PERSONAL INJURY BULLETIN

Personal Injury March 2011 PERSONAL INJURY BULLETIN London Paris Rouen Brussels Geneva Piraeus Dubai Hong Kong Shanghai Singapore Melbourne Sydney First conviction under new UK corporate manslaughter legislation In our last bulletin of November 2010, we reported on the progress of the first case brought against an organisation under the Corporate Manslaughter and Corporate Homicide Act 2007 (the Act ), which came into effect on 6 April 2008. Last month, Cotswold Geotechnical (Holdings) Ltd ( Cotswold ) became the first company to be convicted of corporate manslaughter under the Act. Whilst some commentators contended that the Act was brought into force as a means of providing legal recourse for victims families against the negligent acts of large corporations, this first case has shown that small businesses can and will be prosecuted for unlawful behaviour under the Act. On 8 September 2008, Alex Wright, a 27-year old junior geologist employed by Cotswold, was left working alone in a 3.5 metre deep trench, taking soil samples, when the unsupported soil walls of the trench collapsed and smothered him. He died of traumatic asphyxiation. Wellestablished industry guidelines state that such excavations and trial pits, if indeed they are necessary at all, should only be a maximum of 1.2 metres deep. Kate Leonard, reviewing lawyer at the Special Crime Division of the CPS, said Alex Wright was a young man, full of promise. His death is a tragedy for all those who loved him and would never have happened if Cotswold Geotechnical Holdings had properly protected him. The CPS has dropped a separate case brought against Cotswold s sole director, Peter Eaton, in his own right, for the manslaughter of Mr Wright, due to Mr Eaton s poor health. In order to secure a conviction for corporate manslaughter under the Act, the prosecution must prove that the organisation, which owed the victim (in most cases an employee) a duty of care, caused that person s death (section 1(1) of the Act). In addition, a substantial element of the breach of the duty of care must be due to the way senior management managed or

organised its activities (section 1(3) of the Act). As it stands in the Act, senior management means the persons who play significant roles in the making of decisions about how the whole or a substantial part of its activities are to be managed or organised, or the actual managing or organising of the whole or a substantial part of those activities (section 1(4) of the Act). Courts have yet to interpret what constitutes senior management, as this was not in question in the Cotswold case. Cotswold s conviction for the corporate manslaughter of Mr Wright does go some way to show how the courts are approaching such prosecutions. In particular, the extent of fines imposed on small companies. Cotswold have since been fined 385,000, payable over ten years, given the company s poor financial state. This was despite the Sentencing Guidelines Council s recommendation that the appropriate fine for corporate manslaughter convictions should seldom be less than 500,000. However, some have argued that it will not be until a much larger company faces prosecution for corporate manslaughter that we will really see how the courts intend to use some of their powers under the Act, including fines and the granting of remedial and publicity orders. Rachel Butlin, Associate, on +44 (0)20 7264 8121 or rachel.butlin@hfw.com, or your usual contact at HFW. IMO prohibition of all asbestos on newbuild vessels In light of concerns that vessels, which were asbestos-free when they were built, are having asbestos containing materials added to them by shipbuilders and ship repairers, the International Maritime Organisation (IMO) has approved the Information on Prohibiting the Use of Asbestos on Board Ships. The prohibition, which came into effect on 1 January 2011, marks an amendment to SOLAS regulation II-1/3-5 and forbids any installation of materials containing asbestos on all ships without exceptions, whether in the construction of newbuildings or the renovation of existing vessels. Rachel Butlin, Associate, on +44 (0)20 7264 8121 or rachel.butlin@hfw.com, or your usual contact at HFW. ENIM s right of action under French law For those who have, in the past, dealt with ENIM, the workings of this French institution probably seem mysterious and, in many ways, old-fashioned. This is perhaps not surprising since ENIM, the acronym for Etablissement National des Invalides de la Marine, which is considered as being the father of the French social security system, was created by Louis XIV almost 350 years ago, in 1670. We discuss below how the payments under ENIM work in relation to seafarers. Whereas there are similarities between the general social security regime in France and ENIM, as with many things of a maritime nature, the regime under EMIN is subject to special regulations (e.g a Decree dated 17 June 1938) and to specific rules. Through two different funds ( Caisse des Retraites des Marins and Caisse Générale de Prévoyance ), ENIM is in charge of the health and the retirement of seafarers working on board vessels flying the French flag, as well as of many of the land-based employees working for shipping companies in France. In the event of sickness or an accident at work, medical care is funded by ENIM. It also provides daily allowances to the seafarer in case of temporary disability and, in case of permanent reduction of working capacity, the seafarer is entitled to a lump sum payment as well as an annuity, depending on the extent of permanent disability. In cases of a seafarer s death, the beneficiaries (spouse, children and related dependents) receive a pension. A life pension is paid to the seafarer s wife (or husband) and the children receive a pension until they reach the age of 16 although this rises to 21 if the children are studying. ENIM s right of action under French law ENIM s right of action is governed by French law, under which, in its position as the institution responsible for paying benefits to an injured person, ENIM has a right of recovery to recoup the benefits paid out, from the person(s)/company(ies) who caused the injury. In this respect, ENIM is entitled to seek the reimbursement of sums already paid to the injured person or his family, 02 Personal Injury

