she matters - dla piper

SHE MATTERSIN THIS ISSUE04 BARR V BIFFA WASTE SERVICES LIMITED

06 CORPORATE MANSLAUGHTER AND THE WORK RELATED DEATH PROTOCOL – AN UPDATE

08 NEW ASBESTOS LEGISLATION

10 WILL BUSINESSES SEE ANY BENEFITS FROM THE GOVERNMENT’S ENVIRONMENTAL RED TAPE CHALLENGE?

12 QUARRY DEWATERING: REQUIREMENT FOR ABSTRACTION LICENCES

14 CHANDLER V CAPE PLC

16 LANDFILL TAX – GUIDANCE, MORE GUIDANCE AND CLARIFICATIONS

18 IN BRIEF

The Safety, Health and Environment newsletter from DLA Piper UK LLP

SUMMER 2012

02 | The Safety, Health and Environment newsletter from DLA Piper UK LLP

SHE MATTErS

Teresa HitchcockPartner

It is wise not to have unrealistic expectations of environmental and health and safety legislation, or indeed of the law generally.

An interesting example of such unrealistic expectations is the reference in the article in this edition of SHE Matters on Corporate Manslaughter and the Work related Death Protocol, to a Parliamentary Question on the workings of the Corporate Manslaughter & Corporate Homicide Act 2007. The MP asking the question assumed that, since the Act had been in force for four years and 250-350 people die at work each year, there must be something wrong, if only two companies had been prosecuted.

However, for a prosecution under the Act to be brought, there must be cogent evidence that a gross breach by an organisation of a relevant duty of care caused the death of a person to whom that duty was owed, and that the way in which the organisation’s activities were managed or organised by its senior management was a substantial element of the breach. Clearly it is only in very particular circumstances that these requirements are likely to be satisfied. While the 2007 Act may have removed some of the difficulties in the way of the prosecution of large companies for an offence in the nature of manslaughter, it did not remove all of those difficulties.

Against that background, it would be naïve to assume that even a significant part of the annual tally of fatal incidents at work should lead to a prosecution under the 2007 Act.

This should be no ground for complacency on the part of responsible management.

The technical limitations associated with prosecutions under the 2007 Act do not apply to breaches of general health and safety law, where it is not necessary to show that adverse consequences resulted from the breach. Heavy penalties can be imposed merely as a result of exposing employees or others to risk, though if the incident in fact resulted in a fatality or injury, this will also be reflected in the penalty.

A more realistic expectation is that environmental and health and safety laws should be clear, and not unnecessarily burdensome. The news of the ongoing work on ACOPs resulting from the Löfstedt report, and the progress of the Environmental red Tape Challenge, reported on in this issue, is therefore to be welcomed.

From time to time we welcome to SHE Matters contributions from outside the SHE team and from DLA Piper offices throughout the world. This issue contains an article on the recent Court of Appeal decision in Chandler v Cape Plc, a large part of which has been contributed by DLA Piper’s Insurance team. The decision shows how in certain circumstances parent companies can acquire liabilities which would normally have been expected to have fallen on their subsidiaries, notwithstanding the traditional doctrine of the “corporate veil”, under which parents and their subsidiaries are treated as entirely distinct legal persons. This case was about civil claims, but we also consider how similar situations may arise in a regulatory context.

www.dlapiper.com | 03

BARR V BIFFAWASTE SERVICES

In the last edition of SHE matters, we reported on the decision in Barr v Biffa Waste Services Ltd, in which the Technology & Construction Court, part of the High Court, dismissed a claim by 152 households on a housing estate in respect of odour nuisance emanating from a nearby landfill site operated by Biffa Waste Services.

In that case the Technology and Construction Court had held that where an operator was operating under, and had complied with, the terms of an environmental permit, and was taking all of the precautions that could reasonably be taken consistent with that, to avoid harm to the Claimants, then the carrying on of the permitted activities would be treated as a reasonable user of land, so that a claim in private nuisance would fail. The basis of this decision was an extension to environmental permitting of the accepted principle that a grant of

planning permission of a “strategic” nature can be taken as giving rise to a change in the character of the neighbourhood for the purposes of deciding whether particular activities amounted to a nuisance.

The Claimant in this case appealed to the Court of Appeal, which has recently upheld the appeal.

The Claimants appealed against the court’s decision and Biffa cross-appealed. The Court of Appeal held, allowing the appeal, that the “controlling principle” of the law of nuisance of “reasonable user” was a different way of describing old principles, not “an excuse for reinventing them”. The Court of Appeal noted that there was no principle that the common law should “march with” a statutory scheme covering a similar subject matter. Short of express or implied statutory authority to commit a nuisance there was no basis, in principle or authority, for using such a statutory scheme to cut down private law rights.

Court of Appeal overturns High Court decision


It was found that the permit was not “strategic” in nature, nor did it change the essential “character” of the neighbourhood, which had long included tipping. In this case, the only change had been the introduction of a more offensive form of waste, producing a new type of smell emission. Furthermore, the permit did not, and did not purport to, authorise the emission of such smells.

There was no requirement for the claimants to allege or prove negligence (in the special sense of failure to take reasonable precautions in the operation of the facility to protect neighbours) or breach of condition. Even if compliance with a statutory permit is capable of being a relevant factor, it would be for the defendant to prove compliance, not the other way round.

