucking chains are never checked."
It is clear that the chains used by Walter McLennan fell far short
of the guidance provided by the Code of Practice. It is not suggested that the chains would
have held if there had not been about four tonnes of water in the tyres of the Michigan. The agreed narrative states:
"The breaking load of the
chains is not something that Walter MacLennan would have been expected to know
but is information which his employer is expected to hold and could have
provided to him (together with additional chains) if requested. It is clear that inadequate plant, materials
and information was available to Walter MacLennan who had no information as to
the weight of the vehicle, and an inadequate number of appropriate and
sufficient weight bearing chains."
[18] Notwithstanding
all of this, counsel for Munro submitted to us that the main purpose of the
chains was principally to stop the Michigan from bouncing on the low
loader trailer, and that the failure of the chains should not be regarded as a
major factor in Munro's criminal responsibility for the accident. We are unable to accept this approach, having
regard to the terms of the agreed narrative and the Code of Practice, and above
all to the terms of the charge to which Munro pled guilty. It does, however, require us to take an even
more critical look at the defect in the parking brake.
[19] The
parking brake was operated by a push/pull lever. When this was pulled, brake pads were applied
to a disc attached to the transmission of the Michigan. The design was to prevent the Michigan from moving even with the
engine running and the transmission in gear.
In addition, the transmission had an interlock with the parking brake
which automatically applied the service brakes if an attempt was made to move
the vehicle when the parking brake was applied.
As we understand it, this would only happen if the ignition was switched
on and the engine was running. If the
ignition was switched off and the transmission was in neutral, only the parking
brake would prevent the Michigan from rolling forwards or
backwards, at least on an incline.
Immediately after the accident the parking brake was found to be
inoperative due to a lack of adjustment.
When the lever was pulled, in order to engage the parking brake, the
brake disc was still free to turn. The
reason for this was that the disc pads were worn. They required manual adjustment to be brought
into contact with the brake disc in order to render the parking brake
effective. This adjustment had not taken
place for some time: there were only 3mm
of wear remaining on the brake pads, and it took 20 cranks of the parking brake
adjuster to bring the pads into contact with the disc. Once this was done, the parking brake was
found to be capable of holding the Michigan on a ramp with a gradient
if 1 in 6, i.e. about 15 degrees. The
presence of dirt on the front side of the disc indicated that this situation
had pertained for some time.
[20] Umax's
service records relating to the Michigan were lodged as a Crown
production. According to these records,
on 24 May 2005 it was noted that the
handbrake disc was cracked, site welding was unsuccessful, and a new disc
required. There was no record that a new
disc was ever fitted. On 12 December 2005 it was recorded that the handbrake
was not holding in reverse, when the Michigan rolled backwards. On 9 January
2006 it was noted that the handbrake needed adjusting. Having regard to the state of the parking
brake when it was examined following the accident, this was not done. It is not our function to pass judgment on
Umax, or to comment on the credibility of their site manager
Gavin Sutherland's claim that he was not aware of any braking defect on
the Michigan; but the fact was that information
was available to Umax which was not communicated to Munro. It may be that the interlock function tended
to mask the defect in the parking brake.
In any event, William Munro, Andrew Gillies and
Walter MacLennan all appear to have been under the impression, on the
basis of a test drive without further examination by a qualified engineer, that
the Michigan was in a fit state to be transported by road on the low loader
trailer, with the parking brake being used as the principal means of preventing
it from rolling backwards off the trailer.
Events proved them wrong.
The
appropriate level of fine
The cases
[21] The
relevant provisions of the Health & Safety at Work Etc Act 1974 have been
quoted above at paragraph [1]. Given
that Munro were prosecuted on indictment, the penalty to which they were
liable, in terms of Section 33(1A) of the Act, was a fine of unlimited
amount. That would have remained the
position if they had been prosecuted on indictment in the Sheriff Court, which we were told would
have been the case had the charge to which they pled guilty been the only
charge in the indictment.
[22] Although
there have of course been occasions - fortunately rare - in the Scottish courts
where the level of the appropriate fine for a contravention of the statutory
provisions causing death has had to be considered, most notably in HMA v Transco plc in August 2005, no case has led to a reported judgment
of this court in which the relevant considerations have been discussed. We now have that opportunity. This involves a consideration of the English
authorities.