as well as any future benefits it will have to pay to them, for instance, a life invalidity pension, which, for the purpose of recovery will be capitalised. In order to facilitate such a recovery action by ENIM, the injured person or his/her dependants have an obligation to bring ENIM into any proceedings in which he or they claim compensation for the loss resulting from the injury. Furthermore, if a settlement agreement is signed between the injured person and the third party compensator without ENIM being a party, the agreement is not binding upon ENIM and will not constitute a bar to ENIM bringing its subrogated claims against any third party which it considers to be responsible for the injury. This is important to remember when considering any settlement and to be overlooked at your peril. A further consequence of ENIM having a right of direct action in respect of the injured person s rights, is that any defence which the accused third party raises as against the injured person can equally be raised as a defence to a subrogated claim by ENIM. For instance, the French Supreme Court has confirmed on several occasions that the two year time bar for the commencement of actions applying to collisions at sea applies to ENIM as it would any other claimant. In the event of a work-related accident, ENIM s right of action is specifically governed by Article 20 of the Decree of 1938, which provides: When the accident is attributable to a third party other than the employer or his servant, the victim or his/her successors remain entitled to require the person liable for the accident to indemnify them for their loss in so far as this loss has not been indemnified pursuant to the present Decree. ( ) If the responsibility of the third party is full or shared with the victim, ENIM is entitled to seek reimbursement of the benefits it had to pay, up to the damages which are due by this third party. Employer s immunity: under this text, a claim can be brought against any third party other than the employer or his servant. One significant point to note is that a general principle of French law is that employees have no right to bring a claim against their employer for a work-related accident, except in cases of gross negligence ( faute inexcusable ). This immunity is even stronger in case of seafarers work-related accidents, where no claim can be brought against the employer, even in the case of faute inexcusable. To get round this immunity, the seafarer and ENIM must prove there was a deliberate intention on the part of the employer to cause the employee s injury ( faute intentionnelle ) which is obviously a very high standard of proof to meet. However, the odds are not totally stacked against third parties, as a third party responsible for a workrelated accident is entitled to raise the fault of the injured person as a defence and the level of contributory negligence is taken into consideration when assessing any award of damages. Also Article 20 should be construed as permitting the third party to raise the fault of the employer as a defence. This view has been upheld by the French Supreme Court, which held that: the third party responsible for the injury caused by a work related accident is entitled to limit his liability if the accident is partly due to the fault of the employer or his servant. It is however difficult to discuss and to settle claims with ENIM, which is usually reluctant to accept an apportionment of liability especially in collision cases. This can be particularly frustrating as, for the reasons set out above, ENIM s agreement to any proposed settlement is required. Recently, there have been some developments, which have considerably improved the victims rights under the general social security regime both in terms of legislation and case law. It remains to be seen how these will filter through into ENIM s regime. Stephanie Schweitzer, Partner, on +33 (0)1 44 94 40 50 or stephanie.schweitzer@hfw.com, or your usual contact at HFW. Recently, there have been some developments, which have considerably improved the victims rights under the general social security regime both in terms of legislation and case law. 03 Personal Injury

