In this issue

Editorial
Controlling a killer
Internet Libel
Professional Negligence - IPs (and others!) beware
Spring clean your health and safety policy
Testamentary guardians
New TUPE regulations
Statutory Disciplinary & Grievance Procedures Delayed
Plant hire finds its roots in Adjudication Jungle

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Editorial

Welcome to the Spring edition of The Orchard.

The firm has recently celebrated the first anniversary of its move to Queen Square which I believe those of you who have visited us here will agree has been a great success. In addition, we have come through our first Lexcel review with flying colours. We remain committed to finding additional ways of improving the specialist services we provide to our clients and always welcome any comments which can be fed into that process.

In this edition of The Orchard we have put together the usual spread of articles on several of our legal specialisms and we hope that those not directly relevant to you will be of interest regardless. We have looked at some recent case law to keep you abreast of the latest developments. Some other articles also flag up important changes in the law which are to come into effect.

I wish you and your families an enjoyable Easter,

Peter Watkin

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Controlling a Killer

Are you a landlord?

Are you an employer?

Do you own or manage a building built between the 1950s and 1980s or which has been converted during that time?

If so, you should be aware of your additional responsibilities introduced by the Control of Asbestos at Work Regulations 2002. These impose duties to identify and manage any asbestos containing materials (ACM) in your premises and to compile a register recording their location. This information must then be passed on to anyone who may disturb the ACM, for example any contractors working on the premises or tenants. According to government figures, around 3,000 people a year die from asbestos-related diseases and this number is expected to carry on rising. In order to try to prevent future deaths, this new strict regulatory framework attempts to control the use and exposure to asbestos.

Although some regulation already exists in the Health and Safety at Work Act 1974, these new regulations are tighter. Due to the prevalence of asbestos in buildings constructed between the 1950s and the 1980s, contractors seem to be the most likely to be affected since when the asbestos is exposed or damaged it may release fibres into the air, so presenting a significant risk to those in the vicinity. However any occupiers who disturb the ACM are at risk.

What do you need to do now?

• Check that your current arrangements for the management of asbestos are effective and are being applied properly
• Adopt a precautionary approach to maintenance work
• Alternatively, have a 'mini' survey of the material being worked on before the work is done
• Carry out an initial inspection to look for serious damage and disturbance of material and take any remedial action necessary
• Plan your compliance strategy for the future
  • decide on the type of survey
  • decide who should carry this out
  • determine priorities
  • prepare records
  • decide how maintenance will be controlled
  • inform relevant third parties who
    may be at risk

It is important that you start to implement these measures now. Although the duty to manage regulations will not come into force until May 2004, it is estimated that there are half a million non domestic premises which may contain asbestos and yours could be one of them.

For further information, please contact Julie Scott jhs@meadeking.co.uk

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Internet libel

Consider this problem. A publishes defamatory material about B over the internet. What choice does B have about the jurisdiction in which he can sue?

Two recent cases have explored this problem. In USA Rugby Football Union Ltd v Calhoun the claimant (i.e the governing body of the USA's rugby union team) sued a journalist for defamation for comments in an article which he posted on his own website. It sued in Ireland because the headquarters of the International Rugby Board is based in Dublin and that organisation was a source of its funding. It was its reputation in Ireland that it sought to protect. But on the hearing of an application at an early stage to strike out the claim it did not produce any evidence that the article had been read or that its reputation had been damaged. It said that this was a matter for trial. It lost - in large part because it had not been able to prove that the offending article had actually been accessed. The outcome may well have been different if it had been able to prove that.

In Dow Jones v Gutnick the claimant who was based in Australia sued for libellous statements made about him in an internet publication which emanated from the Dow Jones server based in New Jersey. He chose to issue in Australia on the basis that this was the jurisdiction where he enjoyed his reputation and in which he believed he had been damaged by the article. The court upheld the right of the claimant to issue proceedings in Australia on the basis that that was where his reputation had been damaged. The court also said that the document had to be seen and read on a PC before a cause of action arose. This was obviously the position in Gutnick's case and so his right to sue was upheld.

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Professional negligence: IPs (and others!) beware

To establish an entitlement to damages for professional negligence a claimant has to show

• The existence of a duty of care
• The breach of that duty
• Loss
• Causation i.e. that the breach has caused the loss

In many cases the existence of a duty of care is obvious. Where a professional enters into a contract with his client (whether pursuant to a written retainer or otherwise) he obviously has a duty to demonstrate the standard expected of the ordinary skilled man exercising and professing to have that particular skill. But a professional can also incur liability even when not in a strict professional/client relationship by assuming responsibility to advise the individual concerned. The answer to the question as to whether the professional owes a duty of care can be different at different times. An interesting example is found in Prosser v Castle Sanderson (CA) [2002] BPIR.