[23] In R v F
Howe & Son (Engineers) Ltd [1999] 2 Cr App R (S) 37 the
Court of Appeal made some general observation about cases of this nature, with
particular regard to the gravity of the breach, aggravating features,
mitigating features and the policy underlying the legislation. Following this, in R v Friskies Petcare (UK) Ltd [2000] 2 Cr. App. R.
(S.) 401 the Court of Appeal recommended the use of documents listing in
writing not merely the facts of the case but also the aggravating features
relied on by the Crown and the mitigating features relied on by the
defence. Such documents have come to be
known in England as Friskies schedules.
[24] We do
not think it necessary to go further into the detail of those two cases, in
view of the decision of the Court of Appeal in R v Balfour Beatty Rail
Infrastructure Limited [2007] 1 Cr App R (S) 65, in which the
Court of Appeal, chaired by the Lord Chief Justice, Lord Phillips, set out
principles derived by the sentencing judge in that case from the judgment in Howe and other cases, which at
paragraph 23 they described as "a helpful summary of the guidance afforded
by the decided cases, which guidance we would endorse". These principles, so far as relevant for
present purposes, were stated at paragraph 22 to be as follows:
"(1) Failures
to fulfil the general duties imposed by sections such as, for example, section
3 of the 1974 Act are particularly serious, as such sections are the
foundations for protecting health and safety of the public.
(2)
Historically, fines for such offences, certainly those imposed by
magistrates, have been too low.
(3) It is not
possible to say that a fine should stand in any specific relationship with a
turnover or net profit of the defendant.
Each case must be dealt with according to its own circumstances.
(4) It may be
helpful to look at how far short the defendant fell of the appropriate
standard.
(5) Generally,
where death occurs in consequence of the breach, that is an aggravating
feature. To that proposition I would add
that by analogy with cases of causing death by dangerous driving, multiple
deaths must be regarded as more serious than single deaths, though not, of course,
standing in anything like an arithmetical relationship with them.
(6) A breach
with a view to profit seriously aggravates the offence.
(7) Also
relevant is or may be the degree of the risk and the extent of the danger,
specifically whether it is an isolated failure or one continued over a
period.
(8) The
defendant's resources and the effect of a fine on its business are
important. Any fine should reflect the
means of the offender, and the Court should consider the whole sum it is minded
to order the defendant to pay including any order for costs.
(9) Mitigation
will include (1) a prompt admission of responsibility and a timely plea of
guilty; (2) steps taken to remedy deficiencies drawn to a defendant's
attention; and (3) a good safety record.
(10) Above all,
the objective of the fine imposed should be to achieve a safe environment for
the public and bring that message home, not only to those who manage a
corporate defendant, but also to those who own it as shareholders. Later decisions have all drawn on and
confirmed the usefulness of Howe as
an authority and they have added the following further points of possible
application to this case.
(11) The stated
objective in Howe means that
consistency of fines between one case and another and proportionality between
the fine and the gravity of the offence may be difficult to achieve. Consistency may not, therefore, be a primary
aim of sentencing in this area of law. R v Jarvis
[2005] EWCA Crim 1409 paragraph 7.
(12) The court
can take a more serious view of the breaches where there is a 'significant
public element', particularly where the public has to trust a company entrusted
with work relating to their safety to carry that work out competently and
efficiently. The court can also take
into account in such cases the fact, if appropriate, that it was a matter of
good fortune that the risks, and presumably their consequences, did not turn
out worse than in the event they did. Jarvis, again, paragraph 11."
The thirteenth principle, which does not apply in the
present case, related to the position of a public body.
[25] In
later discussion the court said:
"42 Section 3 of the 1974 Act requires positive
steps to be taken by all concerned in the operation of the business of a company
to ensure that the company's activities involve the minimum risk, both to
employees and to third parties. Knowledge that breach of this duty can result
in a fine of sufficient size to impact on shareholders will provide a powerful
incentive for management to comply with this duty. This is not to say that the
fine must always be large enough to affect dividends or share price. But the
fine must reflect both the degree of fault and the consequences so as to raise
appropriate concern on the part of shareholders at what has occurred. Such an
approach will satisfy the requirement that the sentence should act as a
deterrent. It will also satisfy the requirement, which will rightly be
reflected by public opinion, that a company should be punished for culpable failure
to pay due regard for safety, and for the consequences of that failure.