The Court of Appeal also dismissed a cross appeal by Biffa that it should be regarded as having statutory authority to commit a nuisance by reason of its operating permit from the Environment Agency, and was thus immune from common law private nuisance claims.

The Court of Appeal’s decision essentially restates the law as it was prior to the decision in the High Court.

While operators may take the view that it was a pity that the Court of Appeal did not see fit to follow what might be regarded as a logical extension of recent developments in the case law, it is unlikely that the decision will open a floodgate of claims against operators.

Civil claims in nuisance are relatively rare, because they are costly and risky for claimants. Most claimants will seek to engage the intervention of the relevant regulatory authorities rather than bring a civil claim. In this particular case the Environment Agency had not responded appropriately to complaints from residents, and was heavily criticised for this by the judge at first instance.

The Court of Appeal’s decision does not affect the operation of the traditional doctrine of statutory authority, under which infrastructure such as railway lines, which are authorised by Act of Parliament, are protected against claims in nuisance, provided that the operator takes reasonable precautions to protect neighbours, as referred to above, and is therefore not negligent in that special sense.

The Court of Appeal’s decision also does not affect the principle under which the “character of the neighbourhood may be changed as a result of the grant of planning permission.

It should be noted in this connection that another recent decision of the Court of Appeal, Coventry (t/a RDC Promotions) and another v Lawrence and others, appears to have tightened the conditions for operators relying on this principle. It appears that it will be necessary to show that the permission has not merely been granted, but also implemented, for planning permission to be capable of being relied on to support the contention that a particular use of land is reasonable. However the Court of Appeal in the Coventry v Lawrence case appears to have relaxed the principle in another respect, by accepting that the implementation of a series of planning permissions may have changed the character of the neighbourhood, for the purposes of nuisance litigation, notwithstanding that the planning permissions were not individually of a “strategic” nature.

In another respect the Barr v Biffa case is of interest in suggesting that the courts may be more flexible in granting remedies in nuisance claims. There is a suggestion that while compliance with an environmental permit may not provide a defence to a claim for damages for nuisance, it should be taken into account in deciding whether or not the claimant is entitled to an injunction to prevent the activities giving rise to the nuisance. In the past the courts have accepted that it is only in exceptional cases that, having established a nuisance, the claimant should not be entitled to an injunction, but this may not necessarily be the case in future.

It is understood that appeals have been lodged with the Supreme Court against the decisions of the Court of Appeal in both the Barr v Biffa and Coventry v Lawrence cases, and in a third case relating to the law of nuisance. However it appears that the Supreme Court is taking some time to decide whether or not to hear these appeals.

For further information, please contact:

Noy Trounson Barrister in employed practice T +44 (0)207 796 6318 +44 (0)114 283 3097 [email protected]


CORPORATE MANSLAUGHTER AND THE WORK RELATED DEATH PROTOCOL – AN UPDATE

CORPORATE MANSLAUGHTER – HAVE WE LEARNT ANyTHING?

As many reading this article will know, the Corporate Manslaughter and Corporate Homicide Act 2007 was introduced after many years of discussion and redrafting, with the aim of making it easier for large organisations to be prosecuted where a corporate management failing caused a death. The Act came into force (in the main) in April 2008, but since then its use has been very limited.

BACKGROUND

The Act allows the court to look at management systems and practices across the organisation. It is concerned with how an activity is managed or organised by senior management, and the adequacy of relevant arrangements.

PROSECUTIONS

The first prosecution under the Act was that of a small company, Cotswold Geotechnical Holdings Limited, following the death of 27 year old employee Alex Wright, who died of asphyxiation when a trench from which he was taking soil samples collapsed on him in 2008. The trench was not supported and he had been left working alone and unsupervised by his company managing director. The company was fined £385,000, which was below the Sentencing Guidelines for Corporate Manslaughter and Health and Safety Offences Causing Death (published in February 2010) which stated that fines should “seldom be less than £500,000, and may be measured in millions of pounds”. The level of fine was a reflection of the financial position of the company at the time of sentencing.

The size of the company in this case, which had very short lines of command, meant that from a legal perspective the case was not particularly useful as it provided little assistance on how the Act would be applied in relation to breaches by larger companies with more complex management structures.

In July 2011 a second company, Lion Steel Equipment Limited, was also charged with corporate manslaughter. This followed the death of an employee when he fell through a fragile roof panel. It was hoped that the Lion Steel case would provide more guidance as to how some of the more potentially interesting legal points in the Act (such as who falls within the category of “senior management”) were interpreted, as Lion Steel is a medium sized organisation with over 100 employees. The trial started on 12 June 2012 and a decision made that the alleged health and safety breaches by the company and gross negligence manslaughter charges against three directors would be heard before the corporate manslaughter trial began. On 2 July, however, the judge ordered that gross negligence manslaughter charges against two of the directors be dropped. The prosecution then dropped all remaining charges against the individuals and also the Health & Safety at Work etc Act 1974 charges against the company. The company entered a guilty plea to the corporate manslaughter charge and is due to be sentenced on 20 July. The guilty plea means that the key points of the act will not be examined in court, and we will learn little more in the near future, other than in relation to the level of fines.


