Adding insult to injury

Published by S-Tech Insurance Services

On 1 October, the HSE’s ‘fee for intervention’ scheme went live, entitling the HSE to recover their costs of carrying out investigations and basic enforcement activity from organisations deemed by the HSE to be in contravention of Health & Safety (H&S) legislation. At the same time, another less well publicised but in many respects more important change took place in the criminal costs landscape.

The position prior to 1 October, which had prevailed for a number of years despite a previous attempt by the then Lord Chancellor to undermine it, was that all individuals and organisations prosecuted for H&S offences (including corporate manslaughter, individual gross negligence manslaughter, and breaches of HSWA and H&S regulations) would be entitled to recover their reasonable legal costs from central funds in the event they were successful in defending themselves at trial or the prosecution was abandoned for some reason. In light of the evidentially complex nature of many H&S cases and what is at stake for defendants, defence costs can often be substantial.

As a result of the recent change, however any organisation prosecuted for H&S offences after 1 October will be unable to recover any of its own legal costs, regardless of whether it mounts a successful defence.

Any individual prosecuted for H&S offences after 1 October will be unable to recover any of his/her own legal costs, unless the prosecution fails while still in the Magistrates’ Court or on appeal from the Magistrates’ Court to the Crown Court. Even in these relatively rare scenarios, the innocent individual’s costs recovery will be capped at legal Aid rates (around £50 per hour).

The implications of this change are concerning and manifold. For example, without the benefit of a comprehensive insurance programme relatively small or cash-poor organisations will now be faced with the ‘option’ of either trying to find the funds to pay experienced defence lawyers from cash or capital, with no hope of recovering these costs, or simply admitting guilt, suffering the commercial and reputational impact of a criminal conviction and risking the imposition of increasingly hefty fines and prosecution costs.

For individuals the situation is equally if not more concerning. In circumstances where insurance cover for individuals is often only granted as part of a sophisticated insurance programme, and even then just for Directors and Senior Manager’s many individuals prosecuted for H&S offences are likely to find themselves without the means to pay for experienced defence lawyers. Those who do have the means to pay will not be entitled to recover their costs if and when they are successful in defending themselves, and those few who qualify for full or partial Legal Aid will be compelled to use a Legal Aid law firm.

Organisations should review their insurance cover to make sure that adequate provision is made for defence costs’; for the company, its management and other staff.

The Government’s ‘doubly whammy’ of increasing HSE costs recovery from companies while at the same time barring the recovery of defence costs by those who are wrongly prosecuted for H&S offences, may come as a heavy blow to a number or organisations. However, the fact remains that with these changes a substantial proportion of the costs of misconceived or otherwise unmerited H&S investigations and prosecutions will shift from the public purse to the pockets of innocent organisations.

For more information contact David Lowe at S-Tech Insurance Services Ltd.

Telephone: 01223 445464

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