Increased Magistrates Court fines for business

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (the “Act”) removes or amends the limit on certain types of fines that are given upon conviction in a magistrates’ court. Further, the Act means that there is likely to be an increase in the amount of cases that are dealt with by magistrates.

Commercial Nature

When looking at what affect this may have on commercial organisations, it is important to understand that many commercial laws include a number of offences that carry fines as a punishment. Such offences may have been committed by individuals (such as employees or directors), the company or even different partners within an organisation. Examples of areas in which fines may be imposed include breaches of copyright and associated provisions, data protection breaches, negligence in relation to a conveyancing transaction, breaches in relation to the Health and Safety at Work etc Act 1974 or breaches of relevant anti-bribery legislation. This list is, of course, non-exhaustive, and there are a number of commercial situations in which a criminal offence may occur and in which there may subsequently be a fine.

Criminal Offences

Before looking at the how the fines will change under the Act, it is necessary to understand the different types of criminal offences that may result in a fine. Less serious offences, known as summary only offences, include driving offences and other offences arising out of the breach of certain regulations. Such offences are dealt with in a court of magistrates, and will either be heard by lay magistrates who do not require any special legal experience or qualifications or by a magistrate with specialist knowledge in the particular area to which the matter relates (although this is rare).

More serious offences, known as indictable offences, and which include crimes such as theft, serious assault and burglaries, will be dealt with by either a magistrates’ court or a jury in the Crown Court. It is initially up to the magistrates to decide whether they feel that they will be able to hand down an adequate sentence should the individual be found guilty. If they feel that they do not, they will pass the matter on to the Crown court. If they feel that they do indeed have sufficient powers, it will be up to the individual to chose. The third type of offence is known as an indictable only offence. Such offences are far more serious, and although they may initially be dealt with by a magistrate, they will passed on to the crown court, where they outcome will be decided by a jury alongside a judge.

Changes to fines

The new legislation will mean that magistrates’ courts will be able to issue greater fines in relation to any offence of a criminal nature. It is important to note that the changes do not apply to fines of a civil nature or to fines imposed by the crown court. The changes remove the upper limit for fines as a result of a summary conviction, and this cap was previously set at £5000. Higher caps, such as £20,000 or £50,000 have also been removed, and fines are now unlimited. Fines below £5000 are still capped, but the caps in place may be increased.

Conclusion

It is clear that the new legislation will impact several commercial areas given that there are often criminal sanctions and resultant fines imposed as the result of breaches in regulation. Although there may be an increase in the efficiency of the process of sentencing, it is important that organisations take the time to understand the commercial laws that affect them, as fines that may have relatively low in the past may now be much higher, and have a larger impact on an organisations balance sheet.  There are a number of fines under the Companies Act 2006 which may increase as a result of the changes.  For example, companies may be fined for failing to file accounts or for not delivering an annual return within the relevant timescales. Directors will now need to be more aware of the Companies Act 2006, and indeed any other relevant regulation, as the risk will increase.