Court of Appeal Upholds £3 Million Fine

October 12, 2016

Pascal Bates appeared before the Court of Appeal on 11 October 2016 successfully to resist (on behalf of HSE) ConocoPhillips (U.K.) Limited’s attempts to appeal fines totalling £3 million for breaches of offshore regulations on its Lincolnshire Offshore Gas Gathering System.

The Court of Appeal heard argument concerning the sentencing of offenders for offending involving serious risk not eventuating in injury, concerning the sentencing of very large organisations and concerning the applicability and application of the Sentencing Council’s new Definitive Guideline on the sentencing of health and safety and other offences. ConocoPhillips’ points were dismissed with costs.

The case centred upon uncontrolled gas releases in 2012, which had been consequent upon maintenance conducted under a ‘permit to work’ system which was not properly implemented, controlled and overseen, that resulted in over 600 Kg. of natural gas spilling into a turbine hall and putting at risk 66 persons on the offshore site, 12 of them very seriously at risk. The released gas did not in fact ignite, nobody was injured and there was no property damage or oil pollution caused. However, the emergency response was hampered by two previously undiscovered latent defects in the fire and gas system and in the emergency shutdown system, one of which prevented those managing the installation from seeing where, how and how much gas had been released, forcing them to send men into danger to find that out, and the other of which misinformed the management into believing that all the stored gas on the site had been vented away up stacks into the atmosphere, whereas there remained some stored on another part of the site. A further uncontrolled release of that stored gas was narrowly averted when, before it could eventuate, a member of staff spotted, and took steps to close, a vital valve previously left open by reason of the failures in the permit to work system. But even after that, rescue helicopters still coming in and out to evacuate the 40 non-essential workers would have been at risk had the stored gas been vented up the stacks into their flight paths. That gas was indeed later vented up the stacks when the system was triggered by some batteries reaching low charge, but fortunately only some time after helicopter flights had been concluded.

By reason of the recent falls in oil prices, by the time of sentence ConocoPhillips had seen its annual turnover slashed from over £10 billion to under £5 billion, and its former significant profitability fall into large loss.

At the original Crown Court sentencing hearing on 22 January 2016, there was not enough time after argument for sentence to be passed. The case went part heard to 8 February 2016, the sentencing Judge making it plain in advance that, in the circumstances, he would pass sentence that day without regard to the new guideline, which was due to come into force on 1 February 2016.

The Court of Appeal comprised Treacy L.J., McGowan J. and H.J.J. Adele Williams. Treacy L.J. gave the judgment. Argument had been invited on two bases: that the new guideline was to be disregarded and that it should have been applied. Basing its analysis, out of fairness to ConocoPhillips and as the sentencing Judge had, on the case law applicable before the new guideline came in, the Court found that neither the sentencing Judge’s starting point of £5 million nor the eventual fine passed of £3 million could be said to be manifestly excessive, further expressing the view that the fine could have been more.

Treacy L.J., who had already referred to the ruling in R. v. Sellafield Limited; R. v. Network Rail Infrastructure Limited [2014] EWCA Crim 49; C.A. and had said that the new guideline represented a continuation of the approach in the case law and not a sea change, then went on to consider the result had the new guideline been applied. This was, he said, for the purposes of the new guideline high culpability offending involving a risk of category 1 harm to a number of people. He cited the guideline figures for the starting point and range for a large organisation so offending, expressed the view that it would be necessary to move outside that range to achieve proportionality in sentencing this very large organisation, but did not identify a final figure as it was obvious that £3 million could not be said to be manifestly excessive.