5th annual public sector conference, March 2017, Exeter

5th annual public sector conference
March 2017, Exeter

Alternative Service Delivery
Models
9 March 2017

So what is it?
• Delivering services in a different way – a change
from where you are now – which could be:
– internal transformation
– shared services
– outsourcing
– joint venture (public/public)
– joint venture (public/private)
Or any combination of the above

Why?
• Why might you consider an ASDM?
• Usually a combination of reasons – which might
include:
– improving efficiencies/service delivery
– sharing resources/developing centres of excellence
– making use of private sector expertise
– more freedom (trading through a company)
– saving money

What are your objectives?
• Objectives must be clearly defined
• They can be
– financial
– performance related
– a mix of both
• Outcomes flow from the objectives

Preliminary considerations
What must you do from a
statutory perspective
political perspective
What must you do in order
to support the above
risk perspective
Do you have the power to do it?
Begin with an
assessment of:

What is the Business Case
• People
• Service improvement
• Financial

Who is the right partner?
• Culture
• Geography
• Politics
• Ability

Which model is right for you?
• Will depend on what you are trying to achieve –
• Initial considerations may include:
– how much control do you want to retain?
– for profit OR not-for profit?
– LA control (Teckal) OR commercial freedom?
– wholly owned OR joint venture?
– corporate structure OR contractual arrangement?

Models – available structures
• Some of the key models include:
– administrative arrangements (delegation)
– contractual arrangements
– corporate structures (trading companies)
 company limited by shares
 company limited by guarantee
 Community Interest Companies

Models – (cont)
• Other vehicles
– Mutuals
– Limited liability partnerships
– Co-operative or community benefit societies
– Charitable Incorporated Organisation

Public to Public
• Internal transformation - delegation of powers
– Remondis GmbH & Co. KG Region Nord v Region
Hannover Case C-51/15
– must be true delegation of powers as well as
responsibility
• Contractual relationship
– shared services / collaborations / joint ventures

Public to Public
• Local authority trading company:
– single authority (wholly owned) – Teckal exemption
(now codified in regulation 12 – PCR 2015)
– multi authority – Hamburg Waste principle
(now codified in regulation 12(7) – PCR 2015)
• Usually ‘not-for-profit’ co limited by guarantee

Public to Private
• Outsourcing to private sector
– contractual arrangement
• Public/private joint venture
– choice of vehicle (shares/guarantee/CIC)
• Mutualisation
– employee ownership
– procurement advantages
– not been as popular as expected

Trading Companies:
some key features & considerations

Local Authority Trading Company
• Company limited by shares OR guarantee?
• Some key considerations :
– what is the nature of the venture / what are you trying to do
 How much control do you require (e.g. provision of leisure services
or library services by wholly owned/controlled Teckal company)?
 Need commercial freedom (e.g. housing development company)?
– procurement issues (Teckal OR commercial?)
– need the ability to distribute profits OR be ‘not for profit’?
– how will it be funded – will it require outside / equity
investment and/or capital growth?

Co Ltd by Shares / Guarantee
• Basic corporate structure = CLS / CLG
• Similar in many ways:
– both = corporate structures with separate legal identity
– both have limited liability status
– both can :
 enter into contracts in own name / engage employees
 hold property/enter into leases
– both are subject to company law / have similar management
structure –
 e.g. articles of association (constitution) / governance / directors’
duties / member rights / filing obligations / public register

Company limited by shares
• Some key features:
– shareholder liability limited to amount paid for shares
– well known structure / accepted business model
– well suited to commercial activities / trading
– capable of profit distribution / dividends
– easier to raise equity investment (issue of shares)
– can give security
– can have different classes of shares / structured profit-share
– model allows for employee ownership / incentives

Company limited by guarantee
• Some key features:
– member liability limited to ‘guaranteed sum’ (£1/£10)
– accepted vehicle for ‘not-for-profit’ ventures
 can make a profit, but reinvested, not distributed to members
– usually charitable objects, but not a charity
 not subject to charity regulation, but no ‘charitable’ tax breaks
– membership is easy to join / leave (no shares to sell…)
– easiest entity if looking to meet the Teckal requirements
– grant funding / loan investment possible but not equity
investment (no shares)

Community Interest Company
• Company limited by shares or guarantee
– basic company structure with a layer of ‘regulation’
on top
– CIC Regulator (light touch regulation)
– not a charity – less regulation / but no tax breaks
– may attract investment from more ‘conscious’ investors
– can issue dividends (depending on structure)
– key feature = asset lock