Part 36 offers We discuss and summarise below some of the important decisions in this area of litigation. 1. Claimant to pay defendant s costs despite beating the defendant s Part 36 offer at trial. The case of Carver v BAA Plc [2008] EWCA Civ 412, involved an air hostess, Miss Carver, who, when making her way into a terminal building at Gatwick Airport, stepped into a lift which, because of a defect, was two feet below floor level. Miss Carver ( C ) fell heavily on her left side and suffered ligament damage to her left ankle. At the time of trial, the defendant s offer amounted to 4,520. At trial, C was awarded damages of 4,686.20 inclusive of interest. Once interest on the defendant s offer was taken into account, it was evident that, at trial, C had been awarded 51 more than the defendant s offer. The judge at first instance observed that the real issue now is who is the winner. He held that C was not in practical terms the successful party and, under CPR 36.14(2) it would be unjust to make the defendant pay costs. C appealed, submitting that, under CPR 36.14(1)(a), she had obtained a judgment more advantageous than the defendant s offer, which was evident when one compared the amounts of money. The Court of Appeal dismissed her appeal. Ward LJ held that more needed to be taken in account than the financial sums involved. He stated that Part 36 permits a more wideranging review of all the facts and circumstances of the case in deciding whether the judgment, which is the fruit of the litigation, was worth the fight. [...] No reasonable litigant would have embarked upon this campaign for a gain of 51. This case undoubtedly added uncertainty as to the interpretation of CPR Part 36, in particular the meaning of the phrase more advantageous which appears, even in money cases, to take more into account than simply the financial side of things. As Ward LJ put it, money is not the sole governing criterion. 2. LG Blower v Reeves - a limit on Carver? In this 2010 appeal case of LG Blower Bricklayer Specialist Ltd v Reeves and another [2010] EWCA Civ 726 the defendants were awarded 8,375.94 at trial. In financial terms overall, the defendants had failed to beat the claimant s offer by 661.38. The defendants were, however, only ordered to pay less than half of the claimant s costs. This was due to the conduct of the claimant; in particular his reluctance at the start of the proceedings to discuss settlement. Moore-Bick LJ acknowledged that the decision in Carver had been criticised but recognised that it was binding on the court. Moore-Bick LJ nevertheless constrained the adoption of the principles in Carver to rare cases where the offer has been beaten by a very small amount and there is clear evidence that the successful party has suffered serious adverse consequences as a result of pursuing the case to judgment. It is therefore likely that, only cases involving small differences between the judgment amount and the offer amount need consider the Carver judgment and that, in the majority of cases, the financial difference will dictate whether the judgment is more advantageous than the offer. Both Carver and LG Blower are important judgments. They show that whether a judgment amount has beaten a settlement offer does not necessarily lead to a definite winner and loser, particularly with regard to costs. The conduct of the parties can be an important factor for the courts in determining the costs consequences for each side. Both of these cases show that parties should be willing to talk about settlement on reasonable terms from the outset. Failure to do so could prove detrimental, even if the judgment obtained is financially more than an offer previously not accepted. 3. A Part 36 offer remains open for acceptance until it is withdrawn, in writing, by the offeror. In addition, recent case law has clarified the position as to the precise drafting required and care needed when making and withdrawing Part 36 offers. The case of Gibbon v Manchester City Council [2010] EWCA Civ 726 concerned a lady, Mrs Gibbon ( G ), who tripped and fell in a playground for which Manchester City Council was responsible. The Council made a Part 36 offer of 1,150. G rejected the Council s offer and made a counter-offer that she would accept 2,500. The Council then made an offer of 1,500 which G also rejected. She did not withdraw her counter-offer of 2,500. The Council then increased its offer 04 Personal Injury

to 2,500 which G also rejected, subsequently also withdrawing her counter-offer. On application, it was held that G had not properly withdrawn the counteroffer under CPR 36.3(7) and 36.9(2) and it was still open for acceptance by the Council. The court then gave judgment for G in the sum of 2,500 but ordered her to pay the Council s costs from the date of the offer, which she appealed. The Court of Appeal held that CPR 36.3(7) and 36.9(2) made it clear that a Part 36 offer can be accepted at any time unless the offeror has withdrawn the offer by serving written notice of withdrawal on the offeree and there is no room for the concept of implied withdrawal. It is important to note therefore that when making offers or contemplating offers from the opposition, that due care is paid to those offers that remain open. 4. An offer which includes a time limit for acceptance is not a Part 36 offer. The recent case of C v D & D2 [2010] EWHC 2940 acts as a warning for those making offers, purportedly under CPR Part 36, underlining that they must follow the requirements of that section. Part 36 is a selfcontained code and the use of its rules can prove beneficial, particularly regarding costs, since a party who has not accepted a Part 36 offer and who fails to then beat that offer at judgment is potentially liable for the other party s costs on an indemnity rather than standard basis, and also risks an order against them for an enhanced interest rate (up to 10% above base rate). The claimant in this case made an offer to the defendant by letter headed Offer to Settle under CPR Part 36. It stated that the offer will be open for 21 days from the date of this letter. The letter also said that the offer was intended to have the costs consequences set out in CPR Part 36. The defendant did not purport to accept the offer for 11 months. Warren J held that an offer which includes a time limit for acceptance is incapable of being a Part 36 offer since, as discussed in the Gibbon case, a Part 36 offer remains open until it is withdrawn and a time limit prevents that from happening. The offer expired after 21 days and the defendant did not in fact accept it. Of particular note is that the judge came to the conclusion despite the letter stating on its face that it was a Part 36 offer letter and despite the clear intention that the offer was intended to have the costs consequences of Part 36. This case, and those discussed above, highlight the care needed when dealing with settlement and serve as an indication of the changing nature of case law in this area. Rachel Butlin (pictured right), Associate, on +44 (0)20 7264 8121 or rachel.butlin@hfw.com, or your usual contact at HFW. Conferences & Events Maritime Emergency Management Bonhill House, London (29-31 March 2011) Jim Cashman 7th Combating Piracy Conference Hamburg (6-7 April 2011) Bill Kerr Background to Shipping Prospero House, London (11-15 April 2011) John Forrester and David Brookes If you are interested in receiving more information about these events, please contact events@hfw.com This case, and those discussed above, highlight the care needed when dealing with settlement and serve as an indication of the changing nature of case law in this area. 05 Personal Injury

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