Welcome to the latest edition of the Health & Safety client update.  This update focuses on recent developments within the sector.

July 2009

Contents 

	Introduction
	Cases
	- Professional     Negligence
	- Option Contracts: A Message for Developers
	- Prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007
	- No Anonymity for Police Blogger
	- Extent of a Council's Duties as Landlord
	Article
	- Stress at Work Claims What are the Legal Tests?
	- The Hurdles
	- Protection From  Harassment Act 1997
	- Conclusion
	Contact

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Introduction

Welcome to the July 2009 edition of the MMS Commercial Dispute Resolution Update.  In this edition, we take a look at a number of interesting cases from throughout the UK and note a first prosecution under the Corporate Manslaughter & Corporate Homicide Act 2007.  We begin though with a look at a couple of cases recently concluded by our own team, in the fields of professional negligence and property development.  In this edition's article, Colin Sandilands comments on the hurdles to be overcome in claims for damages as a result of stress at work.



Cases
Professional Negligence
Our professional negligence unit settled an insurance brokers' negligence claim just prior to the hearing of the evidence.

They were representing hotel owners Caluso Ltd who claimed against their former brokers in respect of their failure to advise on a condition requiring an automatic
cut-off in cooking and frying equipment. The policy was avoided by insurers NIG following a fire in the hotel kitchen and Caluso were unable to raise alternative finance to
re-instate.

Liability was ultimately admitted and the case revolved around issues of quantum and causation. In particular, Caluso sought to claim, in addition to the reinstatement costs and business interruption cover they would have received if the policy had not been avoided, consequential loss of profit for the period following the business interruption period under the policy. Traditionally such claims have fallen foul of the rule against claiming damages for failure to pay damages. However, the case of Arbory Group Ltd v Craven Insurance Services [2007] PNLR 23 established a precedent for allowing such claims on the basis that the insurance broker's duty included a duty to protect the prospects of the insured's recovery by way of securing an adequate payment from the underwriters.

Option Contracts: A Message for Developers
Option contracts are coming under exceptional scrutiny in the wake of the economic slowdown.  The Commercial Court has recently ruled in a case which illustrates why developers cannot afford to be careless of the interests of others when exercising their rights under contracts giving them an option to acquire land.

Our property litigation unit recently acted on behalf of a landowner in successfully defending an application to the Court by a developer seeking to compel a landowner to execute a section 75 planning agreement. Following a three day Debate in March of this year, the developers' case was dismissed by the Judge as irrelevant. Whilst, to a significant degree, the case turned on its own facts, the decision could have far reaching consequences in relation to how planning gain agreements are negotiated in future.

A section 75 agreement is used by planning authorities, in this case Aberdeenshire Council, to secure contributions in money or in kind to offset the infrastructural impact and requirements of development. Here, the developer had entered into two separate option contracts to acquire two adjacent areas of land from the landowner. Both contracts contained a number of suspensive conditions - in particular, that the developer obtain planning permission. The contracts entrusted the developer with the prime responsibility for the planning process within various parameters. In December 2008, Aberdeenshire Council duly resolved to grant planning permission subject to a section 75 agreement covering a number of issues.

Both contracts required the landowners, at the request of the developers, to sign an agreement which was: (1) a
pre-requisite of obtaining planning permission; and (2) reasonable. The developers duly negotiated a single section 75 agreement covering both areas of land and submitted two separate requests, under each contract, that the landowners execute it. The landowners declined to do so arguing that the developers had failed to pay proper regard to their interests.  Therefore the developers raised court proceedings with the deadline for executing an option looming large.

The landowners successfully defeated the case at
Debate - without the need for evidence.  The developers argued that, as the agreement was required as a
pre-requisite of obtaining planning permission, it was reasonable and that the landowners were obliged to execute it. In contrast, we submitted that the contract presented a two-fold test and the neither hurdle had been overcome. We argued that the agreement could not be a pre-requisite of obtaining planning permission in relation to each area of land as it sought to regulate development on the other. Further, we argued that the agreement imposed a number of significant liabilities and obligations on the landlowners which were not reasonable. It was envisaged that one of the options would be exercised in tranches and so, unlike a single phase acquisition, the landowners were likely to remain on the hook for a number of the obligations and liabilities for a significant period.

The Judge accepted our arguments and dismissed the action. In relation to the question of reasonableness, the Judge noted that it was significant that that the developers had not sought to address the landowners concerns by other means. For option holders the need to communicate with landowners is underlined.  Issues can then often be tackled by using undertakings or indemnities to address landowners' concerns.

Prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007 
The Crown Prosecution Service (CPS) has announced that it is to bring the first ever prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007, which came into force just over a year ago. 

Cotswold Geotechnical Holdings will be prosecuted under the Act and for health & safety offences over the death of an employee who was killed in September 2008 when the sides of the pit in which he had been collecting soil samples collapsed and crushed him.

In addition, one of the company directors has been charged on an individual basis with gross negligence and with breach of the Health & Safety at Work Act. 

The CPS said: "Under the Corporate Manslaughter and Corporate Homicide Act 2007, an organisation is guilty of corporate manslaughter if the way in which its activities are managed or organised, causes a death and amounts to a gross breach of a duty of care to the person who died."  A substantial part of the breach must have been in the way activities were organised by senior management. "I have concluded that there is sufficient evidence for a realistic prospect of conviction for this offence."

The penalty for a conviction for corporate manslaughter is an unlimited fine for the organisation.  The court can also impose publicity and remedial orders.  A conviction for gross negligence manslaughter carries a maximum sentence of life imprisonment for the individual, although sentences are typically around the 18 month to 2 years mark. 