Mutuals
• Traditional mutual = owned by & run for benefit of the
members
• ‘New’ public sector mutuals are directed towards
delivering a ‘collective benefit’ – improved public
services – rather than maximising profits
• All parties have some control / say in the running of
the business (not-for-profit)
• Some procurement ‘breaks’ but not been as popular as
expected

Some other considerations
• TUPE / Pensions liabilities(on transfer of services
and on termination of contract)
• Companies Act 2006 requirements / obligations
• Directors’ duties / conflicts of interests
• State Aid
• Tax

Procurement the Basics
• Public procurement is the process by which public authorities,
such as government departments or local authorities, purchase
work, goods or services.
• To create a level playing field for all businesses across Europe,
EU law sets out minimum harmonised public procurement rules.
• Key underpinning treaty principles are:
– Equal Treatment
– Non Discrimination
– Transparency
– Proportionality
Remember these!

Legislative Framework
• Public Contracts Regulations 2015
• Concessions Contracts Regulations 2016
• Utilities Contracts Regulations 2016
• The National Health Service (Procurement, Patient Choice
and Competition) (No. 2) Regulations 2013
• The Defence and Security Public Contracts Regulations 2011
And don’t forget case law and statutory guidance

Procurement for ASDM
Type Procurement Required
Outsourcing to private sector Yes
Public Private Partnership Yes (in almost all cases)
Trading Companies Dependant on the company
Public Public Cooperation/shared
service
Probably not
Mutualisation Yes but limited

Contracting body awarding contract to a
controlled company
• Teckal exemption codified in regulation 12 – PCR 2015
do not apply where:
– the contracting entity exercises over the entity similar
control that it exercises over its own departments
– more than 80% of the activities are provided back to the
controlling contracting authority
– no direct private capital participation

Controlled companies awarding contracts
• “Reverse Teckal” - Contracts back to the contracting body
(commonly back office services)
– Regulation 12(2)(a) allows this when a company is controlled by
single contracting body
– Does not mention companies controlled by more than one
contracting body – possible risk that these are not covered
Contracting
body
Controlled
Company 1
Controlled
Company 2
Commercial
Company
Controlled
company
Contracting
body
Contracting
body

Controlled companies awarding contracts
continued…
• “Horizontal Teckal” – contracts awarded between companies
controlled by the same contracting body
Note: they must all be ‘controlled’ companies!
Contracting
body
Controlled
Company 1
Controlled
Company 2
Commercial
Company

Public to public co-operation
• Hamburg Waste principle has been codified in
regulation 12(7) – PCR 2015 does not apply where:
– participating authorities contract to co-operate to
provide public services to achieve common objectives
– implementation of that cooperation is governed solely
by considerations relating to the public interest; and
– the participating authorities perform less than 20% of
the activities on the open market.

Transfer of Powers
Remondis GmbH & Co. KG Region Nord v Region Hannover Case
C-51/15
• Must relinquish its powers and give autonomy over the
execution of tasks
• The transfer must be comprehensive – including powers as
well as responsibilities
• Authority can retain some control (I.e., voting at general
meetings) but this must not control over execution of tasks
• Autonomy is not required to be irreversible, but should not
be terminable by unilateral decision of authority

Reservation of contracts for mutuals
• New Regulations allow certain qualifying services (broadly health,
social, cultural and linked administrative services) to be reserved
for mutuals that meet the following cumulative conditions (Reg 77)
• Maximum contract term of three years
• Note that higher threshold (EUR 750,000) applies
• Still a requirement to advertise contract but able to limit
scope of competition
• Commission to review effects of this provision after three
years

Questions?
Lynne Rathbone, Partner
T: 01392 458739
M: 07789 943343
E: lynne.rathbone@brownejacobson.com
Jennifer Grigg, Solicitor
t: 01392 458773
m: 07342 053740
jennifer.grigg@brownejacobson.com

Latest legal landscape on MCA and DoLS
Mark Barnett
Partner

MCA – Basic Principles
• Autonomy:
– Presumption of capacity
– Least restrictive option
– Person is not to be treated as unable to make a decision merely
because his or her decision is an unwise one
– Do not assess someone as lacking capacity unless taken all
practicable steps to help them make the decision themselves
• And safeguarding:
– Any act done for a person who lacks capacity must be done in
that person’s best interests

Helping P decide
• Don’t start with a ‘blank canvas’ - does P
have all relevant information?
• Could the information be presented in a
way that is easier for P to understand?
• Are there particular times of day when P’s
understanding is better?
• Can the decision wait?
• Is specialist input required around SALT,
behaviour, medication or communication?