Mr. Sleight was an insolvency practitioner who advised Mr. Prosser on a proposed individual voluntary arrangement and was appointed his nominee. S called a meeting of creditors. He chaired the creditors' meeting. The proposal put to the creditors at the meeting involved the sale and refinance of certain of P's properties. If that did not produce payment in full for the creditors P agreed to realise his minority shareholding interest in a company L although that would have severe adverse tax consequences.

The creditors' meeting was heated. It was clear that P would not be able to achieve the necessary majority in favour of his proposal. During a 5 minute adjournment S did not advise P to seek an adjournment for 14 days to respond to the demand made by certain creditors for an immediate liquidation of L and P was compelled to accept that his proposals should involve the immediate liquidation of the company.

The outcome was disastrous for P and he sued S alleging that he had lost the benefit of a substantial chance that the outcome of the IVA would have been different because the creditors would not have insisted that L be put into liquidation if there had been an adjournment to another day.

The question which arose was whether during the short adjournment S owed P a duty of care (as he obviously did in advising him prior to his appointment as a nominee). No duty is owed to the debtor by the nominee or chairman of a creditors' meeting acting as such. It was found however that even though S acted as nominee and chairman of the meeting (and indeed subsequently as supervisor) that was not the capacity in which he was acting during the short adjournment. He had taken it upon himself to act as P's advisor and in doing so made it clear that P had no alternative to placing the company into immediate liquidation. He was thus potentially liable to P if his advice was wrong.

As it was in the particular circumstances of the case S was able to avoid liability because P was not able to prove that he had suffered any recoverable loss.

The Court of Appeal made it clear that nominees or chairmen of creditors' meetings would not have a problem provided they made clear to the debtor the capacity they are acting in at any one time.

The moral of the story? Professionals who make clear when (and on what) they are advising (preferably by a properly worded retainer letter) are safe; those who are less careful are at risk.

For further information, please contact Adam Chivers ajc@meadeking.co.uk

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Spring clean your health and safety policy

How long is it since you reviewed your Health and Safety Policy?

Every employer has a legal duty to

• prepare a Health and Safety Policy statement and detailed arrangements for implementing the policy
• conduct a full risk assessment and action improvements which will minimise any identified risks

These duties are backed by criminal sanctions, which means that failure to comply can result in criminal convictions against the employer company and/or individual directors. According to Health and Safety Executive figures the average fine per case prosecuted rose 39% for the year 2001/2002 to £12,194. This trend is set to continue and remember an injury is not required to prompt a prosecution.

If you are concerned that your present arrangements may fall short of the standards required, we can discuss them with you and assist with any dusting and polishing which will help to make your workplace safer and re-assure you that you have nothing to fear from a surprise inspection, or following a workplace injury.

For further information, please contact Judith Kelly jhk@meadeking.co.uk

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Testamentary Guardians

When considering a will we are obviously concerned about financial matters such as tax saving and ensuring that cash assets are distributed in accordance with the testator's wishes. However, just as important should be the appointment of testamentary guardians for minor children.

Anyone making a will who has "parental responsibility" for a minor child should consider appointing a guardian to look after him/her in the event of death. Both parents of a legitimate child have parental responsibility. In this case, the appointment of a guardian would only take effect on the second death. However, only the mother of an illegitimate child automatically has parental responsibility. The father can only acquire this through a court order, an agreement with the mother, by becoming registered as the child's father, or if he marries the mother of his child.

It is therefore particularly important for a sole parent with parental responsibility to appoint a guardian. If the father of the child has not acquired parental responsibility but a couple are living together the mother should consider making an appointment of the father as a guardian. This can either be done in the will or by a parental responsibility agreement during lifetime giving the father parental responsibility. Bear in mind however that an appointment of a guardian in a will is revocable by the mother whilst a parental responsibility agreement can only be terminated by a Court order. Conversely, parental responsibility is a permanent acceptance of responsibility by the father whereas he can always disclaim an appointment of a guardian after the death of the mother.

For similar reasons, where a widow or widower has minor children by a first marriage and then marries again they should consider making an appointment of his or her second spouse as guardian of the children. Whilst there is no limit to the number of guardians that can be appointed, from a practical point of view it makes sense to appoint either an individual or, if more than one, a married couple. It is a good idea to appoint guardians separately from executors and trustees. This is because your executors and trustees deal with the financial aspects of the children's upbringing whereas guardians are more concerned with education, religion and day to day upbringing.