43 A breach of the duty imposed by s. 3 of the
1974 Act may result from a systemic failure, which is attributable to the fault
of management. It may, however, be the result of negligence or inadvertence on
the part of an individual, which reflects no fault on the part of the
management or the system that they have put in place or the training that they
have provided. In such circumstances a deterrent sentence on the company is neither
appropriate nor possible. Where the consequences of an individual's shortcoming
have been serious, the fine should reflect this, but it should be smaller by an
order of magnitude than the fine for a breach of duty that consists of a
systemic failure."
[26] We find
these passages to be highly persuasive.
In our opinion, especially given that the 1974 Act is a United Kingdom statute, and uniformity
of sentencing, other things being equal, between the various jurisdictions is
desirable, they should be followed by sentencers in Scotland, and we follow them.
Other materials
[27] In addition to these
cases, our attention was drawn to two other documents from England. The first was the Magistrates' Court Sentencing Guidelines, issued by the Sentencing
Guidelines Council in May 2008. Having
regard to the limited sentencing powers of magistrates' courts, we find these
guidelines to be of no assistance for present purposes, beyond their
recognition of the Howe and Balfour Beatty principles. The second was
the Consultation Pater on Sentencing for
Corporate Manslaughter, issued by the Sentencing Advisory Panel at the
request of the Sentencing Guidelines Council in November 2007, in anticipation
of the coming into force of the Corporate Manslaughter and Corporate Homicide
Act 2007 on 6 April
2008.
By Section 1(1) of that Act an organisation to which the section applies
is guilty of an offence if the way in which its activities are managed or
organised causes a person's death and amounts to a gross breach of a relevant
duty of care owed by the organisation to the deceased. By subsection (5) the offence under that section is called corporate manslaughter, in
so far as it is an offence under the law of England and Wales or Northern Ireland, corporate homicide, in so far as it is an
offence under the law of Scotland. This is a more serious offence than a breach
of section 3 of the 1974 Act which causes death, and the Panel's views require
to be read in that context.
[28] In the paper, at
paragraphs 58 to 60, the Panel expressed the provisional view that annual
turnover is the most appropriate measure of an organisation's ability to pay a
fine, and thus the starting points and ranges proposed by them were expressed
as percentages of annual turnover.
Annual turnover was defined as "the aggregate of all sums of money received
by an organisation during the course of its business .... over an annual
period". The Panel's provisional
starting point for an offence of corporate manslaughter committed by a first
time offender pleading not guilty was a fine amounting to 5% of the offender's
average annual turnover during the three years prior to sentencing. After taking into account any aggravating
and/or mitigating factors, the court would then arrive at a fine which would
normally fall within a range of 2.5 to 10% of average annual turnover.
[29] Of more relevance to
our consideration, the Panel's provisional starting point for an offence under
the 1974 Act involving death was a fine amounting to 2.5% of average annual
turnover during the three years prior to the offence. The fine would normally fall within a range
of 1 to 7.5% of average annual turnover.
We were not shown any guidelines issued following the consultation
process, so the consultation paper must be regarded as of some, but limited,
assistance for present purposes.
Munro's financial position
[30] This brings us to the
financial position of Munro. The
information provided to the sentencing judge, and to us, is less than might
have been hoped for. Where a company has
been convicted of an offence such as the present, or indeed any other offence
in respect of which its financial position would be relevant in determining the
level of fine, it is for the company to place before the court sufficiently
detailed information about its financial position to enable the court to see
the complete picture without having to resort to speculation. In addition to the lodging of all relevant
documents, it may in some cases be thought appropriate to lead the evidence of an
accountant. Though this was not done in
the present case, it would have been appropriate, since all that was placed
before the sentencing judge was the directors' report and financial statements,
in relation to Munro, for the years ended 30 September 2005 and 30 September 2006. The sentencing judge was informed that Munro
employed about 60 persons and were a significant employer in the area where
they operated. The sentencing judge paid
particular heed to the directors' report and financial statements for the year
ended 2006. From these he noted that in
that year Munro had a turnover of £2,306,782.