Test for capacity
“A person lacks capacity in relation to the matter
if at the material time he is unable to make a
decision for himself in relation to the matter
because of an impairment of, or a disturbance in
the functioning of, the mind of brain”
s.2(1) MCA 2005

Inability to make a decision
• P is unable to make a decision if they cannot:
– Understand the information about the decision to be
made;
– Retain that information;
– Use or weigh that information as part of the decision
making process;
Or
– Communicate their decision (by whatever means)

Competent adults can make unwise decisions…
Cannot treat someone as
lacking capacity just
because their decision is an
unwise one

Kings College Hospital NHS FT v C & V
• C – a woman described as having lived a full and “sparkly” life was
refusing life sustaining renal dialysis following a paracetamol overdose
• Her decision was supported by her family
• C considered as part of decision, prospect of growing old, living with
fewer material possessions and the fear of never regaining her “sparkle”
• C had previously attempted suicide
• Two psychiatrists assessed C as lacking capacity to make this decision

C had capacity
• Back to basics and the key MCA principles of:
• presumption of capacity; and
• the right to make what others might consider to be unwise
decisions
• In the Judge’s view C had weighed her fear of ongoing treatment,
chronic illness, discomfort, disability and not regaining her
‘sparkle’ within her decision making process
• Whilst decision may seem eccentric and not accord with society’s
emphasis on the sanctity of life, this was not evidence of
incapacity

Capacity - questions to ask
• What is the decision being made/proposed -
assessing capacity for what? CC v KK
• Have we done everything to help the person make
their own decision?
• When should the assessment be undertaken?
• By whom? Coventry City Council v C
• What about fluctuating capacity?

Decision making – s.5 MCA
• No civil or criminal liability for acts:
– Where reasonably believe P lacks capacity; and
– In P’s best interests for act to be done
• Some best interests decisions can never be made on P’s behalf –
marriage, sexual relations, divorce
• Some decisions require the involvement of an IMCA
• Most care and treatment decisions can be made under s. 5 MCA if P
lacks capacity
• But difficult decisions can, and should, go to the Court of
Protection

Re: P – ‘allow Huntington's disease sufferer to
die, judge rules’
• P in advanced stages of disease & had pulled out feeding tube more than
100 times. Relatives believed ‘he wanted to go’
• A consultant neurologist said it would not be right – and futile – for medics
to force the feeding tube on the man
• Hayden J concluded that the tube should not be reinserted, even though
this would hasten P’s death: re-inserting a feeding tube would involve
restraining P. That would be disrespectful and “compromise” his dignity
• P had enjoyed many interests, was a passionate supporter of Manchester
United – his aunt told how he used to regularly visit Old Trafford. A doctor
told the court the man still smiled on hearing United’s name, and that a
recent mention of Everton had “produced a frown”

Re: P
“There is a strong instinct throughout the medical profession, and far more broadly,
to preserve life wherever possible,”
“But that is not a value that stands alone and in splendid isolation….it is to be
considered against a whole raft of other important issues – respect for the dignity and
autonomy of the individual and respect for their wishes.”

Art 5 – Right to liberty and security
“Everyone has the right to liberty and security of person. No
one shall be deprived of his liberty save in the following cases
and in accordance with a procedure prescribed by law”:
• after conviction by a court;
• lawful arrest;
• lawful detention of a minor for educational supervision;
• lawful detention for the prevention of the spreading of
infectious diseases, of persons of unsound mind, alcoholics or
drug addicts or vagrants;
• lawful arrest to prevent unauthorised entry into the country

Lawful detention
• Everyone who is deprived of his liberty by arrest or
detention shall be entitled to take proceedings by
which the lawfulness of his detention shall be
decided speedily by a court and his release ordered
if the detention is not lawful (Art 5(4))
• Everyone who has been the victim of arrest or
detention in contravention of the provisions of this
article shall have an enforceable right to
compensation (Art 5(5))

Deprivation of Liberty Safeguards
• Bournewood - de facto detained
• Schedule A1 (2009) amendment to MCA - DOLS

What is a deprivation of liberty – Cheshire West
The “acid test”:
“… features consistently regarded as key in the
[ECHR] jurisprudence that [P] was
under continuous supervision and control and
was not free to leave”
Lady Hale

Factors which are NOT relevant
• P’s disability
• “relative normality”
• the quality / appropriateness of the placement
“a gilded cage is still a cage”
• P’s awareness of the DoL
• P’s compliance
• Reason or purpose behind the placement

DoLs – key issues
• The zone of parental responsibility
• State responsibility
• Community dols - Re: X streamlined procedure
• Choosing between the available options
• The hospital setting
• DoLS – is it fit for purpose and where next?

