Thames Water Utilites Ltd v R.

For a very large organisation, a sentencing court may need to move well beyond the guideline range for a large company to impose a proportionate financial penalty. It must assess the offender’s financial circumstances and impose a fine which fairly achieves punishment, deterrence and the removal of gain. Relevant previous environmental convictions, especially repeated operational failures, can justify a substantial increase. A failure to give fully structured reasons or to follow every step of a sentencing guideline does not itself invalidate the sentence. The appellate question remains whether the sentence was manifestly excessive or wrong in principle.

Thames Water pleaded guilty to causing an unauthorised discharge of untreated sewage into a brook, contrary to the Environmental Permitting (England and Wales) Regulations 2016. The Crown Court found corporate recklessness and Category 3 harm, and imposed a £2 million fine. It later reduced the fine by £200,000 after charitable environmental donations.

The company appealed against the fine. It contended that the judge had not explained the calculation, had not followed the Sentencing Council guideline step by step, and had imposed a fine disproportionate to a comparable earlier prosecution. The central issue was whether the fine was manifestly excessive or wrong in principle for a very large repeat environmental offender.

1. Appeal dismissed. The court held that the sentence challenged by reference to the £2 million fine was neither manifestly excessive nor wrong in principle. The respondent prosecutor was entitled to agreed costs of £6,000.
2. A sentencing judge’s failure fully to state the route to the figure imposed, or to adopt each stage of a guideline expressly, does not itself invalidate the sentence. The appellate court must decide whether the sentence was wrong in principle or manifestly excessive. It applied the guideline itself and adopted the judge’s unchallenged findings of reckless culpability and upper-end Category 3 harm.
3. For a company whose turnover very greatly exceeds the threshold for a large organisation, the large-company table may provide little assistance. The court must take account of financial circumstances and make a non-mechanistic assessment of punishment, deterrence and removal of gain. A fine outside the indicated range may be necessary to make environmental obligations meaningful to directors and shareholders.
4. The company’s extensive history of environmental convictions was seriously aggravating. Its repeated pump and alarm failures showed persistent management shortcomings. Applying the principles in R v Thames Water Utilities Limited [2015] EWCA Crim 960, a pre-credit fine of £3 million was appropriate. The resulting £2 million fine was proportionate, even though the credit for the guilty plea was generous.
5. The earlier Reading fine of £250,000 was not a valid benchmark. This court had previously described it as lenient and said it would have upheld a substantially higher fine, although it lacked power to increase it. The court also declined to create, or recommend, numerical sentencing ranges for very large organisations. The existing guidance was sufficient and individual organisations vary too greatly for an additional table.

• Court of Appeal (Criminal Division): Appeal dismissed in [2019] EWCA Crim 1344.
• Crown Court at Oxford: Thames Water was fined £2 million on 21 December 2018 after a Newton hearing. On 8 February 2019, the fine was reduced to £1.8 million following environmental charitable contributions, pursuant to section 155 of the Powers of Criminal Courts (Sentencing) Act 2000.