Last reviewed 5 November 2015

In this special report, Tim Ridyard of Woodfines Solicitors reviews the current issues and types of criminal court proceedings facing goods operators and their drivers. The nature, type and ambit of proceedings brought have changed over recent years. He also highlights the need for taking proactive steps at the investigation stage to avoid being prosecuted.

Update

The article below refers to criminal court charges in force from April 2015. On 3 December 2015 the Government announced that with effect from 24 December 2015 such charges (outlined below) will no longer be imposed.

The abolition of these charges follows significant criticism of its provisions and lobbying from many quarters including the Commons Justice Select Committee, lawyers and Magistrates’ Association. A Statutory Instrument has been laid to address this: 2015 No. 1970 The Prosecution of Offences Act 1985 (Criminal Courts Charge) (Amendment) Regulations 2015.

The remaining details in Tim’s article (such as defence costs and fines) are still current.

Introduction

Goods operators need to have sound work systems in place to avoid criminal court prosecutions, now more than ever. In other words, preventative measures should be deployed in order to avoid ”fire-fighting”. It is never possible to completely rule out the possibility of a prosecution, but businesses can do as much as reasonably possible to minimise the risk.

The overall picture and shape of goods operators being investigated and prosecuted has changed and there are a number of reasons for this, such as:

  • the introduction and effect of fixed-penalty regimes and other diversionary measures such as warning letters and cautions;

  • the decreasing number of cases brought by the Crown Prosecution Service (CPS) every year since 2007, with only a small recent upturn in Magistrates’ court cases (even then the number of more serious offences prosecuted has continued to fall*);

  • operators being involved more in waste operations policed by the Environment Agency;

  • decisions by DVSA not to prosecute matters that once used to be brought to court, instead referring matters to the Traffic Commissioner for public inquiry;

  • the impact of limited budgets to resource CPS, police and other enforcement agencies including councils.

(* see Ministry of Justice: Criminal Justice Statistics England & Wales Bulletin 2014)

Magistrates and Crown Court procedures

The basic framework of criminal proceedings has not changed and every case starts its life in the Magistrates’ Court. All criminal offences fall into one of three categories: ”summary” offences that are only dealt with in the Magistrates’ court, ”indictable only” offences that must be committed or transferred to the Crown Court, and ”either-way” offences that remain in the Magistrates Court or end up in the Crown Court, depending on seriousness or complexity or because a defendant elects to be dealt within the Crown Court.

Note: The main and more serious Health & Safety at Work etc Act, Environmental Protection Act and Transport Act offences are either-way matters.

The overwhelming majority of prosecutions are for summary offences and culminate in guilty pleas. In 2014 some 1,467,837 company or individual defendants were prosecuted. (Of course this includes huge numbers of driving offences committed by private motorists.) Of these, 1,147,595 were convicted in the Magistrates Court, 16,222 being committed to the Crown Court for sentence.

The Crown Court dealt with 85,943 defendants, of whom 70,075 pleaded guilty or were found guilty after trial.

The significance of this is that if road transport operators or drivers are prosecuted their cases are overwhelmingly likely to end in conviction, statistically at least. Some types of prosecution, such as those brought by the Health and Safety Executive (HSE) and Environment Agency have high convictions rates. In 2014 the overall conviction rate after trial in the Magistrates Court was 98% and in the Crown Court 82% for all offences.

Note: This is for all types of offence and so must be treated with caution, but it does confirm that prosecuted parties are likely to be convicted.

Magistrates Court — unlimited fines

On 12 March 2015, a change in the law removed the Magistrates’ Court maximum penalty of £5000 for ”Level 5” offences and all other offences with maximum fines of more than £5000. This latter category is significant because it includes the main health and safety and environmental offences often faced by road transport businesses.

In the Magistrates’ Court either-way Health and Safety offences were previously capped at £20,000 and the maximum penalty for environmental offences was capped at £50,000.

While these changes only pertain to Magistrates’ Courts, the effect is that businesses with larger turnovers can no longer work on the basis that their fine will be no greater than £5000. It might well be considerably greater, depending on means and on the view of the offence taken by the Magistrates’ Court.

Moreover, other matters that previously would be committed to the Crown Court for sentencing (because the Magistrates’ Court powers were limited to £20,000 and £50,000 respectively) may very well be dealt with in the Magistrates’ Court, rather than the Crown Court, such as health and safety and environmental offences.