The zone of parental responsibility
• Birmingham City Council v D
• D – as a 15 year old, parental consent could ‘authorise’ a dol
• But not when he turned 16:
– Care package still amounted to continuous supervision and
control and he was not free to leave
– Lacked capacity to consent to welfare arrangements in place
– Not enough to rely on parental consent where the acid test is
met in a 16 y/old – will always need a CoP application
– Resource arguments fell on deaf ears

Who is responsible?
• For there to be a dol, it has to be ‘imputable’ to the State
• Interpreted widely by the courts
• BCC v D:
– Judge accepted that the State has a positive obligation under
Article 5(1) to protect D
• Staffs CC v SRK:
– a welfare order is needed because the State “knows or should
know of the situation on the ground”
– which triggers its (positive) obligations to investigate, support
and sometimes make an application to court

Available options?
• Re: MN:
“The Court of Protection is thus confined to choosing between the available options, including those which there is
good reason to believe will be forthcoming in the foreseeable future….and in the final analysis the Court of
Protection cannot compel a public authority to agree to a care plan which the authority is unwilling to implement”
“[there is a need to] avoid a situation where the already vastly overstretched Court of Protection would be
routinely asked to make hypothetical decisions in relation to best interests with the consequence that CCGs are
driven to fund such packages…”
• North Yorkshire CC, A CCG v MAG
– Lived in a 1 bed ground floor flat, which parties accepted was not suitable
– No other options whilst alternative sought – it was in her best interests to remain there but not so
unsuitable that unlawfully provided
– Article 5 concerned with the reason for the detention, not the condition of it
– To comply with Article 5, all that is required is that the conditions are appropriate, not the most
appropriate
– A high threshold – “seriously inappropriate” – to find a breach of Article 5 on the basis of place and
conditions of detention

Life saving treatment
• LF v Coroner Inner South London (2017)
“…any deprivation of liberty resulting from the administration of life-saving
treatment to a person falls outside Article 5(1) ‘so long as [it is] rendered
unavoidable as a result of circumstances beyond the control of the
authorities and is necessary to avert a real risk of serious injury or damage,
and [is] kept to the minimum required for that purpose’….”
“The purpose of Article 5(1)(e) is to protect persons of unsound mind. This
does not apply where a person of unsound mind is receiving materially the
same medical treatment as a person of sound mind. Article 5(1)(e) is thus
not concerned with the treatment of the physical illness of a person of
unsound mind.”

Bostridge v Oxleas NHS Foundation Trust
• Technical breach of requirements under MHA 1983
• Putting Mr B back in to the position had the tort not been
committed
“..if the position is that….the claimant would in fact have been in
exactly the same position, he will not normally be entitled to
anything more than nominal damages”

What next?
• Still thousands of unauthorised dol
• Is DoLS fit for purpose?
• The Law Commission Consultation
– Still a compelling case to replace DoLS – workloads,
pressure on resources and unlawful dols
• Coroners & Justice Act amendment – definition of
‘state detention’
• Supreme Court with the final word?

Questions?
Mark Barnett
E: mark.barnett@brownejacobson.com
T: 01392 458 768 M: 07920 713971

Property law update for public
sector lawyers
Neil Walker

Browne Jacobson Public Sector
Property
Neil Walker, Associate
T: +44(0)115 908 4127 +44(0)7717170216
E: neil.walker@brownejacobson.com
Ayesha Khalique, Solicitor
T: +44(0)330 045 2210 +44(0)7827992250
E: ayesha.khalique@brownejacobson.com
Rebecca Toates
T: +44(0)115 908 4862 +44(0)7799676365
E: rebecca.toates@brownejacobson.com
Kassra Powles
T: +44(0)115 908 4806 +44(0)7887970939
E: kassra.powles@brownejacobson.com

Property contracts and land law

All reasonable endeavours and
good faith?
• Bristol Rovers (1883) –v- Sainsbury’s
• 2016 EWCA Civ 160
• Planning applications/appeals

Conditional contracts all or nothing … or
any?
• Dooba Developments –v- McLagan Investments
• 2016 EWHC 151 and 2016 EWHC 2944
• Interpretation of a termination clause

Specific performance
• How soon can you act?
• Airport Industrial –v- Heathrow Airport
• 2015 EWHC 3753
• Obligations to develop car parking facilities

Denial of prescriptive rights
• How pro-active must we be?
• Winterburn –v- Bennett
• 2016 EWCA Civ 482
• Notices in car parks

Parking – overstaying
your welcome
• Parking Eye –v- Beavis
• 2015 UKSC67
• Penalties are enforceable?