In May 2012, JMW Farm Limited, a company based in Northern Ireland, was found guilty of corporate manslaughter following the death of an employee in circumstances involving a failure to properly assess risks, and was fined £187,500. The judge in the case noted that an appropriate fine would be one of £250,000, but reduced that by 25% to reflect the fact that a guilty plea was made. Again, however, the company concerned was small and the case therefore tells us little as to how the key provisions of the Act will be interpreted.

LIMITED USE OF THE ACT?

Concerns over the limited use of the Act led to Emily Thornberry MP raising a question of the Attorney General in March 2012. She noted that as of 6 April 2012, it was four years since the Act had come into force, but that although between 250-300 people die at work each year, only two companies had ever been prosecuted; she asked whether the Attorney General “knew what was wrong”. In his written response, the Attorney General, the Rt Hon Dominic Greive MP, explained that there were currently in the region of 50 cases under referral to the Crown Prosecution Service where corporate manslaughter was one of the potential offences under consideration. He noted that many of the cases are at the investigative stage, and that in five, careful consideration was given to an offence under the Act. In four of those cases it was clear that a prosecution for corporate manslaughter should not be brought, however, charges of gross-negligence manslaughter were brought against culpable individuals together with health and safety offences against the organisation and directors. In relation to the fifth case (that of Lion Steel referred to above) the company was charged with corporate manslaughter along with three individual directors being charged with gross negligence manslaughter.

This response demonstrates that it may be a number of years until we have a clearer picture of how often the Act is likely to be used and how its key provisions will be interpreted. In the meantime, organisations would be well advised to ensure that their health and safety arrangements have been properly considered, are implemented on the ground, and are appropriately recorded so that they can be evidenced in the unfortunate event that a serious accident occurs.

WORK RELATED DEATHS AND INqUESTS

Protocol

The Work Related Deaths Protocol was introduced in 1998, and contains guidance on (amongst other things) when a relevant enforcing authority should commence criminal proceedings in relation to a coroner’s inquest

into the death. By way of background, the Protocol’s introduction followed a case involving the prosecution of a landlord in relation to a defective gas fire which had led to the death of a tenant by carbon monoxide poisoning. The landlord was prosecuted under the Health and Safety at Work etc Act 1974, and convicted. A year later he was prosecuted for manslaughter.

He successfully argued that this was an abuse of process, because the manslaughter prosecution was based on the same facts as the health and safety prosecution and so it was in breach of what is commonly referred to as the “double jeopardy” rule.

The Protocol requires that following a death at, or connected with, work, the signatories to it (which include the Health and Safety Executive, local authorities, the Crown Prosecution Service (“CPS”) and the Chief Fire Officers’ Association) must consult with each other, and jointly decide what charges (if any) should be brought. As will be noted from the above, the timing of such charges will also need to be co-ordinated so as to avoid falling foul of the rule against “double jeopardy”.

Update

In September 2011 the 3rd edition of the Protocol was published. The key change related to the guidance on the timing of health and safety charges and inquests. Previous versions had noted that such charges should not be brought until after the result of the inquest. Such timing was often helpful to the prosecuting authority, as it allowed them a good opportunity to assess the evidence. It also, however, meant that there could be significant delays in criminal charges for health and safety offences being brought.

The new version of the Protocol gives the enforcing authorities a wide discretion as to whether to bring changes before or after the inquest. In making such a decision, it must consult with, as appropriate, the police, CPS, coroner, the deceased’s family and any other person who may have a legitimate interest.

We will need to see over the coming months and years how this discretion is exercised, and if indeed the time between work related deaths and prosecutions for related health and safety offences is shortened.


John Gollaglee Legal Director T +44 (0)151 237 4887 [email protected]

Ailish Oxenforth Legal Director T +44 (0)114 283 3336 [email protected]


NEW ASBESTOS LEGISLATION

WHy IS NEW LEGISLATION NECESSARy?

In February 2011 the European Commission issued a “reasoned decision” declaring that the UK had not fully implemented the European Directive from which the most recent UK asbestos legislation, the Control of Asbestos Regulations 2006, derives. This is broadly because the 2006 Regulations allowed too many types of lower risk work with asbestos to be exempt from certain duties under the legislation.

Rather than amend the 2006 Regulations to rectify the non-compliance, the Government decided to revoke the 2006 Regulations and issue a new consolidated set of asbestos regulations, which the Government consulted upon in late 2011.

In addition to making the necessary changes to ensure that the underlying European legislation has been properly transposed the Government has also taken the opportunity to update the asbestos legislation generally. For example amendments have been made to ensure that European labelling requirements for asbestos introduced under “REACH” are implemented.

BACKGROUND

Prior to the introduction of the new legislation Regulation 3(2) of the 2006 Regulations set out a number of activities and/or scenarios where work with asbestos would not only be exempt from the general licensing requirement relating to work with asbestos, but also from the requirement to notify work to the HSE, conduct medical examinations of staff involved in those activities and to maintain health records of employees involved in that work.

This effectively created two categories of work with asbestos: (i) licensable work which must be notified to the HSE; and (ii) non licensable work which did not require notification to the HSE.

The problem with the way in which the Government had transposed the European asbestos legislation was that it had omitted two key phrases, which meant that the range of work which the exemption applied to was much wider than the relevant directive had intended.

As an example, one of the limbs of the low risk

On 6 April 2012 the Control of Asbestos Regulations 2012 (“the Regulations”) came into force in Great Britain. Whilst at first glance this may not appear to be a significant development, as there has been asbestos legislation in force in the UK for quite some time now, the Regulations repeal and recast the existing legislation. Therefore, it is important to understand whether any of the new changes impact upon your operations.

