Now that the HSE has launched a campaign to increase Health and Safety awareness amongst those involved in developing property, the Client/Developer needs to be aware of their legal responsibilities. Failure to do so could result in substantial fines or even imprisonment.
Robert Parks of HSE’s construction division said:
“Tragically, last year, 38 people died on these kinds of projects and many more were injured or suffered ill health because of poor health and safety practice. Whether you think of yourself as a property investor, developer or renovator, everyone has a role to play in helping reduce the number of serious and sometimes fatal incidents”.
One of the reasons for the campaign being targeted at Client/Developers is a concern that many Client/Developers are unaware of their legal obligations under health and safety legislation generally and as “Clients” under the Construction (Design & Management) Regulations 2007 or (“CDM Regs”) in particular. Indeed, one of the main reasons why the CDM Regs were introduced to replace the previous set of regulations which were issued in 1994 was to ensure that Clients were aware of their Health & Safety responsibilities rather than seeking to pass these on by appointing parties to deal with such responsibilities.
There have been a number of legal developments as well as CDM Regs in the last year or so which have increased the profile of Health & Safety as well as the Health & Safety at Work etc Act 1974 and all the regulations that come out of it. All parties should be aware of the Corporate Manslaughter and Corporate Homicide Act 2008 and the Health & Safety Offences Act 2008.
We will look at how this Health and Safety legislation affects Client/Developers.
The Health and Safety at Work Act 1974
This Act introduced a comprehensive and integrated system of rules, covering employers, employees, members of the public, the self-employed, manufacturers, designers and importers of work equipment and materials. Regulations, codes of practice and guidance notes made under the Act expand and clarify the requirements. Failure to comply with this Act can lead to fines and imprisonment. The duty is to do what is possible to ensure safety in so far as is reasonably practicable. There are a number of Regulations that are specifically aimed at the construction industry. A good example is the CDM Regs.
CDM Regs
DUTYHOLDERS
1. Client
CDM Regs recognises that the Client has a key role in development and the construction process as he directs the whole project and is in charge of the “purse strings.”
The CDM Regs apply to the carrying out of any building, civil engineering or engineering construction work. Clients are seen to be one of the major forces who can prevent accidents – their attitude to health and safety is important and guides the whole project.
The CDM Refs were first introduced in 1994 to put health and safety firmly into the design and build process. The previous duties remain, but the provisions on the Client appointing an agent to take on the Client's CDM responsibilities and liabilities have been deleted in order that a Client cannot be absolved of responsibility. There are also additional obligations.
The Client must:
· ensure there are suitable project management arrangements for health and safety in place;
· ensure that Designers and Contractors are provided with all information in the Client’s possession or if there is a CDM Co-ordinator (“CDM-C”) that he provides this to all parties;
· ensure that the construction phase does not start unless the Principal Contractor has prepared a construction phase plan which is sufficient to enable the construction work to start without risk to health or safety;
· notify the Contractor of the minimum notice they will give the Contractor for the commencement of the works. The intention is that a responsible Client will set a reasonable notice period
Clients are not actually required to check work on site or have someone check it. They are not required to plan or manage contractors' projects, specify how work is to be done, provide welfare facilities, check designs, or visit the site.
These duties are incumbent upon a developer in any project but if a project is to last for more than 30 days or 500 worker days then a project is notifiable to the HSE and has further duties which include:
Appointment of the CDM-C and principal contractor, both of whom must be in place until the end of the construction phase.
Provide information relating to the Health & Safety file to the CDM-C.
Retain ample access to Health & Safety file”.
It is noted that the responsibility for ensuring that the CDM-C carries out his tasks is with the Client. The main difference is in relation to the timing of appointment. The Client requires to appoint a CDM-C
“as soon as is practical after initial design work or other preparation for construction work has begun”.
There is a corresponding duty on Designers and Contractors to ensure there is a CDM-C appointed before they begin work other than “initial design work.”
The Client will be deemed to be the CDM-C until one is appointed. This is to ensure that the CDM-C is involved in the project from the very start. This should mean that all parties know who the CDM-C is and he is therefore in a better position to co-ordinate the health and safety information from all other parties. The Client will be deemed to be the CDM-C until one is appointed.
The intended effect of the CDM Regs is to place the onus directly on the Client to place health and safety at the top of the agenda in any development. It is incumbent on the Client/Developer to only appoint a professional team, a CDM-C and a Principle Contractor who are competent to deal with health and safety issues.
There has also been recent legislation that the Client/Developer needs to take account of.
Corporate Manslaughter and Corporate Homicide Act 2008
At common law in England and Scotland, in order to prove corporate manslaughter there must be evidence to show that the controlling mind of the company committed the reckless or negligent acts or omissions that led to the accident. In a large company this test is extremely difficult to satisfy as the decision making process is generally speaking spread out amongst a number of individuals and cannot be pin-pointed to one individual or a defined group of individual. This problem is borne out when it becomes apparent that the only convictions that have been secured in this regard are in relation to companies with one director.
The Corporate Manslaughter and Corporate Homicide Act 2007 (“the Act”) came into force on 6 April 2008 and covers the UK.
Corporations and partnerships will now be guilty of corporate manslaughter if the way in which their activities are managed or organised by their “senior management” causes a person’s death in the UK and amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased.
A “gross breach” is defined as conduct falling far below what can reasonably be expected of the organisation in the circumstances which contributed substantially to the death. This will be decided by the jury considering compliance with health and safety legislation/guidance and the organisation’s safety culture
The Act applies to those parties to whom the company owes a duty of care who will be its employees; anyone who occupies its premises; anyone it supplies goods/services to while carrying out construction or maintenance operations; using or keeping plant and vehicles; or in the course of any other commercial activity. The list is comprehensive and will cover most instances of a companies business. The Act applies to organisations companies, partnerships, trade unions, employers’ associations, police forces, Government departments and public bodies listed in Schedule 1 of the Act.