They made an operating loss of £14,281, but after various adjustments,
particularly in respect of tax, they made a net profit for the year of
£18,854. We would add that in the
previous year turnover was £2,072,418, gross profit was £426,484, operating
profit was £213,473, and net profit was £157,984.
[31] In addition, we were
shown the abbreviated accounts for the year ended 30 September 2007 relating to Munro, and the abbreviated accounts for the years ended
30 September
2006 and 30 September 2007 relating to Construction.
These contain abbreviated balance sheets and accompanying notes, but not
profit and loss accounts. From these it
can be seen that the net assets of Munro were £328,117 as at 30 September 2005, £346,971 as at 30 September 2006, and £339,150
as at 30 September
2007.
The significant drop in gross profit between 30 September 2005 and 30 September 2006 was
attributable to a substantial increase in the cost of sales; we were told that
these were principally fuel costs.
Creditors of Munro included the directors William Munro and David
Munro, who as at 30 September 2006 were owed
£128,011 between them, and as at 30 September 2007
£116,405. Our attention was also
directed to the abbreviated accounts of Construction, but only for the purpose
of showing that as at 30 September 2005 there was a balance due to the
directors of £442,108, and as at 30 September 2006 £441,760. It would appear from these figures that the
financial viability of both Munro and Construction is in part dependent on
loans from William Munro and David Munro, but we were not told when and in
what circumstances these loans were made.
What we were told was that William Munro derives a salary of
£40,000 gross, and his wife Jean a salary of £10,000 gross, from Construction, and
not from Munro; and David Munro derives a salary of £24,000 gross from Munro,
and none from Construction. Counsel
pointed out that most of the operating machinery forming part of the fixed
assets of Munro was leased or on hire purchase.
The construction industry was currently experiencing a downturn in
business, which in the case of Munro was likely to be 30 to 40%. It would cause the company great difficulty
to find, say, £50,000.
The sentencing judge's
approach
[32] In his
report to this Court, the sentencing judge states:
"Having regard to all the foregoing factors I formed
the view that this was a serious offence.
There had clearly been failures by the appellant company in the
operation of their undertaking in relation to the transport of the Michigan loader in the way described in the
charge. I accept that the two technical
factors referred to by counsel had some mitigatory value. It would clearly have been desirable had the
owners of the vehicle drawn to the appellants' attention the increased weight
caused by water in the tyres and the defective state of the parking brake. It did, however, seem to me that this
mitigation was relatively slight, there being a plain obligation upon the
appellants themselves to check matters of this sort. I accepted the force of the submission in
relation to the early plea of guilt, and adjusted my sentence accordingly. In considering the appropriate level of fine,
my principal consideration was the ability of the appellants to meet a
financial penalty. In that regard I took
account of the information contained in the company's accounts. I was of the view that these were the best
evidence available to me as to the company's ability to meet a financial
penalty. As I have already observed
these were audited accounts with an appropriate certificate from chartered
accountants. I had no reason to doubt
the veracity or accuracy of the accounts.
The accounts showed a company which made an operating loss, only turned
into a profit by virtue of tax adjustments.
On this basis it seemed to me that the company had a relatively limited
ability to meet a financial penalty. It
seemed to me that any penalty I imposed should be at a level which, whilst
reflecting the serious nature of the crime, would not result in the insolvency
of the company or render the company in danger of insolvency."
(We do not know why the sentencing judge refers to
Munro as the appellants, rather than the respondents, throughout his report.) The sentencing judge also notes that no
challenge was made to the submission made to him by counsel for Munro that the
drop in profitability between 2005 and 2006 was largely attributable to an
increase in fuel costs. He concludes:
"The grounds of appeal refer to 'An apparent drop in
profitability....'. Candidly I do not understand
the use of the word 'apparent'. I also
note that it is said that the net worth of the company was about £347,000. That statement is factually correct. In candour I did not take it into account in
considering sentence. In my respectful
view it is of little assistance in calculating the appropriate level of
fine. The figure is no more than a
statement of the value of the company on a notional breakup and I would not
consider it relevant to the question of calculation of a fine."