This means that, in future, the lower court (ie lay magistrates or a District Judge sitting in a Magistrates Court) can deal with serious matters including fatalities, rather than these being normally dealt with before a Crown Court Judge. While professionally trained District Judges do regularly sit in the Magistrates Court, most matters are dealt with by lay magistrates who do not normally deal with really complex sentencing cases and hence this may not be ideal.

Environmental offences

There has been a fundamental shift in the way society deals with waste due to legislation. Over time this has meant that significant parts of the road transport sector have become increasingly involved in waste management, as carriers of waste materials and/or as those engaged in recycling and disposal operations. What was previously regarded as waste simply cannot now be dealt with as it used to be.

One consequence of this is that the enforcement activities of the Environment Agency now impact on road transport businesses or waste businesses that rely on their own transport for at least part of these operations. Enforcement activities, including prosecution, centre on such things as correct permitting, on-site management and proper waste transfer documentation. Where the Environment Agency decides to prosecute, the penalties imposed by courts can be very significant and these are set out in the Sentencing Council: Environmental Offences — Definitive Guidelines that took effect from July 2014.

However, one feature of prosecutions brought by the Environment Agency is the use of confiscation orders (under the Proceeds of Crime Act 2002) that are less widely-known and understood but are draconian and can have a very profound effect on the business.

Any business or individual prosecuted can be the subject of an application by the prosecution for confiscation. The purpose of this legislation is to make those who are convicted repay the amount of benefit they have received when committing crimes. While this legislation is used for what one might term “traditional” criminal behaviour such as drug trafficking and fraud, it is also deployed by agencies such as the Environment Agency or the DVSA. In the latter case, applications tend to be restricted to Crown Court cases following conviction for large-scale dishonesty such as false records.

Applications for confiscation orders are not restricted to matters of dishonesty — it should be remembered that the major environment and health and safety offences do not require any dishonest intent: guilt is created with culpability as low as mere inadvertent negligence as well as with a deliberate disregard for the law.

If the application is made then the latter must be transferred to the Crown Court, unless it is already in that jurisdiction, and the case has to be heard and considered.

The “benefit” of a crime has to be calculated and an order is made by the Court that the sum be paid by the convicted defendant.

The confiscation order is additional to any fines or costs (or criminal courts charge) ordered by the Court. The “benefit” figure may very well dwarf the fines and costs orders. The benefit figure does not mean the profit; instead it is calculated on the turnover that relates to the criminal activity.

For example, a road transport business that fails to obtain the correct environmental permit for a site or works outside the existing limit of permitted activities is potentially at risk of being liable to a confiscation order, if prosecuted, for the value of the activities that fall outside the permitted legal limits. This would be the total value of sales and any other benefits including avoided costs such as the cost of obtaining the correct permit. This is indeed a very powerful piece of legislation and the case law relating to it is developing. It has recently established that there may be a very limited number of categories of case where confiscation should only take place calculated by reference to profit rather than turnover. However such cases will be very few and far between.

The moral of this tale is that road transport businesses operating in the waste sector should be extremely circumspect and ensure their operations are properly permitted and comply with such permitting; otherwise they risk a confiscation order, the consequence of which can be stark.

Court proceedings

The nature and type of offences dealt within the criminal courts and which relate to road transport businesses now has a certain configuration for various reasons explained within this article.

The matters brought to court by DVSA that are dealt with in the Crown Court relate primarily to drivers’ hours offences where the charges may be conspiracy or other large-scale deliberate (or highly negligent) failures to conduct lawful drivers’ hours regimes. Such cases may also involve significant numbers of drivers — their cases may have been dealt with in the Magistrates’ Court -with directors and business owners facing Crown Court trial. DVSA also prosecutes large-scale operators’ licence frauds.

Otherwise, DVSA matters tend to be dealt with at the lower court, Magistrates’ Court, for more mundane matters such as:

  • operating without an operator's licence

  • excess weight

  • lower-level drivers’ hours offences

  • construction and use offences

  • driver licences

  • driver CPC matters.

Fixed penalty schemes

The consequences of the introduction of fixed penalty schemes some years ago are clear to see.

Firstly, vast numbers of drivers pay the penalties and hence are not prosecuted. Secondly, operators are no longer prosecuted when previously this was the case. Prosecutions do still continue but this is relatively rare for some offences.

