Bupa Care Homes (BNH) Ltd, R v

Under the health and safety sentencing guideline, the court may assess the extent of harm and culpability when selecting a fine within the applicable Step Two range. Multiple factors supporting a high-culpability assessment may justify a substantial increase within that range. This is not impermissible double counting.

A subsidiary must ordinarily be sentenced as a separate legal person. Its parent’s turnover or resources cannot be treated as those of the subsidiary merely because the subsidiary is wholly owned or remits profits to its parent. At Step Three, a parent’s support may be relevant only if it forms part of the subsidiary’s demonstrated economic reality, such as support needed to maintain it as a going concern. It does not, without a special factor, justify increasing a profitable subsidiary’s fine.

The appellant, which operated a nursing home, pleaded guilty to an offence under section 3(1) of the Health and Safety at Work, etc Act 1974 after a resident died from Legionnaires’ disease. The sentencing judge found longstanding systemic failures in controlling Legionella risk. She assessed culpability as high and harm as Category 2.

The Ipswich Crown Court fixed a Step Two fine of £2.25 million. At Step Three it increased that figure to £4.5 million, taking account of the turnover and resources of the appellant’s ultimate parent, before allowing full credit for the guilty plea and imposing a fine of £3 million.

On appeal, the appellant challenged the Step Two assessment and the Step Three uplift. The central issue was whether a parent company’s resources could justify increasing the fine imposed on its profitable wholly owned subsidiary.

1. Appeal allowed in part. The court upheld the judge’s Step Two assessment, but held that the Step Three uplift was wrong in principle. It quashed the £3 million fine and substituted a fine of £1.5 million.

2. Ground 1 failed. The sentencing guideline required structured judgment, not an arithmetic exercise. Although Step One fixes the culpability and harm categories, the sentencing court may make a quantitative assessment of the gravity of the offending when selecting a point within the Step Two range. The presence of several factors within the high-culpability bracket, the number of persons exposed to risk, and the appellant’s turnover justified the judge’s £2.25 million Step Two figure. This approach was consistent with the flexibility identified in R v Whirlpool UK Appliances Ltd [2017] EWCA Crim 2186.

3. Ground 2 succeeded. The proper starting point was the separate legal personality of the offending subsidiary. A parent’s larger resources could not be treated as the subsidiary’s turnover at Step Two. Nor could the phrase “economic realities” at Step Three be used simply to increase a subsidiary’s fine because its parent had very substantial turnover. That would contradict the approach explained in R v NPS London Ltd [2019] EWCA Crim 228, R v Tata Steel UK Ltd [2017] 2 Cr App R (S) 29, and R v Whirlpool UK Appliances Ltd [2017] EWCA Crim 2186.

4. Parental support may be relevant where it is demonstrated that the subsidiary depends upon it to remain a going concern or to pay the fine. Those circumstances may prevent a reduction for an otherwise impecunious subsidiary. They did not exist here. The appellant was itself a large and profitable organisation, was criminally liable for its own breach, and did not need parental support to pay the fine. Its remittance of profits to its parent did not alter that reality.

5. The pre-trial discussions did not estop the appellant from challenging the Step Three increase. Restoring the pre-discount fine to £2.25 million and applying one-third credit for the guilty plea produced the substituted fine of £1.5 million.

• Court of Appeal (Criminal Division) Allowed the appeal in part and substituted a fine of £1.5 million: [2019] EWCA Crim 1691.

• Ipswich Crown Court On 14 June 2018, after a guilty plea to an offence under section 3(1) of the Health and Safety at Work, etc Act 1974, imposed a fine of £3 million.