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SIBA Quarterly Journal June 2013

Failure to Comply Can Seriously Damage Your Business

All kinds of controls affect licensed premises and licensees, not only those that impact on all businesses such as Health & Safety and Environmental Health Regulations, but additional legislation specific to the licensed trade governed by the Licensing Acts & Regulations.

In this article Litigation & Dispute Resolution Partner John Woosnam, looks at the approach required when a potential breach of regulation occurs.  John specialises in regulatory investigations and prosecutions.

Offences carry potentially high penalties which can be imposed even at the level of a Magistrates Court.  In many cases, the maximum fine which can be imposed by Magistrates has been extended to £20,000.  If the offence is considered serious enough to be referred to the Crown Court the financial penalty can by unlimited.

Prison sentences can also be imposed for many offences.  Directors and managers of limited companies can be held personally liable for an offence if it is shown to have been committed either with their consent or due to any neglect on their part.

  • In June 2012 a pub owner was fined £265 and ordered to pay costs of £514 and a victim surcharge of £15 for sale of alcohol to an underage person.  Under a change of law which came into effect in April 2012, the maximum fine for persistently selling alcohol to children i.e. twice in any three month period, was extended to £20,000.
  • In August 2012 Birmingham Magistrates fined a defendant £8,000 plus £1,092 costs for offences under Food Hygiene Regulations.
  • In August 2011 a pub owner was convicted of food hygiene offences and fined £2,100 and ordered to pay £762 costs, whilst the owner of a restaurant was convicted of food hygiene offences and fined £29,015 and ordered to pay £3,220 costs.

For most of these types of offences, the due diligence defence is available i.e. the defendant can show that it took all reasonable precautions and exercised all due diligence to avoid committing the offence.

The onus is on the defendant to show that this defence applies. In order to do so, it is essential to have well documented policies and procedures in place.  This must include a training programme which ensures that all staff likely to be involved in relevant areas of the business receive appropriate training at the start of their employment, plus regular refresher courses.  All training should be recorded.  There should also be processes and records kept checking that policies are being implemented.

If the worst happens and an incident occurs, it is inevitable that the authorities will investigate.  This will lead to an interview, possibly with those directly involved but also with relevant managers, directors or owners of the business.

The interview is fundamental in determining whether there will be a prosecution and if so, what the end result of that prosecution will be.

This interview is an opportunity for the business to present its case.  The objective must be not only to establish any facts that support a possible due diligence defence, but also to show investigators an awareness of the issues and that appropriate steps have been taken to address them – both before the offence was committed and, if the investigation has shown shortcomings within  procedures, after the event.  Putting a clear and positive case to investigators may persuade them not to prosecute, either because the due diligence defence is likely to be established, or because the Court will have sympathy in light of the steps taken.  At the very least this will highlight mitigating factors which can be used to minimise or reduce any potential penalty.

It is vital to be well prepared for such an interview.  If necessary seek professional help and advice.  The impact of any penalty imposed on conviction is bad enough – but the damage to reputation that can arise from a prosecution can be even more detrimental to the business.