Oral contract variations
• MWB Business Exchange Centres –v- Rock
Advertising
• 2016 EWCA Civ 553
• Licence agreement
• Party autonomy can override contract terms

Replies to CPSEs and Exclusion
Clauses
• First Tower v CDS Superstores
• 2017 Ch.D. 20 Feb
• “No notices received…”
• Notice was received (re asbestos) after CPSE’s
• Negligent misrepresentation
• “No reliance” clause was an unfair contract term

Due process - Section 123
Local Government Act 1972
• Galaxy Land (R) –v- Durham County Council
• 2015 EWHC16
• Section 123 (1) and (2)
• Section 123 (2A)

Comparing Bids
• London Jewish Girls’ High Ltd –v- Barnet LBC
• 2013 EWHC 523
• Consider elements having monetary or commercial
value
• Social value?
• Overage? Nomination rights?

General consents
• Circular 06/03 : General Disposal Consent (England)
2003
• Welsh Government : NAFWC41/2003 General
Disposal Consent (Wales) 2003

Section 123 – Hot off the Press!
• Whitstable Society v Canterbury Council
• 2017 EWHC 254 (Admin)
• Disposal of open space land
• “Oval” outdoor roller skating rink
• Assumption that an affordable housing requirement was
inevitable
• Not so
• Council has breached its statutory duty
• … Court did not quash decision though – to avoid substantial
hardship or prejudice to the third party buyer

Other (relatively) recent and
relevant cases – for reference only
• Trafford (R) –v- Blackpool Borough Council
• 2014 EWHC 85
• Lidl (R) –v- Swale Borough Council and Aldi
• 2001 EWHC
• Leman Land (R) –v- Hackney LBC
• 2001 EWHC 336
• Structadene (R) –v- Hackney LBC
• 2001 2All ER 225

Rights of light injunctions
• Coventry –v- Lawrence
• 2014 UKSC 13
• Ottercroft –v- Scandia Care
• 2016 EWCA Civ 867
• A worrying recent case?
• Minor infringements
• Law Commission recommendations

Overriding easements/covenants
• S.237 TCPA 1990 – LPAs
• New provision
• S.203 Housing and Planning Act 2016
• In force from 13 July 2016
• Now LPAs, UDCs, LHAs, GLA, National Assembly for
Wales, Welsh Ministers and Housing Action Trusts

Minimum energy efficiency
standards
• Energy Efficiency (Private Rented Property) (England and Wales)
Regulations 2015
• Now passed
• 1 April 2018/1 April 2023

Restrictive covenants and
overages
• Bryant Homes –v- Stein
• 2016 EWHC 2435

Development agreement
variations
• Gottlieb (R) –v- Winchester City Council
• 2015 EWHC 231
• Significant changes to 2004 Development
Agreement
• Public Contracts Regulations 2006
• Beware the politicians(I’ll explain !)

Highways searches and
development
• Chesterton Commercial –v- Oxfordshire County
Council
• 2015 EWHC
• Inaccurate records let to misstatement

TVGs and Byelaws
• Newhaven Port and Properties (R) –v- East Sussex
County Council
• 2015 UKSC 7
• Byelaws and TVG application threatened
development

Assignment to guarantors
• EMI Group –v- O&H
• 2016 EWHC 529
• S24 (2) LT (Covenants) Act 1995
• If assignments to guarantors are void – what are the
implications?

AGAs and GAGAs – a reminder
• Good Harvest
• K/J Victoria Street –v- House of Fraser
• 2011 EWCA Civ 904
• Sub-guarantees and guarantees of “next but one”

Protocol and practice – not law
• Property protocols
• www.propertyprotocols.co.uk
• Alienation and Alterations

Reservations of rights
• Timothy Taylor –v- Mayfair House
• 2016 EWHC 1075
• Inference with tenant’s use and occupation
• Quiet enjoyment

Repair and alterations
• Street art
• Creative foundation –v- Dreamland Leisure
• 2015 EWHC 2556
• “repair” of building by removing (and selling!)
mural

Break clauses – bye bye to rent
already paid
• Marks & Spencer –v- BNP Paribas
• 2015 UKSC 72
• Any reimbursement of rent paid for period after
break date?

Surrender by operation of law
• Padwick Properties –v- Punj Lloyd
• 2016 EWHC 502
• Empty property and return of keys sufficient?
• Takes two to surrender?

Consent – not to be unreasonably
withheld
• No1 West India Quay –v- East Tower Apartments
• 2016 EWHC 2438
• Long residential leases
• Bank references and undertakings for surveyor’s
fees
• When does the clock start ticking?

Mind the gap!
• Brown –v- Root Technology
• Recent reminder
• S.27 LRA 2002
• Stodday –v- Pye
• 2016 EWHC 2454

Pretty vacant
• Riverside Park –v- NHS Property Services
• 2016 EWHC 1313
• Break clauses and vacant possession
• Keys?