NEW ASBESTOS LEGISLATION


exemption referred to work which involves “short, non-continuous maintenance activities”. However, in order to properly implement the European legislation this should have read “short, non-continuous maintenance activities in which non-friable materials are handled.”

KEy CHANGES

The principal changes to the legislation have therefore been aimed at amending the existing legislation to ensure that it is compliant with the European requirements. Whilst this could have been achieved simply by inserting the two key phrases in at the relevant point in the legislation the Government was rightfully concerned that doing so without making any consequential amendments may have had unintended and unforeseen consequences.

It has therefore been necessary to separate out the asbestos licensing requirements from the exemption for low risk activities to avoid the requirement for a licence being unintentionally extended to include some lower risk work.

In effect, what the changes have done is extend the type of work for which there is a requirement to notify the HSE. As a result the new legislation effectively now includes three categories of work with asbestos:

■ licensable work which must be notified to the HSE;

■ non licensable work which does not require a notification to the HSE; and

■ low risk work which does not require a licence but for which employers will be required to notify work to the HSE, carry out medical examinations and maintain employee health records.

WHAT ABOUT OTHER ASBESTOS DUTIES?

It important to stress that the changes to the legislation do not change any of the existing duties relating to asbestos which an organisation may have either as an employer or as the owner or occupier of non – domestic premises.

This means that:

■ employers conducting any work with asbestos will still be required to, for example, conduct risk assessments, put suitable control measures in place to protect employees and provide employees with appropriate training; and

■ owners and occupiers of non-domestic premises must still ensure that they conduct a suitable and sufficient assessment is conducted to determine whether or not asbestos is liable to be present in the premises and produce a plan to detail how any asbestos which is present will be managed.

CONCLUSION

Unless you regularly undertake work with asbestos then the changes will not have a significant impact on your operations. Nevertheless, it is important to ensure that any contractors you engage are up to date and compliant with the most recent version of the legislation.


Matthew Shaw Associate T +44 (0)114 283 3128 [email protected]


mailto:[email protected]

In April 2011, the Government launched its Red Tape Challenge, which included a review of over 21,000 pieces of legislation. The legislation was grouped into themes and in September 2011, the Department for Environment, Food and Rural Affairs (DEFRA) invited comments on environmental legislation that applies to businesses.

On 19 March 2012, DEFRA announced the results of its review of environmental legislation after receiving over 3,500 comments from businesses, trade bodies, environmental groups and members of the public. Many of the comments suggested that the environmental framework is overly complex and prevents businesses from complying effectively with their environmental obligations.

DEFRA’s proposals include the removal of 53 pieces of legislation and improvement of a further 132 pieces of legislation.

Environmental legislation will be scrapped where:

it is not being used so has no impact on anyone ■

it is unnecessary because, for example, it imposes ■

burdens that do not in reality help achieve environmental goals

Environmental legislation earmarked for improvement is split into 3 categories:

legislation to be amended or its implementation ■

improved

legislation to be consolidated, with certain provisions ■

being repealed or simplified

legislation to be consolidated, but the provisions will ■

remain the same

Some of the more interesting components of the proposals released by DEFRA include the following:

removing the need for waste transfer notes by the ■

use of others forms of evidence such as invoices, along with the introduction of quick and easy to use electronic recording systems from January 2014

reducing paperwork by allowing the direct electronic ■

upload of hazardous waste returns

addressing concerns that producers under the ■

Waste Electrical and Electronic Equipment (WEEE) regime pay disproportionate sums through producer compliance schemes

scrapping the Site Waste Management Plan Regulations ■

scrapping of 35 redundant regulations and the ■

improvement of a further 69 in relation to the natural environment and wildlife protection

aligning the environmental permitting and planning ■

regimes so that businesses can more easily make simultaneous applications

piloting of Environmental Account Managers to help ■

coordinate complex cases requiring consents from a number of different regulatory bodies from Spring 2012

Many of the amendments that DEFRA proposes to make to improve the legislation will first be subject to public consultations. However, DEFRA has already started to identify the scope for rationalisation of guidance and take forward changes that can be easily introduced. A report on amendments to guidance is expected in September 2012.

The regulators also plan to improve the way in which they regulate. For example, the Environment Agency will take a more relaxed approach to the enforcement

WILL BUSINESSES SEE ANY BENEFITS FrOM THE GOVErNMENT’S ENVIrONMENTAL

RED TAPECHALLENGE?


regime for the best performing and lowest risk sites. The Environment Agency also plans to reduce unnecessary burdens of data reporting, handling and storage for operators. Likewise, Natural England plans to improve its licensing procedures for lower risk activities and simplify paperwork.

DEFRA estimate that the changes will save business in the region of £1 billion over 5 years. However, whether these estimated savings will be realised by businesses remains somewhat uncertain. In the short term at least businesses may incur higher costs should they have to re-train staff and modify internal processes to comply with the changes.

Furthermore, less legislation does not automatically translate to less regulation. The proposed changes may allow regulators to adopt a more focused approach, leading to more stringent enforcement in certain circumstances. It is also important to consider that much

of the environmental legislation in the UK is derived from Europe and therefore this will limit what the Government can do to simplify domestic legislation.

