Failure to heed audits and warnings: the courts’ view
Is your business audited for health and safety, food safety, fire or environmental compliance by an external third-party contractor? Perhaps you’ve recently been inspected under the latest BRCGS audit programme and have received a schedule of non-conformances. Whilst in an ideal world, you’d like to keep those breaches confidential between your business and the inspecting auditor, can that inspection report, the list of breaches and essential compliance actions come back to haunt you?
Maybe your company has its own audit protocol and safety compliance team that carry out site inspections and will follow up with a list of urgent breaches to be actioned as well as recommended next steps. You could even be an auditor who is chasing clients for details of the work that they have taken following your inspection a few weeks ago. If that’s the case, says Kathryn Gilbertson, Partner at HCR Law, then recent decisions from the Court of Appeal will explain how the courts view poor audit reports, the failure to heed warnings, and the impact these have on sentencing.
Whether it is health and safety breaches due to complacency, or a deliberate lapse in corporate compliance, these can result in serious consequences where it can be shown that the employer has had prior knowledge of risks. In cases where warnings were ignored, then the courts have shown an increased willingness to find a greater degree of fault.
The Sentencing Council’s definitive guideline on Health and Safety, Corporate Manslaughter and Food Safety and Hygiene Offences provides the framework that the courts must follow when sentencing these compliance breaches. The judge must determine at Step One the offence category of culpability and harm having regard to the factors in the case and the guideline tables. Thus, identifying whether the breach committed was a deliberate breach, a serious or systemic failure, or a minor isolated event.
It is becoming increasingly clear that employers who have prior knowledge of risks, especially where it is raised internally, will be found to be more culpable. The two cases below demonstrate this shift of attributing high culpability following repeated failures to respond to internal warnings.
R (Office of Rail and Road) v. WH Malcolm Ltd (2022)
This case concerned the death of an 11-year-old child who had gained easy access to a freight terminal operated by the defendant. The victim and six other minors had climbed over a fence to collect a football. Once inside the depot, the deceased climbed onto a freight container where he received a fatal electric shock. The investigation found that the defendant had received multiple internal warnings of trespass. Annual site surveys had identified signs of trespass for a period of eight years prior to the incident. In fact, WH Malcom Ltd themselves had previously reported instances of trespass to the police.
It was not just the case that WH Malcolm failed to see the warning signs. In one instance, following an internal boundary inspection, a quotation to build a fence around the permitter was rejected by senior management on grounds of costs. In its judgment, the court ruled that the offences were high culpability, demonstrated by the failure to take into account concerns raised over a long period of time. The high culpability resulted in the starting point of the fine being shifted from £2.4 million to £4 million. WH Malcom Ltd was eventually ordered to pay £6.5 million. This was upheld at the Court of Appeal.
London Fire Commissioner v. Bupa Care Homes (ANS) (2022)
These proceedings followed the death of a care home resident from a fire. The deceased had been suffering from partial paralysis, and as part of his treatment, he was administered with paraffin creams, which were known to permeate clothing when applied. The deceased had been smoking unsupervised when he accidently dropped his cigarette on his clothing. The injuries sustained from this incident were fatal. A year before the fatal incident, Bupa had circulated a managers’ note that highlighted the risk of increasing flammability to clothing from use of the cream. The note recommended constant supervision of residents when smoking. An internal fire risk assessment recommended necessary measures to be taken to protect smoking residents when being treated with paraffin-based products.
At the initial hearing, the court had found higher levels of culpability against the care home as they had received three separate warnings prior to the incident. Bupa Care Homes appealed on the grounds that their culpability was lower since two of the three warnings were raised internally. However, their appeal was rejected, the court finding that there was no distinction between the effect on culpability from an internal or external warning.
Bupa Care Homes’ fine was raised from a starting point of £1 million and they were eventually ordered to pay a £1.25 million fine.
Conclusion
The failure to respond to internal warnings resulted in significantly higher fines. The court considered the lack of action taken from known risks as evidence of higher levels of culpability. The message being sent is clear; warnings should be taken as opportunities to improve compliance in the workplace. These decisions also show the importance of responding promptly to warnings.
Companies need to be vigilant and take action to deal with compliance breaches. In the Bupa case, the period between the recommendations for supervised smoking being made to the date of the incident was less than 12 months. This was ample time to implement the changes across the organisation.
To ensure that your business isn’t caught out, you should:
- Develop and maintain an internal reporting system for compliance risks, with a person accountable being clearly defined.
- Notify staff on how to report warnings to the accountable person.
- Ensure all warnings are investigated thoroughly and action taken to close these off.
- The accountable person should make senior management aware of the issues.
- Carry out periodic assessments and audits to evaluate the effectiveness of how warnings are reported, addressed, and responded to.
Contact Kathryn Gilbertson on kgilbertson@hcrlaw.com. Colleagues in the Insurance, Risk and Regulatory Team at HCR can also be contacted, visit www.hcrlaw.com.
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