Questions?
Neil Walker, Associate
T: +44(0)115 908 4127 +44(0)7717170216
E: neil.walker@brownejacobson.com

The Independent Inquiry into
child sexual abuse: an update
and key learning points
David Maggs, Partner

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Welcome…

12 March 2015
• This Inquiry will investigate whether public bodies
and other non-state institutions in England and
Wales have taken seriously their responsibility to
protect children from sexual abuse, and make
meaningful recommendations for change in the
future.

“I plan to make recommendations in an interim
report in 2018 and I am determined that the Inquiry
makes substantial progress by 2020.”

• The Inquiry has set out, for the first time, a
timetable of work, enabling all interested parties
to follow its progress more closely.
• There is a renewed focus on identifying the most
important actions to protect children.
• More of the Inquiry’s activity will be conducted in
public.

• I have reviewed the Inquiry’s internal governance
to provide stronger accountability and decision-
making.
• There will be no reduction in its commitment to
exposing the ways in which institutions have failed
victims and survivors in the past. Shedding light on
wrongdoing which has long been hidden is of
paramount importance to so many victims and
survivors of abuse.

• In February 2017, the Panel and I will start taking
evidence in public with a hearing on the child
migration programmes case study. I look forward to
this new phase of the Inquiry’s work.
• https://www.iicsa.org.uk/live

• The experiences of victims and survivors remain of
central importance to the Inquiry’s work. The
Truth Project will continue to grow and I am
immensely grateful to all those who have shared
their experiences with us, and to those who come
forward in future.

• The strategic approach of the Inquiry, delivering
through three major strands of work - public
hearings, research and analysis, and the Truth
Project - is right but their implementation of this
approach has been too slow.

• During 2016 we held 11 preliminary hearings and
205 core participants have been designated across
seven investigations. The Inquiry has sent legal
requests to hundreds of institutions likely to have
relevant information asking them to submit such
evidence. We have received 86,000 documents so
far.

The Inquiry will use:
• statutory powers to obtain relevant evidence
• reviews of official records
• case studies
• public hearings
• primary research
• issues papers, and
• seminars.

• We will accelerate the progress of public hearings
and will hold four public hearings during 2017
•
• In February, the first part of the child migration
programmes case study in the Children Outside the
UK investigation will be held. This will hear
evidence from experts and others to provide an
overview of the child migration programmes

• In July, the second part of the child migration
programmes case study will be heard
• This hearing will cover evidence on behalf of key
institutions based in England and Wales which were
responsible for sending children overseas as part of
the migration programmes

• In October, a hearing in relation to the Cambridge
House, Knowl View and Rochdale investigation
• In December, a hearing in relation to the English
Benedictine Congregation case study in the child
sexual abuse in the Roman Catholic Church
investigation

• The programme of preliminary hearings will
continue
• Preliminary hearings are an important mechanism
for updating core participants and the public on
the progress of investigations. They also allow the
Chair to hear legal submissions and make the
procedural decisions that are necessary to progress
the investigation to a public hearing

• The preliminary hearings will cover a number of
subjects, including the child migration programmes
case study, accountability and reparations for
victims and survivors of abuse and the investigation
into institutional responses to allegations of child
sexual abuse involving the late Lord Janner of
Braunstone QC.

• The Inquiry cannot make effective
recommendations for change solely by considering
the failings of the past. The nature of the
problems that society faces has changed over time,
including the role of the internet and technology in
facilitating abuse, and the blight of modern day
child sexual exploitation. Finding the best solutions
requires a comprehensive understanding of today’s
challenges. The Inquiry’s programme of research
and analysis is essential to that task.

• Throughout 2017/18, the Inquiry will deliver a
programme of new research into child sexual abuse
and exploitation. For example, new research will
be conducted into how churches have implemented
child protection policies in practice. This will
respond to a gap in our knowledge about how well
the safeguarding policies of the Roman Catholic
and Anglican Churches are working on the ground
to protect children.

Questions?
David Maggs
E: david.maggs@brownejacobson.com
T: +44 (0)20 7337 1005

Sentencing: reducing the
potential fine
Dale Collins
Regulatory Partner

Purpose of discussion
• To look at the Guideline and the steps to fine
levels
• To consider how the requirements of each step
can be approached to reduce their impact

Prosecution
• Prosecutions (2014/15)
– HSE 650 cases
– LA 78 cases
– LA had conviction rate of 93%
– HSE had conviction rate of 86%

Sentencing guidelines
• Sentencing guidelines - health and safety
offences, corporate manslaughter and food
safety and hygiene offences guidelines
• Environmental Offences - Definitive Guideline
for the sentencing of environmental offences.