For further information, please contact Jackie Martin jam@meadeking.co.uk or Richard Boulding rjb@meadeking.co.uk

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New TUPE regulations

The government has announced that the new draft TUPE regulations (which are likely to be available within the next few months) are to be subject to a further period of consultation. The date for implementation of the new regulations is expected to be the Spring of 2004.

The expected reforms are:

• TUPE to apply more comprehensively to service contracting operations involving labour-intensive services such as office cleaning, catering, security guarding and refuse collection. This will not affect professional services such as consultancy, accountancy or legal advice
• introduction of a requirement on the old employer to notify the new employer of the employment rights of the transferring employees
• improvement in the operation of TUPE when insolvent businesses are sold, to help promote the 'rescue culture' and save businesses and jobs that would otherwise be lost; and
• clarification of the circumstances in which employers can lawfully dismiss in relation to the transfer and negotiate changes to terms and conditions of employment for 'economic, technical or organisational reasons'.

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Statutory Disciplinary & Grievance Procedures Delayed

The statutory rules on disciplinary and grievance procedures due to be finalised in the autumn of this year have now been put back until April 2004. The regulations form part of the Employment Act 2002 and will be implied into all employment contracts as a minimum procedure that should be followed. Draft procedures are contained in the Employment Act.

For further information on these issues or in relation to any aspects of employment law and practice, please contact Richard Holmes rwfh@meadeking.co.uk or Ben Thomas bt@meadeking.co.uk

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Plant hire finds its roots in Adjudication Jungle

Baldwin's Industrial Services plc v Barr Ltd has earned its place as yet another case stamping its mark upon the interpretation and operation of the Housing Grants Construction and Regeneration Act 1996.

In passing judgment HHJ Kirkham provided not only what could be the first ruling on whether a plant hire contract is a "construction contract" for the purposes of the 1996 Act but also added another decision to the growing number where judges have stayed judgments, ordered a payment into a Court and so defeated an adjudicator's decision.

The decision is important in its clarification of the status of a plant hire contract.

By Section 105 of the Act unless the contract in question provides for installation, then the manufacture or delivery to site of building or engineering components or equipment, materials, plant or machinery are treated as exemptions from the definition of "construction operations".

As the right to adjudicate under the 1996 Act only applies to construction contracts which relate to construction operations, the answer would appear simple. The delivery to site of plant (in Baldwin a large crane) would not be a construction operation so Baldwin could not avail itself of the adjudication procedure set out in the 1996 Act. In fact Barr raised this point of jurisdiction immediately.

Notwithstanding this, the adjudicator decided he was competent to hear the matter and issued his decision that Barr, who had hired the crane were responsible to Baldwin for the cost of repairs and for lost hire charges of a figure in excess of £180,000. Armed with their decision, Baldwin went off to the Court to seek an Order for enforcement.

Prior to the Court hearing Baldwin had joint administrative receivers appointed.

Barr defended Baldwin's application to enforce the adjudicator's decision by again relying on their contention that the contract was not a construction contract for construction operation. Barr argued that it was a contract for mere plant hire and so fell within the exemptions of Section 105.

Baldwin said that the crane had been hired to undertake construction work at the site where Barr was operating. In addition to this and importantly the crane was hired together with an operator.

The court said the labour element in the contract was crucial. The labour was an integral part of building works. The mobile crane hire plus labour formed an integral part of or was preparatory to or was for rendering complete works of "... construction, alteration, repair, maintenance..." etc. It was not just a hire contract.

Barr then sought to stay the execution of any judgment to enforce the adjudicator's decision. It relied on the fact that the court has a discretion to stay an execution of judgment where there are special circumstances.

Barr argued that there were "special circumstances" as Baldwin was now in administrative receivership and their financial position was poor. An adjudicator's decision is binding until subsequently overruled by arbitration or litigation. Because of Baldwin's financial position a temporary position (i.e. paying under the adjudicator's award) would become a final one as Baldwin may not be able to repay sums if subsequently it lost an arbitration or at court.

The court decided that because Baldwin was in receivership and Barr said it would begin proceedings within a month to overturn the adjudicator's decision there were special circumstances and the stay was allowed.

The decision is attractive to those in the plant hire trade who may have thought that they were excluded from the benefits of adjudication. But it also shows that courts are increasingly willing to stay execution against judgment on an adjudicator's decision. The benefits of an award may prove short-lived and illusory.

The decision is to be considered by the Appeal Court in July. Watch this space.

For further information, please contact Philip Burbidge pjb@meadeking.co.uk

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Whilst every effort has been made to ensure accuracy, information contained in the Orchard may not be comprehensive and should not be acted upon without professional advice.

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