On balance it seems that businesses will encounter some benefits as a result of the environmental Red Tape Challenge, but whether the proposed changes will make it considerably easier for businesses to comply with their environmental obligations and deliver resultant cost savings remains to be seen.


Nicholas Rutherford T +44 (0)114 283 3042 [email protected]


The Water Act 2003 contains provisions which bring to an end the current abstraction licence exemption for quarry dewatering (as found in the Water Resources Act 1991 (“WRA 1991”)).

Over the last four or five years Defra has indicated that these provisions will come into force but this has in fact not materialised. However, according to Defra’s recent February consultation on “The withdrawal of compensation on the grounds of serious damage” (“February 2012 consultation”), this is due to happen in 2012. This is consistent with the timeframe set by the Water Framework Directive (“WFD”), under which Member States must, by December 2012, make operational their programme of measures to meet the WFD’s environmental objectives for water bodies.

Once the exemption is withdrawn the many quarry operators who currently dewater under it will need to make applications for abstraction licences. Defra published, in 2009, draft Transitional Regulations (“TR”) to deal with this process. It is presumed that the TR in (or close to) their 2009 form will be adopted this year for this purpose.

According to the TR, operators will have a year (from the date of the coming into force of the TR) in which to make an application to the Environment Agency (“EA”)

for an abstraction licence for their quarry dewatering. As long as an application is made within that timeframe the abstraction may continue until the application (including any appeal) has been determined (which, according to the TR, could take up to a maximum of 5 years). If no licence application is made within the year then thereafter the operator will no longer be entitled to rely on the exemption.

The TR make further provision where an operator makes such a licence application but it is (on appeal) refused or granted with more restrictive conditions than the application had requested and the operator thereby suffers loss and damage. In this situation compensation will be payable to an operator, unless the reason for refusal is that the Secretary of State or the Welsh Ministers are of the opinion that the abstraction causes “serious damage” to any (i) inland waters, (ii) underground waters, (iii) underground strata, or (iv) any flora/ fauna dependent upon them.

In addition, for any quarry operator who already holds an existing abstraction licence, they could in certain

REQUIREMENT FOR ABSTRACTION LICENCES

qUARRy

DEWATERING:


circumstances be varied or revoked. If this is done after 15 July 2012 in respect of certain types of licence and the reason for the revocation/withdrawal is to protect from serious damage any (i) inland waters, (ii) underground waters, (iii) underground strata, or (iv) any flora/fauna dependent upon them then (similarly) the Water Act 2003 provides that no compensation will be payable to the licence holder.

The meaning of “serious damage” is important. The February 2012 consultation considers in detail how “serious damage” in this context should be interpreted. The consultation document explains that this judgment should depend on three factors: (i) the extent and magnitude of the damage; (ii) the qualitative nature of the damage; and (iii) the duration/reversibility of the damage.

These factors are not particularly surprising. What is potentially of greater concern is the manner in which Defra proposes to take cumulative impacts into account. This could manifest itself in two ways. First, where current impacts from an operator’s abstraction are not considered serious but the cumulative impact of the continuing abstraction into the future could be considered serious, then this might suffice to meet the “serious damage” test. Secondly, where two or more abstractions (eg. from different operators) cumulatively have serious impacts this could also meet the “serious damage” test. In this case the February 2012 consultation states that “this would be addressed through an appraisal of the contribution each [person] made to the damage”. Many quarry operators who dewater ultimately put the water back into the system ie their abstraction is not “consumptive”. However the pooling together of different operators’ small impacts could possibly meet the “serious damage” test.

Operators who currently dewater quarries under the exemption are most likely to be concerned about these developments where their quarries are situated within or are geographically close to designated sites for conservation such as SSSIs or European sites (SACs/SPAs). These sites will tend to be monitored more closely than other areas and so data may be available to evidence any link between abstraction activities and any damage. In addition, where quarries are close to European sites, an application for an abstraction licence may also trigger the need for the Environment Agency (“EA”) to conduct a Habitat Regulations Assessment (“HRA”) under the Conservation of Habitats and Species Regulations 2010.

Operators who hold existing abstraction licences are likely already to have had them reviewed by the EA under the EA’s Review of Consents exercise some years ago. But this would not have taken into account impacts on sites designated only as SSSIs, so there could be further implications here. On the other hand, particularly where dewatering has been carried on at a quarry for a long period of time, it may be difficult for any person to reasonably identify a baseline against which to judge possible impacts of the dewatering.

We await with interest news from Defra of the date when the WRA 1991 exemptions will be removed and the TR come into force. However operators should be preparing themselves for the need to make abstraction licence applications for their dewatering activities in 2013.


Penny Simpson Associate T +44 (0)114 283 3353 [email protected]

REQUIREMENT FOR ABSTRACTION LICENCES


CHANDLER V CAPE PLCIt is an established principle of English law that an incorporated company will be treated as a separate personality from its shareholders, and the debts and similar liabilities of the one will not be attributed to the other. Only in exceptional circumstances, generally involving fraud, will the courts “pierce the corporate veil” and disregard the separate legal personality.

The position is different in some other jurisdictions, and there have been attempts in recent years (at EU level) to harmonise company law by making parent companies liable for the obligations of their subsidiaries in certain circumstances. However these attempts have so far been unsuccessful.

