Construction site management leads to director disqualification

HSE v Laxmi Developments Limited and Madhaparia

FACTS

Vijay Madhaparia was the manager at Laxmi Developments Limited which was developing a building site at Mellow Close, Banstead on 23 January 2011.  An HSE inspector visited without notice, and was confronted with such poor standards of management that he served a prohibition notice (PN) and three improvement notices on the developers.

The inspector found workers knocking down the house at first floor level with no edge protection to prevent falls.  It emerged that Mr Madhaparia was aware of this failing, but had instructed workers to go ahead with the demolition without these basic safety measures in place.

On 6 September 2011 photographs were sent anonymously to HSE showing breach of the PN and continuing poor demolition practices on site.

An HSE inspector visited the site again on 3 October 2011 and again standards were found to be very poor.  Two further PNs were issued.

Even after this, the HSE was made aware that workers were continuing to operate from height with no protection.  Subsequent investigation also revealed that Mr Madhaparia had failed to produce an asbestos survey prior to the demolition.  The site was in a residential area and next to a school.  Much of the waste on site was burnt, potentially increasing the dispersal range of any asbestos fibres.

HELD

Laxmi Developments Limited pleaded guilty to breaching section 2(1) and section 33(1)(g) of the Health and Safety at Work Act 1974 (HSWA) and regulation 5 of the Control of Asbestos Regulations 2006 (CAR’s).  The firm was fined £15,000 and ordered to pay the full costs of the investigation and prosecution amounting to £11,930.

Mr Madhaparia pleaded guilty to breaching section 37(1) of the HSWA and regulation 5 of the CAR’s and section 2(1) of the HSWA.  He was fined £1,500 and disqualified from acting as a company director for three years.

Comment:

1. Whilst it is unusual for company directors to be prosecuted personally in relation to offences under the HSWA, there is recent evidence to show that this is likely to be a more frequent occurrence following the failure of the Corporate Manslaughter and Corporate Homicide Act 2007 to deal with personal liability.  After the ground-breaking decision in R v P [2008] the HSE will consider prosecuting directors and senior managers where they either knew, or ought to have known of circumstances giving rise to a breach of any provision of the HSWA.  This is a worrying development for company directors.
2. Both the magistrates’ court and the crown court have wide powers of director disqualification under section 2 of the Company Director’s Disqualification Act 1986 (CDDA).  Courts are being encouraged to use these powers more regularly.
3. In the current case, the disregard for health and safety shown by Mr Madhaparia and his company was shocking.  He exposed workers and the site’s neighbours – including young children – to appalling risks and the management of health and safety was non-existent even at the most basic level.  Currently there is little or no judicial guidance upon the court’s use of its discretionary powers under CDDA 1986 but it is likely that courts will begin to use this sanction more routinely in the future.
4. Given that there is evidence that breaches of health and safety legislation will result in more significant financial penalties, liability for court and investigation costs, adverse publicity, disqualification of directors, and potential exposure of directors to imprisonment, all employers are strongly urged to ensure that they lead health and safety at work effectively and robustly.

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