Although no individual are prosecuted under this Act, Courts can impose unlimited fines and apply remedial orders and publicity orders against the company. The Act dispenses with the previous common law in relation to corporate manslaughter but Client/Developers should be aware that companies and company directors will continue to have duties under the Health and Safety at Work Act 1974 which could lead to prosecutions and imprisonment of individual directors.
Health and Safety (Offences) Act 2008
The Health and Safety Offences Act 2008 (“the Act”) is a new piece of legislation that will give courts greater powers of sentencing and increase in fines for those who breach Health and Safety legislation. The Act amends Section 33 of the Health and Safety at Work etc Act 1974, and raises the maximum penalties available to the courts in respect of certain health and safety offences.
The Act widens the range of offences for which an individual can be imprisoned and increases the maximum penalties that can be imposed for health and safety regulation breaches, from £5,000 to £20,000 in the lower courts. Sentences can now be more easily set at a level that will deter businesses that do not take their health and safety management responsibilities seriously and further encourage employers and others to comply with the law.
Furthermore, by extending the £20,000 maximum fine to the lower courts and making imprisonment an option, more cases will be resolved in the lower courts so that justice will be more expedient, less costly and more efficient. Whereas in the past there were more limited options, jail sentences for particularly blameworthy health and safety offences committed by individuals, can now be imposed reflecting the severity of such crimes.
Further developments in Health and Safety sentencing
In addition, guidelines on setting appropriate levels of fine for Corporate Manslaughter and Corporate Homicide Act convictions, as well as Health and Safety convictions, are awaited. These are anticipated to increase the levels of fines awarded and to change the basis on which the fine is calculated by reference to turnover rather than profits. The proportion currently being considered is as much as 10% of turnover.
Criminal and Civil Liability
Breaches of health and safety law can lead to both criminal and civil liability. A Client/Developer may have to pay a criminal fine following prosecution by the HSE and civil damages (compensation) to the person who is injured or whose property is damaged.
The law prohibits insurance against criminal fines which can run into tens of thousands of pounds. It is possible to take out legal expenses insurance which will cover all or part of the legal fees. Civil claims fines can all be insured against as a matter of public policy.
Why now?
There is a public perception that health and safety penalties are inadequate and, in particular, those in senior positions in corporate entities ought to be held more accountable personally for health and safety failings in the company.
A study carried out for the HSE between May and November 2005 on the effectiveness of the use of the Company Directors Disqualification Act 1986 in relation to disqualification orders related to health and safety failures in the management of companies revealed that there were very few cases where this Act had been used (less than 20 cases). There will now be some pressure on the HSE and Courts to use these new found sentencing powers to disqualify senior personnel from holding director’s posts.
The directors and senior managers will also be convicted if it can be shown that the company failing occurred as a result of their consent, connivance or neglect under Section 37 of the Health and Safety at Work Act 1974.
At present, whenever there is an accident, in general terms the HSE does not need to prove that businesses didn't do what they were supposed to – the burden of proof is reversed and it is up to businesses to prove that they did everything "reasonably practicable" in the circumstances to prevent the risk of an injury arising. A difficult onus to prove.
Are senior personnel vulnerable?
The HSE Enforcement Policy requires that individuals be considered for prosecution as a matter of course in its investigations. We have seen a dramatic increase in the number of director and senior managers being the subject of investigation and prosecution in the past 12 months. This Act ought to cause most organisations to review their health and safety management structure.
Some argue that the problem with the current approach to safety management is that significant time and resources are devoted to producing documents which can be used in Court to justify the actions that were taken, rather than on taking action. It could be said that this change will reinforce that position.
Avoidance
If a hefty fine is levied against the company it may be tempting to the directors to put the company into voluntary liquidation and start up a new business to take over the dissolved company’s assets. However directors should be aware that section 216 of the Insolvency Act 1986 gives prosecutors the option to prosecute both the old and new companies. Also Section 36 and 37 of the Health & Safety at Work Act 1974 allows regulators to prosecute the directors of a company irrespective of whether the company is prosecuted. If they can be sure that they have connived, consented or been neglectful of the company’s failings. That position is not affected by insolvency.
Investigations
Managing the accident investigations in the immediate aftermath (and continuing thereafter) is crucial in order to protect a company’s interests. Any company faced with an HSE investigation should therefore:
- seek advice from specialist solicitors so that investigations attract privilege
- review, update and implement immediately, the company’s health and safety policies, make risk assessments and method statements in order to demonstrate to the HSE that the company is taking swift action to prevent a recurrence.
- train staff to communicate effectively with investigating authorities
A company’s health and safety systems should be regularly audited and benchmarked against industry standards to ensure they comply with HSE guidance.
Conclusions
Before embarking on a development a Client/Developer should make themselves aware that there is a plethora of health and safety legislation that will directly affect him, his company and his development. The responsibility extends not just to himself and to anyone involved in the development process but also the public during the process and as end-users. It is therefore incumbent on any Client/Developer to take the best advice and employ those parties who are competent to carry out there particular services and/or tasks so that any design and/or works are carried out as safely as possible. The Client/Developer needs to work hard to ensure that there is a culture of safety imbued throughout the company in general and each development in particular.
A failure to comply with CDM Regs as well as the Health & Safety at Work Act 1974 and the Corporate Manslaughter and Corporate Homicide Act 2008 can lead to criminal prosecution with substantial fines being levied against the company. It should also be noted that directors can be personally prosecuted to head up the fines and/or imprisonment under the Health & Safety at Work Act.
The consequences on the individuals involved and/or affected do not bear thinking about.