Legalised ignorance? – director's acquittal illustrates the threat of H&S legislative change

Introduction

"Legalised ignorance" was the description by Stephen Hepburn MP of the alleged state of knowledge of health and safety matters in UK boardrooms when introducing his Health and Safety (Directors Duties) Bill in January 2005. That proposed legislation failed in the House of Commons last Friday evening (4 March) but it is not the first such attempt and will not be the last. This article analyses the recent prosecution of a director following a fatal accident and illustrates why changes such as those proposed by Mr Hepburn represent a threat to all UK directors not just those designated with responsibility for health and safety duties. The article also describes the problem of overlapping directors legal expenses insurance and the solution to the issue in this case.

HSE v Wilcox – the facts

Malcolm France died on 29 October 2001. He was an experienced maintenance engineer at a rubber factory. He had been employed at the factory for more than 20 years, was proud of his role and respected by his colleagues. He was known around the plant as "Mr Safety". Malcolm France trained other engineering staff in the use of safety procedures for various machinery. On the day he died he had been accompanying a quality assurance inspector on a tour of the factory and was annoyed to have been called away to deal with a breakdown on a rubber-mixing machine.

The machine operators had had intermittent problems with the 'Mark III' mixer over several weeks. One of a number of problems was that rubber would stick to the hydraulic door at the base of the machine where the mixed rubber would drop out on to a conveyor belt. The door would occasionally jam and the machine could not be operated further when that happened. The cause of the jams was under investigation by line managers.

Mr France's immediate task was to get the machine working again so that production could resume. No doubt he was also conscious that his visitor was waiting for him to return. Instead of using the safety interlock system which completely disabled the machine and made it harmless (but which took some 5-7 minutes to complete), Mr France pressed an emergency stop button and went underneath the machine to inspect and clear the door area. From that position he could not be seen from the operator's platform. The operators had gone for 'a smoke break'. An engineering colleague who had worked on the machine earlier that day happened to come back and re-activated the machine without checking underneath. Mr France was killed instantly.

Prosecution of David Wilcox

The Police, HSE inspectors and their expert were called to the factory. The Police concluded that it had been a tragic accident. After investigation, the HSE commenced criminal proceedings both against the Company and its manufacturing director, David Wilcox, who had responsibilities (with others) for health and safety. The Company pleaded guilty to shortcomings in various of its safety procedures which the HSE investigation had uncovered and which it accepted had contributed to its employees, including Mr France, being exposed to the risk of injury (s.2 Health and Safety at Work Act (HSWA) 1974). An example was that the Health and Safety Manager had not completed a detailed risk assessment for maintenance operations on the machine. The Company was duly convicted and ordered to pay a substantial fine (£175,000) related to its turnover and ability to pay.

The prosecution against Mr Wilcox continued, almost certainly due to changes to HSE guidelines for prosecutors in July 2004, which encouraged such proceedings to be actively pursued in fatal accident cases. The charge against him was that by his "consent, connivance or neglect" (s.37 HSWA 1974), he was said to have caused the Company to be in breach of its legal obligations. On the factory floor, of course, David Wilcox was regarded as being "on trial for causing the death of Malcolm France". Since this was a serious criminal charge it was set down to be heard before a jury in the Crown Court. If convicted Mr Wilcox was exposed to an unlimited fine (although not imprisonment) and would have a criminal record.

The case against Mr Wilcox was based upon his response to an accident (on the same mixer machine) 17 days before Mr France's death. One of the machine operators – knowing that he should have called a maintenance engineer – instead ignored safety rules and went under the working machine to clear rubber from the door seal. He badly gashed his finger on a turning rotor. The accident was reported to Mr Wilcox. He spoke to the injured operator on site and learned from him that other operators were similarly ignoring safety procedures. Mr Wilcox gave oral instructions via his production and engineering managers to the effect that only engineers were to carry out maintenance work on the mixer, and then only when the machine had been properly shut down using the full safety interlock system. Notwithstanding this, Mr France died 17 days later in the circumstances described above.

At trial Mr Wilcox was criticised by the prosecution's QC, amongst other things for:

• failing to carry out a written risk assessment or give a written warning after the first accident
• failing to establish that shortcuts with safety were being taken not only by machine operators but by engineers, including Mr France
• failing, personally, to check that Mr France and others were correctly following proper procedures as they had been instructed to do (and as the engineering manager had confirmed to Mr Wilcox that they were).

On 24 January 2005, after a 6-day trial, the jury rejected those (and other) criticisms and returned a unanimous verdict of 'not guilty'.

Proposed changes to the law – implications

The Health and Safety (Directors Duties) Bill 2005 was the fifth Private Members Bill to be introduced in this area since 2000. Each has failed, so far, but the pressure (from trade unions and other campaigning groups) is likely to continue until further legislative change is achieved.

It is not possible to say that had the latest Bill been in force then Mr Wilcox would have been convicted on the facts of his case. However, it is possible to say that had it applied it would probably have greatly increased the number of allegations against him, making a successful defence more difficult and expensive to achieve. Of wider potential concern is that it would potentially have exposed every other member of the Company's board to similar allegations and perhaps criminal charges. The reason is that the Bill proposed the creation of a Health and Safety Information Director (HSID) whose job would have included: reporting "promptly" to other directors any "death, injuries or other incident"; reporting what steps were required to prevent recurrence of those events and; informing the board of the health and safety implications of its decisions. This part of the Bill was aimed at large companies but could in time have been amended to apply to medium-sized and small companies.

On the facts of Mr Wilcox's case the scope of the prosecution would almost certainly have moved 'inside the boardroom' with the HSE seeking to show that the HSID did not advise other directors appropriately or in sufficient detail, or that the board did not give sufficient weight or act promptly enough in response to the HSID's recommendations. The potential for conflict between directors in these circumstances is obvious.

With the failure of the draft Bill last Friday that immediate prospect has now receded. However, the general threat of similar legislative change remains, perhaps next time with active government support.

Legal expenses – double insurance

As a postscript, Mr Wilcox's case also threw up the issue of double insurance. Typically this can arise when there is a merger of different companies, the involvement of separate brokers for different types of insurance cover, or just insufficient co-ordination of insurance requirements. In respect of the legal costs arising from the HSE prosecution, Mr Wilcox had the benefit of cover both under the Company's Employers Liability (EL) policy and the Directors & Officers (D&O) policy. Each policy had a relevant limitation clause as follows:

EL: "Contribution: if at any time any claim arises under this Policy there be any other insurance effected by or on behalf of the Insured covering the same…liability…. the Company will not be liable to pay or contribute more than its rateable proportion of any such claim and costs and expenses in connection therewith".

D & O: "Other insurance: Underwriters shall not be liable to pay or indemnify… loss in respect of which the Director or Officer are entitled to indemnity under any other insurance, so that this Certificate can only contribute excess of such other insurance…".

The Courts' approach where this situation occurs is illustrated by the following extract from the leading case; National Employers v Haydon (1980) 2 L R 149:

"You look at each policy independently and if each would be liable but for the existence of the other then the exclusion clauses would be treated as cancelling each other out; both insurers are then liable".

In this case agreement was reached between the two insurers concerned and Mr Wilcox's defence costs were paid on a 50:50 basis. The majority of those costs will now be recovered from Central Funds (i.e. taxpayers funds) following the successful defence.

Simon Chandler is a solicitor in the insurance and reinsurance group at CMS Cameron McKenna's Bristol office and acted for David Wilcox in this case. For more information, please email [email protected] or phone +44(0)117 9300 200.