Nevertheless the principle of the “corporate veil” does not mean that a parent company cannot become, as a result of its own acts or omissions, itself subject to a liability which would normally have fallen on its subsidiary. A recent example of this has been provided, as regards civil claims in negligence, by the case of Chandler v Cape plc. In that case, the Court of Appeal held that the parent company of a defunct subsidiary had assumed a direct duty of care to an employee of that subsidiary in respect of exposure to asbestos, and was therefore separately liable to an employee in respect of asbestosis contracted as a result of the occupational exposure of the employee to asbestos when working for the subsidiary more than 50 years previously.

BACKGROUND

Mr Chandler worked for Cape Products Limited, a UK subsidiary of Cape plc. Cape plc and its subsidiaries have had an extensive past involvement in asbestos production worldwide, and the parent company has a long and generally successful history in defending itself against asbestos-related claims brought by employees of its overseas subsidiaries, and/or their dependants. During Mr Chandler’s employment with Cape Products Limited at a works in Uxbridge, he was exposed to asbestos and decades later developed asbestosis. Cape Products Limited had been dissolved in the meantime and it had no employer’s liability insurance covering asbestosis claims. Mr Chandler therefore brought his claim against Cape plc, the parent company, which was still in existence.

Not surprisingly, Cape plc invoked the corporate veil and asserted that they were not liable for the negligence of their subsidiary. Mr Chandler however argued that Cape plc owed him a direct duty of care on the basis that it had assumed responsibility for the safety of employees of Cape Products Limited. Cape plc employed a medical adviser who had visited Mr Chandler’s place of work and been involved in correspondence with HM Inspector of Factories in relation to another employee who had developed asbestosis whilst working for Cape Products Limited. The medical adviser had also carried out work in relation to the link between asbestos and lung disease and had become an international authority in the field. There was also evidence that Cape plc had employed a group medical adviser since at least 1946 and had kept statistics in relation to asbestos related diseases amongst all employees of the Cape Group, including Cape Products Limited.

Cape plc also intervened in the methods of manufacture used by Cape Products Limited. As a result, the court at first instance found that Cape plc, as the parent company, had superior knowledge of health issues affecting its subsidiary’s employees and could and did intervene in its subsidiary’s operations. The court found that Cape plc owed a separate duty of care to the employees of Cape Products Limited.

DECISION OF THE COURT OF APPEAL

Cape plc’s appeal to the Court of Appeal was dismissed. The Court of Appeal agreed with the trial judge that Cape plc had assumed responsibility for Mr Chandler’s safety. Furthermore, it agreed that in determining whether a duty of care existed between Cape plc as the parent company and the claimant as employee, the three part test in Caparo v Dickman should be applied so that a duty would arise when:

the damage caused to the subsidiary/employee is foreseeable by the parent company; ■

there is “ ■ proximity” of relationship between the parent company and the subsidiary/employee;

it is fair, just and reasonable for the court to impose a duty of care on the parent company. ■


In the Chandler case, the Court of Appeal has however gone beyond the specific facts of the case by setting out general principles which it considered relevant to whether a duty of care should be imposed on a parent company to its subsidiary’s employees. The relevant factors are whether:

the business of the parent company and the subsidiary ■

are in a relevant respect the same;

the parent company has, or ought to have, superior ■

knowledge on some relevant aspect of health and safety in the particular industry;

the subsidiary’s system of work is unsafe as the parent ■

company knew, or ought to have known; and

the parent knew or ought to have foreseen that ■

the subsidiary or its employees would rely on its using that superior knowledge for the employees’ protection.

It is the last factor which hides a possible sting in the tail. In the leading judgment Lady Justice Arden suggested that where the three preceding bullet points were satisfied, it was not necessary to show, for the purpose of satisfying the requirement in the last bullet point above, that the parent was in the practice of intervening in health and safety policies of the subsidiary. It could be sufficient if the parent had a practice of intervening in the trading operations of the subsidiary in other respects, in relation to, for example, production and funding issues.

This passage significantly extends the principle beyond the facts of Chandler, where there was clear evidence of the parent company’s involvement in health and safety issues but may well be followed by other courts in future cases.

We understand that there has been no appeal to the Supreme Court against the Court of Appeal’s decision.

SIGNIFICANCE FOR CIVIL CLAIMS

Whilst it is clear that Cape plc had involvement in health issues affecting their subsidiary, this is not a common feature of most long tail disease claims because until comparatively recently it was relatively unusual for companies to have group medical advisers or health and safety managers. In contrast, parent companies are much more likely to have been involved in production and funding issues relating to their subsidiaries.

Whether the parent company had superior knowledge is likely to be a contentious issue. A court is likely to accept superior knowledge where the subsidiary is created by the parent company but may be reluctant to do so where the subsidiary initially existed independently of the parent and was acquired by way of share purchase.

In order for the case to be relied upon the parent company will have to have owned the subsidiary contemporaneously with the exposure and it is also unlikely to impact on venture capitalists because they will not be treated as having superior knowledge.

REGULATORy LAW

This civil case is a reminder that the doctrine of the “corporate veil” does not necessarily have the same significance as regards regulatory law that it would have as respects contractual or fiscal obligations.