Why?
• Because
– fines imposed on large organisations have been
considered as trifling and the public perceive
organisations as “getting away with it”, especially in
fatality cases
– the courts didn’t have guidance which would ensure
some level of consistency in sentencing

When?
• Sentenced on or after 1 February 2016
• “Regardless of the date of the offence”

Who?
• Organisations
• Individuals

What?
• Applies to health and safety and food safety
breaches and Corporate Manslaughter
• The Guidance provides a series of fine ranges for
offences with starting points within each range
• There is then adjustment up or down from this
starting point within the given range
• Across the whole gamut the range is from £50 to
£20 million

Effect to date
• Merlin Attractions Operations
Fine: £5m | Turnover: £412m | Breach: S3(1) HSWA | Date: 27 September 2016
Alton Towers’ Smiler rollercoaster crashed, injuring 16 people, two of whom had
legs amputated.
• Network Rail
Fine: £4m | Turnover: £6098m | Breach: S3(1) HSWA | Date: 21 September 2016
Pedestrian killed on a Suffolk level crossing. Firm failed to act on warnings that
speed should be restricted.
• ConocoPhillips (UK)
Fine: £3m | Turnover: £4822m | Date: 8 February 2016
Breach: R9 and 2x R19 Offshore Installations (Prevention of Fire and Explosion, and
Emergency Response) Regulations
Major failings in permit to work and common isolation procedures led to three gas
releases on the Lincolnshire Offshore Gas Gathering System. The firm was refused
permission to appeal the fine on 11 October.

So how can we attempt to reduce
the level of fine?
• There are a number of steps in the sentencing
process
• Consider each step and how steps taken before the
event can impact upon each step
• Consider what needs to be done for the hearing

How?
• Step 1
– Determine offence category based on culpability and
RISK of harm
– Culpability has four ranges from “very high” to
“low”
– Harm is based on seriousness and likelihood

Seriousness of
harm risked
Seriousness of
harm risked
Seriousness of
harm risked
Level A
Death
Physical or mental
impairment resulting in
lifelong dependency on third
party care for basic needs
Significantly reduced life •
expectancy
Level B
Physical or mental
impairment, not amounting
to Level A, which has a
substantial and long-term
effect on the sufferer’s ability
to carry out normal day-to-
day activities or on their
ability to return to work
A progressive, permanent or
irreversible condition
Level C
All other cases not
falling within Level
A or Level B
High likelihood
of harm
Harm category 1 Harm category 2 Harm category 3
Medium
likelihood of harm
Low likelihood
of harm
(start towards
bottom of range)

Turnover
• Micro: Turnover not more than £2million
• Small: Turnover between £2 million and £10 million
• Medium: Turnover between £10 million and £50
million
• Large: £50 million and over
• If an organisation's turnover very greatly exceeds the
threshold for large companies then it may be
necessary to move outside the suggested range to
achieve a proportionate sentence.

Very high culpability
Micro Small Medium Large
Harm 1 £250k
£150k – £450k
£450k
£300k - £1.6
million
£1.6million
£1million -
£4million
£4million
£2.6million -
£10million
Harm 2 £100k
£50k - £200k
£200k
£100k -
£800k
£800k
£400k -
£2million
£2million
£1million -
£5.25million
Harm 3 £50k
£25k - £100k
£100k
£50k - £400k
£400k
£180k -
£1million
£1million
£500k -
£2.7million
Harm 4 £24k
£12k - £50k
£50k
£20k - £190k
£190k
£90k - £500k
£500k
£240k -
£1.3million

Still step 1
• Court then considers
– Whether the offence exposed a number of workers
or members of the public to the risk of harm
– Whether the offence was a significant cause of
actual harm
• If one or both of these factors apply the court must
consider either moving up a harm category or
substantially moving up within the category range at
step two

The challenge: Looking at
culpability and risk
• How do you reduce culpability/risk categorisation? Prove
systems were in place, working and effective. So, prior to any
incident you need to be able to show you have procedures in
place to,
• Review health and safety policies, systems and procedures
• Review all health and safety legislation and guidance
applicable to the business.
• Consider industry standards - establish what benchmarks
should be applied. Legal compliance should be viewed as a
minimum standard.
• Ensure risk assessments are kept completely up to date and
reviewed when circumstances change.

