First Corporate Manslaughter conviction

Have the floodgates now opened and are you at risk? The jury in the trial of Cotswold Geotechnical (Holdings) Ltd took just one and a half hours to find the company guilty of failing to ensure the safety of one of its employees, Mr Wright.
Mr Wright was alone in a 4 metre deep trial pit in which the excavated sides were not supported. The pit collapsed on Mr Wright who was crushed to death by the weight of the soil. In line with industry wide safety regulations, and the company’s own health and safety requirements, the sides of the pit should have had earthwork support, and if the sides had been so supported the tragedy may have been averted. Cotswold Geotechnical was prosecuted under the Corporate Manslaughter and Corporate Homicide Act 2007, and was fined £385,000. The use of this Act is a big sanction that the HSE can employ, and Companies and Company Directors are at real risk of being prosecuted under the Act. Apparently there are a number of other Corporate Manslaughter cases that may come before the Courts, and the Cotswold Geotechnical case may just be the first of many to be heard in the coming months. If you need any more information about the Corporate Manslaughter and Corporate Homicide Act 2007 and how its application may affect your business, then you need to contact us without delay.

Insolvent Company Adjudications

Buying an insolvent company’s assets / contracts may not permit the buyer to use adjudication to recover monies. In the current economic climate where cash-flow and cost control are all important, a buyer who has taken over an insolvent party’s assets should be cautious in assuming that the right to use adjudication to recover monies due under that contract is available to it. Whilst the guidance from the Courts on this matter is inconclusive, if the assignment is not properly put in place, the way that the assignment was formed may be used as a defence to enforcement proceedings, a defence that may well be successful. Therefore, in this are in particular area the old legal maxim ‘caveat emptor’ (i.e. ‘buyer beware’) particularly comes into play. If you need advice regarding the above matters (either in respect of assignments or in respect of using adjudication provisions where insolvent companies are involved), please contact us so we can give you the appropriate advice

'Tolent’ clause ‘alive and well’ in Scotland

A recent court case in Scotland indicated that a ‘Tolent’ type clause in Scotland would not be considered to be ineffective, a judgment that is contrary to the recent English Courts’ view that ‘Tolent’ type clauses are ineffective as decided in Yuanda (UK) Co. V WW Gear Construction Ltd. In the very recent April 2011 Scottish case of Profile Projects Ltd v Elmwood (Glasgow) Ltd it was found that a clause in the contract between the parties which said that, in the event that the parties go to adjudication, the Referring Party would be responsible for both parties costs (and the Adjudicator’s fees and expenses) (colloquially referred to as a ‘Tolent’ clause (following the Bridgeway v Tolent English case in 2000)) was not ineffective. An argument that was run was that the ‘Tolent’ clause in question should be considered to be ineffective because it prevented a party from going to adjudication at any time. However, the Scottish court rejected that argument and found that the clause in question did not prevent the Referring Party from going to adjudication at any time, but may have discouraged the Referring Party from doing so. As the clause in question did not act as an actual bar to adjudication it could not be considered to be non-compliant with the HGCRA 1996. Clearly, therefore there now appears to be two opposing views in respect of ‘Tolent’ clause depending upon whether the matter is considered by the English courts or by the Scottish courts. This inconsistency between the Courts north and south of the border, simply makes a complicated area of the law even more difficult for contractors and subcontractors to understand. Therefore, if you need advice regarding a ‘Tolent’ type clause in your contract or subcontract, please contact us so we can provide you with advice based upon the current state of the law.