13th August 2010
A Court of Appeal decision to uphold a £400,000 fire safety fine against retailers New Look will have left other industry players a little hot under the collar
New Look was originally prosecuted after a fire broke out at an Oxford Street store on 26 April 2009, when about 400 people had to be evacuated. The company was fined £250,000 and £150,000 respectively for failing to carry out an assessment of fire risks to individuals and failing to adequately train employees in fire safety.
Escape routes had not been clearly identified and were obstructed, in some places by combustible materials. The court said the absence of competent fire marshals to co-ordinate the evacuation showed the retailer’s shortcomings.
The company then appealed on the grounds that the penalties were disproportionate as the offences did not cause the fire or lead to severe injury or death. The decision to turn down the company’s appeal sparked initial surprise, given that the fine was in excess of the figure reserved as a start point for cases of corporate manslaughter.
The Court of Appeal sent a clear message that those in control of premises subject to the Regulatory Reform (Fire Safety) Order 2005 cannot afford to dedicate fewer resources on their fire safety obligations than they would in meeting health and safety requirements.
The starting figure used by the judge at first instance for assessment of the fine was £600,000. Endorsement by the Court of Appeal represents a departure from the former judicial tendency to reserve fines in excess of £500,000 for cases of major public disaster. Assessment of the seriousness of a breach can now be expected to be made with principal reference to the risk created.
An unequivocal message was also sent out that where harm to individuals is avoided by mere good fortune despite serious fire safety regulation breaches, then to extend too great a degree of mitigation may in itself offend the principle of proportionality. The judge explained: ‘The absence of death and injury is plainly an important matter in this case, but I consider there are circumstances in which a court may not need to wait for the onset of human tragedy to send out a clear message that safety of customers and staff, or indeed anyone who may be affected, must be regarded as of paramount importance.’
The fine has ignited criticism in some camps, as it is perceived as inconsistent with those applied for breaches under the Heath and Safety at Work Act. The message from the Court appears to be that permitting fire safety risks to persist creates a risk of almost unrivalled proportions to individuals and that this should be reflected in any corresponding penalty.
The three principal considerations of the court in passing sentence were the seriousness of the breach, the capacity of the organisation to meet the fine and the need for the fine to make an impact on shareholders and senior managers. While these factors reduced the fine’s starting point, the resulting fine comfortably exceeded the previous record £300,000 fine under the same regulations handed to Shell last year.
The retailer received a relevant enforcement notice in December 2000 at the same premises, having itself highlighted deficiencies during a risk assessment conducted in April 2007. It was particularly criticised for having only one fire safety adviser for a group of more than 600 shops. This, together with the fact the risks could have been removed without too great a cost or inconvenience to the retailer illustrated, according to the Court, a dismissive attitude towards its fire safety obligations.
In future, those in control of premises subject to the Regulations may wish to review their policies. Consideration should given to the specific structure and layout of the premises, as well as the practices performed within it. Changes to any of these should prompt re-examination of the risks posed and the magnitude of the corresponding obligations they create. Risk assessments ought not to overlook factors flowing from the location of the building and its immediate landscape. Training must be thorough and up-to-date — a more onerous obligation for companies whose staff turnover is high but an expensive duty to neglect.
Whatever the opinion formed as to the fairness or otherwise of the level of fine upheld in this case, there is no question that shareholders and managers who ignore or fail to fully address their obligations under the Regulations do so at their peril.
Ron Reid is a partner and head of the regulatory unit at Shoosmiths solicitors www.shoosmiths.co.uk