• Cont.
• Review the company’s “safety culture” – not just the official
documents, policies and procedures but what happens “on
the ground”, and how procedures are enforced. Effective
compliance measures will be crucial.
• Ensure the Board is involved in the process and is promoting
health and safety
• Protect employees by telling them about H&S issues that
affect them

• Cont.
• Have in place an incident management plan/procedure to
ensure that should a serious incident occur the investigation and
any subsequent issues can be effectively managed.
• Improve record-keeping
• implement a consistent and documented enforcement regime
for health and safety issues across the business - what actually
happens to employees when they fail to comply with health and
safety rules? Does the policy state that breach of health and
safety rules is considered to be gross misconduct? Is the
disciplinary procedure used?

Looking at harm
• Very little you can do to reduce level of harm, but
you can specifically show that the risk of that harm
being suffered was reduced through,
– Suitable and sufficient training
– Effective Monitoring
 Not an unjustified acceptance that what is in place is
both best practice and being followed
– Equipment suitability, assessment and upkeep

Judge’s comments in recent
prosecutions of major company
– “It is accepted by the defendant that he (the injured person)
should have been supervised to ensure that no bad habits
evolved”
– “The company’s failure was a failure to supervise a trusted and
experienced employee (the person who was supposed to be
looking after the injured person)”
– “What has been evident in each of the investigations is that,
whilst there were procedures and processes in place, the
Company could not prove that it was ensuring that those
procedures were being consistently followed “on the ground”

Judge’s comments in recent
prosecutions of major company
• “It couldn’t do this in many cases because it recognised the
competence and expertise of the individuals and accepted that
each was doing what they should have been doing without
sufficient monitoring”
• “Neither could the Company prove the effectiveness of its
systems, monitoring and training because its record keeping was
not adequate (through poor completion or poor retention”

Step 2
• Starting point and category range
– the court is required to focus on the organisation’s
annual turnover or equivalent to reach a starting
point for a fine. The court should then consider
further adjustment within the category range for
aggravating and mitigating features.

Business turnover
• Little we can do re size, but suggest,
– Obtaining a detailed financial report re effect of
fine on business
– NB-- for public authorities the turnover figure is the
Annual Revenue Budget

Then…adjustment
• Factors increasing seriousness include
– Previous convictions, having regard to a) the nature
of the offence to which the conviction relates and
its relevance to the current offence; and b) the time
that has elapsed since the conviction
– Cost-cutting at the expense of safety
– Deliberate concealment of illegal nature of activity
– Poor health and safety record

• Factors reducing seriousness or reflecting
mitigation
– No previous convictions or no relevant/recent
convictions
– Evidence of steps taken voluntarily to remedy
problem
– High level of co-operation with the investigation,
beyond that which will always be expected
– Good health and safety record
– Effective health and safety procedures in place
– Self-reporting, co-operation and acceptance of
responsibility

Step 3
• Check whether the proposed fine based on
turnover is proportionate to the overall means of
the offender

• “The fine must reflect the seriousness of the offence
and that the court must take into account the financial
circumstances of the offender.
• “The fine must be sufficiently substantial to have a real
economic impact which will bring home to both
management and shareholders the need to comply with
health and safety legislation”

How to approach this step
• At this stage we get the opportunity to put forward
the true financial position taking into account
actual profit rather than simply turnover.

Step 4
• The court should consider any wider impacts of the
fine within the organisation or on innocent third
parties; such as
– the fine impairs offender’s ability to make
restitution to victims;
– impact of the fine on offender’s ability to improve
conditions in the organisation to comply with the
law;
– impact of the fine on employment of staff, service
users, customers and local economy (but not
shareholders or directors).

How to approach this step
• Here we put forward a strong argument re the
proportionality of any likely fine and its likely
effect on the business in order to try to ensure it is
at the low end of the range

• Step 5
– Consider any factors which indicate a reduction,
such as assistance to the prosecution
• Step 6
– Reduction for guilty pleas
• Step 7
– Compensation and remediation
• Step 8
– Totality principle
• Step 9
– Reasons

How does this approach affect
the business?
• Likely to increase costs as more legal argument
both leading-up to the hearing and during….even
for guilty pleas
• BUT may save money from the “bottom line” so far
as the fine is concerned, so money well
spent…especially as the costs are likely to be
covered by an insurance policy.

Questions?
Dale Collins
T: +44 (0)1392 458770
E: dale.collins@brownejacobson.com

All information correct at time of production.
The information and opinions expressed within this document are
no substitute for full legal advice. It is for guidance only and
illustrates the law as at the published date. If in doubt, please
telephone us on 0370 270 6000.
© Browne Jacobson LLP 2017 – The information contained within
this document is and shall remain the property of Browne
Jacobson. This document may not be reproduced without the prior
consent of Browne Jacobson.

5th annual public sector conference, March 2017, Exeter

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