Keep out of harm's way

Cutting corners on health and safety is not good business practice. It turns you into a criminal. And as the law shifts to recognise corporate liability, you can expect to be treated like one.

Sadly, some in the construction industry regard compensation for injury or death as part of civil liability - nothing more serious. Earlier this month, a building being converted in Hull collapsed, killing three men ("Building", 7 April, pages 3 and 10). The Health and Safety Executive is now investigating whether work had continued without adequate supervision after it had issued a prohibition notice.

Despite common misconceptions, public liability insurance does not cover fines and costs imposed by criminal courts. And the Health and Safety at Work Act is essentially a criminal statute - although, historically, the criminal courts have imposed only modest fines for breaches of such law. But besides fines, there is an important exposure to legal costs. In R vs Associated Octel (1996), the Court of Appeal held that the prosecution's costs included those incurred carrying out investigations.

And in 1999, R vs F Howe & Son (Engineering) Limited handed down a strong judicial message. It included the following observations:

• A fine must be large enough to bring home to managers and shareholders the need for safety
• A fine should not generally be so large as to imperil the earnings of employees or create a risk of insolvency - unless the case is so serious that the defendant ought not to be in business
• If a crime results in death, the penalty should reflect public concern at unnecessary loss of life
• Magistrates should always think carefully before accepting health and safety cases if they could not impose a suitably large fine, or if death or serious injury has resulted
• The standard of care imposed by the legislation is the same whatever the size of the company.

The Howe decision has been widely adopted. In July 1999 alone, a record three fines were imposed in the space of one week: Great Western Trains was fined £1.5m after seven passengers died in the Southall crash; London Underground was fined £300 000 after the death of a passenger at Eastcote Station; and Friskies Pet Care was fined £600 000 after an employee was electrocuted while repairing factory machinery.

Most readers will be familiar with last year's prosecution of Balfour Beatty and Geoconsult following the collapse of the Heathrow Express tunnel. Mr Justice Cresswell followed Howe and fined Balfour Beatty £1.2m with £100 000 costs and Geoconsult £500 000 with £100 000 costs.

In Sea Empress - a case involving a tanker which ran aground and broke up after salvage attempts - the Court of Appeal recently reduced an initial fine of £4m to £750 000. But the costs order stood at £850 000. We are going to see even larger sums with the Paddington crash trial. The HSE has sought to impress upon the courts that breaches of health and safety law are serious crimes. In this, it has the support of the Lord Chancellor, who says: "Someone injured by breach of the Health and Safety at Work Act 1974 is no less a victim than someone who is assaulted".

Ministers have indicated that they mean to widen the range of offences for which imprisonment is available and raise maximum fines. And the government remains pledged to enact the Law Commission's 1996 recommendation for a new offence of "corporate killing".

In recent memory there was widespread anger after the failed prosecution of P&O European Ferries over the sinking of the Herald of Free Enterprise, which killed 192 people. This was followed by the Piper Alpha, Clapham, Hilisborough and Port Ramsgate disasters. Again, no convictions were secured.

The problem has been that gross negligence is not enough to establish corporate guilt without evidence proving the guilt of an identified person. But with fines and costs soaring, the industry cannot afford to ignore this fast-developing area of law. Parliament is on the case.