This is because the duties which a company may assume under regulatory law are not as narrowly focussed on specific entities and individuals as, for example, contractual obligations. For example, under s3 Health and Safety at Work etc Act 1974, employers may have a general health and safety duty towards the employees of other employers, and/or to the public at large, in addition to their duties under s2 to their own employees. Under Part IIA Environmental Protection Act 1990, it is possible, in particular circumstances, for a parent company to acquire liabilities in respect of land owned by a subsidiary if it can itself be shown to have “caused” or “knowingly permitted” the presence of the relevant contaminating substances. There is therefore certainly scope under regulatory law for parent companies to incur liabilities in respect of the assets, activities or employees of their subsidiaries as a result of their own acts or omissions. However this should not be undue cause for concern in the light of the Chandler case.

The territorial application of UK health and safety law is tightly circumscribed, and there is therefore no question of UK regulators imposing UK health and safety standards in respect of the employment overseas of the employees of overseas subsidiaries.

As regards the UK, there are fairly well settled principles for the application of health and safety law, and a parent company is only likely to incur liabilities where it has had a clear direct involvement in the activities which have given rise to an adverse health and safety incident.

The jurisdiction of environmental regulators is similarly limited in territorial terms. As regards contaminated land, the provisions of Part IIA of the 1990 Act do have an element of retrospection, and attempts to hive off responsibilities incurred as a result of past ownership or occupation of land to a “company of straw” are unlikely to be successful. However, the legislation and guidance do impose high thresholds for the legislation to apply at all, and do require regulators to respect the contractual allocation of liabilities made through agreements negotiated at arm’s length in the ordinary course of business. It is also possible to avoid the costs of proceedings under Part IIA where it can be shown that contamination issues will be addressed in the course of redevelopment of the land pursuant to planning permission.


George Mortimer Associate T +44 (0)121 262 5505 [email protected]

Noy Trounson Barrister in employed practice T +44 (0)20 7796 6318/+44 (0)114 283 3092 [email protected]


LANDFILL TAXGUIDANCE, MORE GUIDANCE AND CLARIFICATIONS

Over the last couple of months HM Revenue & Customs has created much consternation in the waste management sector. This initially started in May when it released a briefing paper which increased the landfill tax liabilities on various materials that were previously treated by many as being exempt from the tax. Following demonstrations and lobbying a further briefing was released in June seeking to clarify certain matters and HMRC at the beginning of July released further interim advice to the industry.

The initial briefing was something of a bombshell and was interpreted to mean that the top “fluff layer” which is the top layer of waste used to protect the cap membrane which seals a landfill cell should be liable to landfill tax. It also sought to clarify what materials are considered inert and therefore qualify for the much reduced tax rate. It achieved this by reference to the Landfill Tax (Qualifying Material) Order 2011 (“2011 Order”) and noted that this excludes topsoil, construction soil and soil from demolition in buildings. It also indicated that wastes arriving from waste transfer stations and recycling facilities would be subject to the full landfill tax.


stone from street works containing tarmac and building demolition waste of bricks, stone and concrete which includes small pieces of wood and small amounts of plaster that would not be feasible for a contractor to separate. In relation to consignments of construction soils and soils from demolition of buildings the lower rate will only apply where all the materials being landfilled are again included within the 2011 Order.

It also reiterates that waste transfer documentation must accurately record the composition of the waste and set out specifically which qualifying materials are contained in the consignment. Further, in relation to consignments of fines the documentation must indicate from which qualifying materials the fines that go into the trommel were derived.

The interim advice has generally been welcomed although industry awaits further guidance from HMRC in particular in relation to evidential requirements such as what constitutes “incidental” amounts of non-qualifying material in a load that is otherwise qualifying material.


Alastair Clough Legal Director T +44 (0)114 283 3114 [email protected]

The June briefing paper indicated that waste rocks and soils listed in the 2011 Order would be liable for the lower inert tax rate but in order to achieve this operators would have to provide relevant evidence such as waste transfer notes and where such wastes are contaminated with other materials including metal, wood and plastic or chemicals then they would be liable for the full standard rate. In relation to wastes from transfer stations and recycling facilities it was considered that due to their highly variable nature it was unlikely that it could be demonstrated that these should qualify for the lower rate.

Following meetings between industry representatives and HMRC during June, HMRC released interim advice early in July. This indicates that the lower rate will only apply to loads of materials which arise from waste transfer or recycling facilities (often referred to as fines) where those fines are materials or a mix of materials that are included within the 2011 Order. It notes, however, that a consignment of qualifying material can contain an “incidental” amount of non-qualifying material and still qualify for the lower rate. The interim guidance lists four examples of waste loads with contaminants that would be classed as “incidental”. These include a load of subsoil and

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IN BRIEFConsultation on COMAHThe Government has carried out a consultation on the way in which the chemical industry is regulated. This forms part of the Focus on Enforcement initiative, which is designed to work alongside the red Tape challenge to address areas where the legislation itself is fit for purpose, but the way in which it is enforced is cumbersome and could be improved.


The consultation sought views on the way regulators:

give advice on complying with the law under the ■

COMAH regulations;

arrange and carry out inspections of locations or ■

equipment;

require companies to make formal applications, or ■

provide information, in order to obtain necessary permits;

apply any requirements to attend courses or obtain ■

particular qualifications;

apply emergency planning requirements; and ■

take enforcement proceedings against individuals or ■

businesses in the event of failure to comply with regulations.

The consultation closed on 15 June 2012.