Excess weight is a good example of a fixed penalty. Previously, a vehicle carrying excess weight would lead to the prosecution of both the operator and driver in tandem. The introduction of fixed penalties supposedly amended the approach to mean fixed penalties would be issued against drivers — unless the vehicle was grossly overweight, in which case operators and drivers would continue to be prosecuted. However, the operator would be dealt with via the Office of the Traffic Commissioner through having to report the driver fixed penalty and face the possible disciplinary consequences. It is questionable to what extent the net effect is simply that the driver bears the burden and operators get away relatively scot-free — certainly they do avoid any criminal sanction for the most part.

With regard to driver licensing offences and driver CPC matters, however, DVSA are keen to pursue road transport businesses that permit drivers to use vehicles without the correct licensing. (“Permit” has a particular legal connotation in this context — it does not mean that a business actively condones the act; on the contrary it is almost a strict liability offence.) Not having the correct driver licence invalidates the insurance and, further, it is of course a Most Serious Infringement (MSI) for the purpose of Standard operator licences; Traffic Commissioners take a serious view of such convictions even where businesses operate under a Restricted licence.

Apart from matters brought by the DVSA, the cases relating to the road transport sector commonly dealt with in the Crown Court tend to be serious matters relating to fatal accidents (whether on the public highway or not) and Environment Agency cases.

Matters brought by the HSE centre on breaches of Section 2 and Section 3 of the Health and Safety at Work etc Act 1974, where businesses have not provided proper systems of work for own employees or third parties. Over the last couple of years, road transport business-related cases leading to the imposition of very significant fines have centred on accidents occurring at operating centres and works premises. These have tended to involve fatal or very serious trips, strikes by forklift trucks or falls from height, vehicle strikes in the workplace and crushes.

We have already examined the removal of any cap on Magistrates’ Court fines; however, for some time, there has been an ongoing trend of increasingly large financial penalties being imposed by the Crown Court on businesses and individuals that are convicted of certain categories of offence, and in particular serious and fatal accidents including breaches of health and safety requirements.

This approach is affirmed in Health and Safety Offences, Corporate Manslaughter, Food Safety and Hygiene Offences: Consultation Published November 2014. It is anticipated that publication of definitive sentencing guidelines for health and safety offences and corporate manslaughter set out in the consultation will be published in November 2015. The approach to sentencing outlined within does in part reaffirm the current sentencing approach but it also sets out very specific starting points and bands for every type of offence and type of business in terms of its turnover.

These guidelines cite one example of a case involving the death in a transport yard of an employee in a medium-size business following a guilty plea at the earliest opportunity. The starting point for consideration of a fine where the business’ culpability is assessed as ”medium” is a sum of not less than £540,000; the suggested fine range is £300,000 to £1.3 million.

This is for a business with a turnover of £10 million or more. The equivalent starting point fine for a smaller firm with a turnover between £2 million and £10 million would be £160,000, with a potential fine range of £100,000 to £600,000.

These are colossal figures and the continuing trend is for the criminal courts to take a very robust view with regard to health and safety matters including those dealt with in the Crown Court for fatal offences.

Corporate manslaughter

The Health and Safety Offences, Corporate Manslaughter, Food Safety and Hygiene Offences: Consultation also deals with corporate manslaughter. This specific offence has only been prosecuted approximately 20 times to date. In part, this relates to the difficulty in establishing that the way an organisation managed its activities not only caused the fatality but also exercised a gross breach of the duty of care — and it has to be proved that a substantial element of the breach lay at the door of senior management.

Nevertheless, the suggested guidelines set out by the Sentencing Council proposes swingeing fines; the starting point for fines for serious corporate manslaughter cases range from £450,000 to £7.5 million. These are simply starting points for courts to decrease or increase depending on the circumstances of the case.

Road transport accidents on the public highway, where an employee driver may be charged with death by dangerous or careless driving, do not ordinarily lead to proceedings against the road transport business since they relate to driver errors. The position may be different, however, in situation where vehicles have been badly maintained or where drivers have been permitted to drive excess hours which can lead to businesses being prosecuted.

Legal costs

It is not possible to recover the costs of legal representation for the work being carried out on behalf of a business during an investigation, unless this is covered under any insurance policy.

If a business, or an individual within the business such as a director, is prosecuted then the issue of prosecution and defence costs is a significant factor. Again, this can be a major incentive to avoid prosecution depending on the financial resources of the business.

The basic position is that, following a guilty plea, any defendant in a criminal court is ordinarily ordered to pay all or a contribution towards the prosecution costs.

