The cost of non-compliance

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Thames Water has received a record £20.3 million fine for water pollution. The fine is ten times higher than the previous largest fine of £2 million (given to Southern Water in December 2016).

The company pleaded guilty to offences involving the release of untreated effluent into the River Thames at six sites in Oxfordshire and Buckinghamshire in 2013 and 2014. Factors which contributed to the severity of the fine included the killing of fish, impacts on health for people and animals, effects on nature reserves and wildlife, and other environmental damage.

The judge at Aylesbury Crown Court used the Environmental Offences Definitive Guideline to calculate the fine. The Guideline advises a maximum fine of £3 million for large companies (those with turnover over £50 million per year). However, for "very large companies", those whose turnover greatly exceeds £50 million, judges have discretion to move outside the fine ranges set in the Guideline. Thames Water's turnover is £2 billion, 40 times greater than the £50 million lower limit for "large companies".

It is clear now that judges are willing to use that discretion and will not hesitate in very serious cases to hand down fines well outside the usual range specified in the Guideline, to send a robust message to companies, directors and shareholders.

It does not look likely that this will be an isolated case. As an indicator of the direction the courts are taking, the case builds on comments by the Court of Appeal in 2015 that, in the most serious environmental cases, fines may well be "equal to a substantial percentage, up to 100 per cent of the company's pre-tax net profit for the year in question … even if this results in fines in excess of £100 million".

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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