[33] It is apparent from these passages that the
sentencing judge was not invited to consider the decisions of the Court of
Appeal in Howe and Balfour Beatty. It is also apparent that, as he expressly
states, his "principal consideration was the ability of [Munro] to meet a
financial penalty", and that in assessing that ability he proceeded on the
basis of the net profit for the year ended 30 September
2006.
Discussion
[34] In our
view the sentencing judge fell into error in approaching the question of the
determination of the appropriate fine in this manner. He should have taken into account the gravity
of the offence, and any aggravating or mitigating features, along with the
ability of Munro to pay a fine. He
should, above all, have borne in mind the policy underlying section 3 of the
1974 Act and the public interest in the requirement that Munro should be
punished for its culpable failure to pay due regard for safety, and for the
consequences of that failure: Balfour Beatty at
paragraph 42.
[35] Munro
were under a clear statutory duty to protect the health and safety of the
public. They were responsible for
transporting the Michigan, a very heavy wheeled
vehicle, on a low loader trailer along public roads, including the A9 trunk
road. It was entirely foreseeable that
if the Michigan rolled off the low loader trailer,
members of the public using the road would be exposed to grave risk of death or
serious injury. It would, of course, be
a matter of chance whether, if it did so, it would collide with no vehicle or,
as actually happened, with a vehicle containing two occupants, or with a
vehicle, such as a bus, containing many occupants. Their duty was to conduct their undertaking
in such a way as to ensure, so far as was reasonably practicable, that such a
thing did not happen.
[36] While,
in the circumstances, little turns on the fact that its actual train weight was
about four tonnes in excess of the maximum permissible gross weight of the loaded
tractor and trailer unit, Munro failed to comply with their statutory duty
because the chains were inadequate and the handbrake of the Michigan did not
work. If, as counsel submitted, it was
not intended that the chains alone should be sufficient to prevent the Michigan
from rolling off the low loader trailer, that is not only incompatible with the
terms of Munro's plea of guilty, but it also means that they were relying on
the handbrake alone for that purpose. No
doubt Umax should have told them that problems with the handbrake had been
reported. No doubt the test drive, for
the reasons explained above, did not disclose that the handbrake was
defective. But if the intention was to
rely on the handbrake, and that alone, to prevent the Michigan from rolling off the low
loader trailer, more was clearly required:
most obviously, the Michigan should have been properly
inspected by a person sufficiently qualified and experienced to detect the
defect. This had, after all, already
manifested itself to the extent that it had been recorded in the service
records kept by Umax.
[37] The
driver, Walter MacLennan, is not to be blamed. So far as individuals are concerned, the
fault lay higher up in the company.
William Munro and Andrew Gillies were in a position to take the
appropriate decision at a managerial level.
In the context of the operations of a small family company, we regard
this as a systemic failure. The
consequences of Munro's corporate error of judgment were catastrophic, and need
to be brought home to Munro's directors, Construction as their shareholders,
and the Munro family members who ultimately own them.
[38] On the
other hand, we accept that Munro have no previous convictions and that, particularly
since the Michigan was in their possession for only a
short time, this was an isolated occurrence.
There can be no doubt that there has been a prompt admission of
responsibility and a timely plea of guilty.
Munro have taken the whole matter very seriously, as is evident from the
attendance of William Munro at every stage of the court proceedings.
[39] As has
been seen, it is not easy to form a complete picture of Munro's financial
position. Net profit is not the only
relevant factor in assessing the level of fine which will serve the purposes of
retribution and deterrence, and thus serve as punishment without bringing a
company to its knees. We accept that,
although their turnover is substantial, they are not a particularly profitable
company and are very much exposed to such factors as increases in fuel prices
as well as fluctuations in the economy.
[40] Taking
a broad view of the matter, in light of the passages from Balfour Beatty quoted above and the other considerations we have
discussed, and making due allowance for the timing of the plea of guilty, we
have come to the view that the sentence imposed by the sentencing judge was far
too low and took inadequate account of the nature of the offence itself and the
need for appropriate punishment in the public interest. In our view an appropriate starting point,
taking account of all the relevant circumstances, would have been one of £40,000,
which would then have been discounted by 25%, to reflect the plea of guilty and
its timing, resulting in a fine of £30,000.
Result
[41] We
shall accordingly quash the fine imposed by the sentencing judge and substitute
a fine of £30,000.