While it is for the Court to order costs as it thinks fit, any defendant should be prepared to expect the prosecution's costs in full to be ordered. The prosecution is entitled to claim not only the costs of the prosecution but also the costs of the investigation if it has been investigating the matter itself. The effect of this is that in larger cases the combined investigation/prosecution costs claim can be enormous and may often be far in excess of the fine that is imposed by the Court. It is entirely permissible for a court to make a costs order greater than any fine imposed.

A further incentive for any business to avoid a prosecution is not only to avoid fines but also the substantial costs orders that can be imposed.

The prosecution’s case may not succeed, of course: the case may end in not guilty verdicts being reached; the case might collapse before trial; or the prosecution might simply withdraw / discontinue the case. However, there is a sting in the tail here. Following changes in the law relating to defence costs in criminal cases (from October 2012 onwards) a limited company cannot recover any defence costs and individuals can only recover defence costs at no more than equivalent Legal Aid rates.

The net effect of this is that — unless an insurance policy exists to underwrite the cost of legal representation — all or almost all the defence costs have to be met by the defendant. This may appear iniquitous: if the case fails, the defence has to pick up the bill simply to defend itself. This problem is not widely known and a shock to those facing actual or potential prosecution. Only where the Court orders that ”wasted costs” be paid is there a possibility of some reimbursement: this is where the prosecution have acted negligently and even in such cases the defence may not receive full reimbursement.

There is currently no prospect of this defence costs situation changing and what to many is a fundamentally unfair situation is likely to remain. There will otherwise have to be a change in the law permitting payment of defence cross from ”central funds”, in other words the State.

Criminal Courts charges

Unfortunately, a conviction of any offence committed on or after 13 April 2015 now also leads to the mandatory imposition of a criminal courts charge. The courts simply have no discretion in this regard.

Imposition of this charge has proved so controversial that a very significant number of magistrates have in fact resigned from the bench. One criticism is that this charge positively encourages defendants to plead guilty to offences of which they may be entirely innocent and should contest at trial.

The size of the criminal charges is unlikely to concern larger businesses facing prosecution. It may be a consideration of very small businesses and certainly individuals who are deciding whether or not to plead guilty to an offence.

The main Criminal Courts charges are as follows.

  • Magistrates’ Court — guilty plea to summary offence: £150

  • Magistrates’ Court — guilty plea to either way offence: £180

  • Conviction in Magistrates’ Court after trial for summary offence: £520

  • Conviction after trial by Magistrates’ Court for either way offence: £1000

  • Crown Court — guilty pleas: £900

  • Conviction after trial in Crown Court: £1200.

Investigations

The various issues referred to above clearly indicate that today the avoidance of prosecution is of paramount importance, more than ever.

What occurs “pre-charge” or "pre-summons" is critical and is an area where the taking of legal advice and correct decision-making can make the difference between being prosecuted or not. Road transport businesses often take the view that — in the fullness of time — legal advice and representation can be taken post-interview and if they are prosecuted. This is an ill-advised approach: legal advice and assistance should be sought at the earliest opportunity to try to avoid the investigation leading to a prosecution, and if a prosecution inevitably is going to follow the best strategic approach can be thought through. Making the correct decision here may incur legal costs but it may ultimately save tens of thousands of pounds. It may also save a business.

Most interviews conducted under caution do not take place where goods operators and drivers are under arrest, except where there may be a serious allegation of dishonesty or there have been serious accidents probably causing fatalities. Many police interviews take place where operators or drivers are ”volunteers”, ie free to leave if they wish to do so, and interviews with bodies such as the Environment Agency, HSE or local councils are also ones where it is not mandatory to attend.

It is very often extremely wise not to attend an interview being conducted under caution, but instead to provide a written statement prepared in advance to lodge with the investigating party, be that DVSA, Environment Agency or other relevant body. This allows there to be a degree of control over the investigation process. Investigating officers do provide limited disclosure of the evidence they wish to produce in interviews under caution but it is invariably incomplete, often deliberately so, and if a business or individual attends an interview they have limited control over the interview. Such interviews, not least those where there is no legal representation, often career out of control with suspects making unwise admissions and ill-prepared statements.

Often prosecutions only get off the ground because of information or admissions made in interview.

The best approach, therefore, is that if any event occurs leading to an investigation and it is clear an interview under caution may take place, with the prospect of a prosecution thereafter, this needs to be managed very carefully indeed. The key to this is early intervention to manage the investigation process and avoid prosecution.