The case is calling in court this month and we will be keeping a close eye on its progress.

No Anonymity for Police Blogger
The High Court has refused to allow a police blogger to remain anonymous.

A serving police officer, calling himself "Night Jack - an English detective" sought an injunction to prevent the Times newspaper from revealing his identity.  In his blogs, Night Jack talked of local criminals, police bureaucracy and expressed strong views on a range of  topical issues.

Night Jack's lawyers argued that preserving his anonymity was in the public interest and that all the blogger's readers needed to know about him was that he was serving police officer.

The Judge rejected this argument, deciding blogging was "essentially a public rather than a private activity".  He determined that knowing the experience or seniority of the commentator would allow readers to make an informed judgement on Night Jack's views.  He also commented that it was not part of the court's function to protect police officers from potential disciplinary action. It was said such action could be initiated against Night Jack as a result of the nature of the information being communicated to the public through his blogs.

Extent of a Council's Duties as Landlord
In a case that will be of interest throughout the UK, the House of Lords has ruled that a Council will not be held liable for the criminal conduct of its tenants or for a failure to warn one tenant of threats made by another.

In Mitchell v Glasgow City Council, the Council were sued by the family of the late Mr Mitchell.  The family argued that the Council had a duty of care to protect their tenant, Mr Mitchell, from another tenant and had a duty to warn Mr Mitchell of threats made by the other tenant against him.  Shortly after making threats to do so, the tenant assaulted Mr Mitchell, inflicting wounds that led to his death. 

In determining that the Council were not subject to the duties advanced by the family of Mr Mitchell, the House of Lords remarked that, had they concluded such duties existed, there was no obvious reason why those duties should not also apply to private landlords and possibly others.

The court also noted that if such duties were imposed, Councils and others would be obliged to spend a great deal of time and money implementing a practice of giving warnings as a matter of routine, when their focus would more usefully be devoted to their primary functions. 

The case therefore puts the brakes on this potential extension of a Council's duties and provides a degree of comfort to landlords.
 
Mitchell v Glasgow City Council 2009 SLT 247



Article
Stress at Work Claims - What are the Legal Tests?
The Health and Safety Executive report on survey results from 2007/08 which bring out that an estimated 442,000 individuals in Britain, who worked in the last year, believed that they were experiencing work-related stress at a level that was making them ill. 

As well as resulting in days being lost due to ill health absence, some of these employees might also have claims for damages in relation to injury to their health. 

"Stress at work" claims have been running through the Courts over the last 20 years or so.  One such recent case in the English High Court, Connor v Surrey County Council, has attracted considerable press attention.  The claimant, a head teacher, sued her employers in respect of their failure to protect her and intervene over the behaviour of two school governors.  Ms Connor suffered depression and symptoms of post traumatic stress disorder, leading to early retirement. The Court awarded Ms Connor 400,000 in damages.

This level of award highlights the potential cost award of damages highlights the potential cost to employers of such claims, but what are the legal tests involved in pursuing or defending a "stress at work" case of this type?

The Hurdles
There are a number of hurdles which must each be overcome if a claim is to be successful:

1. The claimant must have suffered a psychiatric illness (rather than stress or anxiety falling short of this).
   
   
2. It must have been reasonably foreseeable to the employer that there was a real risk of the claimant developing a psychiatric illness.  This is very difficult to prove. The court will have to be satisfied that there was a particular reason why the employer was, or ought to have been, aware of the risk.  A court might determine that this hurdle can be overcome if the employee had been absent due to work related stress on an earlier occasion (as was the case in Walker
   v Northumberland County Council).
   
   
3. Once it is, or ought to be, reasonably foreseeable to the employer that there is a real risk of the employee developing a psychiatric illness, the employer is under a duty to take reasonable steps to prevent that harm occurring.  Whether the employer has taken reasonable steps is assessed having regard to the magnitude of the risk and the nature, size and resources of the employer.  It is important to look carefully at what the employer did.  Expert evidence may be needed as to whether any steps taken were reasonable.  Regard might also be had to whether the employer breached any relevant statutes, such as the Health & Safety at Work Act 1974.
   
   
4. It is necessary for the claimant to prove that the psychiatric illness was caused by the event constituting the breach of duty.

In practice these are difficult hurdles to overcome. 

Protection From Harassment Act 1997
Given the difficulties of succeeding with stress at work cases advanced under the common law, it is worth considering whether the Protection from Harassment Act might offer an easier route to damages in certain cases.

A claim under the 1997 Act does not involve the same hurdles.  It requires a course of conduct intended to amount to harassment or that would appear to a reasonable person to amount to harassment.  The Courts have also determined that an employer can be vicariously liable for harassment perpetrated by its employee.

Whereas that appears to open a clear route for claimants, the Courts' interpretation of what is meant by harassment has curtailed that possibility to a considerable extent.  Recent authorities indicate that the conduct complained of must be serious enough to amount to a criminal act.  This will be a difficult test to satisfy in most cases.

Conclusion
Actions for damages in "stress at work" claims remain possible but difficult. There are many hurdles to overcome.  A feature of many such cases is that they involve problems that have been left for a long time without being adequately tackled. Difficulties have often become more and more entrenched as a result.  Such claims often call for sensitive handling given the nature of the injury involved and also the likelihood that relationships with, or among, senior staff often feature heavily. Early intervention when the signs of potential ill health are spotted must be a priority.

For more information on stress at work claims, please contact Colin Sandilands on 0131 228 7249 or colin.sandilands@mms.co.uk

Contact

If you would like further information on the contents of this email, or like to discuss how we may be able to assist you, please contact:

Douglas Blyth
Associate
0141 303 2471
douglas.blyth@mms.co.uk