Construction company’s health and safety fine increased eight-fold

Scottish judges have substantially increased a fine payable by a construction company convicted last year of health and safety offences. Construction firm Discovery Homes (Scotland) Ltd were originally fined £5,000 following the death of Polish worker, Andrezej Freitag, in 2008 but now have to pay eight times the amount.

At the original hearing in June 2009, the company was found guilty of a breach of section 2(1) of the Health and Safety at Work Act 1974 for failing to safeguard Mr Freitag, who fell two storeys down an unprotected shaft on a housing construction site in Dundee.

The majority of the company’s funds for the Dundee development came from a bank overdraft facility. When the bank refused to make funds available to pay a fine, the Sheriff took the view that he could only look to small amounts of cash that the Company held in the bank. The turnover of the company in the year to September 2008 was £2.9m with accumulated profits of £283,000 but the accounts were neither requested by nor supplied to the Prosecution before the original sentencing hearing.

On appeal, however, more detailed financial documentation was provided for the court, which was asked to consider evidence as to the personal wealth of company shareholders and directors’ pay. Armed with the new information, the appeal court, which also referred to the guidelines on sentencing in cases of corporate manslaughter issued by the Sentencing Guidelines Council in England, considered the company’s arrangements for paying each of its two directors – in the form of dividends or remuneration – a sum of £50,000 a year. In light of this, the court took the view that an appropriate fine for the company would be £40,000. In the case of director, Mr Pratt, the court was not persuaded that his personal fine for breaching section 37(1) of the HSWA was unduly lenient and so it remained at £4,000.

Dominic Graham, of DWF LLP’s Regulatory team said: “This case is the latest in a line of sentencing appeals that demonstrate the response of Prosecutors and the courts to public demands for increased fines for health and safety offences. Consequently, it is essential that companies facing a fine give thought at an early stage to the potentially wide-ranging financial information that they may need to put before the Courts.

“It is also an example of the need for companies to have access to and follow competent health and safety advice (which is a requirement of the Management of Health & Safety at Work Regulations 1999) and is indicative of the general increase in investigations and prosecutions of directors that we have been anticipating as well as the potential financial consequences for directors if either the company or one of its directors is convicted“.