Southern Water Services Ltd, R v

In sentencing a corporate offender for environmental offending, the court should assess culpability and actual or potential harm before considering the offender’s financial circumstances. Potential serious harm may include the effect that perceived pollution could have on confidence in local amenities, fisheries and the local economy, even where no actual damage is proved.

A substantial and profitable company cannot rely on the fact that profits have been retained rather than distributed. A company seeking mitigation should provide evidence from its chief executive and board explaining the cause of the offence, the response to it and the measures adopted to prevent repetition. Without that evidence, mitigation may be very limited.

Southern Water Services Ltd pleaded guilty in the Canterbury Magistrates’ Court to contravening conditions imposed by regulations 12(1), 38(1)(a) and 39(1) of the Environmental Permitting (England and Wales) Regulations 2010. Faults at a sewage-pumping station led to discharges of untreated sewage into the sea, and the company delayed notifying the regulators.

The case was committed to the Crown Court at Canterbury. The sentencing judge found unexplained culpability and a potential for serious harm to the local economy, although there was no evidence of actual harm. She imposed a fine of £200,000.

The company appealed against sentence, challenging the findings on culpability and harm and contending that the fine was excessive.

1. Appeal dismissed. There was no basis to interfere with the £200,000 fine. The court stated that a substantially greater fine would also have been within the proper range on the facts found.

2. The sentencing judge correctly assessed culpability first and then actual or potential harm before turning to the offender’s financial circumstances. The company had not produced proper evidence at sentence to establish that the design fault was not its responsibility or to explain why repair had been delayed. It could not fairly challenge the judge’s conclusions by advancing unsupported matters on appeal.

3. Although actual harm had not been proved, the judge was entitled to find potential serious harm. The relevant risk included loss of confidence in coastal waters used for bathing, water sports and shell fisheries, and the consequential effect on the local economy. The regulator’s permission was conditional upon operation of equipment intended to remove harmful bacteria.

4. The company’s turnover and profitability demonstrated substantial resources. Its decision to retain profits in the business rather than distribute dividends did not reduce the relevance of those profits to sentence. Its record of 160 previous offences also supported the conclusion that there was persistent offending.

5. For serious corporate offending, the chief executive and board should explain the cause of the offending, the steps taken to reform the company and the measures proposed to protect the public from repetition. That enables the sentencing court to assess mitigation and the statutory purposes of sentencing. The court applied the guidance stated in R v Sellafied Limited and R v Network Rail Infrastructure Limited [2014] EWCA Crim 49.

• Court of Appeal (Criminal Division). The company’s appeal against its fine was dismissed.
• Crown Court at Canterbury. On 23 August 2013, the sentencing judge fined the company £200,000 after its guilty plea had been committed for sentence.
• Canterbury Magistrates’ Court. On 2 July 2013, the company pleaded guilty to contravening conditions imposed under the Environmental Permitting (England and Wales) Regulations 2010 and the case was committed to the Crown Court.