10 September 2014

Phoenix firms rising out of the ashes of health and safety cases

This case is notable for the way in which the court approached the sentencing of a company and its director, where it appeared that a phoenix firm was likely to arise. It suggests a possible new approach from the court when dealing with so-called ‘phoenix’ firms in health and safety cases.

Malcolm Hinton, 56, died in 2012 when a raised hopper for collecting dirt fell on him at a Mobile Sweepers (Reading) Ltd depot in Headley, Hampshire. The company ceased trading soon afterwards and was fined only £8,000. By contrast, the company’s sole director was personally fined £183,000 and disqualified as a Companies Act director for five years.

The investigation found that other sweepers owned by the company were not properly maintained and that record-keeping across the business for training and maintenance logs was poor. The prosecution was keen to highlight the ‘culture of blatantly disregarding the health and safety of those who worked there and those who came into contact with [the company]’. Its accident rate was such that even the company director had been injured while working there.

If the courts decide to start pursuing owners and directors personally, this will beef up the regulatory regime. The sanctions imposed in this case indicate a willingness by the court to attribute the blame to an individual after a serious incident, in order to make sure that someone ‘pays’.

Two examples of ‘Phoenix Firms’ in recent cases that have escaped punishment by the courts include:

  1. Bryn Thomas Crane Hire Limited: sentenced in April 2011 following the death of Richard Thornton in March 2007. The company went into pre-pack administration three months before the sentencing hearing and was therefore fined only £4,500. Its last filed accounts showed a pre-tax profit of over £800,000. After putting the company into administration, the directors then bought out the business, and now trade as Bryn Thomas Cranes.
  2. In August 2011, Foxtel Limited was fined £1 after an employee, Noel Corbin, fell 13.5 metres from the roof of a four-storey residential building while trying to fix a TV dish. The company ceased trading and had no assets at the time of sentence. A very similar business with the Foxtel name has since started trading from the same address.

The Mobile Sweepers case seems to indicate a shift in attitude to the way in which Phoenix firms have been allowed to escape punishment for health and safety failures.


Category: Article