Consultation of front of pack nutritional labellingThe Department of Health launched a UK wide consultation on front of pack nutritional labelling on 14 May 2012. Front of pack labelling was a policy of the previous government, which was seeking to introduce mandatory traffic light labelling. This was scrapped by the incoming coalition government in favour of voluntary schemes. This has led to inconsistencies with some manufacturers using traffic lights, and some using High/Medium/Low categories. In addition, there is variation around how the categories are calculated.

However, the new Provision of Food Information to Consumers Regulation (EU) No 1169/2011 requires that the energy value and the amounts of fat, saturates, carbohydrate, sugars, protein and salt must be displayed on the packet. The Government has taken the opportunity to look again at food labelling with a view to producing a consistent standard across the UK. Particular issues being consulted upon include whether to permit nutrients to be expressed as “per portion” rather than “per 100g”; whether the value should be “as sold” or for some foods with manufacturers’ preparation instructions, “as consumed”; whether it should be mandatory to include the percentage of the relevant Guideline Daily Amount; and how the labels should be designed.

The consultation closes on 6 August 2012.

Consultation on the revision of Approved Codes of Practice “ACOPs”One of the recommendations in the Löfstedt report “Reclaiming Health and Safety for All” was that the Health and Safety Executive conduct a review of its ACOPs. ACOPs have been recognised as a very useful tool in bridging the gap between legislation and guidance, but it was suggested that many might benefit from revision and consolidation.

The HSE conducted an initial review of 32 of its 52 ACOPs (the remainder are being considered as part of sector specific reviews). It has identified 15 ACOPs that it proposes to revise, consolidate or withdraw and is consulting on these changes. The ACOPs in question deal with:

Dangerous substances and explosive atmospheres ■

(five ACOPs are being considered);

Legionella; ■

Asbestos (two ACOPs are being considered); ■

Gas safety (two ACOPs are being considered); ■

Hazardous substances; ■

Workplace health, safety and welfare; ■

Management of health and safety; ■

Agriculture; and ■

Pipelines. ■

There are also 15 ACOPs where no or minor changes are proposed, and two ACOPs which will be revised or withdrawn without consultation.

The consultation closes on 14 September 2012.

For further information on the three topics above, please contact:

Rachel Scales Solicitor T +44(0)114 283 3458 [email protected]


Statutory nuisanceRarely used provisions in Part III Environmental Protection Act 1990 allow individuals to make a complaint regarding a statutory nuisance to a magistrates’ court rather than persuading the local authority to act. The provisions empower magistrates courts, where satisfied that a statutory notice exists, in addition to making an order to prohibit or require the abatement of the notice, and the execution of any necessary works, to impose a fine on the defendant. It is thought that the main reason why these provisions are rarely used, even where local authorities have failed to act despite pressure to do so, is that the complainant is on risk as to being ordered to pay costs if he fails to establish that the matters complained of do in fact amount to a statutory nuisance. This would be a significant deterrent against bringing proceedings.

However the recent case of R (on the application of De Souza) v Croydon Magistrates establishes that although the procedure is described as being by way of a “complaint”, the term used for civil proceedings before magistrates, the provisions are in fact criminal in nature. It follows that the magistrates courts have no power to make a costs order against an unsuccessful complainant (in which case the normal rule would be that “costs follow the event”), unless there are specific grounds for making a “wasted costs” order, but only, as in other criminal proceedings, to make an order for costs to be paid out of central funds. If potential claimants become aware of this, there may well therefore be increased use of the procedure. This may make life more difficult for businesses which have to operate in residential neighbourhoods.

Environmental DevolutionThe Welsh Assembly Government has received broad support in responses to its consultation on proposals to merge the Welsh branches of the Environment Agency and the Forestry Commission with the Countryside Commission for Wales to create a new body, provisionally to be known as Natural Resources Wales, with both regulatory and management functions.

It is envisaged that the new body would be launched on 1 April 2013, but it appears that many respondents consider this too ambitious a timescale.

The division of functions between the Environment Agency and the new body, is likely to be complex, particularly in respect of river basins which cross the national boundaries.

A future issue of SHE Matters will look at this subject further when a clearer picture of the likely future arrangements emerges.

Implementation of The RoHS DirectiveThe Department for Business Innovation and Skills has been consulting on implementation policy, draft Regulations and draft guidance notes to transpose the new RoHS Directive (2001/65/EU) in the UK, with effect from 2 January 2013.

The new Directive has a new scope, which is defined completely in the Directive itself, rather than cross-referencing to the WEEE Directive, as did the old Directive. The new Directive provides for two categories of equipment under the original WEEE Directive which were excluded from the scope of RoHS to be subject to the Directive, but phased in over a period up to 22 July 2016, and subject to various exemptions. These two categories are mechanical devices and monitoring and control instruments. In addition, industrial monitoring and control instruments will be subject to the Directive only from 22 July 2017. There is also provision for products with any electrical function to be brought into the scope of the RoHS Directive from 23 July 2019.

The Consultation will close on 6 July 2012.

For further information on the three topics above, please contact:

Teresa Hitchcock Partner T +44 (0)114 283 3302 [email protected]

www.dlapiper.com

The articles in this publication are intended as a general overview and discussion of the subjects dealt with. They are not intended and should not be used as a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper is a global law firm operating through various separate and distinct legal entities.

Further details of these entities can be found at www.dlapiper.com

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